AMENDED AND RESTATED
SENIOR SECURED CREDIT AGREEMENT
among
METRIS COMPANIES INC.
as Borrower,
THE LENDERS FROM TIME TO TIME PARTIES HERETO,
XXXXXXX XXXXX CREDIT PARTNERS L.P.,
as Administrative Agent
and
DEUTSCHE BANK TRUST COMPANY AMERICAS
as Collateral Agent
Dated as of June 18, 2003
TABLE OF CONTENTS
No.
Article I Definitions........................................................1
Section 1.01. Defined Terms.....................................1
Section 1.02. Terms Generally..................................18
Article II THE CREDITS......................................................19
Section 2.01. Commitments......................................19
Section 2.02. Fees.............................................19
Section 2.03. Evidence of Debt; Repayment of Term Loan.........19
Section 2.04. Interest on Term Loan............................19
Section 2.05. Default Interest.................................20
Section 2.06. Performance Interest Payments....................20
Section 2.07. Prepayments......................................21
Section 2.08. Pro Rata Treatment...............................22
Section 2.09. Sharing of Setoffs...............................22
Section 2.10. Payments.........................................22
Section 2.11. Taxes............................................23
Article III REPRESENTATIONS AND WARRANTIES..................................26
Section 3.01. Organization; Powers.............................26
Section 3.02. Authorization....................................26
Section 3.03. Enforceability...................................26
Section 3.04. Governmental Approvals; No Conflicts.............26
Section 3.05. Financial Statements.............................27
Section 3.06. No Material Adverse Effect.......................27
Section 3.07. Title to Properties; Possession Under Leases.....27
Section 3.08. Subsidiaries.....................................27
Section 3.09. Litigation; Compliance with Laws.................28
Section 3.10. Agreements.......................................28
Section 3.11. Federal Reserve Regulations......................28
Section 3.12. Investment Company Act; Public Utility Holding
Company Act......................................28
Section 3.13. Use of Proceeds..................................29
Section 3.14. Tax Returns......................................29
Section 3.15. No Material Misstatements........................29
Section 3.16. Employee Benefit Plans...........................29
Section 3.17. Environmental Matters............................30
Section 3.18. Security Interests...............................31
Section 3.19. Refinancing of Prior Credit Agreement............31
Section 3.20. Regulatory Compliance............................31
Article IV CONDITIONS OF LENDING............................................31
Section 4.01. Conditions to Closing............................31
Section 4.02. Conditions to Effectiveness......................32
Article V AFFIRMATIVE COVENANTS.............................................34
Section 5.01. Existence; Businesses and Properties.............35
Section 5.02. Insurance........................................35
Section 5.03. Obligations and Taxes............................35
Section 5.04. Financial Statements, Reports, etc...............36
Section 5.05. Litigation and Other Notices.....................37
Section 5.06. Employee Benefits................................38
Section 5.07. Maintaining Records; Access to Properties and
Inspections......................................39
Section 5.08. Further Assurances...............................39
Section 5.09. Information Regarding Collateral.................40
Section 5.10. Sale of Accounts.................................41
Section 5.11. Regulatory Compliance............................41
Section 5.12. Funding of Credit Agreement Reserve
Securities Account...............................41
Section 5.13. CP Reserve Account...............................41
Section 5.14. Additional Accounts..............................42
Article VI NEGATIVE COVENANTS...............................................42
Section 6.01. Financial Covenants..............................42
Section 6.02. Limitations on Indebtedness......................43
Section 6.03. Liens............................................44
Section 6.04. Securities Account Pledge Agreement..............46
Section 6.05. Mergers, Consolidations, and Sales of Assets.....46
Section 6.06. Investments, Loans, Advances and Guarantees......47
Section 6.07. Restricted Payments; Certain Payments of
Indebtedness.....................................49
Section 6.08. Disposition of Assets............................50
Section 6.09. Transactions with Affiliates.....................50
Section 6.10. Amendment of Material Documents..................51
Section 6.11. Limitations on Restrictions on Dividends
by Subsidiaries..................................51
Section 6.12. Limitation on Negative Pledge Clauses............51
Section 6.13. Changes in Fiscal Periods........................52
Section 6.14. Limitations on Lines of Business, etc............52
Section 6.15. Certain Matters Related to Accounts..............52
Section 6.16. Employee Benefit Plans...........................52
Article VII EVENTS OF DEFAULT...............................................53
Article VIII THE AGENTS.....................................................57
Section 8.01. The Administrative Agent and the Collateral
Agent............................................57
Article IX MISCELLANEOUS....................................................61
Section 9.01. Notices..........................................61
Section 9.02. Survival of Agreement............................61
Section 9.03. Binding Effect...................................62
Section 9.04. Successors and Assigns...........................62
Section 9.05. Expenses; Indemnity..............................64
Section 9.06. Right of Setoff..................................66
Section 9.07. Applicable Law...................................66
Section 9.08. Waivers; Amendment...............................66
Section 9.09. Interest Rate Limitation.........................67
Section 9.10. Entire Agreement.................................68
Section 9.11. Waiver of Jury Trial.............................68
Section 9.12. Severability.....................................68
Section 9.13. Counterparts.....................................68
Section 9.14. Headings.........................................68
Section 9.15. Jurisdiction; Consent to Service of Process......68
Section 9.16. Confidentiality..................................69
Section 9.17. Releases of Guarantees and Liens.................70
Section 9.18. Mutual Drafting..................................70
Section 9.19. Amendment and Restatement........................70
Exhibits
Exhibit A Form of Borrower Security Agreement
Exhibit B Form of Borrower Pledge Agreement
Exhibit C Form of Assignment and Acceptance
Exhibit D Form of Subsidiary Guaranty
Exhibit E Form of Exemption Certificate
Exhibit F Form of Credit Agreement Reserve Securities Account Control Agreement
Exhibit G Form of Promissory Note
Exhibit H Form of Subsidiary Security Agreement
Schedules
Schedule 2.01 Commitments
Schedule 3.08 Subsidiaries
Schedule 3.09 Litigation
Schedule 3.14 Tax Returns
Schedule 3.18 UCC Filings
Schedule 5.04f) -1 Metris Master Trust Monthly Report
Schedule 5.04(f)-2 Monthly DMCCB Income Statement and Balance Sheet
Schedule 5.04(f)-3 DMCCB Monthly Credit Card Loan Report
Schedule 5.04(f)-4 Monthly Servicer Report
Schedule 6.02 Indebtedness
Schedule 6.03 Liens
Schedule 6.06 Investments
AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT (this
"Agreement"), dated as of June 18, 2003 among METRIS COMPANIES INC., a Delaware
corporation (the "Borrower"), the parties identified as lenders hereto (together
with any other persons from time to time which become party hereto pursuant to
Section 9.04, the "Lenders"), XXXXXXX XXXXX CREDIT PARTNERS L.P., as
administrative agent for the Lenders (in such capacity, the "Administrative
Agent") and Deutsche Bank Trust Company Americas, as collateral agent for the
Lenders (in such capacity, the "Collateral Agent").
The Borrower has requested the Lenders to extend credit to the Borrower
in an aggregate principal amount of up to $125,000,000 in the form of a term
loan (the "Term Loan") and the Lenders have agreed to do so pursuant to the
Senior Secured Credit Agreement dated as of June 5, 2003 (the "Closing Date
Credit Agreement") among the Borrowers, the Lenders and Deutsche Bank Trust
Company Americas, as administrative agent, subject to the conditions to
effectiveness set forth therein. This Agreement amends and restates the Closing
Date Credit Agreement. The proceeds of such Term Loan are to be used by the
Borrower and its subsidiaries to refinance the term loans outstanding under the
Prior Credit Agreement (as defined below), to provide working capital and for
other general corporate purposes in the ordinary course of business. The Lenders
are willing to extend such credit to the Borrower on the terms and subject to
the conditions herein set forth.
Accordingly, the Borrower, the Administrative Agent, the Collateral
Agent, and the Lenders 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:
"Accelerated Performance Payment" shall have the meaning given
such term in Section 2.06(b) of this Agreement.
"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.
"Acquisition Test Period" shall have the meaning set forth in
Section 6.06(g).
"Adjusted Treasury Rate" shall mean, as of any date of
determination, the quotient of (x) the yield for the six-month U.S.
Treasury xxxx security as referenced in The Wall Street Journal (or if
not so referenced, in any other national financial publication approved
by the Lenders) for the week ending immediately prior to the date of
such determination, plus .50%, and (y) twelve (12).
"Administrative Agent" shall mean Xxxxxxx Xxxxx Credit
Partners L.P., as the administrative agent for the Lenders under this
Agreement and the other Loan Documents, or any successor administrative
agent.
"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.
"Agents" shall mean the Administrative Agent and the
Collateral Agent, and "Agent" shall mean either the Administrative
Agent or the Collateral Agent, as the context may require.
"Approved Fund" shall mean any fund that is managed or advised
by a Lender or the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
"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, $5,000,000 minus the aggregate amount expended in
cash on or prior to such date in connection with any Investment made
pursuant to Section 6.05(a)(ii), or Section 6.06(j).
"Available Total Investment Basket" shall mean, as of any date
of determination, $25,000,000 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 6.05(a)(ii), or Section 6.06(j).
"Bank Regulatory Authority" shall mean the Board, the OCC, the
Federal Deposit Insurance Corporation and all other relevant bank
regulatory authorities (including, without limitation, relevant state
bank regulatory authorities).
"Bankruptcy Code" shall mean the United States Bankruptcy Code
of 1978, as amended.
"Big Four Accounting Firm" shall mean any of Pricewaterhouse
Coopers LLP, Ernst & Young LLP, KPMG 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 Pledge Agreement" shall mean the Pledge Agreement to
be entered into in favor of the Collateral Agent (substantially in the
form of Exhibit B hereto), as such agreement may be amended,
supplemented, modified or restated from time to time as permitted
thereby.
"Borrower Security Agreement" shall mean the Borrower Security
Agreement, substantially in the form of Exhibit A hereto, made by the
Borrower in favor of the Collateral Agent, as such agreement may be
amended, supplemented, modified or restated from time to time as
permitted thereby or replaced by a comparable agreement.
"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.
"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. Xxx Preferred Stock.
"Change in Control" shall mean means the occurrence of any of
the following events (whether or not approved by the Board of Directors
of the Borrower): (i) any Person (as such term is used in Sections
13(d) and 14(d) of the Exchange Act, including any group acting for the
purpose of acquiring, holding or disposing of securities within the
meaning of Rule 13d-5(b)(1) under the Exchange Act), other than the
Permitted Holders, is or becomes the "beneficial owner" or "beneficial
owners" (as defined in Rule 13d-3 and 13d-5 under the Exchange Act,
except that a Person shall be deemed to have "beneficial ownership" of
all shares that any such Person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time,
upon the happening of an event or otherwise), directly or indirectly,
of more than 35% of the total voting power of the then outstanding
Voting Stock of the Borrower; but only in the event that the Permitted
Holders "beneficially own," directly or indirectly, in the aggregate a
lesser percentage of the total voting power of the then outstanding
Voting Stock of the Borrower than such other Person and do not have the
right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of the
Borrower; (ii) the Borrower consolidates with, or merges with or into,
another Person (other than the Borrower or a Wholly-Owned Subsidiary of
the Borrower) or the Borrower or its Subsidiaries sell, assign, convey,
transfer, lease or otherwise dispose of all or substantially all of the
assets of the Borrower and its Subsidiaries (determined on a
consolidated basis) to any Person (other than the Borrower or a
Wholly-Owned Subsidiary of the Borrower), other than any such
transaction where immediately after such transaction the Person or
Persons that "beneficially owned" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that a Person shall be deemed to have
"beneficial ownership" of all securities that such Person has the right
to acquire, whether such right is exercisable immediately or only after
the passage of time), immediately prior to such transaction, directly
or indirectly, the then outstanding Voting Stock of the Borrower
"beneficially own" (as so determined), directly or indirectly, a
majority of the total voting power of the then outstanding Voting Stock
of the surviving or transferee Person; (iii) during any period of two
consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of the Borrower (together with any
new directors whose election by such Board of Directors or whose
nomination for election by the shareholders of the Borrower was
approved by a vote of a majority of the directors of the Borrower then
still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of the Borrower then in office; or (iv) the Borrower is
required by the holders of its Series C Preferred to redeem the Series
C Preferred upon the occurrence of a Change in Control (as defined in
the Certificate of Designation relating to the Series C Preferred).
"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 Agent" shall mean Deutsche Bank Trust Company
Americas as the collateral agent for the Lenders under this Agreement
and the other Loan Documents, or any successor collateral agent.
"Collateral Documents" shall mean the Borrower Security
Agreement, the Subsidiary Security Agreements, the Securities Account
Control Agreements, the Credit Agreement Reserve Securities Account
Control Agreement, the Deposit Account Control Agreements, the Pledge
Agreements, and the executed stock powers referred to in each Pledge
Agreement and any other agreement or instrument pursuant to which any
Loan Party transfers, grants or pledges a security interest in any of
its property or assets to the Collateral Agent for the ratable benefit
of the Lenders, in each case in form and substance satisfactory to the
Lenders.
"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. Xxx
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 December 31, 2002 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"), plus (c) amounts paid as Monthly Performance
Payments.
"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.
"CP Reserve Account" shall mean the securities account
established pursuant to the Credit Agreement Reserves Securities
Account Control Agreement in connection with the Borrower's obligation
to either terminate or cause control over certain deposit or securities
accounts to be established in favor of the Collateral Agent pursuant to
Section 5.13.
"Credit Agreement Reserve Securities Account" shall mean the
securities account established pursuant to the Credit Agreement
Reserves Securities Account Control Agreement.
"Credit Agreement Reserves Securities Account Control
Agreement" shall mean the Credit Agreement Reserve Securities Account
Control Agreement, substantially in the form of Exhibit F hereto or in
a form reasonably satisfactory to the Lenders, made by the Borrower in
favor of the Collateral Agent, for the ratable benefit of the Lenders,
as such agreement may be amended, supplemented, modified or restated
from time to time as permitted thereby or replaced by a comparable
agreement.
"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 Loss Reserves" shall mean, at any date of
determination, the amount of reserves for credit losses in respect of
Managed Accounts Receivable.
"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 the fiscal quarter ended June 30, 2003, 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.
"Default Interest Rate" shall mean the Interest Rate plus 2%.
"Deposit Account Control Agreement" shall mean any Deposit
Account Control Agreement, in a form reasonably satisfactory to the
Required Lenders, among the Borrower, the Collateral Agent, and the
Depository Institution at which a deposit account or accounts are
maintained for the ratable benefit of the Lenders, as such agreement
may be amended, supplemented, modified or restated from time to time as
permitted thereby or replaced by a comparable agreement.
"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.
"DMCCB" shall mean Direct Merchants Credit Card Bank, National
Association, or its successor.
"DMCCB Covenant" shall mean the minimum measurements set forth
in Section 6.01(g) hereof.
"dollars" or "$" shall mean lawful money of the United States
of America.
"Effective Date" shall have the meaning assigned to such term
in Section 4.02.
"Employee Benefit Plan" shall mean an employee benefit plan as
defined in Section 3(3) of ERISA.
"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 entity, 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), (c), (m), or (o) 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.
"Event of Default" shall have the meaning assigned to such
term in Article VII.
"Exchange Act" shall mean the Securities Exchange Act of 1934.
"Excluded Subsidiaries" shall mean (i) any Credit Card Bank,
(ii) any Receivables Transfer Subsidiary, (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, and (iv) Metris Travel Services, Inc., Metris Warranty
Services of Florida, Inc., Metris Direct Services, Inc., Metris
Warranty Services, Inc., and Metris Club Services, Inc.
"Existing Letters of Credit" shall mean the letters of credit
issued prior to this Agreement and outstanding as of the date hereof,
in the aggregate stated amount of $7,304,000.
"FDIA" shall mean the Federal Deposit Insurance Act, as
amended from time to time.
"Fee Letters" shall mean (i) the letter agreement dated June
5, 2003, among the Borrower and the Lenders, with regard to payment
from the Borrower of the fee (the "Structuring Fee") referred to in
therein; (ii) the letter agreement dated June 4, 2003 between the
Borrower and Deutsche Bank Trust Company Americas with regard to this
Agreement and (iii) the letter agreement dated June ___, 2003, between
the Borrower and the Administrative Agent with regard to this
Agreement.
"Fees" shall mean any fees due under the Fee Letters.
"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.
"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 benefited 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.
"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 intercompany
loans, 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.
"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 Payment Date" shall mean the first Business Day of
each month.
"Interest Rate" shall mean a fixed interest rate equal to 12%
per annum.
"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 either S&P or
Fitch, Inc. 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).
"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.
"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.
"Loan Documents" shall mean this Agreement, the Subsidiary
Guaranties and the Collateral Documents.
"Loan Parties" shall mean the Borrower, each Pledgor (as
defined in the related Pledge Agreement), each Subsidiary Guarantor and
each Security Interest Grantor.
"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.
"Make Whole Payment" shall mean the sum of the present values
of each remaining payment of interest which would have accrued on the
principal amount of the Term Loan being prepaid, as if the prepayment
had not occurred, discounted, from the date such payment is due to the
date of such prepayment on a monthly basis at the Adjusted Treasury
Rate (using, for purposes of this calculation, a 360-day year
consisting of twelve 30-day months).
"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
Second Amended and Restated Pooling and Servicing Agreement dated as of
January 22, 2002 among MRI, DMCCB and U.S. Bank National Association,
as trustee, as amended, supplemented or otherwise modified from time to
time.
"MasterCard" shall mean MasterCard International Incorporated.
"MasterCard Guaranty" shall mean the Guaranty dated November
11, 1996 between the Borrower as Guarantor and MasterCard as amended
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.
"Maturity Date" shall mean one year from the Effective Date.
"MCS Pledge Agreement" shall mean the Pledge Agreement to be
entered into by MCS in favor of the Collateral Agent (substantially in
the form of Exhibit B hereto), as such agreement may be amended,
supplemented, modified or restated from time to time as permitted
hereby.
"MDI" shall mean Metris Direct, Inc., a Minnesota corporation.
"MDI Pledge Agreement" shall mean the Pledge Agreement to be
entered into by MDI in favor of the Collateral Agent (substantially in
the form of Exhibit B hereto), as such agreement may be amended,
supplemented, modified or restated from time to time as permitted
hereby.
"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 Excess Spread Percentage" shall mean, as the context
may require (i) with respect to any Series under the Metris Master
Trust (a) the Portfolio Yield for such Monthly Period less (b) the Base
Rate for such Monthly Period and/or, (ii) with respect to the Metris
Master Trust as a whole, (a) the weighted average Portfolio Yield for
all publicly issued Series under the Metris Master Trust for such
Monthly Period less (b) the weighted average Base Rate for all publicly
issued Series under the Metris Master Trust. All such amounts shall be
as disclosed monthly (on or about the 18th day of each month) in a Form
8-K filing by Metris Receivables, Inc. as the originator under the
Metris Master Trust. For purposes of the definition, "Base Rate" and
"Portfolio Yield" shall have the respective meanings assigned to such
terms in the relevant supplements to the Master Trust Agreement as
defined on the Closing Date, provided that with respect to any Series
issued after the Closing Date, the Base Rate and Portfolio Yield will
be calculated in the manner set forth in the documentation governing
such Series 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 increase the reported Series Excess Spread)
than the relevant definitions existing on the Closing Date.
"Monthly Performance Payment" shall mean, with respect to any
Monthly Period for which there is a Performance Payment Date, an amount
equal to the Monthly Excess Spread Percentage multiplied by
$125,000,000 divided by twelve.
"Monthly Period" shall mean the period from and including the
first day of each calendar month of the Borrower to and including the
last day of such calendar month.
"Moody's" shall mean Xxxxx'x 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 has any liability or obligation, or has within any of
the preceding five plan years had any liability or obligation whether
contingent or otherwise.
"Net Proceeds" means the aggregate cash proceeds received by
the Borrower or any Subsidiary in respect of any insurance settlement,
litigation award, sale of assets (including, without limitation, any
cash received upon the sale or other disposition of any non-cash
consideration received in any such sale), net of (i) the direct costs
incurred by the Borrower or such Subsidiary and relating to such
insurance settlement, litigation award, or sale of assets (including,
without limitation, legal, accounting and investment banking fees, and
sales commissions); (ii) any relocation expenses incurred as a result
thereof, (iii) taxes, including income taxes, paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), and (iv) amounts required
to be applied to the repayment of Indebtedness secured by a Lien on the
asset or assets that were the subject of such sale.
"Note" shall mean each promissory note substantially in the
form of Exhibit G hereto.
"Obligations" shall mean (a) the Borrower's obligations in
respect of the due and punctual payment of principal of and interest on
the Term Loan 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 Fees, expenses, Monthly Performance
Payments, indemnities, reimbursements and other obligations, monetary
or otherwise, of the Borrower under this Agreement or any other Loan
Document and (c) all obligations, monetary or otherwise, of each
Subsidiary under each Loan Document to which it is a party.
"OCC" shall mean the Office of the Comptroller of the Currency
of the United States of America.
"OCC Agreement" shall mean any of the operating agreement,
dated as of March 18, 2003, between the Board of Directors of DMCCB,
the Board of Directors of the Borrower, and the OCC and all agreements
related thereto including the Capital Assurance and Liquidity
Maintenance Agreement ("CALMA"), dated as of March 18, 2003, between
Direct Merchants Bank and MCI, and the Liquidity Reserve Deposit
Agreement, dated as of March 18, 2003, among DMCCB, JPMorgan Chase
Bank, and the OCC dated March 19, 2003, each as shall be amended from
time to time.
"Participant" shall have the meaning assigned to such term in
Section 9.04(f).
"Pay Out Event" shall have the meaning set forth in the Master
Trust Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA.
"Performance Payment Date" shall mean the 20th day of each
month, starting on July 20, 2003 and continuing through and including
January 20, 2005, unless the Monthly Performance Payment is otherwise
terminated as a result of an Accelerated Performance Payment, provided
that if the 20th day of the month is not a Business Day then the next
succeeding Business Day.
"Permitted Holders" shall mean Xxxxxx X. Xxx Partners, L.P.
and any of its affiliates.
"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;
(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; and
(f) money market mutual funds registered under the
Investment Company Act of 1940 and which have the highest
investment rating from S&P and Moody's.
It is understood and agreed that the Collateral Agent or its
affiliates are permitted to receive additional compensation that could
be deemed to be in the Collateral Agent's economic self-interest for
(1) serving as investment adviser, administrator, shareholder servicing
agent, custodian or sub-custodian with respect to certain of the
investments, (2) using affiliates to effect transactions in certain
Permitted Investments and (3) effecting transactions in Permitted
Investments.
"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 or as to which the Borrower or any ERISA Affiliate has or may
have an obligation or liability, whether direct or indirect.
"Pledge Agreements" shall mean, collectively, the Borrower
Pledge Agreement, the MDI Pledge Agreement and the MCS Pledge
Agreement.
"Pledge Permitted Investments" shall have the meaning assigned
to such term in the Borrower Security Agreement.
"Prior Credit Agreement" shall mean the Amended and Restated
Credit Agreement dated as of July 21, 2000, as amended, among the
Borrower, JPMorgan Chase Bank, as administrative agent, and the Prior
Lenders.
"Prior Lenders" shall mean each of the lenders or financial
institutions party to the Prior Credit 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.
"Receivables Transfer Program" shall mean (i) the structured
receivables program conducted pursuant to that certain Second Amended
and Restated Bank Receivables Purchase Agreement dated as of January
22, 2002, between DMCCB and the Borrower, that certain Second Amended
and Restated Purchase Agreement dated as of January 22, 2002, between
the Borrower and MRI, 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.
"Reportable Event" shall mean any reportable event as defined
in Section 4043(b) of ERISA or the regulations issued thereunder.
"Required Lenders" shall mean, at any time, Lenders having
Term Loans representing more than 50% of the sum of the total
outstanding Term Loans 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.
"Rolling Three Month Average Excess Spread Percentage" shall
mean for any Monthly Period, the sum of the Monthly Excess Spread
Percentage for the 3 preceding Monthly Periods divided by 3; provided,
however, that the Rolling Three Month Average Excess Spread Percentage
will be measured starting with the June 2003 Monthly Period and every
month thereafter.
"Securities Account Control Agreement" shall mean a Securities
Account Control Agreement, in a form reasonably satisfactory to the
Required Lenders, among the Borrower or MDI, as applicable, the Person
with whom such securities account is established, and the Collateral
Agent, for the ratable benefit of the Lenders, as such agreement may be
amended, supplemented, modified or restated from time to time as
permitted thereby or replaced by a comparable agreement.
"Securities Account Pledge Agreement" shall mean the Amended
and Restated Securities Account Pledge Agreement dated as of the
Effective Date, amending and restating the Securities Account Pledge
Agreement dated March 17, 2003, made by the Borrower in favor of U.S.
Bank National Association, as such agreement may be amended, restated
or replaced from time to time as permitted by Section 6.04 hereof.
"Security Interest Grantor" shall mean each Subsidiary of the
Borrower party to a Subsidiary Security Agreement, other than any
Credit Card Bank, any Receivables Transfer Subsidiary, Crescent Ridge
Aviation, Inc., ICOM Limited, and MES Insurance Agency, LLC.
"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 mean any series of Investor Securities issued
by the Trust pursuant to a Supplement, which may include within any
such Series a Class or Classes of Investor Securities subordinate to
another such Class or Classes of Investor Securities (all capitalized
terms used in this definition shall have the meaning set forth the
Master Trust Agreement including any supplement thereto).
"Series Pay Out Event" shall mean a Pay Out Event under any
Series of the Metris Master Trust.
"Series C Preferred Stock" means the Series C perpetual
convertible preferred stock, par value $.01 per share, of the Borrower.
"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
date of this Agreement shall be deemed to be reasonably customary.
"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 are, at the time any
determination is being made, owned, Controlled or held by the parent
and/or one or more direct or indirect subsidiaries of the parent
including any subsidiary of the Borrower created or acquired by the
Borrower after the date hereof, other than the Metris Master Trust.
"Subsidiary Guarantors" shall mean each Subsidiary of the
Borrower party to a Subsidiary Guaranty other than an Excluded
Subsidiary.
"Subsidiary Guaranty" shall mean a Guaranty to be executed and
delivered by each Subsidiary Guarantor on the Effective Date,
substantially in the form of Exhibit D.
"Subsidiary Security Agreement" shall mean a Subsidiary
Security Agreement, substantially in the form of Exhibit H hereto, to
be made by each Security Interest Grantor in favor of the Collateral
Agent for the ratable benefit of the Lenders, as such agreement may be
amended, supplemented, modified or restated from time to time as
permitted thereby or replaced by a comparable agreement.
"Supermajority-Owned Subsidiary" shall mean any Subsidiary as
to which at least 80% of the outstanding common stock thereof is owned
directly by the Borrower or a Subsidiary Guarantor.
"Term Loan" shall have the meaning set forth in the preamble
to this Agreement.
"T.H. Xxx Preferred Stock" shall mean, at any date of
determination, the amount of the obligation of the Borrower in respect
of the Series C 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 Permitted Holder after the Effective Date
pursuant to the Certificate of Designation of Series C Preferred Stock
of the Borrower on a consolidated balance sheet of the Borrower in
conformity with GAAP consistently applied.
"Transactions" shall have the meaning assigned to such term in
Section 3.02.
"Trust Pay Out Event" shall have the meaning set forth in the
Master Trust Agreement.
"UCC" shall mean the Uniform Commercial Code as from time to
time in effect in the State of New York.
"VISA" shall mean Visa U.S.A. Inc.
"VISA Program Security Agreement" shall mean the Security
Agreement dated as of January 22, 2003 between VISA and DMCCB.
"Voting Stock" of any Person as of any date means the Capital
Stock of such Person that is at the time entitled to vote in the
election of the Board of Directors of such Person.
"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. 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
Section 2.01. Commitments. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, to make its Term Loan to the Borrower on the
Effective Date in the amount set forth on Schedule 2.01. Amounts repaid in
respect of any Term Loan may not be reborrowed.
Section 2.02. Fees. All Fees shall be paid on the dates due, in
immediately available funds, to the Lenders or the Collateral Agent, as
applicable, in accordance with the Fee Letters.
Section 2.03. Evidence of Debt; Repayment of Term Loan.
(a) The Term Loan made by each Lender to the Borrower shall be evidenced
by a promissory note of the Borrower, substantially in the form of
Exhibit G, with appropriate insertions therein as to payee, date and
principal amount, payable to the order of such Lender and representing
the obligation of the Borrower to pay the aggregate unpaid principal
amount of the Term Loan made by each Lender to the Borrower pursuant
to this Agreement, with interest thereon as prescribed in this
Agreement.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness to such Lender
resulting from the Term Loan made by it 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 the Term Loan made hereunder, (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 (iv) the amount of Monthly Performance
Payments made. 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 Term
Loan in accordance with its terms.
(c) The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Lender (i) the Monthly
Performance Payment and monthly interest due on each related payment
date and (ii) the then unpaid principal amount of the Term Loan
together with all other outstanding Obligations on the Maturity Date.
Section 2.04. Interest on Term Loan. Subject to the provisions of
Section 2.07, the Term Loan 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 Interest Rate. Interest on the Term Loan shall be payable monthly in
arrears on each Interest Payment Date.
Section 2.05. Default Interest.
(a) If (i) all or a portion of the principal amount of the Term Loan or
any Monthly Performance Payment shall not have been paid when due or;
(ii) any interest payable on the Term Loan shall not have been paid
when due, or (iii) any other Obligations shall not have been paid when
due, then such overdue Obligations shall bear interest at a rate per
annum which is equal to the Default Interest Rate from the date of
such non-payment until such amount is paid in full (as well after as
before judgment); or
(b) If the Rolling Three Month Average Excess Spread Percentage shall be
less than 2% for the Metris Master Trust as a whole, then the
outstanding Term Loan shall bear interest, commencing on the first day
of the month in which such event occurred, through and including the
last day of the calendar month that is two months after such event
occurred (and measured in three month increments thereafter) at a rate
per annum equal to the Default Interest Rate. The minimum time period
under which the Term Loan shall bear interest at the Default Interest
Rate is three months, provided that after such three month minimum
period, if the Rolling Three Month Average Excess Spread Percentage is
not less than 2%, then the Default Interest Rate shall no longer apply
unless and until the Rolling Three Month Average Excess Spread
Percentage shall again go below 2%.
Section 2.06. Performance Interest Payments.
(a) Commencing on July 20, 2003, and continuing on each Performance
Payment Date thereafter to and including the earlier of (i) January
20, 2005; or (ii) a date on which the Accelerated Performance Payment
is made pursuant to clause (b) of this Section 2.06, the Borrower
shall pay the Monthly Performance Payment in immediately available
funds to the Administrative Agent for the ratable accounts of the
Lenders.
(b) On any Business Day that is not a scheduled Performance Payment Date
between July 20, 2003 and January 20, 2005, the Borrower will have the
right at its option to make a one-time payment to the Administrative
Agent for the ratable accounts of the Lenders (the "Accelerated
Performance Payment") to prepay its obligations with respect to all
future Monthly Performance Payments. The Accelerated Performance
Payment shall be an amount equal to the product of $125,000,000 times
the percentage rate corresponding to the applicable payment date set
forth below:
Date of Payment Accelerated Performance
(Dates Inclusive) Payment Percentage
July 21, 2003 to August 19, 2003.......................7.4%
August 21, 2003 to September 19, 2003..................7.0%
September 21, 2003 to October 19, 2003.................6.6%
October 21, 2003 to November 19, 2003..................6.2%
November 21, 2003 to December 19, 2003.................5.8%
December 21, 2003 to January 19, 2004..................5.4%
January 21, 2004 to February 19, 2004..................5.0%
February 19, 2004 to March 19, 2004....................4.6%
March 21, 2004 to April 19, 2004.......................4.2%
April 21, 2004 to May 19, 2004.........................3.8%
May 21, 2004 to June 19, 2004..........................3.4%
June 21, 2004 and thereafter to
January 19, 2005.......................................3.0%
(c) On the Performance Payment Date occurring on January 20, 2005, or on
such earlier date that the Borrower makes the Accelerated Performance
Payment, the Borrower shall pay to the Administrative Agent for the
account of the Lenders an amount equal to the positive difference, if
any, between $4,000,000 minus the sum of (i) the aggregate amount of
Monthly Performance Payments paid to the Administrative Agent for the
account of the Lenders on or prior to such date pursuant to clause (a)
of this Section 2.06, plus (ii), if applicable, the Accelerated
Performance Payment paid pursuant to clause (b) of this Section 2.06.
Section 2.07. Prepayments.
(a) The Borrower shall have the right at any time and from time to time to
prepay the Term Loan, in whole or in part, and, if in part, in a
minimum principal amount of $5,000,000, upon giving written notice (or
telephone notice promptly confirmed by written notice) to the
Administrative Agent before 1:00 p.m., New York City time, one
Business Day prior to prepayment. To effect such an optional
prepayment, the Borrower shall pay to the Administrative Agent for the
ratable accounts of the Lenders, the principal amount of the Term Loan
being so prepaid, plus interest accrued at the Interest Rate on such
prepaid principal amount to the date of prepayment, plus an amount
equal to the Make Whole Payment. Each Lender Party to this Agreement
acknowledges that same day payment by the Administrative Agent to
Lender is feasible for the Administrative Agent only to the extent
that such Lender receives its payments at a U.S. financial institution
within the United States.
(b) The Borrower shall immediately prepay the Term Loan in an amount equal
to the sum of (i) 100% of the Net Proceeds from the sum of (x) the
issuance, in whatever form, of debt or equity by the Borrower or any
of its affiliates (excluding any intercompany debt and any issuance of
securities pursuant to a Receivables Transfer Program); and (y) any
insurance settlement or litigation award; and (ii) to the extent that
the cumulative amount of Net Proceeds from sales of assets by Borrower
or any Subsidiary exceeds $10,000,000 (excluding: (1) sales of
charged-off receivables to the extent Net Proceeds thereof are not
paid to the Borrower; (2) sales pursuant to a Receivables Transfer
Program; (3) sales of assets by DMCCB, to the extent the Net Proceeds
thereof are retained by DMCCB; and (4) sales of retained or residual
interests owned by MRI and sold by MRI pursuant to its Receivables
Transfer Program and allowed under the MRI Certificate of
Incorporation), in whatever form, then 75% of such cumulative Net
Proceeds in excess of $10,000,000 from such sale of assets described
in this clause (ii), provided however, that any such prepayment made
under this Section 2.07(b) shall not exceed the then outstanding
principal amount of the Term Loan. All prepayments under this Section
2.07(b) shall be accompanied by accrued interest on the principal
amount being prepaid to the date of prepayment together with a
prepayment premium equal to 6% of the principal amount being prepaid.
Whether or not any asset sale which results in the receipt of Net
Proceeds in excess of $100,000 (except for exclusions (1) through (4))
would result in a mandatory prepayment pursuant to this Section
2.07(b), the Borrower shall promptly deliver prior written notice to
the Lenders, the Administrative Agent, and the Collateral Agent of any
sale.
Section 2.08. Pro Rata Treatment. Each payment or prepayment of
principal of the Term Loan and each payment of interest on the Term Loan shall
be allocated pro rata among the Lenders in accordance with the respective
principal amounts of their outstanding Term Loan.
Section 2.09. 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 the Term Loan as a result of
which the unpaid principal portion of the aggregate amount of its Term Loan
shall be proportionately less than the unpaid principal portion of the Term Loan
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 Term Loan of such other Lender, so
that the aggregate unpaid principal amount of the Term Loan held by each Lender
shall be in the same proportion to the aggregate unpaid principal amount of the
Term Loan then outstanding as the principal amount of its Term Loan, prior to
such exercise of banker's lien, setoff or counterclaim or other event was to the
principal amount of the Term Loan, 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 2.15
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 the Term Loan 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 Term Loan directly to the Borrower in the amount of such
participation.
Section 2.10. Payments.
(a) The Borrower shall make each payment (including principal of or
interest on the Term Loan, Monthly Performance Payments or any Fees or
other amounts) hereunder and under any other Loan Document not later
than 1:00 pm, New York City time, on the date when due in dollars and
without set off or deduction to the Administrative Agent pursuant to
the wiring instructions provided by the Administrative Agent to the
Borrower. 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. Each of the parties to
this Agreement acknowledges that the 1:00 p.m. deadline is feasible
for the Administrative Agent, only to the extent that each Lender
receives its payments at a U.S. financial institution
(b) Whenever any payment (including principal of or interest on the Term
Loan, Monthly Performance Payments 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 2.11. Taxes.
(a) Any and all payments by the Borrower hereunder shall be made, in
accordance with this Section 2.11, 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 2.11) 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 this Section 2.11(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 on an after-tax basis (including, for the
avoidance of doubt, all taxes, penalties, interest and expenses,
whether or not included in the definition of Taxes) 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 2.11. 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 2.11, 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 2.11 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 2.11
shall survive the payment in full of the principal of and interest on
the Term Loan 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, Form W-9,
or Form W-8ECI (as applicable to it), 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
E, 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 or which is no longer applicable to it (including
without limitation, because of any change in any applicable treaty,
law, or regulation) that such Non-U.S. Lender is not legally able to
deliver, but such Non-U.S. Lender shall promptly notify Borrower of
such inability.
(g) Any Lender claiming any additional amounts payable pursuant to this
Section 2.11 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 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 as
directed by the Required Lenders, 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.
(i) Each Lender that is a United States person as defined in Section
7701(a)(30) of the Code shall on or before the Effective Date, deliver
to the Administrative Agent a W-9 form, in form and substance
satisfactory to the Administrative Agent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to each of the Lenders, the
Administrative Agent and the Collateral Agent 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 Loan Party of each of the Loan Documents to which it is a
party and the borrowing and the Monthly Performance Payments (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 Loan Party is a party, when executed and delivered by the
Borrower or such Loan Party, as the case may be, as of the Effective Date will
constitute, a legal, valid and binding obligation of the Borrower or such Loan
Party, as the case may be, enforceable against the Borrower or such Loan Party,
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 or as
of the Effective Date will be 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 consolidated
balance sheets and statements of earnings and statements of cash flows
(a) as of and for the fiscal year ended December 31, 2002, audited by
and accompanied by the opinion of KPMG LLP, independent public
accountants, and (b) as of and for the fiscal quarter ended March 31,
2003, 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 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 Effect. There has been no event giving
rise to a Material Adverse Effect in the business, assets, operations or
financial condition of the Borrower and the Subsidiaries, taken as a whole,
since March 31, 2003.
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 leased 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 a list of all
direct or indirect Subsidiaries of the Borrower, including without limitation,
all Excluded Subsidiaries 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 or a
Subsidiary therein.
Section 3.09. Litigation; Compliance with Laws. Except as set forth on
Schedule 3.09 or otherwise publicly disclosed,
(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.
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 the Term 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
Term Loan to refinance the loan under the Prior Credit Agreement (and to repay
in full all indebtedness and other amounts accrued or otherwise payable
thereunder) and 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, or any other document,
certificate or statement furnished to the Administrative Agent, the Collateral
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, 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 or to the public generally, in the other Loan Documents or in
any other documents, certificates and statements furnished to the Administrative
Agent, the Collateral 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 plan documents,
applicable provisions of ERISA and the Code and the regulations and published
interpretations thereunder with respect to the Employee Benefit Plans 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 (as defined in Section 4001(a)(16) of ERISA) 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
fair market value of the assets of such Plan, and the present value of all
benefit liabilities (as defined in Section 4001(a)(16) of ERISA) 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 by more
than $5,000,000 the fair market value of assets in all such defined plans.
Neither the Borrower nor any ERISA Affiliate has incurred any Withdrawal
Liability or are in default (as defined in Section 4219(e)(5) of ERISA) with
respect to payments to a Multiemployer Plan. 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. No accumulated funding
deficiency (as defined in Section 412 of the Code or Section 302 of ERISA) has
occurred with respect to any Plan. Neither Borrower nor any ERISA Affiliate is
subject to any present or potential liability under Title IV of ERISA which,
individually or in the aggregate, could have a Material Adverse Effect. No
material liability to the PBGC (other than required premium payments), the
Internal Revenue Service, any Employee Benefit Plan or any trust established
under Title IV of ERISA has been, or is expected by Borrower or any ERISA
Affiliate to be, incurred by Borrower or any ERISA Affiliate. None of Borrower
nor any ERISA Affiliate has any contingent liability with respect to any
post-retirement benefit under any "welfare plan" (as defined in Section 3(1) of
ERISA), other than liability for continuation coverage under Part 6 of Title I
of ERISA. No lien under Section 412(n) of the Code or 302(f) of ERISA or
requirement to provide security under Section 401(a)(29) of the Code or Section
307 of ERISA has been or is reasonably expected by Borrower, or ERISA Affiliate
to be imposed on the assets of Borrower or any member ERISA Affiliate. Borrower
is not a party to any collective bargaining agreement. Neither Borrower nor any
ERISA Affiliate has engaged in any transaction prohibited by Section 408 of
ERISA or Section 4975 of the Code. As of the Closing Date and throughout the
term of the Loan, Borrower is not and will not be an "employee benefit plan" as
defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, and none
of the assets of Borrower will constitute "plan assets" of one or more such
plans for purposes of Title I of ERISA. As of the Closing Date and throughout
the term of the Loan, Borrower is not or will not be a "governmental plan"
within the meaning of Section 3(3) of ERISA and Borrower will not be subject to
state statutes applicable to Borrower regulating investments and fiduciary
obligations, of Borrower with respect to governmental plans.
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 Agreements by
the parties thereto, the Collateral 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 Agreements),
subject to no other Liens, other than permitted Liens.
(b) At all times after execution and delivery of the Collateral Documents,
by the appropriate parties thereto and completion of the filings
listed on Schedule 3.18, and execution and delivery of the control
agreements included in the Collateral Documents, the security
interests created in favor of the Collateral Agent, for the ratable
benefit of the Lenders, pursuant to such Collateral Documents will
constitute valid, perfected security interests in the Collateral (as
defined in each respective agreement) 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), other than permitted Liens.
Section 3.19. Refinancing of Prior Credit Agreement. This Agreement and
the Indebtedness hereunder constitutes a refinancing, replacing or other
restructuring in whole or in part (including, without limitation, the increase
in the amount available to the Borrower thereunder) of the Prior Credit
Agreement, and the Loan Documents constitute "Permitted Debt" within the meaning
of the Senior Note Indentures.
Section 3.20. Regulatory Compliance. Borrower and each affiliate is in
full compliance with the OCC Agreement to which it is a party.
ARTICLE IV
CONDITIONS OF LENDING
Section 4.01. Conditions to Closing. The date, on or prior to June 30,
2003, on which the following conditions shall have been satisfied shall be the
"Closing Date":
(a) The Administrative Agent and Lender's counsel shall have received this
Agreement, duly authorized, executed and delivered by a duly
authorized officer of the Borrower, each Lender, and the
Administrative Agent.
(b) The Lenders and the Administrative Agent shall have received all Fees
(due and payable pursuant to this Agreement and the Fee Letters) and
other amounts due and payable on or prior to the Closing Date,
including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses (including, without limitation, travel
expenses, diligence expenses and reasonable fees, charges and
disbursements of counsel) required to be reimbursed or paid by any
Loan Party hereunder or under any other Loan Document through the
Closing Date.
(c) No Trust Pay Out Event, Series Pay Out Event, Pay Out Event, or event
giving rise to a Material Adverse Effect in the business, assets,
operations or financial condition of the Borrower and its
Subsidiaries, taken as a whole, shall have occurred.\
(d) No default or event of default shall exist under the Senior Note
Indenture or any other material Indebtedness of the Borrower.
(e) The Administrative Agent and each Lender shall have received such
additional documents, information and materials as any of them may
reasonably request.
Section 4.02. Conditions to Effectiveness. This Agreement shall become
effective on the date (the "Effective Date"), and the obligation of any Lender
to fund to Borrower the Lender's pro rata share of the Term Loan shall occur on
the date, on which each of the following conditions is satisfied (provided such
conditions shall have been fulfilled on or prior to June 30, 2003):
(a) The Collateral Agent shall have received this Agreement, the
Subsidiary Guaranties, and each of the Collateral Documents (including
certificates for all pledged shares of stock and related stock powers
or form powers of attorney) executed and delivered by a duly
authorized officer of the relevant Loan Parties and either
acknowledgement copies of UCC financing statements covering all of the
Collateral or post-filing lien searches showing the filing of such
financing statements.
(b) The Administrative Agent shall have received this Agreement, the
Subsidiary Guaranties and each of the Collateral Documents executed
and delivered by a duly authorized officer of the relevant Loan
Parties.
(c) Each Agent and each Lender shall have received an incumbency
certificate and certified copies 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.
(d) Each Agent and each Lender shall have received true and complete
copies of the certificate of incorporation and by-laws or other
organizational document of each Loan Party and Excluded Subsidiary,
certified as of the Effective Date as complete and correct copies
thereof by the Secretary or an Assistant Secretary of such Loan Party.
(e) With respect to corporate matters only, each Agent and each Lender
shall have received an executed legal opinion of counsel to the Loan
Parties (which may be in house), in form and substance satisfactory to
the Agents and the Lenders.
(f) Each Agent and each Lender shall have received one or more executed
legal opinions of Xxxxxx & Xxxxxxx LLP, special counsel to the
Borrower, in form and substance reasonably satisfactory to the
Lenders, as to (i) enforceability of the Loan Documents against the
Loan Parties party thereto; (ii) the creation and perfection (and as
to pledged stock in certificated form, the priority) of security
interests granted by Loan Parties pursuant to the Loan Documents;
(iii) the entering into and performance of the obligations under the
Loan Documents to which the Borrower is a party will not violate or
cause any breach of the Senior Note Indenture and such other
agreements evidencing material Indebtedness of the Borrower
identified, and copies of which have been provided, by the Borrower to
such counsel; (iv) the matters set forth in Section 3.12 hereof; and
(v) no consent from, approval of, notice or application to or filing
with any federal or Minnesota governmental authority is necessary in
connection with the pledge of the DMCCB stock pursuant to the MDI
Pledge Agreement, or the enforcement thereof or foreclosure thereon
(other than such consent, approval, notice, application or filing
requirements that would be required in connection with the change of
control of a national bank), and such pledge would not violate
applicable federal or Minnesota law, rules or regulations.
(g) 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.
(h) Counsel to the Administrative Agent and the Lenders shall have
received the results of a recent search of the UCC, 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 Lenders' Counsel.
(i) (1) The Borrower shall have paid all principal, interest, fees and
expenses accrued and otherwise outstanding under the Prior Credit
Agreement whether or not due and payable on the Effective Date and all
security interests for the benefit of the lenders thereunder shall
have been terminated except for the assets covered by the Securities
Account Pledge Agreement. (2) The Lenders and the Collateral Agent
shall have received all Fees (due and payable pursuant to this
Agreement and the Fee Letters) 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 (including,
without limitation, travel expenses, diligence expenses and reasonable
fees, charges and disbursements of counsel) required to be reimbursed
or paid by any Loan Party hereunder or under any other Loan Document
through the Effective Date.
(j) No Trust Pay Out Event, Series Pay Out Event, Pay Out Event, or event
giving rise to a Material Adverse Effect on the business, assets,
operations or financial condition of the Borrower and the
Subsidiaries, taken as a whole, shall have occurred.
(k) The Borrower and each Loan Party 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 no Event of Default or
Default shall have occurred and be continuing at the time of, funding
the Term Loan.
(l) No default or event of default shall exist under the Senior Note
Indenture or any other material Indebtedness.
(m) The Agents and Lenders shall have received such additional documents,
information and materials as they may reasonably request.
(n) Each Agent and each Lender shall have received from the Borrower a
copy of the Securities Account Pledge Agreement, and all Schedules and
Exhibits hereto, each of which shall be in form and substance
satisfactory to the Lenders.
(o) The Administrative Agent and each Lender shall have received from the
Borrower a copy of the Solvency Certificate that shall be in form and
substance satisfactory to the Lenders.
(p) The Administrative Agent and each Lender shall have received from the
Borrower a certificate of Borrower's Financial Officer, demonstrating
compliance with Section 6.01 covenants as of May 31, 2003.
(q) The Administrative Agent and each Lender shall have received from the
Borrower certified copies of (i) all indentures to the Senior Note
Indebtedness and (ii) the agreements identified in (i) of the
definition of Receivables Transfer Program.
(r) A certificate of a Responsible Officer of the Borrower certifying that
the financial statements of DMCCB as of March 31, 2003 and April 30,
2003 prepared in accordance with GAAP and delivered to the Lender and
the Administrative Agent are true, accurate and complete.
(s) The Borrower shall have deposited into the CP Reserve Account the
Required CP Account Deposit Amount (as defined in the Credit Agreement
Reserves Securities Account Control Agreement).
ARTICLE V
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees with each Lender and each Agent that,
so long as this Agreement shall remain in effect, the principal of or interest
on the Term Loan, any Fees, any Monthly Performance Payments, or any other
expenses or amounts payable under any Loan Documents shall be unpaid, unless the
Required Lenders shall otherwise consent in writing, the Borrower will, and will
cause each of the Subsidiaries (except with respect to Section 5.12 which shall
apply only to the Borrower) 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.
(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, 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, and (c) such contest effectively suspends
collection of the contested obligation and the enforcement of any Lien securing
such obligation or 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 (which may, if possible, post such
materials on Intralinks so long as all Lenders shall have access thereto):
(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 LLP or any other Big Four 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) (x) concurrently with any delivery of financial statements under
clause (a) or (b) above, 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)
within 30 days after the end of each month, 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 the
most recently ended calendar month) 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 60 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 the assumptions used therein) and, promptly
when available, any significant revisions of such budget;
(e) (i) 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 (ii) promptly after
delivery thereof, such other reports as the Borrower or any Subsidiary
shall have delivered to any other Governmental Authority;
(f) within 30 days after the end of each month, the reports set out on
Schedules 5.04(f)-1, 5.04(f)-2, 5.04(f)-3; 5.04(f)-4;
(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; and
(h) true copies of any strategic plans or projections delivered by the
Borrower or any Subsidiary to the OCC promptly after such delivery
thereto but only to the extent delivery of such information is not
prohibited by applicable law.
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 five (5) Business 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 $1,000,000, 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 five (5)
Business 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 (iv)
promptly and in any event within five (5) Business 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; and (v) within ten (10) days of sending
or receipt by Borrower, copies of all filings or correspondence with
the Department of Labor, the PBGC or Internal Revenue Service,
Employee Benefit Plan, Multiemployer Plan regarding any Plan, or
regarding or disclosing any liability or potential liability or
violation of law under any such employee benefit plan or any notice
from the Department of Labor or Internal Revenue Service of assessment
or investigation regarding a prohibited transaction under Section 4975
of the Code or Section 406 of ERISA, notice from the Internal Revenue
Service of imposition of excise tax with respect to an Employee
Benefit Plan, or any Form 5500 filed by any Borrower with respect to
an Employee Benefit Plan which includes a qualified accountant's
opinion, in any such case in (v) which could result in a liability in
excess of $500,000 either alone or in the aggregate.
(b) Borrower further covenants and agrees to deliver to the Administrative
Agent such certifications or other evidence from time to time
throughout the term of the Loan, as reasonably requested by the
Administrative Agent or any Lender in its sole discretion, that (i)
Borrower is not an "employee benefit plan" as defined in Section 3(3)
of ERISA, which is subject to Title I of ERISA, or a "governmental
plan" within the meaning of Section 3(3) of ERISA, (ii) Borrower is
not subject to state statutes applicable to Borrower regulating
investments and fiduciary obligations of Borrower with respect to
governmental plans; and (iii) at least one of the following
circumstances is true:
(i) Equity interests in Borrowing are publicly offered securities,
within the meaning of 29 C.F.R.ss.2510.3-101(b)(2);
(ii) Less then 25 percent of each outstanding class of equity
interests in Borrower are held by "benefit plan investors'
within the meaning of 29 C.F.R. ss. 2510.3-101(f)(2); or
(iii) Borrower qualifies as an "operating company" or a "real estate
operating company" within the meaning of 29 C.F.R.
ss.2510.3-101(c) or (e) or an investment company registered
under The Investment Company Act of 1940.
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, the
Collateral 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, the Collateral 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, the Collateral 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,
the Collateral Agent or the Lenders or any of them 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 or the
Administrative Agent under this Section shall be made through and coordinated by
the Collateral 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 either 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 Collateral 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 Collateral Agent, from time to time upon
request as directed by the Administrative Agent upon request as
directed by the Lenders, evidence reasonably satisfactory to the
Collateral Agent, as so directed, 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 (other than MES Insurance Agency, LLC)
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 Collateral Agent, for the benefit of the Lenders, a new
pledge agreement or such amendments or supplements to the Pledge
Agreement as the Collateral Agent shall deem necessary or advisable,
as directed solely by the Lenders, to grant to the Collateral 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 Collateral 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)
that has not previously done so, provide the Agents with written
notice of the existence of such a Subsidiary, and cause such
Subsidiary to execute and deliver to the Collateral Agent a Subsidiary
Guaranty in substantially the form of Exhibit D hereto .
(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.
Section 5.09. Information Regarding Collateral. The Borrower will
furnish to the Collateral 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 UCC or otherwise that are required in order for
the Collateral 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 Collateral Agent if any material portion of
the Collateral is damaged or destroyed.
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 Compliance. Cause each of its Insured
Subsidiaries to be at all times (i) 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; and
(ii) in the case of the Borrower and DMCCB, to the extent either is a party
respectively, be in compliance with any agreements (as may be amended from time
to time) entered into with any Bank Regulatory Authority including the OCC
Agreement.
Section 5.12. Funding of Credit Agreement Reserve Securities Account.
Cause to be funded into the Credit Agreement Reserve Securities Account all
amounts to be funded under, and shall comply with all of the terms of, the
Credit Agreement Reserves Securities Account Control Agreement if, as set forth
in such Agreement, the Rolling Three Month Average Excess Spread Percentage goes
below 2% with respect to the Metris Master Trust as a whole.
Section 5.13. CP Reserve Account. On the Effective Date, cause to be
funded into the CP Reserve Account the Required CP Reserve Account Deposit
Amount (as defined in the Credit Agreement Reserves Securities Account Control
Agreement) and not later than August 11, 2003, cause either (a) a control
agreement or a sweep agreement, in form and substance reasonably satisfactory to
the Collateral Agent and the Required Lenders, to be executed and delivered with
respect to deposit account No. 000-0000000-00 entitled "MDI Chase Cash Account"
(the "MDI Chase Deposit Account") among MDI, X.X. Xxxxxx Xxxxx Bank and the
Collateral Agent, or (b) termination or closure by MDI of the MDI Chase Deposit
Account. In the event either (a) or (b) above occurs, the Lenders shall direct
the Collateral Agent to certify to the Securities Intermediary under the Credit
Agreement Reserves Security Account Control Agreement that the CP Reserve
Account Required Balance (as defined therein) is zero, and authorize the
termination of the CP Reserve Account; provided that if a sweep agreement rather
than a control agreement is executed and delivered pursuant to clause (a), then
the Lenders shall have no obligation to direct the Collateral Agent to so
certify to the Collateral Agent. The Borrower agrees not to deposit any
additional funds into the MDI Chase Cash Account from and after the Effective
Date; it being acknowledged by the Lenders, however, that X.X. Xxxxxx Xxxxx Bank
or an affiliate will deposit amounts payable to MDI into the MDI Chase Cash
Account from time to time.
Section 5.14. Additional Accounts. Deliver a control agreement, in form
and substance reasonably satisfactory to the Required Lenders, prior to the
establishment of any deposit account or securities account established on or
after the Effective Date, other than deposit accounts or securities accounts
exclusively related to Receivables Transfer Programs.
ARTICLE VI
NEGATIVE COVENANTS
The Borrower covenants and agrees with each Lender and each Agent that,
so long as this Agreement shall remain in effect, the principal of or interest
on the Term Loan, any Fees or any other expenses or amounts payable under any
Loan Document shall be unpaid, 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 2.0 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 $750,000,000 after
the Effective Date.
(c) Minimum Excess Spread Percentages.
(i) With respect to the Metris Master Trust as a whole, permit the Monthly
Excess Spread Percentage to be less than 1%.
(ii) With respect to any Series under the Metris Master Trust, permit the
Rolling Three Month Average Excess Spread Percentage 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 15%.
(g) DMCCB Covenant. In the case of DMCCB, permit its (i) cash and cash
equivalents (including marketable securities) plus (ii) net credit
card loans minus (iii) deposits, minus (iv) $35,000,000 at any time to
be less than the respective amounts set forth, as of the corresponding
dates set forth below. Items (i), (ii) and (iii) shall be as shown on
DMCCB's most recent monthly financial statements prepared in
accordance with GAAP.
Dates (inclusive) Minimum Amount
Effective Date - September 30, 2003 $210,000,000
October 1, 2003 - December 31, 2003 $200,000,000
January 1, 2004 - March 31, 2004 $190,000,000
After March 31, 2004 $180,000,000
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) Indebtedness secured by Liens permitted under clauses (f)(ii), (h),
(i), (k) and (l) of Section 6.03;
(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 conducted
by MRI, Metris Funding Co. or Metris Asset Funding Co., and, with
respect to MCI recharacterization of any sale thereby as indebtedness
in connection with any such transfer of assets or receivables pursuant
to a Receivables Transfer Program conducted by MRI, Metris Funding Co.
or Metris Asset Funding Co.
(f) Indebtedness in connection with loans and advances permitted by
Section 6.06(d) (for the avoidance of doubt, the exception in this
clause shall only be permitted so long as no Default has occurred or
is continuing);
(g) Indebtedness in respect of deposits held by any Depositary
Institution;
(h) Unsecured Indebtedness of Borrower and its Subsidiaries maturing after
January 20, 2005 in an amount not to exceed $50,000,000 and any other
unsecured Indebtedness of the Borrower and its Subsidiaries maturing
at any time but not to exceed $5,000,000 (for the avoidance of doubt,
the exceptions in this clause shall only be permitted so long as no
Default has occurred or is continuing); 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); provided that the
aggregate principal amount of all Indebtedness incurred pursuant to
this clause (i)(x) shall not exceed $10,000,000, 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)(y) shall not exceed
$5,000,000 (for the avoidance of doubt, the exceptions in this clause
shall only be permitted so long as no Default has occurred or is
continuing).
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
except that no Liens shall be permitted with respect to the Capital Stock of any
Credit Card Bank or any other Subsidiary other than pursuant to the Pledge
Agreements:
(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 worker's compensation, unemployment insurance and
other social security laws or regulations;
(f) (i) deposits to secure the performance of bids, trade contracts (other
than for Indebtedness), leases (other than Capital Lease Obligations)
and (ii) 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 of the Borrower and/or any
Subsidiary, so long as after giving effect thereto the aggregate
outstanding principal amount of Indebtedness secured by such Liens
under this Section 6.03(i) does not exceed $5,000,000 at such time;
(j) Liens created by the Collateral Documents including Liens that attach
as a result of an Event of Default or Default;
(k) Liens on cash, cash equivalents, marketable securities and
certificates of deposit pledged pursuant to the Securities Account
Pledge Agreement, to secure the Borrower's obligations with respect to
letters of credit issued from time to time by U.S. Bank National
Association, which Liens shall not at any time exceed an aggregate
market value of $11,000,000 (which $11,000,000 includes all Liens
securing at 110% of the stated amount of letters of credit outstanding
from time to time, including those letters of credit outstanding on
the Effective Date and listed on Schedule 6.03).
(l) Liens securing DMCCB's settlement obligations to MasterCard or VISA
pursuant to the Bylaws of MasterCard or VISA, and all rules,
regulations and policies of membership with MasterCard or VISA or as
required by any Bank Regulatory Authority including under the OCC
Agreement, provided however, that any such Lien to MasterCard or Visa
shall only be allowed to the extent such settlement obligations are
not already reserved for under the OCC Agreement.
Section 6.04. Securities Account Pledge Agreement. Amend the Securities
Account Pledge Agreement without the prior written consent of the Required
Lenders, which consent shall not be unreasonably withheld.
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:
(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, or (ii) upon the receipt of an
opinion, in form and substance reasonably acceptable to the Lenders,
by a nationally recognized investment or accounting firm, as to the
fairness to the Lenders, 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 (I) in which no Person
other than the Borrower or a Wholly Owned Subsidiary Guarantor
receives any consideration and, (II) after giving effect to such
transaction, each of the Available Total Investment Basket, and the
Available Cash Investment Basket is not less than zero;
(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(d), (e) and (f);
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
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 (including guaranteeing the obligations of) the
Borrower or any Subsidiary Guarantor, (ii) to or into any Subsidiary
that is not a Subsidiary Guarantor in an aggregate amount not to
exceed $2,000,000 at such time, (iii) to or into an existing
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) any amounts required under the OCC
Agreement 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 (after application of
the FFIEC Expanded Guidance for Subprime Lending Programs), 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 $5,000,000;
(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) Upon the receipt of an opinion, in form and substance reasonably
acceptable to the Lenders, by a nationally recognized investment or
accounting firm, as to the fairness to the Lenders, 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 $300,000,000 , 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) 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, MasterCard or VISA
to be obtained by a Subsidiary in the ordinary course of business;
(i) 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; and
(j) Qualified Investments not otherwise permitted by clause (i) 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.
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 declare and pay dividends any time after
December 31, 2003 provided that the aggregate amount of such dividend
shall be allowed under existing law, shall not cause a default or
event of default under the Senior Note Indenture or any other material
Indebtedness, and shall not exceed .01 per share of Borrower's Capital
Stock and in no event to exceed $1,000,000 in any fiscal quarter; 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. For the
avoidance of doubt, during the occurrence or continuance of an Event
of Default, clauses (iii) through (v) of this Section 6.07(a) shall
not be permitted exceptions.
(b) Cause or allow DMCCB to make or agree to pay, directly or indirectly,
any dividends to the Borrower or any of its Subsidiaries in excess of
the lesser of (i) $20,000,000 per fiscal quarter and (ii) the greater
of (x) zero and (y) the difference between (1) cumulative net earnings
from April 1, 2003 and (2) cumulative dividends paid from July 1,
2003.
(c) 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 the sale of the facility located at 0000 Xxxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxx 00000 (including the adjacent parking
lot)) shall not exceed $50,000,000 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; and
(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;
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 and all such Net Proceeds shall be applied in accordance
with Section 2.07(b) (and, for the avoidance of doubt, the exclusions set forth
in Section 2.07(b) shall apply). The notice provisions of Section 2.07 shall
apply with respect to any sale under this Section.
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.
Section 6.10. Amendment of Material Documents. Amend, modify or waive
(a) any certificate of incorporation, by-laws or other organizational documents
of any of the Loan Parties or any Excluded Subsidiary or (b) the Senior Note
Indenture, in each case in any respect materially adverse to the Lenders, the
Collateral Agent or the Administrative Agent, provided that, with respect to
(a), the Borrower shall deliver a copy of each such amendment, modification or
waiver in each case certifying that such amendment, modification or waiver is
not in any respect materially adverse to the Lenders, the Collateral Agent or to
the Administrative Agent, and with respect to (b) only, as evidenced by an
opinion of outside counsel, and in each case under (a) and (b) such certificate
or opinion shall be reasonably acceptable to the Required Lenders in form and
substance.
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 restrictions
imposed by applicable requirements of law or by any Bank Regulatory Authority.
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) and shall be limited by the provisions of Section
6.02(i), (e) any restrictions regarding encumbrances on property leased by the
Borrower or a Subsidiary contained in the documents relating to the relevant
lease, (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; and (g) any restrictions on encumbrances on
property imposed by applicable requirements of law, the OCC Agreement or by any
Bank Regulatory Authority.
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 Lenders with such financial information as is reasonably useful to
allow 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 a Pledge Agreement, (ii) directly into a Receivables
Transfer Program, (iii) to a Subsidiary Guarantor, or (iv) as permitted by
Section 6.08(d), (e) and (f).
Section 6.16. Employee Benefit Plans. Borrower shall not engage in any
transaction which would cause any obligation, or action taken or to be taken,
hereunder (or the exercise by the Administrative Agent, the Collateral Agent or
any Lender of any of its rights under this Agreement or the other Loan
Documents) to be non-exempt (under a statutory or administrative class
exemption) prohibited transaction under ERISA or result in a violation of a
state statute regulating governmental plans that would subject the
Administrative Agent, the Collateral Agent, or any Lender to liability for a
violation of ERISA or such a state statute.
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 the Term
Loan or Monthly Performance Payments 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;
(c) default shall be made in the payment of any interest on the Term
Loan or any Fee or any other Obligations (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), Section 5.05(e), Section 5.13, or Article VI 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 ten (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, the
Collateral 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 or fail to pay any amount 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 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) (a) (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 the
Bankruptcy Code 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; or
(i) any insolvency event, Servicer Default (as defined under the
Master Trust Agreement or any Series thereunder), Trust Pay Out
Event, Series Pay Out Event, Pay Out Event, event of default,
amortization event, termination event or similar occurrence shall
occur under any OCC Agreement, loan agreement, security
agreement, trust agreement, indenture, or Receivables Transfer
Program sale or financing agreement, to which the Borrower, the
Metris Master Trust or any direct or indirect Subsidiary is a
party;
(j) the Borrower or any of its Subsidiaries shall (i) voluntarily
commence any proceeding or file any petition seeking relief under
the Bankruptcy Code 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) or other event 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 or Multiparty Plan in an aggregate amount exceeding
$5,000,000 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, in connection with releases of collateral thereunder
in accordance with the terms thereof);
(p) a Change in Control shall occur;
(q) 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
(ii) 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; or
(r) any demand is made by MRI on any demand note made by the Borrower
in favor of MRI;
then, and in every such event (other than an event with respect to the Borrower
described in clause (b) of paragraph (h) or 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,
declare the Term Loan then outstanding to be forthwith due and payable in whole
or in part, whereupon the principal of the Term Loan 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 in any event with respect to the Borrower
described in clause (b) of paragraph (h) or in paragraph (i) or (j) above, the
principal of the Term Loan 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.
The Lenders shall be entitled to deliver a "Notice of Sole Control" or the
equivalent under any control agreement only upon the occurrence and continuation
of an Event of Default.
ARTICLE VIII
THE AGENTS
Section 8.01. The Administrative Agent and the Collateral Agent.
(a) In order to expedite the transactions contemplated by this
Agreement and the other Loan Documents, each Lender hereby
appoints the Administrative Agent to act as administrative agent
on behalf of the Lenders, and each Lender hereby appoints the
Collateral Agent to act as collateral agent on behalf of the
Lenders. Each of the Lenders, and each subsequent holder of the
Term Loan, any Note or any interest therein 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 and the
other Loan Documents, together with such actions and powers as
are reasonably incidental thereto and authorizes the Collateral
Agent to take such actions on behalf of such Lender or holder and
to exercise such powers as are specifically delegated to the
Collateral Agent by the terms and provisions hereof and the other
Loan Documents, 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 Term Loan and all
other amounts due to the Lenders hereunder or the other Loan
Documents, and promptly to distribute to each Lender its pro rata
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 an officer of 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, in each
instance, subject to the authorization and direction pursuant to
Section 8.01(c) of the Required Lenders (or all Lenders as the
context may require), to exercise all rights granted to the
Administrative Agent under this Agreement and the other Loan
Documents; and (d) to distribute to each Lender copies of all
notices, financial statements and other materials delivered by
the Borrower pursuant to this Agreement or the other Loan
Documents as received by the Administrative Agent; provided,
however, that no duties or responsibilities herein or therein
shall be implied to have been assumed by the Administrative
Agent. The Collateral Agent is hereby expressly authorized by the
Administrative Agent and the Lenders, without hereby limiting any
implied authority, (w) to receive on behalf of the Administrative
Agent and the Lenders all payments due under the Collateral
Documents and the Subsidiary Guaranties, and promptly to
distribute such amounts to the Administrative Agent for
distribution to each Lender as provided above; (x) to give notice
on behalf of the Administrative Agent and each Lender to the
Borrower or any other Loan Party of any default specified in the
Collateral Documents or the Subsidiary Guaranties of which an
officer in the corporate trust department of the Collateral Agent
has actual knowledge acquired in connection with its agency
hereunder or thereunder; provided, however, the Collateral Agent
shall be entitled to rely conclusively on all certifications and
withdrawal requests made by any other party hereto, shall not
have any obligation to investigate any statements made therein or
be liable for any withdrawals made pursuant to a request by the
Lenders that later proves to be improper or incorrect; (y) to act
as Collateral Agent on behalf of the Lenders hereunder and under
the Collateral Documents and the Subsidiary Guaranties and, in
each instance, subject to the authorization and direction from
the Administrative Agent or all Lenders, to exercise all rights
granted to the Collateral Agent hereunder or under such
Collateral Documents and Subsidiary Guaranties; and (z) take the
actions it is authorized to take pursuant to the Loan Documents,
subject to authorization and direction pursuant to Section
8.01(c), in order to release collateral thereunder; provided,
however, that no duties or responsibilities herein or therein
shall be implied to have been assumed by the Collateral Agent.
(b) Neither 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 willful
misconduct, or be responsible for any statement, warranty or
representation herein or the contents of any document delivered
in connection herewith (or the other Loan Documents), 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. Neither Agent shall be responsible to the Lenders or
the holders of any interest in the Notes or the Term Loan for the
due execution, genuineness, validity, enforceability or
effectiveness of this Agreement, or any other Loan Documents or
other notes, instruments or agreements. Each 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 interest in Notes or the Term Loan. Each 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 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 or the other Agent 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 other Agent or
the Borrower of any of their respective obligations hereunder or
under any other Loan Document or in connection herewith or
therewith. Either 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.
(c) Except as expressly set forth in the Loan Documents, the Lenders
hereby acknowledge that each 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 (or all Lenders as the
context may require). For the avoidance of doubt, it is
understood that this Section 8.01(c) shall not be construed to
permit an Agent to take any discretionary action whatsoever, but
merely an acknowledgment that the Required Lenders (or the
Lenders, as the case may be) can instruct such Agent to take
action, or refrain from taking action, provided that such action
(or inaction, as the case may be) does not involve discretionary
decision-making.
(d) Subject to the appointment and acceptance of a successor Agent as
provided below, (i) either Agent may resign at any time by
notifying the Lenders, the other Agent and the Borrower and (ii)
such Agent, at the request of the Required Lenders shall resign.
Upon any such resignation, the Required Lenders shall have the
right to appoint a successor, subject to the consent of the
Borrower (which consent shall not be unreasonably withheld or
delayed). If no successor shall have been so appointed by the
Required Lenders (and reasonably consented to by the Borrower)
and shall have accepted such appointment within 30 days after the
retiring Agent gives notice of its resignation or the Required
Lenders shall have requested the resignation of such Agent, then
(i) the retiring Agent may, on behalf of the Lenders and the
Borrower, appoint a successor Agent, if such Agent shall have
resigned by notifying the Lenders or (ii) otherwise, the Required
Lenders may petition a court of competent jurisdiction to replace
the terminated Agent, in each case (except as waived by the
Required Lenders) 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 a successor 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 Agent and the retiring Agent shall be discharged from
its duties and obligations hereunder. Each retiring Agent shall
execute and deliver any and all instruments or documents
necessary or advisable to transfer its rights, powers, privileges
and duties hereunder and under the other Loan Documents and to
maintain the perfection and priority of all security interests
granted under the Loan Documents. After an 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 an
Agent.
(e) Notwithstanding anything herein to the contrary, (i) the Required
Lenders may, with or without cause, at any time terminate the
rights and obligations of either Agent hereunder, and (ii) if a
Default has occurred and is continuing, no consent of the
Borrower shall be required under this Section 8.01 in connection
with any termination or appointment of an Agent.
(f) The Borrower hereby agrees to pay the reasonable fees and
expenses of each Agent (including fees of counsel) for its
service under this Agreement and any other Loan Document, and to
indemnify and hold harmless the Agent and any of its directors,
officers, employees or agents, on demand, 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
an 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 under this Agreement or any other Loan Document. To
the extent not paid by the Borrower, the Lenders may (in their
sole discretion) reimburse an Agent, upon written request, each
in the amount of its pro rata share of expenses incurred for the
benefit of the Lenders by such Agent; provided that neither the
Borrower nor any Lender shall be liable to such Agent for any
portion of such fees or expenses disbursements resulting from the
gross negligence or willful misconduct of such Agent or any of
its directors, officers, employees or agents. If, and to the
extent that the obligations under this Section 8.01 are
unenforceable for any reason, the Borrower hereby agrees to make
the maximum contribution to the payment in satisfaction of such
obligations which is permissible under applicable law.
(g) Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent, the Collateral 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, the Collateral 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 hereunder.
(h) The covenants contained in this Section 8.01 shall survive the
payment or satisfaction in full of all other Obligations
(i) The relationship between the Administrative Agent and each of the
Lenders, and the Collateral Agent and each of the Lenders, is
that of an independent contractor. The use of the term "Agent" is
for convenience only and is used to describe, as a form of
convention, the independent contractual relationship between such
Agent and each of the Lenders. Nothing contained in this Credit
Agreement nor the other Loan Documents shall be construed to
create an agency, trust or other fiduciary relationship between
an Agent and any of the Lenders.
(j) As an independent contractor empowered by the responsibilities
hereunder and under the Loan Documents, the Collateral Agent is
nevertheless a "representative" of the Lenders, as that term is
defined in Article 1 of the Uniform Commercial Code, for purposes
of actions for the benefit of the Lenders and by the
Administrative Agent with respect to all collateral security and
guaranties contemplated by the Loan Documents. Such actions
include the designation of the Collateral Agent as "secured
party," "mortgagee" or the like on all financing statements and
other documents and instruments, whether recorded or otherwise,
relating to the attachment, perfection, or deeds of trust in
collateral security intended to secure the payment or performance
of any of the Obligations, all for the benefit of the Lenders and
the Administrative Agent.
(k) A payment by the Borrower to an Agent hereunder or any of the
other Loan Documents for the account of any Lender shall
constitute a payment to such Lender. The Collateral Agent agrees
to promptly remit any payment to the Administrative Agent, except
as otherwise expressly provided herein or in any of the other
Loan Documents. The Administrative Agent agrees promptly to
distribute to each Lender such Lender's pro rata share of
payments received by the Administrative Agent for the account of
the Lenders except as otherwise expressly provided herein or in
any of the other Loan Documents.
(l) If a court of competent jurisdiction shall adjudge that any
amount received and distributed by an Agent is to be repaid, each
Person to whom any such distribution shall have been made shall
either repay to such Agent its proportionate share of the amount
so adjudged to be repaid or shall pay over the same in such
manner and to such Persons as shall be determined by such court.
(m) Any and all rights granted to the Administrative Agent under this
Agreement or any other Loan Document are to be held and exercised
by the Administrative Agent as administrative agent for the
benefit of the Lenders pursuant to the provisions of this
Agreement. Any and all rights granted to the Collateral Agent
under this Agreement or any other Loan Documents are to be held
and exercised by the Collateral Agent as collateral agent for the
benefit of the Lenders pursuant to the provisions of this
Agreement.
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., 00000 Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxxxx 00000, Attention of Treasurer
(Telephone No. (000) 000-0000) (Telecopy No. (000) 000-0000),
with a copy to the attention of General Counsel of Metris
Companies Inc., 00000 Xxxxxxx Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxxxx
00000 (Telephone No. (000) 000-0000) (Telecopy No. (952)
593-5098);
(b) if to the Administrative Agent, to it at Xxxxxxx Xxxxx Credit
Partners L.P., 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxxxx Xxxxxx (Telephone No. 000-000-0000)
(Telecopy No. 212-357-4597);
(c) if to the Collateral Agent, to it at Project Finance and Escrow
Group Deutsche Bank Trust Company Americas, 00 Xxxx Xxxxxx, Mail
Stop: NYC60-2710, Xxx Xxxx, XX 00000, Attention: Xxxxx Xxxxxxx
(Telecopy No. 212-797-8625); and
(d) if to a Lender, to it at its address set forth on Schedule 2.01
or as may be modified by written notice to the Borrower or 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 or the
Collateral Agent 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 Term Loan, 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 the Term Loan or any Fee or any other
amount payable under this Agreement or any other Loan Document is outstanding
and unpaid.
Section 9.03. Binding Effect. This Agreement shall become effective when
it shall have been executed by the Borrower, the Administrative Agent, the
Collateral Agent and each Lender and thereafter shall be binding upon and inure
to the benefit of the Borrower, the Administrative Agent, the Collateral Agent,
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 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, the
Collateral 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 the Term Loan and the related
Notes at the time held by it) provided that (i) the amount of the
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 $1,000,000; and (ii) the parties to
each such assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance. From and after
the effective date specified in each Assignment and Acceptance,
which effective date shall be at least five (5) 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
any Interest, Fees, Monthly Performance Payments and other
Obligations accrued for its account hereunder, not so assigned
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 the
outstanding balances of its Term Loan 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 each Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement as are delegated
to such 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
principal amount of the Term Loan and related Notes held by 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, the Collateral 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 the Term 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, the Collateral Agent 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, and a form W-9 in form satisfactory
to the Administrative Agent completed in respect of the assignee
(unless the assignee shall already be a Lender hereunder), 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 other
Lenders, the Collateral Agent and the Borrower.
(f) Each Lender may without the consent of the Borrower or either
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 Term Loan and the related Notes held by 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 provisions contained in Section 2.11 limited, as
to each Participant, to the amount the selling Lender could claim
and (iv) the Borrower, the Administrative Agent, the Collateral
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 Term Loan 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 Term Loan and related Notes, or
extending any scheduled principal payment date or date fixed for
the payment of principal of or interest or fees on the Term Loan
and related Notes).
(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 Collateral Agent and
the Administrative Agent, 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, in the form of Exhibit G hereto,
evidencing the Term Loan 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 without the prior written consent of
the Required Lenders.
Section 9.05. Expenses; Indemnity.
(a) The Borrower agrees to pay all reasonable out-of-pocket expenses
incurred by the Lenders and the Agents 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 each
Agent 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 Term Loan made
hereunder, including (i) the reasonable fees and disbursements of
outside counsel to Lenders and the Administrative Agent and
counsel to the Collateral 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 Agents or any Lender.
(b) The Borrower agrees to indemnify the Administrative Agent, the
Collateral Agent, 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 Term
Loan 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 willful
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 (A) 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, (B) for
separate counsel for each Agent, and (C) local counsel for any of
the forgoing.
(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 the Term Loan, 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 an 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.
(a) 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.
(b) If any Lender (a "benefited Lender") shall at any time receive
any payment of all or part of its Term Loan, Performance
Payments, or interest thereon, or fees, or receive any collateral
in respect thereof (whether voluntarily or involuntarily, by
setoff, or otherwise), in greater proportion than any such
payment to or collateral received by any other applicable Lender,
if any, in respect of such other Lender's Term Loan, Performance
Payments, or interest thereon, or fees, such benefited Lender
shall purchase for cash from such other Lenders such portion of
each such other Lender's Term Loans, Performance Payments or
fees, or shall provide such other Lenders with the benefits of
any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefited Lender to share the excess
payment or benefits of such collateral or proceeds ratably with
each of such other Lenders; provided, however, that if all or any
portion of such excess payment or benefits is thereafter
recovered from such benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the
extent of such recovery, but without interest. The Borrower
agrees that each Lender so purchasing a portion of another
Lender's Term Loan, Monthly Performance Payments or fees may
exercise all rights of payment (including rights of setoff) with
respect to such portion as fully as if such Lender were the
direct holder of such portion.
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 (EXCLUDING THE CONFLICT OF LAW PRINCIPLES THEREOF, BUT
INCLUDING NEW YORK GENERAL OBLIGATIONS LAW SECTIONS 5-1401 AND 5-1402).
Section 9.08. Waivers; Amendment.
(a) No failure or delay of either Agent or any Lender in exercising
any power, remedy, privilege or right hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any
such right, remedy, privilege or power, or any abandonment or
discontinuance of steps to enforce such a right, remedy,
privilege or power, preclude any other or further exercise
thereof or the exercise of any other right, remedy, privilege or
power. The rights, powers, privileges and remedies of the Agents
and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights, powers,
privileges or remedies otherwise provided by law. 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 Administrative Agent, the Collateral Agent, the Required
Lenders, the Borrower, and each other affected Loan Party;
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 or
interest on the Term Loan (or any Note), or Monthly Performance
Payments, or waive or excuse any such payment or any part
thereof, or decrease the rate of interest on the Term Loan (or
any Note), without the prior written consent of each Lender
affected thereby, (ii) 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, (iii) reduce the amount or extend the time of payment of
any Fee, indemnity or other Obligation payable to the Lender, or
an Agent hereunder or under any other Loan Document, 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 or the Credit Agreement Reserves
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 an Agent hereunder without the prior written consent
of such Agent. Each Lender and each holder of a Term Loan shall
be bound by any waiver, amendment or modification authorized by
this Section, and any consent by any Lender or holder of a Term
Loan pursuant to this Section shall bind any Person subsequently
acquiring a Term 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 Term Loan held by such Lender, together with all
Charges payable to such Lender, shall be limited to the Maximum Rate.
Section 9.10. Entire Agreement. This Agreement and the other Loan
Documents and the letter agreements 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 Collateral Agent, 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 such 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 an 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 an Agent or any Lender on a nonconfidential
basis prior to its disclosure to such 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 such Agent or such
Lender or (z) becomes available to an 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
such 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 Collateral 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.
(b) At such time as the Term Loan and the other Obligations shall
have been paid in full in cash, 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 Agents and
each Loan Party under the Collateral Documents shall terminate.
In connection with any such payment in full of the Obligations,
each Agent shall deliver a payoff and/or release letter, as
applicable (in form and substance satisfactory to the Lenders and
the Borrower) in respect of the Liens created by the Collateral
Documents.
Section 9.18. Mutual Drafting. This Agreement and each other Loan
Document is the joint product of the parties hereto and each provision hereof
has been subject to the mutual consultation, negotiation, and agreement of the
parties hereto, and shall not be construed for or against any party hereto.
Section 9.19. Amendment and Restatement. This Agreement amends and
completely restates the Senior Secured Credit Agreement, dated June 5, 2003,
among Metris Companies Inc., as borrower, the lenders party thereto, and
Deutsche Bank Trust Company Americas, as administrative agent thereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Borrower, the Administrative Agent, the
Collateral 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.
METRIS COMPANIES INC., as Borrower
By: /s/Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President and Treasurer
XXXXXXX XXXXX CREDIT PARTNERS L.P.,
as Administrative Agent for the Lenders
By /s/Xxxxxx Dornbrowski
Name: Xxxxxx Dornbrowski
Title: Authorized Signatory
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Collateral Agent for the Lenders
By /s/Xxxxxxx X. Xxxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Vice President
HIGH YIELD PORTFOLIO,
a series of Income Trust, as Lender
By /s/Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Assistant Vice President Income Trust
AXP VARIABLE PORTFOLIO - EXTRA INCOME FUND,
a series of AXP Variable Portfolio
Income Series, Inc., as Lender
By /s/Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Assistant Vice President Income Trust
DK ACQUISITION PARTNERS, L.P., as Lender
By: X.X. Xxxxxxxx & Co., its General Partner
By: /s/Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title:
PERRY PRINCIPALS INVESTMENTS, L.L.C., as Lender
By /s/Xxxxxxx Xxxxxxxxxxx
Name: Xxxxxxx Xxxxxxxxxxx
Title: Managing Director
and Chief Financial Officer
THE VARDE FUND V, L.P.,
a Delaware limited partnership
By: The Varde Fund V, G.P. LLC, a Delaware limited
liability company, its General Partner
By: Varde Partners, L.P., a Delaware limited
partnership, its Managing Member
By: Varde Partners, Inc., a Delaware corporation,
its General Partner
By /s/Xxxx Xxxx
Name: Xxxx Xxxx
Title: Vice President
YORK CAPITAL MANAGEMENT, L.P., as Lender
By /s/Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Director
KZH SOLEIL-2, LLC, as Lender
By /s/Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: Authorized Agent
GALAXY 1999-1, LTD., as Lender
By /s/Xxxx X. Xxxxxx, III
Name: Xxxx X. Xxxxxx, III
Title: Managing Director
SUNAMERICA LIFE INSURANCE COMPANY, as Lender
By /s/Xxxx X. Xxxxxx, III
Name: Xxxx X. Xxxxxx, III
Title: Managing Director
XXXXXXX XXXXX CREDIT PARTNERS L.P., as Lender
By /s/Xxxxxx Dornbrowski
Name: Xxxxxx Dornbrowski
Title: Authorized Signatory
SPCP GROUP LLC, as Lender
By: SILVER POINT CAPITAL LP
its managing member
By /s/Xxxxxx X. Mule
Name: Xxxxxx X. Mule
Title: Managing Member
EXHIBIT A
FORM OF BORROWER SECURITY AGREEMENT
BORROWER SECURITY AGREEMENT, dated as of June 18, 2003, made by METRIS
COMPANIES INC., a Delaware corporation ("Borrower"), in favor of DEUTSCHE BANK
TRUST COMPANY AMERICAS, as Collateral Agent (in such capacity, the "Collateral
Agent") for the benefit of the Lenders (as defined in the Credit Agreement
referred to below).
W I T N E S S E T H:
WHEREAS, pursuant to the Amended and Restated Senior Secured Credit
Agreement, dated as of June 18, 2003, among the Borrower, the Lenders, Xxxxxxx
Sachs Credit Partners L.P., as administrative agent for the Lenders (in such
capacity, the "Administrative Agent"), and the Collateral Agent (as amended,
modified, supplemented, extended or restated from time to time, the "Credit
Agreement"), the Lenders have agreed to make an extension of credit to the
Borrower upon the terms and subject to the conditions set forth therein; and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective extensions of credit to the Borrower under the Credit
Agreement that the Borrower enter into the Borrower Security Agreement as
provided herein.
NOW, THEREFORE, in consideration of the premises and to induce the
Collateral Agent, the Administrative Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their respective loans
(collectively, the "Term Loan") to the Borrower, the Borrower hereby agrees with
the Collateral Agent for the 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
Code (as defined below) or, if not defined in the Code, in the Credit
Agreement. All references to terms defined in the Code shall mean such
term as it may be amended, supplemented or otherwise modified to be
more expansive after the date hereof as set forth in the Code.
(b) The following terms shall have the following meanings:
"Account" has the meaning given such term in the Code, but
excludes Accounts (including credit card receivables) sold or
transferred by the Borrower as permitted by the Credit Agreement
including without limitation assets sold pursuant to a
Receivables Transfer Program.
"Agreement" means this Borrower Security Agreement, as the
same may be amended, supplemented or otherwise modified from time
to time.
"Chattel Paper" has the meaning given such term in the Code.
"Code" means the Uniform Commercial Code as from time to
time in effect in the State of New York.
"Collateral" has the meaning given such term in Section 2.
"Collateral Account" means any collateral account
established by the Collateral Agent as provided in Section 5.1
hereof.
"Deposit Account" has the meaning given such term in the
Code, including any demand, time, savings, passbook or similar
account maintained with a bank.
"Document" has the meaning given such term in the Code,
including a document of title or a "warehouse receipt" (as
defined in Section 7-201(2) of the Code).
"Excluded Assets" means any property, including but not
limited to Accounts, Chattel Paper, Documents, General
Intangibles, Instruments, Investment Property, 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, any interests in real property or Fixtures, and any
collateral pledged pursuant to the Pledge Agreement.
"General Intangibles" means any personal property (other
than goods, Accounts, Chattel Paper, Deposit Accounts, Documents,
Instruments, Investment Property, letters of credit, Letter of
Credit Rights, commercial tort claims and money) including,
without limitation, things in action, contract rights, payment
intangibles, software, corporate and other business records,
inventions, designs, patents, patent applications, service marks,
trademarks, trade names, trade secrets, internet domain names,
engineering drawings, good will, registrations, copyrights,
licenses, franchises, customer lists, tax refund claims,
royalties, licensing and product rights, rights to the retrieval
from third parties of electronically processed and recorded data
and all rights to payment resulting from an order of any court,
and without limiting any of the foregoing, such other items as
may be set forth in the Code from time to time.
"Instrument" has the meaning given such term in the Code.
"Investment Property" has the meaning given such term in the
Code, including a security, whether certificated or
uncertificated, a security entitlement, a securities account and
all financial assets therein, a commodity contract or a commodity
account.
"Lien" means any security interest, mortgage, pledge, lien,
charge, encumbrance, title retention agreement or analogous
instrument or device (including the interest of the lessors under
capitalized leases), in, of or on any assets or properties of the
Person referred to.
"Proceeds" means all "proceeds" as such term is defined in
Section 9-102(a)(64) of the Code.
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.
(c) All references herein to any Section of the Code shall be
deemed to include any successor sections and all amendments,
supplements and modifications thereto.
2. Grant of Security Interest. As collateral security for the prompt and
unconditional complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations, the Borrower hereby
grants to the Collateral Agent for the 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 Deposit Accounts;
(d) all Documents;
(e) all Equipment;
(f) all General Intangibles;
(g) all Instruments;
(h) all Inventory;
(i) all Investment Property;
(j) all Letter of Credit Rights;
(k) all books and records pertaining to the Collateral;
(l) to the extent not otherwise included in the foregoing
clauses (a) through (k), all other personal property (including,
without limitation, any tax refunds) of the Borrower, other than
Excluded Assets; and
(m) to the extent not otherwise included in the foregoing
clauses (a) through (l), income payments and Proceeds and products of
any and all of the foregoing and all collateral security, including any
guarantees, given by any Person to the Borrower (or for the benefit of
the Borrower) with respect to any or all 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 and the other Loan Documents):
3.1 Title; No Other Liens. Except for the security interest granted
to the Collateral Agent for the benefit of the Lenders pursuant to this
Agreement, the Borrower owns each item of the Collateral free and clear
of any and all Liens or claims of others, other than Liens permitted by
the Credit Agreement. As of the Effective Date, no financing statement
or other public notice with respect to all or any part of the Collateral
will be on file or of record in any public office, except such as have
been filed (i) in favor of the Collateral Agent for the benefit of the
Lenders, pursuant to this Agreement, (ii) in connection with Liens
permitted by the Credit Agreement, or (iii) in connection with the
termination of the Prior Credit Agreement contemporaneously with the
effectiveness of the Credit Agreement.
3.2 Perfected First Priority Liens. All necessary or advisable
steps have been taken and all financing statements necessary or
advisable for recordation or filing have been recorded or filed
so as to create and perfect the security interests of the
Collateral Agent as of the Effective Date. The security interests
granted pursuant to this Agreement (a) upon completion of the
filings and other actions (which have been filed and upon the
extension of credit under the Credit Agreement are effective)
will constitute perfected security interests in the Collateral in
favor of the Collateral Agent for the 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,
other than with respect to permitted Liens under Section 6.03 of
the Credit Agreement.
3.3 Real Property. The Borrower does not have any fee ownership
interest in any real property.
3.4 Chief Executive Office. The Borrower's legal name (as set forth
in its constituent documents filed with the appropriate governmental
official or agency) is as set forth in the opening paragraph hereof. The
jurisdiction of organization of the Borrower is the state of Delaware
and its chief executive office is now and since July 1, 1996 has been
located in the State of Minnesota. The Borrower has not been organized
under the laws of any jurisdiction other than the State of Delaware
since July 1, 2001. The Borrower has not changed its name, identity or
corporate structure since July 1, 1996.
3.5 Effectiveness of Representations. Each of the representations
made in this Section 3 shall be deemed made as of the Effective Date and
shall survive the extension of the Term Loan by the Lenders under the
Credit Agreement.
3.6 Delivery of Collateral. Delivery at any time by the Borrower to
the Collateral Agent of Collateral or of additional specific
descriptions of certain Collateral shall constitute a representation and
warranty by the Borrower to the Collateral Agent hereunder that the
representations and warranties of this Article 3 are true and correct to
each item of such Collateral.
4. Covenants. The Borrower covenants and agrees with the Collateral
Agent and the Lenders that, from and after the date of this Agreement until the
Obligations shall have been paid in full:
4.1 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 continuing perfected security interest free and
clear of all Liens (other than permitted Liens under Section 6.03 of
the Credit Agreement) or claims of others 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 Collateral Agent, and at the sole expense of the Borrower, the
Borrower will promptly and duly execute and deliver such further
writings, instruments and documents and take such further actions as
may be required by applicable law or as the Collateral Agent may
reasonably request for the purpose of evidencing, effecting,
perfecting, maintaining, obtaining or preserving the full benefits of
this Agreement and of the rights and powers herein granted, including,
without limitation, 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.
(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 Collateral Agent or any
Lender; provided that the Collateral Agent shall, at the reasonable
request and sole expense of the Borrower, authorize and execute such
releases as may be necessary to effect any such transfer.
4.2 Changes in Locations, Name, etc. The Borrower will not (unless,
in each case, it shall have given the Collateral 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 3.4; or
(b) change its name, identity or corporate structure to such an
extent that any financing statement filed in connection with this
Agreement would become seriously misleading.
4.3 Covenants Regarding Collateral. The Borrower shall:
(a) at all times have rights in, to and under the Collateral;
(b) keep and maintain separate books and records relating to the
Collateral at the locations set forth on Schedule 1 in a form
satisfactory to the Collateral Agent, and not remove the same without
the prior written consent of the Required Lenders, and allow the
Collateral Agent and its representatives access to such books and
records and to the Collateral, at all reasonable times, for the
purpose of examination, verification, copying, extracting and other
reasonable purposes as the Collateral Agent may require;
(c) deliver to the Collateral Agent promptly at its request any
requested schedules, lists, invoices, bills of lading, documents of
title, purchase orders, receipts, chattel paper, instruments and other
items relating to the Collateral;
(d) when necessary for the perfection or maintenance of the
Collateral Agent's security interest in the Collateral or when
reasonably requested to do so by the Collateral Agent, make, stamp or
record such entries or legends on any of the Borrower's books and
records relating to the Collateral or the Collateral as the Collateral
Agent shall reasonably request from time to time;
(e) when necessary or desirable for the perfection of the
Collateral Agent's security interest in the Collateral, post notices
in and about designated areas where the Collateral or any portion
thereof may be stored from time to time as the Collateral Agent shall
reasonably request;
(f) notify the Collateral Agent in the event of material loss or
damage to any material portion of the Collateral or of any material
adverse change in the Collateral, or of any dispute, claim, action
proceeding or other occurrence which could materially and adversely
affect the interests of the Collateral Agent in the Collateral and, at
the request of the Collateral Agent, appear in and defend, at the
Borrower's expense, any such action or proceeding;
(g) pay all expenses incurred in the delivery, storage or other
handling of the Collateral promptly when due;
(h) not sell, lease or otherwise dispose of, or permit the sale,
lease or disposition of, any Collateral except for sales, leases and
other dispositions permitted by the terms of the Credit Agreement;
(i) maintain insurance on that portion of the Collateral
consisting of Equipment and Inventory, of such types, coverage, form
and amount and with duly licensed and reputable companies, and supply
the Lenders and the Collateral Agent with certificates or other
evidence satisfactory to the Lenders and the Collateral Agent as to
the continuance of such insurance (all such insurance shall be payable
to the Collateral Agent as an additional insured for the benefit of
the Collateral Agent and the Lenders, and shall provide for thirty
days' prior written notice of cancellation to the Collateral Agent
and, should the Borrower fail to maintain such insurance, the same may
be maintained by the Collateral Agent, at its option upon notice to
the Borrower);
(j) pay and discharge, or cause to be paid and discharged, all
Liens, taxes, assessments and governmental charges levied, assessed or
imposed upon any of the Collateral unless and to the extent only that
(a) the same shall be contested in good faith and by appropriate
proceedings by the Borrower, (b) written notice of such contest shall
have been given to the Collateral Agent, (c) as a result of
undertaking such proceedings, the Collateral is not thereby subjected
to any sale, forfeiture or loss, and (d) the Borrower has established
or shall establish a reserve fund for all such contested amounts
satisfactory to the Collateral Agent;
(k) promptly notify the Collateral Agent of any Lien, claim,
security interest, right or other encumbrance arising out of or with
respect to the Collateral;
(l) keep and maintain the Collateral which consists of tangible
personal property in good condition, working order and repair, not
commit or suffer any waste of such Collateral, and make all repairs or
replacements to such Collateral which may be required in accordance
with prudent business practices, except that the Borrower shall not be
obligated to make any repair or replacement with respect to any
insured loss if the Collateral Agent has received all insurance
proceeds payable as a result of such loss;
(m) at the expense of the Borrower, allow the Collateral Agent
acting at the direction of the Required Lenders and its duly
authorized officers, agents and/or representatives upon reasonable
advance notice and during normal business hours, (a) to enter upon and
to examine and inspect the Collateral, (b) to discuss the Borrower's
affairs and finances with any Person and verify with any Person the
amount, quality, quantity, value and condition of, and any other
matter relating to, the Collateral, and (c) such right of access to
the Collateral as may be reasonably necessary for the proper
maintenance and repair of the Collateral consisting of tangible
personal property in the event of the failure by the Borrower to
perform its obligations under this Security Agreement or the other
Loan Documents;
(n) fully perform all of the Borrower's duties under and in
connection with each of the Loan Documents and each other document to
which the Collateral or any part thereof relates;
(o) observe and comply with all laws, regulations, ordinances,
rules, and orders of any federal, state, municipal or other
governmental authority relating to the Collateral and the use thereof;
and
(p) from time to time promptly execute and deliver to the
Collateral Agent all such further assurances, security agreements,
pledges, control agreements, assignments, certificates, supplemental
documents and other instruments of conveyance, transfer, mortgage,
pledge or change, and authorize financing statements, and do all other
acts or things as the Collateral Agent may reasonably request from
time to time in order to more fully create, evidence, perfect,
continue, maintain and preserve the priority of the security interest
in the Collateral.
5. Remedies.
5.1 Proceeds to be Turned Over To Collateral Agent. All Proceeds
(including all income and payments) received by the Borrower consisting
of cash, checks, notes, drafts, and other items of payment shall be held
by the Borrower in trust for the Collateral Agent and the Lenders,
segregated from other funds of the Borrower, and shall, if required by
the Collateral Agent, forthwith upon receipt by the Borrower, be turned
over to the Collateral Agent in the exact form received by the Borrower
(duly endorsed by the Borrower to the Collateral Agent, if required)
and held by the Collateral Agent in a Collateral Account maintained by
or on behalf of, and with control by, the Collateral Agent. All
Proceeds (including income and payments) while held by the Collateral
Agent in a Collateral Account (or by the Borrower in trust for the
Collateral 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 5.2.
5.2 Application of Proceeds. If an Event of Default shall have
occurred and be continuing (irrespective of whether the Term Loan has
been accelerated), at any time at the Collateral Agent's election, the
Collateral Agent may apply all or any part of Proceeds (including
income and payments) held in any Collateral Account in payment of the
Obligations in such order as the Collateral Agent may elect, and any
part of such funds which the Collateral 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 Collateral Agent to the Borrower
or to whomsoever may be lawfully entitled to receive the same. Any
balance of such Proceeds (including income and payments) remaining
after the Obligations shall have been paid in full shall be paid over
to the Borrower or to whomsoever may be lawfully entitled to receive
the same.
5.3 Other Remedies. If an Event of Default shall occur and be
continuing (irrespective of whether the Term Loan has been accelerated),
the Collateral Agent, on behalf of the Lenders, may exercise, in
addition to all other rights and remedies granted to them in this
Agreement, the other Loan Documents, or in any other instrument or
agreement securing, evidencing or relating to the Obligations, or at law
or in equity, all rights and remedies of a secured party under the Code.
Without limiting the generality of the foregoing, the Collateral 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 Collateral 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 Collateral 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 Collateral Agent's
request, to assemble the Collateral and make it available to the
Collateral Agent at places which the Collateral Agent shall reasonably
select, whether at the Borrower's premises or elsewhere. The Collateral
Agent shall apply the net proceeds of any action taken by it pursuant
to this Section 5.3, 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 Collateral 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 Collateral Agent may elect, and only
after such application and after the payment by the Collateral Agent of
any other amount required by any provision of law, need the Collateral
Agent account for the surplus, if any, to the Borrower. 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 ten (10) Business Days before such sale or other disposition.
5.4 The Collateral Agent shall have the right, without notice to the
Borrower, to enter upon and into the premises of the Borrower without
liability for trespass and to remove all of the Collateral and all
books, records, invoices and other documentation relating thereto. The
Collateral Agent may require the Borrower to assemble or package the
Collateral and make it available to the Collateral Agent at a place to
be designated by the Collateral Agent reasonably convenient to the
parties, and in such event the Borrower agrees to make available to the
Collateral Agent all of the Borrower's facilities for the purposes of
removing or taking possession of the Collateral or putting it in a
saleable form. If the Collateral requires preparation, repair,
maintenance or further work in order to be in a saleable form, the
Collateral Agent shall have the right, but not the obligation, to
complete the work for such purpose, and the cost of such preparation,
repair, maintenance or further work shall be payable by the Borrower.
The completion of any such work shall not be a condition to the right
of the Collateral Agent to sell or other wise dispose of the Collateral
in accordance with the terms hereof.
5.5 The Collateral Agent may charge on its own behalf and pay to
others all reasonable amounts for expenses incurred and for services
rendered in connection with the exercise of the rights and remedies of
the Collateral Agent hereunder, including, without limiting the
generality of the foregoing, reasonable legal and accounting fees and
expenses, and in every such case the amounts so paid together with all
costs, charges and expenses incurred in connection therewith, with
interest thereon from the date of demand paid at an interest rate per
annum equal to the lower of (i) the Default Interest Rate and (ii) the
maximum interest rate permitted by law.
The Borrower agrees, to the fullest extent permitted by law, that it
shall not (and it hereby irrevocably waives its right to) at any time plead, or
claim the benefit or advantage of, any appraisement, value, stay, extension,
moratorium or redemption law now or hereafter in force, in order to prevent or
hinder the enforcement of this Agreement or the absolute sale of the Collateral
subject to this Agreement.
6. Collateral Agent's Appointment as Attorney-in-Fact; Collateral
Agent's Performance of Borrower's Obligations.
6.1 Powers. The Borrower hereby irrevocably constitutes and appoints
the Collateral 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 Collateral 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 endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under
any Account 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 Collateral Agent for the
purpose of collecting any and all such moneys due under any Account 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
5.3, 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 Collateral Agent or as the Collateral 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
from any Person; (3) sign and endorse 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 Collateral Agent may deem appropriate;
(7) remove from any premises where they may be located any and all
documents, instruments, files and records relating to the Collateral
or the Collateral and any receptacles and cabinets containing the
same, and at the Borrower's cost and expense, to use such of the
personnel, supplies and space of the Borrower at its place of business
as may be necessary to properly administer and control the Collateral
or the collections and realizations thereon; (8) receive, open and
dispose of all mail addressed to the Borrower and to notify postal
authorities to change the address for delivery thereof to such address
as that Collateral Agent may designate; (9) collect or withdraw all
sums of money or other solvent credits the Borrower may have to its
credit with any banking institution; and (10) 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
Collateral Agent were the absolute owner thereof for all purposes, and
do, at the Collateral Agent's option and the Borrower's expense, at
any time, or from time to time, all acts and things which the
Collateral Agent deems necessary to protect, preserve or realize upon
the Collateral and the Collateral Agent's security interests therein
and to effect the intent of this Agreement.
Anything in this Section 6.1 to the contrary notwithstanding, the
Collateral Agent agrees that it will not exercise any rights under
the power of attorney provided for in this Section 6.1 unless an Event
of Default shall have occurred and be continuing, or as permitted by
Section 6.2 hereof.
6.2 Performance by Collateral Agent of Borrower's Obligations. If the
Borrower fails to perform or comply with any of its agreements
contained herein, the Collateral 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).
6.3 Borrower's Reimbursement Obligation. The expenses of the
Collateral Agent and any Lender incurred in connection with actions
undertaken as provided in this Agreement shall be secured by the
Collateral as provided in the Credit Agreement and shall be payable by
the Borrower to the Collateral Agent, for the benefit of the Persons
entitled to such payments, within 10 Business Days of demand therefor,
with such amounts constituting Obligations hereunder and under the
Credit Agreement, payable in accordance with Section 2.05 of the Credit
Agreement.
6.4 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.
7. Duty of Collateral Agent. The Collateral 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 Collateral deals with similar property
for its own account. Except as expressly required by the Code, none of the
Collateral Agent or 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
Collateral Agent and the Lenders hereunder are solely to protect the Collateral
Agent's and the Lenders' interests in the Collateral and shall not impose any
duty upon the Collateral Agent or any Lender to exercise any such powers. The
Collateral 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. Notwithstanding the foregoing, neither
the Borrower, the Collateral Agent nor any Lender shall be liable for any
special, indirect, consequential or punitive damages, even if it has been
advised of the possibility of such damages.
8. Execution of Financing Statements. Pursuant to Section 9-509 of the
Code, the Borrower authorizes the Collateral 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 Collateral Agent reasonably determines
appropriate to perfect the security interests of the Collateral Agent under this
Agreement.
9. Authority of Collateral Agent. The Borrower acknowledges that the
rights and responsibilities of the Collateral Agent under this Agreement with
respect to any action taken by the Collateral Agent or the exercise or
non-exercise by the Collateral 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 Collateral 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
Collateral Agent and the Borrower, the Collateral Agent shall be conclusively
presumed to be acting as agent for the Administrative Agent and 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.
10. Notices. All notices, requests and demands to or upon the Collateral
Agent or the Borrower hereunder shall be effected in the manner provided for in
Section 9.01 of the Credit Agreement.
11. 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.
12. Entire Agreement; Amendments in Writing; No Waiver; Cumulative
Remedies; Borrower Waivers.
12.1 Entire Agreement. This Agreement and the other Loan Documents
contain and constitute the entire agreement among the parties hereto,
the Collateral Agent and the Lenders and supersede any and all prior
negotiations, agreements, correspondence and understandings and
communications respecting the subject matter hereof.
12.2 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.
12.3 No Waiver by Course of Conduct. None of the Collateral Agent or
any Lender shall by any act (except by a written instrument pursuant to
Section 12.2), 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 Collateral 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
Collateral 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 Collateral Agent or such Lender would otherwise have on any
future occasion.
12.4 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.
12.5 Borrower Waivers. The Borrower waives presentment, demand,
notice, protest, notice of acceptance of this Agreement, notice of loans
made, credit extended, collateral received or delivered or other action
taken in reliance hereon and all other demands and notices of any
description. With respect to Obligations, the Loan Documents and the
Collateral, the Borrower assents to any extension or postponement of
the time of payment or any other indulgence, to any substitution,
exchange or release of Collateral, to the addition or release of any
party or person primarily or secondarily liable, to the acceptance of
partial payments thereon and the settlement, compromising or adjusting
of any thereof, all in such manner and at such time or times as the
Collateral Agent may deem advisable. Except as may be required by the
Code, the Collateral Agent shall have no duty to the Borrower as to the
collection or protection of Collateral or any income thereon, nor as to
the preservation of rights against prior parties, nor as to the
preservation of any rights pertaining thereto beyond the safe custody
thereof.
The Collateral Agent shall not, under any circumstances or in
any event whatsoever, have any liability to the Borrower for any error
or omission or delay of any kind occurring in the liquidation of or
realization upon any of the Collateral, including any instrument
received in payment thereof, or any damage resulting therefrom. Without
limiting any indemnity or other rights of the Collateral Agent or any
of the Lenders hereunder or under the Loan Documents, the Borrower
shall indemnify and hold harmless (on an after tax basis) the
Collateral Agent and the Lenders against any claim, loss, expense or
damage arising out of the liquidation of or realization upon any of the
Collateral, including, without limitation, any instrument received in
payment thereof.
THE BORROWER ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS
AGREEMENT IS A PART IS A COMMERCIAL TRANSACTION, AND HEREBY VOLUNTARILY
AND KNOWINGLY WAIVES ITS RIGHTS TO NOTICE AND HEARING AS ALLOWED UNDER
DELAWARE LAW, OR OTHERWISE UNDER ANY STATE OR FEDERAL LAW WITH RESPECT
TO ANY PREJUDGMENT REMEDY WHICH THE COLLATERAL AGENT MAY DESIRE TO USE.
12.6 To the extent permitted by law, all rights of the Collateral
Agent under this Agreement and the other Loan Documents may be enforced
by the Collateral Agent without the possession of any promissory note or
any other instrument or document evidencing any Obligation or the
production thereof in any proceeding.
13. Subject to Credit Agreement. Any and all rights granted to the
Collateral Agent under this Agreement are to be held and exercised by the
Collateral Agent as collateral agent and as secured party for the benefit of the
Lenders pursuant to the provisions of the Credit Agreement. Each of the Lenders
shall be a beneficiary of the terms of this Agreement. Any and all obligations
under this Agreement of the parties to this Agreement, and the rights and
indemnities granted to the Collateral Agent under this Agreement, are created
and granted subject to, and in furtherance (and not in limitation) of, the terms
of the Credit Agreement and the rights and indemnities of the Collateral Agent
contained therein shall apply equally to this Agreement. Nothing in this
Agreement expressed or implied is intended or shall be construed to give to any
Person other than the Borrower, the other Loan Parties, the Lenders and the
Collateral Agent any legal or equitable right, remedy, or claim under or in
respect of this Agreement or any covenant, condition, or provision herein
contained; and all such covenants, conditions and provisions are and shall be
held to be for the sole and exclusive benefit of the Borrower, the other Loan
Parties, the Lenders and the Collateral Agent. Notwithstanding anything herein
to the contrary, the Collateral Agent shall exercise its rights and powers
subject to the direction and indemnity of the Lenders, the Borrower and the
other Loan Parties, as the case may be, as provided in the Credit Agreement.
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
Collateral 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 (WITHOUT
REGARD TO THE CONFLICT OF LAW PRINCIPLES OTHER THAN SECTION 5-1401 AND SECTION
5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
17. 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 Agreement.
18. Effective Date. This Agreement shall be effective on the Effective
Date.
19. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO
A TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY OR ARISING HEREUNDER OR THEREUNDER.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed and delivered as of the date first above written.
METRIS COMPANIES INC.
By
Its
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Collateral Agent
By
Its
Schedule 1
Location of Collateral Books and Records
00000 Xxxxxxx Xxxxxxxxx, Xxxxxxxxxx, XX 00000
00000 X. Xxxxxxxxx Xxxxx, Xxxxxxxxxx, XX 00000
EXHIBIT B
FORM OF PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT, dated as of June 18, 2003, is made and given by
___________, a ___________ corporation (the "Pledgor"), to DEUTSCHE BANK TRUST
COMPANY AMERICAS, as collateral agent (in such capacity, the "Collateral Agent")
for the benefit of the lenders (the "Lenders") party to the Credit Agreement
defined below (the "Secured Parties").
The Lenders have agreed to make the Term Loan to Metris Companies Inc.
(the "Borrower") subject to the terms and conditions specified in the Amended
and Restated Senior Secured Credit Agreement, dated as of June 18, 2003, among
the Borrower, the Lenders, the Collateral Agent and Xxxxxxx Xxxxx Credit
Partners L.P., as administrative agent for the Lenders (in such capacity, the
"Administrative Agent") (as amended, modified, extended or restated from time to
time, the "Credit Agreement"). Direct is a wholly owned Subsidiary of the
Borrower and will derive substantial direct and indirect benefit from the
extension of credit made to the Borrower under the Credit Agreement. The
obligations of the Lenders to make the Term Loan under the Credit Agreement are
and will be conditioned on, among other things, the execution and delivery by
the Pledgor 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
Term Loan and any Monthly Performance Payments payable under the Credit
Agreement when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise and (ii) all Fees, expenses,
indemnities, reimbursements and other obligations, monetary or otherwise, of the
Borrower to the Collateral 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 Collateral 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";
and, 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 Pledgor and the Collateral Agent hereby agree as
follows:
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." All other terms used in this Pledge Agreement that are
not specifically defined herein or the definitions of which are not
incorporated by reference shall have the meanings given such terms in
the Credit Agreement and the Uniform Commercial Code.
(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,
Monthly Performance Payments, fees and expenses) under the Credit
Agreement shall be paid in full.
"Federal Securities Laws" shall have the meaning assigned to such
term in Section 12.
"Liens" shall have the meaning given such term in the Credit
Agreement.
"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.
"Security Interest" shall have the meaning assigned to such term
in Section 2.
"Subsidiary" shall mean any subsidiary of the Pledgor.
"Uniform Commercial Code" shall mean the Uniform Commercial Code
as in effect from time to time in the State of New York as it may be
amended, supplemented or otherwise modified to be more expansive after
the date hereof as set forth in the Uniform Commercial Code.
2. Pledge. As security for the payment and performance in full of the
Obligations, the Pledgor hereby transfers, assigns, grants, bargains, sells,
conveys, hypothecates, pledges, sets over and delivers unto the Collateral
Agent, and grants to the Collateral Agent, for the benefit of the Secured
Parties, a first priority security interest (the "Security Interest") in all its
right, title and interest in, to and under the following, whether now owned or
hereafter acquired, and including any securities account containing a securities
entitlement with respect thereto: (a) the shares of capital stock listed in
Schedule 1 hereto as being owned by it, and the certificates representing or
evidencing such shares (the "Pledged Stock") and any shares of capital stock of
any Subsidiary (except to the extent such a pledge is prohibited by law or
regulation of any Governmental Authority) obtained by it in the future, and the
certificates representing or evidencing such shares; (b) all other property
which may be delivered to and held by the Collateral 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 thereof for or in
substitution therefor 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 the 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, without limitation, the "Collateral"). Upon delivery to the
Collateral Agent (a) any stock certificates, including those with respect to the
Pledged Stock, 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
Collateral Agent and the Lenders' counsel and by such other instruments and
documents as the Collateral 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 Pledgor and such other
instruments or documents as the Collateral Agent may request. With respect to
all Pledged Securities consisting of uncertificated securities, book-entry
securities or securities entitlements, the Pledgor shall either (a) execute and
deliver, and cause any necessary issuers or securities intermediaries to execute
and deliver, control agreements in form and substance satisfactory to the
Collateral Agent covering such Pledged Securities, or (b) cause such Pledged
Securities to be transferred into the name of the Collateral Agent. Each
subsequent delivery of Pledged Securities shall be accompanied by a schedule
describing the securities theretofor and then being pledged hereunder, which
schedule shall be attached hereto as Schedule 1 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 Collateral Agent, its successors and assigns, forever; subject,
however, to the terms, covenants and conditions hereinafter set forth.
3. Representations and Warranties. The Pledgor hereby represents,
warrants and covenants to and with the Collateral Agent that, from and after the
Effective Date:
(a) the Pledged Stock set forth in Schedule 1 attached hereto
pledged by the Pledgor represents all of the issued and outstanding
capital stock of each identified Subsidiary;
(b) this Pledge Agreement constitutes the valid and binding
obligation of the Pledgor, enforceable against the Pledgor in
accordance with its terms, except as such enforceability may be
subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar law
of general application affecting creditors' or secured creditors'
rights;
(c) the Pledgor has full power and authority to execute this
Pledge Agreement, to perform the Pledgor's obligations hereunder and
to subject the Collateral to the Security Interest created hereby;
(d) no financing statement covering all or any part of the
Collateral is on file in any public office (except for any financing
statements filed by or on behalf of the Secured Parties and financing
statements relating to the Prior Credit Agreement which have been or
will be terminated on the Effective Date in connection with the
payment in full of the obligations of the Borrower under the Prior
Credit Agreement from the proceeds of the Term Loan);
(e) the Pledged Stock has been duly authorized and validly issued
by the issuer thereof and is fully paid and non-assessable. The
certificates representing the Pledged Shares are not subject to any
offset or similar right or claim of the issuers thereof;
(f) the Pledged Shares constitute the percentage of the issued
and outstanding shares of stock of the respective issuers thereof
indicated on Schedule 1 (if any such percentage is so indicated);
(g) the authorized equity securities of Direct consist of _____
shares of common stock, par value $____ per share, of which 1,000
shares are issued and outstanding and constitute a portion of the
Pledged Stock; the authorized equity securities of MRI consist of
_____ shares of common stock, par value $____ per share, of which 100
shares are issued and outstanding and constitute a portion of the
Pledged Stock; and the authorized equity securities of DMCCB consist
of _____ shares of common stock, par value $____ per share, of which
_______ shares are issued and outstanding and constitute a portion of
the Pledged Stock. The Borrower owns all of the issued and outstanding
voting shares of Direct and Direct owns all of the issued and
outstanding voting shares of MRI and DMCCB. No legend or other
reference to any purported Lien (except in favor of the Collateral
Agent hereunder) appears upon any certificate representing any of the
Pledged Stock. There are no agreements relating to the issuance, sale,
or transfer of any equity securities or other securities of Direct or
any other Subsidiary (other than the OCC Agreements pertaining to
DMCCB). None of the outstanding equity securities or other securities
of any issuer of Pledged Stock was issued in violation of the
Securities Act or any other legal requirement. The Pledgor does not
own, and has not entered into any agreement to acquire, any equity
securities or other securities of any Person or any direct or indirect
equity ownership interests in any other business except as expressly
permitted by the Credit Agreement.
(h) except for the security interest granted herein to the
Collateral Agent on behalf of the Lenders, the Pledgor (i) is and will
at all times continue to be the direct and sole owner, beneficially
and of record, of the Pledged Securities pledged by it, (ii) holds the
same free and clear of all Liens, except the Security Interest, (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 the Pledgor or otherwise, to be forthwith deposited with (or,
if book entry only, registered in the name of) the Collateral Agent
and pledged or assigned hereunder;
(i) the Pledgor (i) has good right and legal authority to pledge
the Collateral pledged by it pursuant to this Pledge Agreement and
(ii) will defend its title or interest thereto or therein against any
and all Liens (other than the Security Interest), however arising;
(j) no consent, authorization or approval of any Governmental
Authority or any securities exchange on the part of the Pledgor was or
is necessary to the validity of the pledge and security interest
granted under this Pledge Agreement;
(k) by virtue of the execution and delivery by the Pledgor of
this Pledge Agreement, on the Effective Date when the certificates,
instruments or other documents representing or evidencing the
Collateral pledged by it are delivered to the Collateral Agent in
accordance with this Pledge Agreement, the Collateral 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;
(l) the pledge effected hereby is effective to vest in the
Collateral Agent, on behalf of the Lenders, as of the Effective Date
upon delivery to the Collateral Agent of the stock certificates and
related stock powers required hereunder regarding the Pledged Stock, a
valid, perfected first priority security interest in the Pledged
Stock, free and clear of all Liens other than the Security Interest;
and
(m) neither the execution and delivery of this Pledge Agreement
by the Pledgor, the consummation of the transaction contemplated
hereby nor the satisfaction of the terms and conditions of this Pledge
Agreement:
(i) results in any breach or violation of any provision of
the charter or by-laws of the Pledgor or any law, rule,
regulation, order, writ, judgment, injunction, decree,
determination or award currently in effect having applicability
to the Pledgor or any of its properties, including regulations
issued by any Governmental Authority having supervisory powers
over the Pledgor;
(ii) constitutes a default (or an event which with the
giving of notice or the passage of time, or both, would
constitute a default) by the Pledgor under, or a breach of any
provision of, any loan agreement, mortgage, indenture or other
agreement or instrument to which the Pledgor is a party or by
which it or its properties is bound; or
(iii) results in or requires the creation of any Lien upon
or in respect of any of the property of the Pledgor except the
Security Interest.
4. Registration in Nominee Name; Denominations. The Collateral Agent, on
behalf of the Lenders, shall have the right, in its sole and absolute
discretion, to hold the Pledged Securities in the name of the Pledgor,
endorsed or assigned in blank or in favor of the Collateral Agent, or in its own
name or the name of its nominee. The Pledgor will promptly give to the
Collateral 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 only, the
Collateral 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.
5. Voting Rights; Dividends and Interest; etc.
(a) Unless and until an Event of Default shall have occurred and be
continuing:
(i) The 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 Collateral Agent shall execute and deliver to the
Pledgor, or cause to be executed and delivered to the Pledgor, all
such proxies, powers of attorney, and other instruments as the Pledgor
may reasonably request for the purpose of enabling the Pledgor to
exercise the voting and/or consensual rights and powers which it is
entitled to exercise pursuant to subparagraph (i) above.
(iii) The Pledgor shall be entitled to receive and retain any and
all cash dividends and cash interest paid on the Pledged Securities.
(b) Upon the occurrence and during the continuance of an Event of
Default only and upon notice by the Collateral Agent to the Pledgor, all
rights of the Pledgor to exercise the voting and consensual rights and
powers which it is 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 Collateral 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.
(c) Voting Proxy. Upon the occurrence and during the continuance of
any Event of Default, the Collateral Agent shall have the right in its sole
discretion, and the Pledgor shall execute and deliver all such proxies and
other instruments as may be necessary or appropriate to give effect to such
right, to terminate all rights of the Pledgor to exercise or refrain from
exercising the voting and other consensual rights it would otherwise be
entitled to exercise pursuant to Section 5(a)(i) hereof, and all such
rights shall thereupon become vested in the Collateral Agent who shall
thereupon have the sole right to exercise or refrain from exercising such
voting and other consensual rights; provided, however, that the Collateral
Agent shall not be deemed to possess or have control over any voting rights
with respect to any Collateral unless and until the Collateral Agent has
given written notice to the Pledgor that any further exercise of such
voting rights and other consensual rights by the Pledgor is prohibited and
that the Collateral Agent and/or its assigns will henceforth exercise such
voting rights and other consensual rights; and provided, further, that
neither the registration of any item of Collateral in the Collateral
Agent's name nor the exercise of any voting rights or other consensual
rights with respect thereto shall be deemed to constitute a retention by
the Collateral Agent of any such Collateral in satisfaction of the
Obligations or any part thereof.
(d) Rights of the Collateral Agent. The Collateral Agent may (but
without any obligation to do so) discharge any taxes, liens, security
interests or other encumbrances levied or placed on the Collateral or pay
for insurance on the Collateral, or pay for the maintenance and
preservation of the Collateral; the amount of such payments, plus any and
all fees, costs and expenses of the Collateral Agent (including reasonable
attorneys' fees and disbursements) in connection therewith, shall, at the
option of the Collateral Agent, be reimbursed by the Pledgor on demand,
with interest thereon from the date of demand paid at an interest rate per
annum equal to the lower of (i) the Default Interest Rate and (ii) the
maximum interest rate permitted by applicable law.
6. Remedies upon Event of Default. If an Event of Default shall have
occurred and be continuing, the Collateral Agent, may without notice to the
Pledgor, exercise in respect of the Collateral, in addition to other rights and
remedies provided for herein or otherwise available to it (whether in equity or
in law), all of the rights and remedies available to it, all rights and remedies
of a secured party on default under Article 9 of the Uniform Commercial Code,
and may without notice except as specified below, 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 or upon such
other terms as the Collateral Agent may reasonably believe are commercially
reasonable without assumption of any credit risk, with the right of the
Collateral Agent to purchase all or any part of the Collateral so sold at any
such sale or sales, public or private, free of any equity or right of redemption
in the Pledgor, which right of equity is, to the extent permitted by applicable
law, hereby expressly waived or released by the Pledgor. The Collateral 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 Collateral Agent shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. The Pledgor agrees that a private sale or sales made under
the foregoing circumstances shall be deemed to have been made in a commercially
reasonable manner. Each such purchaser at any such sale (including the
Collateral Agent) shall hold the property sold absolutely, free from any claim
or right on the part of the Pledgor, and the Pledgor hereby waives (to the
extent permitted by law) all rights of redemption, stay and appraisal which the
Pledgor now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted.
The Pledgor agrees that, to the extent notice of sale shall be required
by law, at least ten Business Days' prior written notice of the time and place
of any public sale or the time after which any private sale is to be made shall
constitute reasonable notice within the meaning of Section 9-611 of the Uniform
Commercial Code. 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 Collateral 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 Collateral Agent may, in
its sole and absolute discretion, determine. The Collateral 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 Collateral 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
Collateral Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Collateral 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 Collateral Agent
or any other Secured Party may bid for or purchase, free (to the extent
permitted by law) from any equity or right of redemption, stay or appraisal on
the part of the Pledgor (all said rights being also hereby expressly 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 Collateral Agent or any other Secured Party from the
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 the Pledgor therefor. For purposes
hereof, a written agreement to purchase the Collateral or any portion thereof
shall be treated as a sale thereof; the Collateral Agent shall be free to carry
out such sale pursuant to such agreement, and the Pledgor shall be entitled to
the return of the Collateral or any portion thereof subject thereto,
notwithstanding the fact that after the Collateral 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 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 Collateral 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. All of the rights and remedies granted to the
Collateral Agent, including but not limited to the foregoing, shall be
cumulative and not exclusive and shall be enforceable alternatively,
successively or concurrently as the Collateral Agent may deem expedient.
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 Collateral Agent as follows:
FIRST, to the payment of all reasonable costs and expenses
incurred by the Collateral 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 Collateral Agent hereunder on behalf of the Pledgor and any
other costs or expenses incurred in connection with the exercise of any
right or remedy hereunder;
SECOND, to the Collateral Agent for payment in full of the
Obligations, pro rata as among the Lenders in accordance with the
monetary Obligations owed to them until all the Obligations have been
paid in full; and
THIRD, to the Pledgor, its successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Collateral 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 Collateral Agent
(including, pursuant to a power of sale granted by statute or under a judicial
proceeding), the receipt of Collateral 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 Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.
8. Limitations on Responsibility of Collateral. The Collateral 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 Collateral
Agent makes no representation as to the value or condition of the Collateral or
any part thereof, as to the title of the 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 Collateral
Agent shall incur no liability or responsibility in respect of any such matters.
The Collateral 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 Collateral Agent has possession of the
Collateral. The Collateral Agent shall have no duty to the 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 Collateral 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 Collateral
Agent shall not be required to ascertain or inquire as to the performance by the
Pledgor of any of the covenants or agreements contained herein or in the other
Loan Documents. Neither the Collateral 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 Collateral 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 Collateral Agent or the Required Lenders hereunder solely by
reason of the circumstance that, at the time such action is taken by any such
Person, the Collateral Agent or the Required Lenders which gave the notice to
take such action are no longer the Collateral Agent or the Required Lenders. The
Collateral 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. The Collateral Agent shall have no duties or
responsibilities except those expressly set forth in this Pledge Agreement and
the other Loan Documents including, without limitation, the Credit Agreement.
9. Reliance by Collateral Agent; Indemnity Against Liabilities; etc.
(a) Whenever in the performance of its duties under this Pledge
Agreement the Collateral Agent shall deem it necessary or desirable that a
matter be proved or established with respect to the Pledgor or any other
Person in connection with the taking, suffering or omitting of any action
hereunder by the Collateral Agent, such matter may be conclusively deemed
to be proved or established by a certificate executed by an officer of such
Person, and the Collateral Agent shall have no liability with respect to
any action taken, suffered or omitted in reliance thereon.
(b) The Collateral Agent may consult with counsel and shall be fully
protected in taking any action hereunder in accordance with any advice of
such counsel. The Collateral 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 or the Required Lenders, as the
case may be.
(c) The Collateral 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 Collateral 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 Collateral Agent in connection
with this Pledge Agreement.
(d) The Collateral 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 Collateral Agent shall
have received a written notice of such Default or Event of Default. The
Collateral 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 the
Pledgor or the Required Lenders. To the extent permitted by law, the
Collateral Agent shall 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 Collateral Agent has received any
notice of such an Event of Default, but only upon direction from the
Required Lenders.
(e) If the Collateral Agent has been requested to take any specific
action pursuant to any provision of this Pledge Agreement or any other Loan
Document, the Collateral 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.
10. Indemnification by Pledgor. The Pledgor agrees to indemnify and hold
harmless the Collateral Agent and the Lenders and their respective 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 Collateral Agent in its capacity
as the Collateral Agent, or any Lender 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 the Pledgor shall not be liable to the
Collateral Agent, any Lender or other indemnified party for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the gross negligence or willful
misconduct of the Collateral Agent, any such Lender or any of their respective
directors, officers, employees or agents. The covenants contained in this
Section 10 shall survive the Credit Agreement Termination Date.
11. The Collateral Agent Appointed Attorney-in-Fact. The Pledgor hereby
appoints the Collateral Agent the attorney-in-fact of the Pledgor for the
purpose of carrying out the provisions of this Pledge Agreement and taking any
action and executing any instrument which the Collateral 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
Collateral 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 the 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.
12. Securities Act, etc. In view of the position of the 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 ("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 "Federal
Securities Laws") with respect to any disposition of the Pledged Securities
permitted hereunder. The Pledgor understands that compliance with the Federal
Securities Laws might very strictly limit the course of conduct of the
Collateral Agent if the Collateral 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 Collateral 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. The Pledgor
agrees that the Collateral 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 Collateral Agent reasonably believes is commercially
reasonable (within the meaning of Section 9-610 of the Uniform Commercial Code).
The Pledgor hereby waives any claims against the Collateral 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 Collateral Agent shall accept the first offer received
and does not offer any portion of the Pledged Securities to more than one
possible purchaser. The Pledgor further agrees that the Collateral Agent has no
obligation to delay the sale of any Pledged Securities for the period of time
necessary to permit the 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 the 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 Collateral 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 Collateral
Agent placed all or any portion of the Pledged Securities privately with a
purchaser or purchasers.
13. Collateral Agent's Expenses. The Pledgor agrees to pay upon demand
to the Collateral Agent the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its outside counsel and of any
experts or agents, which the Collateral Agent may incur in connection with (i)
the administration of, or compromise or settlement respecting 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 Collateral Agent hereunder, or (iv) the
failure of the Pledgor to perform or observe any of the provisions hereof. Any
such amounts payable as provided hereunder shall be additional Obligations
secured hereby and the Collateral Agent may apply the Collateral to payment of
or reimbursement of itself for such liability.
14. Subject to Credit Agreement. Any and all rights granted to the
Collateral Agent under this Agreement are to be held and exercised by the
Collateral Agent as collateral agent and as secured party for the benefit of the
Lenders pursuant to the provisions of the Credit Agreement. Each of the Lenders
shall be a beneficiary of the terms of this Agreement. Any and all obligations
under this Agreement of the parties to this Agreement, and the rights and
indemnities granted to the Collateral Agent under this Agreement, are created
and granted subject to, and in furtherance (and not in limitation) of, the terms
of the Credit Agreement and the rights and indemnities of the Collateral
Agent contained therein shall apply equally to this Agreement. Nothing in this
Agreement expressed or implied is intended or shall be construed to give to any
Person other than the Pledgor, the other Loan Parties, the Lenders and the
Collateral Agent any legal or equitable right, remedy, or claim under or in
respect of this Agreement or any covenant, condition, or provision herein
contained; and all such covenants, conditions and provisions are and shall be
held to be for the sole and exclusive benefit of the Pledgor, the other Loan
Parties, the Lenders and the Collateral Agent. Notwithstanding anything herein
to the contrary, the Collateral Agent shall exercise its rights and powers
subject to the direction and indemnity of the Lenders, the Pledgor and the other
Loan Parties, as the case may be, as provided in the Credit Agreement.
15. 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.
16. 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 Pledgor, the Collateral 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) The Pledgor shall not assign or delegate any of its rights and
duties hereunder, except as permitted in the Credit Agreement.
(c) The covenants, promises and agreements by the Pledgor shall inure
to the benefit of each Lender and each assignee of any Lender permitted
under Section 9.04 of the Credit Agreement.
17. Applicable Law. THIS PLEDGE AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK (EXCLUDING
THE CONFLICT OF LAW PRINCIPLES THEREOF, BUT INCLUDING NEW YORK GENERAL
OBLIGATIONS LAW SECTIONS 5-1401 AND 5-1402).
18. Waivers; Amendments.
(a) No failure or delay of the Collateral 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
Collateral 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 the 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 the Pledgor in any case shall entitle the 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.
19. 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.
20. Survival of Agreement. All covenants, agreements, representations
and warranties made by the Pledgor 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 Term Loan under the Credit Agreement
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 Term Loan remains outstanding and has not been
paid in full and the Credit Agreement has not been terminated.
21. Termination. This Pledge Agreement, and the Security Interest
granted hereunder, shall terminate when all the Obligations have been paid in
full, at which time the Collateral Agent shall reassign and deliver to
the Pledgor, or to such Person or Persons as the Pledgor shall designate,
against receipt, such of the Collateral (if any) as shall not have been sold or
otherwise applied by the Collateral 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 Collateral Agent and at the expense of the Pledgor.
22. 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.
23. 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.
24. 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.
25. Further Assurances. The Pledgor agrees to do such further acts and
things, and to execute and deliver such additional conveyances, assignments,
agreements and instruments, as the Collateral 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 Collateral Agent its rights and remedies hereunder.
26. Effective Date. This Pledge Agreement shall be effective on the
Effective Date.
27. Waiver of Jury Trial. EACH OF THE PARTIES HERETO WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREUNDER OR THEREUNDER. EACH OF THE PARTIES HERETO (I) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OR 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 (II) ACKNOWLEDGES THAT IT HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT AND THE OTHER RELATED DOCUMENTS TO WHICH IT IS A
PARTY, BY AMONG OTHER THINGS, THIS WAIVER.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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.
[ ], as Pledgor
By__________________________________
Its_______________________________
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Collateral Agent
By__________________________________
Its_______________________________
SCHEDULE 1
PLEDGED SECURITIES
Certificate Number of
Name of Company Name of Pledgor Number Shares
Metris Direct, Inc. Metris Companies Inc. 4 1,000
Metris Travel Services Inc. Metris Direct, Inc. 1 1,000
Metris Warranty Services Metris Direct, Inc. 1 1,000
of Florida, Inc.
Metris Receivables, Inc. Metris Direct, Inc. 5 100
Metris Direct Services, Inc. Metris Direct, Inc. 1 1,000
Metris Funding Co. Metris Direct, Inc. 2 100
Metris Asset Funding Co. Metris Direct, Inc. 1 1,000
magnUS Services, Inc. Metris Direct, Inc. 1 1,000
Metris Warranty Metris Direct, Inc. 1 1,000
Services, Inc.
Crescent Ridge Aviation, Inc. Metris Direct, Inc. 1 1,000
Metris Card Services, LLC Metris Companies Inc. 3 1
Metris Direct, Inc. 4 99
Metris Credit Card Services, Inc. Metris Card Services, LLC 2 1,000
Metris Club Services, Inc. Metris Direct, Inc. 2 1,000
Metris Financial Services, Inc. Metris Direct, Inc. 2 1,000
Direct Merchants Credit Card Bank, Metris Direct, Inc. 6 24,000
National Association
EXHIBIT C
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Amended and Restated Senior Secured Credit
Agreement, dated as of June 18, 2003 (as it may hereafter be amended, modified,
extended or restated from time to time, the "Credit Agreement"), among Metris
Companies Inc., a Delaware corporation (the "Borrower"), the Lenders named
therein (the "Lenders"), Xxxxxxx Xxxxx Credit Partners L.P., as administrative
agent for the Lenders (in such capacity, the "Administrative Agent"), and
Deutsche Bank Trust Company Americas, as collateral agent for the Lenders (in
such capacity, the "Collateral Agent"). Terms defined in the Credit Agreement
are used herein with the same meanings.
___________________(the "Assignor") and _______________(the "Assignee")
agree as follows:
1. The Assignor hereby sells and assigns, without recourse, to the Assignee, and
the Assignee hereby purchases and assumes, without recourse, from the Assignor,
effective as of the date set forth on the second page hereof (the "Assignment
Date"), the interests set forth on the third page hereof (the "Assigned
Interest") in the Assignor's rights and obligations under the Credit Agreement
together with unpaid interest accrued on the assigned Term Loan to the
Assignment Date and the amount, if any, set forth on the reverse hereof of the
Fees, Monthly Performance Payments and other obligations accrued to the
Assignment Date for the account of the Assignor. Each of the Assignor and the
Assignee hereby makes and agrees to be bound by all the representations,
warranties and agreements set forth in Section 9.04(c) of the Credit Agreement,
a copy of which has been received by each such party. From and after the
Assignment Date (i) the Assignee shall be a party to and be bound by the
provisions of the Credit Agreement and, to the extent of the interests assigned
by this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the Loan Documents, and (ii) the Assignor shall, to the
extent of the interests assigned by this Assignment and Acceptance, relinquish
its rights and be released from its obligations under the Credit Agreement (and,
in the case of an Assignment and Acceptance covering the entire remaining
portion of an Assignor's rights and obligations under the Credit Agreement, such
Assignor shall cease to be a party to the Credit Agreement (but, unless
otherwise agreed in this Assignment and Acceptance, shall continue to be
entitled to any Fees, Monthly Performance Payments and other Obligations accrued
for its account thereunder and not yet paid)).
2. The Assignee also covenants with each of the Lenders, the Administrative
Agent and the Borrower that the Assignee will not make a public offering of the
interest being assigned to and accepted by it hereby, and will not reoffer or
resell such interest, in a manner that would render the issuance and sale of
such interest, whether considered together with the resale or otherwise, a
violation of the Securities Act of 1933, as amended from time to time, or any
state securities or "blue sky" laws, or require registration pursuant thereto.
3. From and after the Assignment Date, the Administrative Agent shall make, or
cause to be made, all payments under the Credit Agreement in respect of the
interest assigned hereby (including without limitation, all payments of
principal and interest) to the Assignee. The Assignor and the Assignee may make
any appropriate adjustments in payment under the Credit Agreement to those
specified in Section 1 hereof for periods prior to the Assignment Date directly
between themselves.
4. This Assignment and Acceptance is being delivered to the Administrative Agent
together with, if the Assignee is organized under the laws of a jurisdiction
outside the United States, the forms specified in Section 2.11(f) of the Credit
Agreement, duly completed and executed by such Assignee.
5. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York (excluding the conflict of law
principles thereof but including General Obligations Law Sections 5-1401 and
5-1402).
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notice:
Effective Date of Assignment:
[Signatures to commence on the following page]
Outstanding Term Loan Amount [and Accrued
Interest]Assigned (and identifying
information as to the related Note(s).
Term Loan Amount: $
Monthly Performance Payments,
Fees and Other Obligations Assigned
(if any):
This Assignment and Acceptance,
dated as of the Assignment Date,
including the terms set forth above,
are hereby agreed to:
Accepted
_____________________, as Assignor ____________________________, as
Administrative Agent
By_____________________________ By_____________________________
Its__________________________ Its__________________________
Accepted
_____________________, as Assignee METRIS COMPANIES INC.
By_____________________________ By_____________________________
Its__________________________ Its__________________________
EXHIBIT D
FORM OF SUBSIDIARY GUARANTY
SUBSIDIARY GUARANTY, dated as of June 18, 2003, is made by (the
"Subsidiary Guarantor"), in favor of DEUTSCHE BANK TRUST COMPANY AMERICAS, as
collateral agent for the Lenders (in such capacity, the "Collateral Agent") for
the benefit of the lenders ("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 Amended and Restated Senior Secured Credit
Agreement, dated as of June 18, 2003 (as amended, modified, extended or restated
from time to time, the "Credit Agreement"), among Metris Companies Inc. (the
"Borrower"), the Lenders, Xxxxxxx Sachs Credit Partners L.P., as administrative
agent for the Lenders (in such capacity, the "Administrative Agent"), and the
Collateral Agent, each of the Lenders has made extensions of credit to the
Borrower upon the terms and subject to the conditions set forth therein; and
WHEREAS, in connection with the execution and delivery of the Credit
Agreement, the Subsidiary Guarantor is required to execute a guarantee (this
"Subsidiary Guaranty") guaranteeing all of the Borrower's obligations under the
Credit Agreement and the other Loan Documents; and
WHEREAS, the Borrower is the direct or indirect parent of the
Subsidiary Guarantor, and it is to the advantage of the Subsidiary Guarantor
that the Lenders make the extensions of credit to the Borrower pursuant to the
Credit Agreement.
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent, the Collateral Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their respective extensions
of credit to the Borrower under the Credit Agreement, the Subsidiary Guarantor
hereby agrees with the Collateral Agent for the 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 the Term Loan, the Subsidiary
Guarantor hereby absolutely, unconditionally and irrevocably guarantees, as
a primary obligor and not merely as a surety, the due and punctual payment,
performance and discharge of all Obligations. All payments by the
Subsidiary Guarantor shall be in lawful money of the United States of
America. Each and every default in payment of any Obligation shall give
rise to a separate cause of action hereunder, and separate suits may be
brought hereunder as each cause of action arises.
The Subsidiary Guarantor waives diligence, 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, notice of
default and notice of protest for nonpayment and all other formalities. The
obligations of the Subsidiary Guarantor hereunder shall not be discharged
or impaired or otherwise affected by: (i) the failure or delay of any
Lender or the Collateral Agent to assert any claim or demand or to enforce
or otherwise exhaust its rights or remedies against the Borrower, the
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 Collateral Agent or any
Lender for the performance of any of the Obligations; (v) the failure or
delay of any Lender or the Collateral Agent to exercise any right or remedy
against any other guarantor of the Obligations; (vi) the release of any
other guarantor of the Obligations; (vii) the failure of any Lender or the
Collateral 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, willful 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 the Subsidiary Guarantor or otherwise operate as a
discharge of the Subsidiary Guarantor as a matter of law or equity or which
would impair or eliminate any right of the Subsidiary Guarantor to
subrogation.
This Guaranty is irrevocable by the Subsidiary Guarantor. It is a
continuing, absolute and unconditional guaranty and shall terminate only
upon the full satisfaction of the Obligations.
The 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 obligations of the 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.
The 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, insolvency
or reorganization of the Borrower or otherwise.
In furtherance of the foregoing and not in limitation of any other
right which the Collateral Agent or any Lender may have at law or in equity
against the 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, the
Subsidiary Guarantor hereby promises to and will, upon receipt of written
demand by the Collateral Agent or the Required Lenders, forthwith pay, or
cause to be paid, to the Collateral 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 them and paid by the Subsidiary Guarantor,
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 the Subsidiary Guarantor, such assignment to be pro
tanto to the extent to which the Obligations in question were discharged by
the Subsidiary Guarantor, or make such other disposition thereof as the
Subsidiary Guarantor shall direct (all without recourse to the Collateral
Agent or any Lender and without any representation or warranty by the
Collateral Agent or such Lender).
Upon payment by the Subsidiary Guarantor of any sums to the Collateral
Agent or the Lenders hereunder, all rights of the 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
the 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.
The Subsidiary Guarantor waives (i) notice of and hereby consents to
any agreements or arrangements whatsoever by the Collateral 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 the Subsidiary Guarantor's
liability hereunder; (ii) any defense based upon any legal disability or
other defense of the Borrower, or by reason of the cessation or limitation
of the liability of the Borrower from any cause (other than full payment of
all Obligations), including, but not limited to, failure of consideration,
breach of warranty, statute of frauds, statute of limitations, accord and
satisfaction, and usury; (iii) any defense based upon any legal disability
or other defense of any other guarantor or other Person; (iv) any defense
based upon any lack of authority of the officers, directors, partners or
agents acting or purporting to act on behalf of the Borrower or any
principal of the Borrower or any defect in the formation of the Borrower or
any principal of the Borrower; (v) any defense based upon the application
by the Borrower of the proceeds of the Term Loan for purposes other than
the purposes represented by the Borrower to the Lender or intended or
understood by the Lender or the Subsidiary Guarantor; (vi) any defense
based upon the Lender's failure to disclose to the Subsidiary Guarantor any
information concerning the Borrower's financial condition or any other
circumstances bearing on the Borrower's ability to pay the Obligations;
(vii) any defense based upon any statute or rule of law which provides that
the obligation of a surety must be neither larger in amount nor in any
other respects more burdensome than that of a principal; (viii) any defense
based upon the Lender's election, in any proceeding instituted under the
Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy
Code or any successor statute; (ix) any defense based upon any borrowing or
any grant of a Lien under Section 364 of the Bankruptcy Code; (x) any
defense based on the Lender's failure to be diligent or to act in a
commercially reasonable manner, or to satisfy any other standard imposed on
a secured party, in exercising rights with respect to collateral securing
the Obligations; (xi) any defense based on errors and omissions by the
Collateral Agent or any Lender in connection with the administration of the
Term Loan, except for gross negligence or willful misconduct; (xii) any
defense based on application of fraudulent conveyance or transfer law or
shareholder distribution law to any of the Obligations or the security
therefor; (xiii) any defense based on the Lender's failure to seek relief
from stay or adequate protection in the Borrower's bankruptcy proceeding or
any other act or omission by the Lender which impairs the Subsidiary
Guarantor's prospective subrogation rights; (xiv) any defense based on
legal prohibition of the Administrative Agent's, the Collateral Agent's or
any Lender's acceleration of the maturity of the Obligations during the
occurrence of an Event of Default or any other legal prohibition on
enforcement of any other right or remedy of the Lender with respect to the
Obligations and the security therefore; and (xv) the benefit of any statute
of limitations affecting the liability of the Subsidiary Guarantor
hereunder or the enforcement hereof. Nothing shall discharge or satisfy the
liability of the Subsidiary Guarantor hereunder except the full performance
and payment of the Obligations. The Subsidiary Guarantor hereby represents
that it does not have any fee ownership in any real property.
The Subsidiary Guarantor authorizes the Collateral Agent, without
giving notice to the Subsidiary Guarantor or consent of the Subsidiary
Guarantor and without affecting the obligations of the Subsidiary Guarantor
hereunder, from time to time to: (a) compromise, settle, renew, extend the
time for payment, change the manner or terms of payment, discharge the
performance of, decline to enforce or release all or any of the
Obligations, grant other indulgences to the Borrower in respect thereof, or
modify in any manner any documents (other than this Subsidiary Guaranty)
relating to the Obligations; (b) declare all Obligations due and payable
upon the occurrence of an Event of Default; (c) take and hold security for
the performance of the Obligations and exchange, enforce, waive and release
any such security; (d) apply and reapply such security and direct the order
or manner of sale thereof as the Lender, in its sole discretion, may
determine; (e) release, surrender or exchange any deposits or other
property securing the Obligations or on which the Collateral Agent may at
any time have a Lien, release, substitute or add any one or more endorsers
or guarantors of the Obligations, or compromise, settle, renew, extend the
time for payment, discharge the performance of, decline to enforce, or
release all or any obligations of any such endorser or guarantor or other
Person who is now or may hereafter be liable on any Obligations or release,
surrender or exchange any deposits or other Property of any such Person;
(f) apply payments received by the Collateral Agent to any Obligations in
such order as the Collateral Agent may determine, in its sole discretion,
whether or not any such Obligations are covered by this Subsidiary
Guaranty; and (g) assign this Subsidiary Guaranty in whole or in part.
Each reference herein to the Collateral Agent, 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 the 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 the Subsidiary
Guarantor following which disposition the 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 the Subsidiary Guarantor that results in the Subsidiary
Guarantor no longer being a Subsidiary.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of the Subsidiary Guarantor
hereunder shall in no event exceed the amount which can be guaranteed by
the Subsidiary Guarantor under applicable federal and state laws relating
to the insolvency of debtors.
(c) The 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 Collateral 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, the Subsidiary
Guarantor under this Subsidiary Guaranty; provided, however, that the
Subsidiary Guarantor will only be liable for the fees of a single firm
which shall act as common counsel for the Lenders, except (A) 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 Subsidiary
Guarantor, that in its judgment 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 the other Lenders, or (iii) defense of
any action or proceeding is not assumed by the Lenders, (B) for separate
counsel for the Collateral Agent, and (C) local counsel for any of the
foregoing. This Subsidiary Guaranty shall remain in full force and effect
until the Obligations are paid in full.
(d) No payment or payments made by the Borrower or any other Person or
received or collected by the Collateral 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 the Subsidiary
Guarantor hereunder which shall, notwithstanding any such payment or
payments other than payments made by the Subsidiary Guarantor in respect of
the Obligations or payments received or collected from the Subsidiary
Guarantor in respect of the Obligations, remain liable for the Obligations
up to the maximum liability of the Subsidiary Guarantor hereunder until the
Obligations are paid in full.
(e) The Subsidiary Guarantor agrees that whenever, at any time, or
from time to time, it shall make any payment to the Collateral Agent or any
Lender on account of its liability hereunder, it will notify the Collateral
Agent and such Lender in writing that such payment is made under this
Subsidiary Guaranty for such purpose.
3. Representations and Warranties. The Subsidiary Guarantor hereby
represents and warrants to the Collateral Agent and each Lender that the
representations and warranties set forth in Article III of the Credit Agreement
as they relate to the Subsidiary Guarantor, each of which is hereby incorporated
herein by reference, are true and correct, and the Collateral Agent and each of
the Lenders shall be entitled to rely on each of them as if they were fully set
forth herein.
4. Covenants. The Subsidiary Guarantor hereby covenants and agrees with
the Collateral Agent and the Lenders that, from and after the date of this
Subsidiary Guaranty until the Obligations are paid in full, it will comply with
each of the covenants set forth in Articles V and VI of the Credit Agreement as
they relate to the Subsidiary Guarantor.
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 the Subsidiary Guarantor against any of and all the
obligations of the 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.
6. Authority of Collateral Agent. The Subsidiary Guarantor acknowledges
that the rights and responsibilities of the Collateral Agent under this
Subsidiary Guaranty with respect to any action taken by the Collateral Agent or
the exercise or non-exercise by the Collateral 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 Collateral 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 Collateral Agent and the Subsidiary Guarantor, the Collateral
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
Guarantor 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 Collateral 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 the Subsidiary Guarantor, at the Subsidiary Guarantor's
address or transmission number for notices set forth under its signature
below.
The Collateral Agent, each Lender and the Subsidiary Guarantor may
change its address and transmission numbers for notices by notice in the manner
provided in this Section.
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 Guarantor with respect to the subject matter hereof and there are no
promises or representations by the Collateral 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 Collateral 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 Collateral 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
Collateral 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
Collateral 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 the Subsidiary Guarantor and shall inure
to the benefit of the Collateral Agent and the Lenders and their successors and
assigns, except that the Subsidiary Guarantor may not assign or transfer any of
its rights or obligations under this Subsidiary Guaranty without the prior
written consent of the Collateral Agent.
13. GOVERNING LAW. THIS SUBSIDIARY GUARANTY SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
(EXCLUDING THE CONFLICT OF LAW PRINCIPLES THEREOF BUT INCLUDING GENERAL
OBLIGATIONS LAW SECTIONS 5-1401 AND 5-1402).
14. Waiver of Jury Trial. The 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. The 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) The 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
Collateral 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) The 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 court or any
Federal court of the United States of America sitting in New York City. The
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) The 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 Collateral Agent or any
Lender to serve process in any other manner permitted by law.
16. Limitation of Guarantor's Liability. Notwithstanding any other
provision of this Subsidiary Guaranty, in any action or proceeding involving any
state corporate law or any state or federal bankruptcy, insolvency,
reorganization or other law affecting the rights of creditors generally, the
parties hereto agree that if the obligations of the Subsidiary Guarantor
hereunder would otherwise be held or determined to be void, invalid,
unenforceable or constitute a fraudulent transfer or conveyance under Title 11
of the United States Code, as amended, the Uniform Fraudulent Conveyance Act,
the Uniform Fraudulent Transfer Act or any similar federal or state law, on
account of the amount of such Subsidiary Guarantor's liability under this
Guaranty, then, notwithstanding any other provision of this Subsidiary
Guaranty, the amount of such liability shall, without any further
action by the Subsidiary Guarantor or any other Person, be automatically limited
and reduced to the highest amount that is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or
proceeding; provided, however, that nothing in this sentence shall affect the
provisions of any agreement regarding contribution among the Subsidiary
Guarantor and other guarantors of the Obligations after giving effect to the
limitations under this Section 16.
17. Subject to Credit Agreement. Any and all rights granted to the
Collateral Agent under this Agreement are to be held and exercised by the
Collateral Agent as collateral agent and as secured party for the benefit of
the Lenders pursuant to the provisions of the Credit Agreement. Each of the
Lenders shall be a beneficiary of the terms of this Agreement. Any and all
obligations under this Agreement of the parties to this Agreement, and the
rights and indemnities granted to the Collateral Agent under this Agreement, are
created and granted subject to, and in furtherance (and not in limitation) of,
the terms of the Credit Agreement and the rights and indemnities of the
Collateral Agent contained therein shall apply equally to this Agreement.
Nothing in this Agreement expressed or implied is intended or shall be
construed to give to any Person other than the Subsidiary Guarantor, the other
Loan Parties, the Lenders and the Collateral Agent any legal or equitable right,
remedy, or claim under or in respect of this Agreement or any covenant,
condition, or provision herein contained; and all such covenants, conditions and
provisions are and shall be held to be for the sole and exclusive benefit of the
Subsidiary Guarantor, the other Loan Parties, the Lenders and the Collateral
Agent. Notwithstanding anything herein to the contrary, the Collateral Agent
shall exercise its rights and powers subject to the direction and indemnity of
the Lenders, the Subsidiary Guarantor and the other Loan Parties, as the case
may be, as provided in the Credit Agreement.
18. Effective Date. This Subsidiary Guaranty shall be effective as of
the date first above written.
IN WITNESS WHEREOF, the undersigned have caused this Subsidiary
Guaranty to be duly executed and delivered by its duly authorized officer as of
the day and year first above written.
[ ]
By
Its
Address for Notices:
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Attention: Treasurer
Fax: (000) 000-0000
EXHIBIT E
FORM OF EXEMPTION CERTIFICATE
Reference is made to the Credit Agreement dated as of June 18, 2003 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among Metris Companies Inc., a Delaware corporation (the
"Borrower"), the lenders defined therein, Xxxxxxx Xxxxx Credit Partners L.P., as
administrative agent for the Lenders (in such capacity, the "Administrative
Agent") and Deutsche Bank Trust Company Americas, as collateral agent for the
Lenders (in such capacity, the Collateral Agent").
Capitalized terms used herein that are not defined herein shall have
the meanings ascribed to them in the Credit Agreement.
_________________________ ("Non-U.S. Lender") is providing this
certificate pursuant to Section 2.11(f) of the Credit Agreement. The Non-U.S.
Lender hereby represents and warrants that:
1. The Non-U.S. Lender is the sole record and beneficial owner of the Term
Loan in respect of which it is providing this certificate;
2. The Non-U.S. Lender is not a "bank" for purposes of Section
881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the
"Code"). In this regard, the Non-U.S. Lender further represents and
warrants that:
(a) the Non-U.S. Lender is not subject to regulatory or other legal
requirements as a bank in any jurisdiction; and
(b) the Non-U.S. Lender has not been treated as a bank for purposes of
any tax, securities law or other filing or submission made to any
Governmental Authority, any application made to a rating agency or
qualification for any exemption from tax, securities law or other legal
requirements;
3. The Non-U.S. Lender is not a 10-percent shareholder of the Borrower
within the meaning of Section 881(c)(3)(B) of the Code; and
4. The Non-U.S. Lender is not a controlled foreign corporation receiving
interest from a related person within the meaning of Section
881(c)(3)(C) of the Code.
IN WITNESS WHEREOF, the undersigned has duly executed this certificate.
[NAME OF NON-U.S. LENDER]
By
Its
Date
EXHIBIT F
FORM OF CREDIT AGREEMENT RESERVE
SECURITIES ACCOUNT CONTROL AGREEMENT
CREDIT AGREEMENT RESERVE SECURITIES ACCOUNT CONTROL AGREEMENT dated as
of June 27, 2003, among Metris Companies Inc., a Delaware corporation
("Borrower"), Deutsche Bank Trust Company Americas, as Collateral Agent for the
benefit of the Lenders ("Secured Party"), and Deutsche Bank Trust Company
Americas, as securities intermediary ("Securities Intermediary") (the
"Agreement").
WHEREAS, pursuant to the Amended and Restated Senior Secured Credit
Agreement, dated as of June 18, 2003, among the Borrower, the Lenders, Xxxxxxx
Sachs Credit Partners L.P., as administrative agent (in such capacity, the
"Administrative Agent"), and Deutsche Bank Trust Company Americas as collateral
agent (in such capacity, the "Collateral Agent") (as amended, modified, extended
or restated from time to time, "Credit Agreement"), the Lenders made an
extension of credit to the Borrower upon the terms and subject to the conditions
set forth therein; and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective extensions of credit to the Borrower under the Credit
Agreement that the Borrower enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent, the Collateral Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their respective extensions
of credit to the Borrower, the Borrower hereby agrees with the Collateral Agent,
as agent for the benefit of the Lenders, as follows:
1. Defined Terms. Unless otherwise defined herein, terms used herein
shall have the meanings given to them in the Credit Agreement, and the following
terms shall have the following meanings:
"Accounts" shall mean, collectively, the CARS Account and the CP
Reserve Account.
"CARS Account" shall mean the account established solely for the
purpose of holding all amounts required under section 5.12 of the Credit
Agreement.
"CARS Account Monitoring Date" shall mean (i) at any time when the
CARS Account Required Balance equals zero, monthly on the Performance
Payment Date in such month, (ii) at any time when the CARS Account Required
Balance is greater than zero, every three months on the Performance Payment
Date in such month starting with the last Performance Payment Date on which
the CARS Account Required Balance changed from zero to an amount greater
than zero.
"CARS Account Required Balance" shall mean (i) prior to July 20, 2003,
zero and (ii) beginning on July 20, 2003 and measured on every CARS Account
Monitoring Date thereafter, the lesser of (a) all outstanding Obligations
and (b) the product of (1) the number of consecutive CARS Account
Monitoring Dates on which the Rolling Three Month Average Excess Spread
Percentage with respect to the Metris Master Trust as a whole is less than
2%, and (2) $15,000,000.
"CP Reserve Account" shall mean the account established solely for the
purpose of holding all amounts required under Section 5.13 of the Credit
Agreement.
"CP Reserve Account Refund Amount" shall mean, as of the related date
of determination, the greater of (i) zero, and (ii) the difference between
the current balance of the CP Reserve Account and the CP Reserve Account
Required Balance.
"CP Reserve Account Required Balance" shall mean $5,000,000 until the
condition precedent set forth in Section 5.13 of the Credit Agreement is
satisfied as evidenced by the certificate described in Section 14(a)
hereof, upon which event it shall be zero.
"Entitlement Order" shall have the meaning assigned to such term in
Section 8-102(a)(8) of the UCC.
"Financial Assets" shall have the meaning assigned to such term under
Section 8-102(a)(9) of the UCC.
"Notice of Sole Control" shall have the meaning assigned to such term
in Section 13(a) hereof.
"Required CARS Account Deposit Amount" shall mean, as of any CARS
Account Monitoring Date, the greater of (i) zero and (ii) the difference
between the CARS Account Required Balance and the current balance in the
CARS Account.
"Required CARS Account Refund Amount" shall mean, as of any CARS
Account Monitoring Date, the greater of (i) zero and (ii) the difference
between the current balance of the CARS Account and the CARS Account
Required Balance.
"Required CP Reserve Account Deposit Amount" shall mean $5,000,000.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the State of New York, as it may be amended, supplemented or
otherwise modified to be more expansive after the date hereof as set forth
in the UCC.
2. Accounts.
(a) Establishment of Credit Agreement Reserve Securities Account. The
Securities Intermediary hereby confirms that (i) the Securities
Intermediary has established the CARS Account as account number 37623
titled "Deutsche Bank Trust Company Americas, as Collateral Agent-CARS
Account", (ii) the CARS Account is a "securities account" as such term is
defined inss. 8-501(a) of the UCC, (iii) the Securities Intermediary shall,
subject to the terms of this Agreement, treat the Secured Party as entitled
to exercise the rights that comprise any Financial Asset credited to the
account and transferred to the account by the Borrower, (iv) all property
delivered to the Securities Intermediary pursuant to this Agreement for
deposit in the CARS Account will be promptly credited to the CARS Account,
(v) subject to Section 13(c) hereof, the Borrower, and not the Securities
Intermediary, shall select the investments to be made with amounts credited
to the CARS Account and (vi) all Financial Assets held by the Securities
Intermediary and credited to the CARS Account shall be held by the
Securities Intermediary in accordance with its customary procedures for
holding similar property as in effect from time to time.
(b) Establishment and Funding of CP Reserve Account. The Securities
Intermediary hereby confirms that (i) the Securities Intermediary has
established the CP Reserve Account as account number 37764 titled "Deutsche
Bank Trust Company Americas, as Collateral Agent - CP Reserve Account",
(ii) the CP Reserve Account is a "securities account" as such term is
defined inss.8-501(a) of the UCC, (iii) the Securities Intermediary shall,
subject to the terms of this Agreement, treat the Secured Party as entitled
to exercise the rights that comprise any Financial Asset credited to the
account and transferred to the account by the Borrower, (iv) as of the date
hereof the Borrower has deposited the Required CP Reserve Account Deposit
Amount in the CP Reserve Account, and all property delivered to the
Securities Intermediary pursuant to this Agreement for deposit to the CP
Reserve Account will be promptly credited to the CP Reserve Account, (v)
subject to Section 13(c) hereof, the Borrower, and not the Securities
Intermediary, shall select the Permitted Investments to be made of amounts
credited to the CP Reserve Account and (vi) all Financial Assets held by
the Securities Intermediary and credited to the CP Reserve Account shall be
held by the Securities Intermediary in accordance with its customary
procedures for holding similar property as in effect from time to time.
3. Funding of the Credit Agreement Reserve Securities Account.
(a) On each CARS Account Monitoring Date, the Borrower shall deposit
the Required CARS Account Deposit Amount into the CARS Account. On and at
all times from and after the Effective Date, the Borrower agrees to
maintain in the CARS Account Financial Assets at least equal to the CARS
Account Required Balance. If at any time any investment losses on
investments in the CARS Account cause the balance in the CARS Account to
fall below the CARS Account Required Balance, the Borrower shall promptly
deposit cash into the CARS Account in an amount sufficient to cause the
CARS Account Required Balance to be met. Subject to Section 7 hereof, the
Securities Intermediary shall be entitled to rely conclusively on all
certifications and requests made pursuant to this Agreement by the Secured
Party or, with respect to a Borrower request pursuant to clause 3(b), shall
not have any obligation to investigate any statements made therein or be
liable for any withdrawals made by the Secured Party pursuant to such a
request that later proves to be improper or incorrect.
(b) Except as otherwise described below, all earnings on amounts
deposited in or investments credited to an Account shall be credited to and
retained in such account. The Securities Intermediary and the Borrower may
by mutual agreement arrange for substitutions of the Financial Assets
credited to an Account from time to time so long as the CARS Account
Required Balance or the CP Reserve Account Required Balance (as the case
may be) is maintained. If at any time the value of the Financial Assets
credited to an Account (as determined by the Secured Party) exceeds the
CARS Account Required Balance or the CP Reserve Account Required Balance
(as the case may be), the Borrower may request a release of such excess
(each such request being a "Reserve Deposit Release Notice"), a copy of
which shall be provided by the Securities Intermediary to the Secured
Party, and the Securities Intermediary promptly shall release such excess,
not to exceed the Required CARS Account Refund Amount or the CP Reserve
Account Refund Amount. The Borrower shall not have any right to withdraw
any amount deposited in or credited to an Account except as provided in
this clause (b); provided that at such time as the CP Reserve Account
Required Balance is permitted by the Secured Party to be reduced to zero in
accordance with Section 5.13 of the Credit Agreement, the Securities
Intermediary shall transfer to the Borrower all amounts credited to the CP
Reserve Account and thereafter terminate the CP Reserve Account.
4. "Financial Assets" Election. The Securities Intermediary hereby
agrees that each item of property (whether investment property, financial
asset, security, instrument or cash) credited to either Account shall
be treated as a "financial asset" within the meaning of ss. 8-102(a)(9)
of the UCC.
5. Entitlement Orders. If at any time the Securities Intermediary shall
receive an Entitlement Order issued by the Secured Party and relating to either
Account, the Securities Intermediary shall comply with such Entitlement Order
without further consent by Borrower or any other person.
6. Subordination of Lien; Waiver of Set-Off. In the event that the
Securities Intermediary in its individual capacity has or subsequently
obtains by agreement, operation of law or otherwise, a security interest in the
Accounts or either of them or any security entitlement or other property
credited thereto, the Securities Intermediary hereby agrees that such security
interest shall be subordinate to the security interest of the Secured Party. The
Financial Assets and other items or property then credited or deposited to the
Accounts will not be subject to deduction, set-off, banker's lien, or any other
right in favor of any person other than the Secured Party (except that the
Securities Intermediary may set-off (i) all amounts due to it in respect of its
customary fees and expenses for the routine maintenance and operation of the
Accounts, and (ii) the face amount of any checks which have been credited to the
Accounts but are subsequently returned unpaid because of uncollected or
insufficient funds or otherwise).
7. Reliance Upon Instructions. The Securities Intermediary may rely upon
the contents of any notice or instructions that the Securities Intermediary
believes in good faith to be from the Borrower or Secured Party (as directed by
the Required Lenders), as the case may be, without any independent
investigation; provided, however, that if a Notice of Sole Control is delivered
to the Securities Intermediary, all further directions from the Borrower shall
be disregarded until further notice from the Secured Party as directed by the
Required Lenders. The Securities Intermediary shall have no duty to inquire into
the authority of the person giving such notice or instruction. Notwithstanding
any other provision in this Section 7, in the event that the Securities
Intermediary receives conflicting notices or instructions, any notice received
from the Secured Party shall govern and supersede any and all conflicting
notices.
8. Financing Documents. The Securities Intermediary shall not be deemed
to have any imputed knowledge of: (a) any of the terms or conditions of the
Credit Agreement or any document referred to therein or relating to any
financing arrangement between the Borrower and the Secured Party, or any breach
thereof, or (b) any occurrence or existence of a default, unless otherwise
notified. The Securities Intermediary has no obligation to inform any person of
such breach or to take any action in connection with any of the foregoing,
except such actions regarding the Accounts as are specified in this Agreement
or, once a Notice of Sole Control has been delivered pursuant to Section 13(a)
hereof, as otherwise instructed by the Secured Party. The Securities
Intermediary is not responsible for the enforceability or validity of the
security interest in the amounts credited to the Accounts; provided, that the
Securities Intermediary will do nothing to impair the enforceability or
validity of the security interest in or to the amounts deposited in the
Accounts or the Account themselves, and the Securities Intermediary will take
such actions as are requested by the Secured Party to maintain the
enforceability and validity of the security interest in the amounts deposited in
the Accounts or the Accounts themselves.
9. Granting Clause. As security for all amounts owed under the Credit
Agreement, and to the extent not granted under the Borrower Security Agreement,
the Borrower hereby pledges, assigns and conveys to the Secured Party, all of
its right, title and interest in and to the Accounts and all cash or other
Financial Assets now or hereafter credited thereto.
10. Conflict with other Agreements. There are no other agreements
entered into between the Securities Intermediary and the Borrower with respect
to the Accounts. In the event of any conflict between this Agreement (or any
portion thereof) and any other agreement now existing or hereafter entered into,
the terms of this Agreement shall prevail.
11. Amendments. No amendment or modification of this Agreement shall be
binding on any party hereto unless it is in writing and is signed by all of the
parties hereto.
12. Notice of Adverse Claims. Except for the claims and interest of the
Secured Party and the Borrower in the Accounts, the Securities Intermediary does
not have knowledge of any claim to, or interest in, either of the Accounts or in
any Financial Asset credited thereto. If any person asserts any lien,
encumbrance or adverse claim (including any writ, garnishment, judgment, warrant
of attachment, execution or similar process) against the Accounts or in any
Financial Asset carried therein, the Securities Intermediary will promptly
notify the Secured Party and the Borrower.
13. Maintenance of Credit Agreement Reserve Securities Account. In
addition to, and not in lieu of, the obligation of the Securities Intermediary
to honor entitlement orders as agreed in Section 5 hereof, the Securities
Intermediary agrees to maintain the Accounts as follows:
(a) Notice of Sole Control. If the Secured Party informs the
Securities Intermediary that an Event of Default has occurred and is
continuing under the Credit Agreement and delivers to the Securities
Intermediary a Notice of Sole Control in substantially the form set forth
in Exhibit A hereto (a "Notice of Sole Control"), the Securities
Intermediary agrees that after receipt of such notice, it will take all
instruction with respect to the Accounts solely from the Secured Party.
Prior to receipt of a Notice of Sole Control, Borrower shall be able to
direct all activities with respect to the CARS Account so long as (i) the
CARS Account Required Balance shall be maintained and (ii) such directions
are consistent with the terms of Section 13(c) hereof. Prior to receipt of
a Notice of Sole Control, Borrower shall be able to direct all activities
with respect to the CP Reserve Account so long as (i) the CP Reserve
Account Required Balance shall be maintained and (ii) such directions are
consistent with the terms of Section 13(c) hereof.
(b) Voting Rights. Until such time as the Securities Intermediary
receives a Notice of Sole Control pursuant to Section 13(a) hereof, any
Financial Assets credited to either of the Accounts shall be voted by the
Borrower.
(c) Permitted Investments. Until such time as the Securities
Intermediary receives a Notice of Sole Control, the Borrower shall direct
the Securities Intermediary with respect to the selection of investments to
be made; provided, however, that in any event the Securities Intermediary
shall not honor any instruction to purchase any investments other than
Permitted Investments identified on Schedule 13(c) hereto and any and all
investment losses relating to either of the Accounts shall be for the
account of the Borrower.
(d) Statements and Confirmations. The Securities Intermediary will
promptly send copies of all statements, confirmations and other
correspondence concerning the Accounts and/or any Financial Assets credited
thereto simultaneously to each of the Borrower and the Secured Party at the
respective addresses set forth in Section 16 of this Agreement.
(e) Tax Reporting. All items of income, gain, expense and loss
recognized in the Accounts shall be reported to the Internal Revenue
Service and all state and local taxing authorities under the name and
taxpayer identification number of the Borrower.
14. Representations, Warranties and Covenants of the Securities
Intermediary. The Securities Intermediary hereby makes the following
representations, warranties and covenants:
(a) The CARS Account has been established as set forth in Section 2(a)
above and will be maintained in the manner set forth herein until
termination of this Agreement. The CP Reserve Account has been established
as set forth in Section 2(b) above and will be maintained until the CP
Reserve Account Required Balance is permitted to be reduced to zero
pursuant to Section 5.13 of the Credit Agreement, which will be evidenced
by a written certificate of the Secured Party to the Securities
Intermediary to such effect. The Securities Intermediary shall not change
the name or account number of either Account without the prior written
consent of the Secured Party.
(b) No Financial Asset is or will be registered in the name of the
Borrower, payable to the order of the Borrower, or specially endorsed to
the Borrower, except to the extent such Financial Asset has been endorsed
to the Securities Intermediary or in blank.
(c) This Agreement is the valid and legally binding obligation of the
Securities Intermediary.
(d) The Securities Intermediary has not entered into, and until the
termination of this Agreement will not enter into, any agreement with any
other person relating to either Account and/or any Financial Assets
credited thereto pursuant to which it has agreed to comply with Entitlement
Orders of such person. The Securities Intermediary has not entered into any
other agreement with any Borrower or Secured Party purporting to limit or
condition the obligation of the Securities Intermediary to comply with
Entitlement Orders as set forth in Section 5 hereof.
(e) The Securities Intermediary is a "securities intermediary", as
defined in Section 8-102(a)(14) of the UCC, that in the ordinary course of
its business maintains securities accounts.
(f) Pursuant to Section 8-110(e)(1) of the UCC, for purposes of this
Agreement, the Securities Intermediary's jurisdiction is the State of New
York.
(g) The Securities Intermediary is not a "clearing corporation" as
defined in Section 8-102(a)(5) of the UCC.
(h) Each of the Accounts constitutes a "securities account" within the
meaning of Section 8-501(a) of the UCC.
15. Successors. The terms of this Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
corporate successors and assigns or heirs and personal representatives.
16. Notices. Any notice, request or other communication required or
permitted to be given under this Agreement shall be in writing and deemed to
have been properly given when delivered in person, or when sent by telecopy or
other electronic means and electronic confirmation of error free receipt is
received or three Business Days after being sent by certified or registered
United States mail, return receipt requested, postage prepaid, addressed to the
respective party at the address set forth below.
Securities Intermediary: Deutsche Bank Trust Company Americas
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxxx
Secured Party Deutsche Bank Trust Company Americas
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxxx
Borrower Metris Companies, Inc.
00000 Xxxxxxx Xxxx.
Xxxxxxxxxx, Xxxxxxxxx 00000
Attn: Treasurer
Any party may change its address for notices in the manner set forth
above.
17. Termination. The rights and powers granted herein to the Secured
Party have been granted in order to perfect its security interest in the
Accounts, are powers coupled with an interest and will not be affected by either
the bankruptcy of the Borrower or the lapse of time. The obligations of the
Securities Intermediary hereunder shall continue in effect until the security
interests of the Secured Party in each applicable Account have been terminated
pursuant to the terms of the Credit Agreement and the Secured Party has notified
the Securities Intermediary of such termination in writing. Any claim or cause
of action of any party against any other relating to this Agreement which
existed at the time of termination shall survive the termination. All mail
received after the date specified in such notice of termination shall be
returned by the Securities Intermediary to the Secured Party by first class mail
or such other means mutually agreeable to the Secured Party and the Securities
Intermediary.
18. Counterparts. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and any
party hereto may execute this Agreement by signing and delivering one or more
counterparts. Any successor to the Collateral Agent under the Credit Agreement
shall be the successor to the Secured Party under this Agreement.
19. Removal or Resignation of the Securities Intermediary. The Secured
Party shall at the direction of the Required Lenders remove the Securities
Intermediary and appoint a successor entity (the "Successor Securities
Intermediary") to assume the duties and obligations of the Securities
Intermediary. In addition, the Securities Intermediary may upon sixty (60) days'
written notice to the Secured Party resign from its position as securities
intermediary. In each such case, however, the Securities Intermediary will
cooperate with the Secured Party in the appointment of a Successor Securities
Intermediary pursuant to this Section 19 and any Successor Securities
Intermediary shall be a "securities intermediary" as defined in Section
8-102(a)(14) of the UCC and shall agree to be bound by the terms and conditions
of this Agreement.
20. Liability of the Securities Intermediary; Failure to Perform. The
Securities Intermediary will be liable only for direct damages if it fails to
exercise ordinary care. The Securities Intermediary shall be deemed to have
exercised ordinary care if its action or failure to act is in conformity with
general banking usages or is otherwise a commercially reasonable practice of the
banking industry. The Securities Intermediary shall not be liable for any
special, indirect or consequential damages, even if it has been advised of the
possibility of such damages. None of the Borrower, the Secured Party or the
Securities Intermediary shall be liable, as long as it has exercised such
diligence as the circumstances require, for any failure to perform its
obligations hereunder which failure arises directly as a result of an event
reasonably beyond its control or that cannot be reasonably anticipated,
including, without limitation, an act of a governmental regulatory/authority, an
act of God, war, terrorist act, labor disputes or failure of both its primary
computer system and adequately maintained backup computer system.
21. Indemnification. The Borrower agrees to indemnify the Lenders, the
Secured Party and the Securities Intermediary for, and hold the Lenders, the
Secured Party and Securities Intermediary harmless from, all claims, demands,
losses, liabilities and expenses, including reasonable legal fees and expenses,
resulting from or with respect to this Agreement, either Account and the
services provided hereunder, including, without limitation: (a) any action
taken, or not taken, by the Lenders, the Secured Party and/or the Securities
Intermediary in regard thereto in accordance with the terms of this Agreement;
(b) any amounts which have been credited to any Securities Account but
subsequently were returned unpaid because of uncollected or insufficient funds
and any adjustments for amounts that were credited to either Account in error;
and (c) any failure of the Borrower or the Secured Party to pay any invoice or
charge of the Securities Intermediary for (i) services rendered in respect of
this Agreement or either Account or (ii) any amounts owing to the Securities
Intermediary from the Borrower with respect thereto or to the service provided
hereunder, excluding in any event any loss, liability, damage, judgment, claim,
deficiency, tax or expense arising as a result of the Securities Intermediary's
gross negligence or willful misconduct. Any amount due under this indemnity
shall be an Obligation under the Loan Documents which shall bear interest at a
rate per annum equal to the Default Interest Rate from the date such amount is
due until such amount is paid in full. This indemnity shall survive termination
of this Agreement.
22. Application of the Credit Agreement. Any and all rights granted to
the Collateral Agent under this Agreement are to be held and exercised by the
Collateral Agent as collateral agent and secured party for the benefit of the
Lenders pursuant to the provisions of the Credit Agreement. Each of the Lenders
shall be a beneficiary of the terms of this Agreement. Any and all obligations
under this Agreement of the parties to this Agreement, and the rights and
indemnities granted to the Collateral Agent under this Agreement, are created
and granted subject to, and in furtherance (and not in limitation) of, the terms
of the Credit Agreement and the rights and indemnities of the Collateral Agent
contained therein shall apply equally to this Agreement. Nothing in this
Agreement expressed or implied is intended or shall be construed to give to any
Person other than the Borrower, the Lenders, the Securities Intermediary and the
Collateral Agent any legal or equitable right, remedy, or claim under or in
respect of this Agreement or any covenant, condition, or provision herein
contained; and all such covenants, conditions and provisions are and shall be
held to be for the sole and exclusive benefit of the Borrower, the Lenders and
the Collateral Agent. Notwithstanding anything herein to the contrary, the
Collateral Agent shall exercise its rights and powers subject to the direction
and indemnity of the Lenders and the Borrower, as the case may be, as provided
in the Credit Agreement.
Notwithstanding anything to the contrary in this Agreement, in the
event that any term or provision of the Credit Agreement conflicts with any term
or provision of this Agreement, the relevant terms and provisions of the Credit
Agreement shall control regarding such specific term or provision.
23. Governing Law; Submission to Jurisdiction; Waivers. The Securities
Intermediary, Secured Party and BORROWER agree that this Agreement and the
operations of each Account (including with respect to all issues of perfection,
the effect of perfection or non-perfection and priority of the security
interest) shall be construed in accordance with the laws of the State of New
York (and not the CONFLICTS OF LAW principles THEREOF, EXCEPT NEW YORK GENERAL
OBLIGATIONS LAW SECTIONS 5-1401 AND 5-1402), and the Securities Intermediary's
"jurisdiction" within the meaning of the UCC is the State of New York. EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(a) CONSENTS THAT ANY ACTION OR PROCEEDING RELATING TO THE
TRANSACTIONS CONTEMPLATED BY OR ARISING FROM, OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT IN RESPECT OF, THIS AGREEMENT, THE CREDIT
AGREEMENT OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR
THEREWITH MAY BE BROUGHT IN STATE OR FEDERAL COURTS LOCATED IN THE STATE OF
NEW YORK;
(b) WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH
ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO
PLEAD OR CLAIM THE SAME;
(c) AGREES THAT ANY SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR
CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
PREPAID, TO ITS ADDRESS; AND
(d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT TO XXX IN ANY OTHER JURISDICTION.
24. Waiver of Jury. The parties hereto hereby voluntarily, irrevocably
and unconditionally waive any right to have a jury participate in resolving
any dispute, whether sounding in contract, tort, or otherwise, between or among
any of the parties hereto arising out of, in connection with, related to, or
incidental to the relationships established hereunder, the Credit Agreement or
any other agreement or document executed or delivered in connection herewith or
therewith or the transactions related hereto. This provision is a material
inducement to the parties entering into this transaction.
25. Extension of Credit. Except as otherwise agreed to in writing,
nothing in this Agreement or any course of dealing between the Borrower, the
Secured Party or the Securities Intermediary commits or obligates the Securities
Intermediary to provide or extend any overdraft or other credit to any of the
other parties hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
METRIS COMPANIES INC.
By_________________________________
Its____________________________
Deutsche Bank Trust Company Americas,
as Collateral Agent and Secured Party
By_________________________________
Its____________________________
Deutsche Bank Trust Company Americas,
as Securities Intermediary
By_________________________________
Its____________________________
Exhibit A
[Letterhead of Collateral Agent]
[Date]
[Name and Address of Securities Intermediary]
Attention:____________________
Re: Notice of Sole Control
Ladies and Gentlemen:
As referenced in the Credit Agreement Reserve Securities Account
Control Agreement dated June ___, 2003 among Metris Companies Inc., us and you,
we hereby give you notice of our sole control over Credit Agreement Reserve
Securities Account number [_______________] in the name "Deutsche Bank Trust
Company Americas, as Collateral Agent - CARS Account" [and/or CP Reserve Account
number [__________] in the name of Deutsche Bank Trust Company Americas-CP
Reserve Account], for the Administrative Agent and the other Lenders under the
Credit Agreement and all Financial Assets credited thereto. You are hereby
notified that an Event of Default has occurred and is continuing under the
Credit Agreement. You are hereby instructed not to accept any direction,
instructions or entitlement orders with respect to such Account[s] or the
Financial Assets credited thereto from any person other than the undersigned,
unless otherwise ordered by a court of competent jurisdiction.
You are instructed to deliver a copy of this notice by facsimile
transmission to Metris Companies Inc.
Very truly yours,
Deutsche Bank Trust Company Americas,
as Collateral Agent (and Secured Party)
By_________________________________
Its______________________________
cc: Metris Companies Inc.
SCHEDULE 13(C)
PERMITTED INVESTMENTS
(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 the
lesser of (i) 90 days or (ii) the number of days until the Maturity Date;
(b) investments in commercial paper maturing within the lesser of (i)
90 days or (ii) the number of days until the Maturity Date from the date of
acquisition thereof and having, at such date of acquisition, a rating from S&P
or from Xxxxx'x of at least A1/P1 (or equivalent rating), respectively;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within the lesser of (i) 90 days or (ii) the number of
days until the Maturity Date 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 the lesser of (i) 30 days and (ii) the number of days until the Maturity
Date from the date of acquisition thereof for securities described in clause (a)
above and entered into with a financial institution satisfying the criteria
described in clause (c) above.
Exhibit G
Form of Promissory Note
TERM NOTE
$[ ] [Effective Date]
FOR VALUE RECEIVED, METRIS COMPANIES INC., a Delaware corporation (the
"Borrower") for value received, hereby unconditionally promises to pay to the
order of ____________________ (the "Lender") by payment to the Administrative
Agent (for the benefit of the Lender) at its office as set forth in the Credit
Agreement (defined below) or at such other office as the Administrative Agent
may notify the undersigned of, in lawful money of the United States of America
and in immediately available funds, the principal amount of
______________________________ AND NO/100 DOLLARS ($ ), to pay interest
(computed on the basis of actual days elapsed and a year of 360 days) in like
funds on the unpaid principal amount hereof, from time to time from the date
hereof, at the rates and times set forth in, and all other Obligations set forth
in, the Amended and Restated Senior Secured Credit Agreement dated as of June
18, 2003 (as the same may hereafter be from time to time amended, restated or
otherwise modified, the "Credit Agreement"), among the undersigned, the Lender
and the other lenders named therein, and the Administrative Agent and Collateral
Agent referred to therein, until such amount is paid in full (both before and
after judgment to the extent permitted by law). Capitalized terms used in this
note and not otherwise defined have the meanings given such terms in the Credit
Agreement.
The principal of this note (this "Note") is payable as provided for in
the Credit Agreement. Reference is hereby made to the Credit Agreement for a
more complete statement of the terms and conditions under which the Loans
evidenced hereby are to be made and repaid.
This Note is one of the promissory notes collectively evidencing the
Term Loan referred to in the Credit Agreement. This Note is secured and its
maturity is subject to acceleration, in each case upon the terms provided in the
Credit Agreement.
This Note is subject to prepayment to the extent provided in the Credit
Agreement. Upon the occurrence of any one or more of the Events of Default
specified in the Credit Agreement, all amounts then remaining unpaid on this
Note shall become, or may be declared to be, immediately due and payable, all as
provided in the Credit Agreement.
In the event of default hereunder, the undersigned agrees to pay all
costs and expenses of collection, including reasonable attorneys' fees and
disbursements. The undersigned waives demand, presentment, notice of nonpayment,
protest, notice of protest and notice of dishonor.
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PRINCIPLES THEREOF OTHER THAN NEW YORK GENERAL OBLIGATIONS
LAW SECTIONS 5-1401 AND 5-1402.
METRIS COMPANIES INC.
By
Name
Title
EXHIBIT H
FORM OF SUBSIDIARY SECURITY AGREEMENT
SUBSIDIARY SECURITY AGREEMENT, dated as of June 18, 2003, made by
_____________, a ________________ corporation (the "Grantor"), in favor of
DEUTSCHE BANK TRUST COMPANY AMERICAS, as Collateral Agent (in such capacity, the
"Collateral Agent") for the benefit of the Lenders (as defined in the Credit
Agreement referred to below).
W I T N E S S E T H:
WHEREAS, pursuant to the Amended and Restated Senior Secured Credit
Agreement, dated as of June 18, 2003, among Metris Companies Inc. (the
"Borrower"), the Lenders, Xxxxxxx Sachs Credit Partners L.P., as administrative
agent for the Lenders (in such capacity, the "Administrative Agent"), and the
Collateral Agent (as amended, modified, supplemented, extended or restated from
time to time, the "Credit Agreement"), the Lenders have agreed to make an
extension of credit to the Borrower upon the terms and subject to the conditions
set forth therein;
WHEREAS, the Grantor is a Subsidiary of the Borrower and will derive
substantial direct and indirect benefit from the extension of credit made to the
Borrower under the Credit Agreement; and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective extensions of credit to the Borrower under the Credit
Agreement that the Grantor enter into the Subsidiary Security Agreement as
provided herein.
NOW, THEREFORE, in consideration of the premises and to induce the
Collateral Agent, the Administrative Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their respective loans
(collectively, the "Term Loan") to the Borrower, the Grantor hereby agrees with
the Collateral Agent for the 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
Code (as defined below) or, if not defined in the Code, in the Credit
Agreement. All references to terms defined in the Code shall mean such
term as it may be amended, supplemented or otherwise modified to be
more expansive after the date hereof as set forth in the Code.
(b) The following terms shall have the following meanings:
"Account" has the meaning given such term in the Code, but
excludes Accounts (including credit card receivables) sold or
transferred by the Borrower as permitted by the Credit Agreement
including without limitation assets sold pursuant to a Receivables
Transfer Program.
"Agreement" means this Subsidiary Security Agreement, as the same
may be amended, supplemented or otherwise modified from time to time.
"Chattel Paper" has the meaning given such term in the Code.
"Code" means the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Collateral" has the meaning given such term in Section 2.
"Collateral Account" means any collateral account established by
the Collateral Agent as provided in Section 5.1 hereof.
"Deposit Account" has the meaning given such term in the Code,
including any demand, time, savings, passbook or similar account
maintained with a bank.
"Document" has the meaning given such term in the Code, including
a document of title or a "warehouse receipt" (as defined in Section
7-201(2) of the Code).
"Excluded Assets" means any property, including but not limited
to Accounts, Chattel Paper, Documents, General Intangibles,
Instruments, Investment Property, 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, any interests in real property or Fixtures, and
any collateral pledged pursuant to the Pledge Agreement.
"General Intangibles" means any personal property (other than
goods, Accounts, Chattel Paper, Deposit Accounts, Documents,
Instruments, Investment Property, letters of credit, Letter of Credit
Rights, commercial tort claims and money) including, without
limitation, things in action, contract rights, payment intangibles,
software, corporate and other business records, inventions, designs,
patents, patent applications, service marks, trademarks, trade names,
trade secrets, internet domain names, engineering drawings, good will,
registrations, copyrights, licenses, franchises, customer lists, tax
refund claims, royalties, licensing and product rights, rights to the
retrieval from third parties of electronically processed and recorded
data and all rights to payment resulting from an order of any court,
and without limiting any of the foregoing, such other items as may be
set forth in the Code from time to time.
"Instrument" has the meaning given such term in the Code.
"Investment Property" has the meaning given such term in the
Code, including a security, whether certificated or uncertificated, a
security entitlement, a securities account and all financial assets
therein, a commodity contract or a commodity account.
"Lien" means any security interest, mortgage, pledge, lien,
charge, encumbrance, title retention agreement or analogous instrument
or device (including the interest of the lessors under capitalized
leases), in, of or on any assets or properties of the Person referred
to.
"Proceeds" means all "proceeds" as such term is defined in
Section 9-102(a)(64) of the Code.
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.
(c) All references herein to any Section of the Code shall be
deemed to include any successor sections and all amendments,
supplements and modifications thereto.
2. Grant of Security Interest. As collateral security for the prompt and
unconditional complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations, the Grantor hereby
grants to the Collateral Agent for the benefit of the Lenders: a security
interest in all of the following property now owned or at any time hereafter
acquired by the Grantor or in which the Grantor 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 Deposit Accounts;
(d) all Documents;
(e) all Equipment;
(f) all General Intangibles;
(g) all Instruments;
(h) all Inventory;
(i) all Investment Property;
(j) all Letter of Credit Rights;
(k) all books and records pertaining to the Collateral;
(l) to the extent not otherwise included in the foregoing clauses
(a) through (k), all other personal property (including, without
limitation, any tax refunds) of the Grantor, other than Excluded
Assets; and
(m) to the extent not otherwise included in the foregoing clauses
(a) through (l), income payments and Proceeds and products of any and
all of the foregoing and all collateral security, including any
guarantees, given by any Person to the Grantor (or for the benefit of
the Grantor) with respect to any or all of the foregoing.
3. Representations and Warranties. The Grantor 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 Grantor as permitted by the Credit Agreement and the other Loan Documents):
3.1 Title; No Other Liens. Except for the security interest granted to
the Collateral Agent for the benefit of the Lenders pursuant to this
Agreement, the Grantor owns each item of the Collateral free and clear of
any and all Liens or claims of others, other than Liens permitted by the
Credit Agreement. As of the Effective Date, no financing statement or other
public notice with respect to all or any part of the Collateral will be on
file or of record in any public office, except such as have been filed (i)
in favor of the Collateral Agent for the benefit of the Lenders, pursuant
to this Agreement, (ii) in connection with Liens permitted by the Credit
Agreement, or (iii) in connection with the termination of the Prior Credit
Agreement contemporaneously with the effectiveness of the Credit Agreement.
3.2 Perfected First Priority Liens. All necessary or advisable steps
have been taken and all financing statements necessary or advisable for
recordation or filing have been recorded or filed so as to create and
perfect the security interests of the Collateral Agent as of the Effective
Date. The security interests granted pursuant to this Agreement (a) upon
completion of the filings and other actions (which have been filed and upon
the extension of credit under the Credit Agreement are effective) will
constitute perfected security interests in the Collateral in favor of the
Collateral Agent for the 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, other than with respect to permitted Liens
under Section 6.03 of the Credit Agreement.
3.3 Real Property. The Grantor does not have any fee ownership
interest in any real property.
3.4 Chief Executive Office. The Grantor's legal name (as set forth in
its constituent documents filed with the appropriate governmental official
or agency) is as set forth in the opening paragraph hereof. The
jurisdiction of organization of the Grantor is the state of Delaware and
its chief executive office is now and since _________ has been located in
the State of Minnesota. The Grantor has not been organized under the laws
of any jurisdiction other than the State of Delaware since July 1, 2001.
The Grantor has not changed its name, identity or corporate structure since
_______.
3.5 Effectiveness of Representations. Each of the representations made
in this Section 3 shall be deemed made as of the Effective Date and shall
survive the extension of the Term Loan by the Lenders under the Credit
Agreement.
3.6 Delivery of Collateral. Delivery at any time by the Grantor to the
Collateral Agent of Collateral or of additional specific descriptions of
certain Collateral shall constitute a representation and warranty by the
Grantor to the Collateral Agent hereunder that the representations and
warranties of this Article 3 are true and correct to each item of such
Collateral.
4. Covenants. The Grantor covenants and agrees with the Collateral Agent
and the Lenders that, from and after the date of this Agreement until the
Obligations shall have been paid in full: 4.1 Maintenance of Perfected Security
Interest; Further Documentation; Release of Security Interest.
(a) The Grantor shall maintain the security interest created by
this Agreement as a continuing perfected security interest free and
clear of all Liens (other than permitted Liens under Section 6.03 of
the Credit Agreement) or claims of others 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 Collateral Agent, and at the sole expense of the Grantor, the
Grantor will promptly and duly execute and deliver such further
writings, instruments and documents and take such further actions as
may be required by applicable law or as the Collateral Agent may
reasonably request for the purpose of evidencing, effecting,
perfecting, maintaining, obtaining or preserving the full benefits of
this Agreement and of the rights and powers herein granted, including,
without limitation, 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.
(c) Concurrently with the transfer by the Grantor 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 Collateral Agent or any
Lender; provided that the Collateral Agent shall, at the reasonable
request and sole expense of the Grantor, authorize and execute such
releases as may be necessary to effect any such transfer.
4.2 Changes in Locations, Name, etc. The Grantor will not (unless, in
each case, it shall have given the Collateral 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 3.4; or
(b) change its name, identity or corporate structure to such an
extent that any financing statement filed in connection with this
Agreement would become seriously misleading.
4.3 Covenants Regarding Collateral. The Grantor shall:
(a) at all times have rights in, to and under the Collateral;
(b) keep and maintain separate books and records relating to the
Collateral at the locations set forth on Schedule 1 in a form
satisfactory to the Collateral Agent, and not remove the same without
the prior written consent of the Required Lenders, and allow the
Collateral Agent and its representatives access to such books and
records and to the Collateral, at all reasonable times, for the
purpose of examination, verification, copying, extracting and other
reasonable purposes as the Collateral Agent may require;
(c) deliver to the Collateral Agent promptly at its request any
requested schedules, lists, invoices, bills of lading, documents of
title, purchase orders, receipts, chattel paper, instruments and other
items relating to the Collateral;
(d) when necessary for the perfection or maintenance of the
Collateral Agent's security interest in the Collateral or when
reasonably requested to do so by the Collateral Agent, make, stamp or
record such entries or legends on any of the Grantor's books and
records relating to the Collateral or the Collateral as the Collateral
Agent shall reasonably request from time to time;
(e) when necessary or desirable for the perfection of the
Collateral Agent's security interest in the Collateral, post notices
in and about designated areas where the Collateral or any portion
thereof may be stored from time to time as the Collateral Agent shall
reasonably request;
(f) notify the Collateral Agent in the event of material loss or
damage to any material portion of the Collateral or of any material
adverse change in the Collateral, or of any dispute, claim, action
proceeding or other occurrence which could materially and adversely
affect the interests of the Collateral Agent in the Collateral and, at
the request of the Collateral Agent, appear in and defend, at the
Grantor's expense, any such action or proceeding;
(g) pay all expenses incurred in the delivery, storage or other
handling of the Collateral promptly when due;
(h) not sell, lease or otherwise dispose of, or permit the sale,
lease or disposition of, any Collateral except for sales, leases and
other dispositions permitted by the terms of the Credit Agreement;
(i) maintain insurance on that portion of the Collateral
consisting of Equipment and Inventory, of such types, coverage, form
and amount and with duly licensed and reputable companies, and supply
the Lenders and the Collateral Agent with certificates or other
evidence satisfactory to the Lenders and the Collateral Agent as to
the continuance of such insurance (all such insurance shall be payable
to the Collateral Agent as an additional insured for the benefit of
the Collateral Agent and the Lenders, and shall provide for thirty
days' prior written notice of cancellation to the Collateral Agent
and, should the Grantor fail to maintain such insurance, the same may
be maintained by the Collateral Agent, at its option upon notice to
the Grantor);
(j) pay and discharge, or cause to be paid and discharged, all
Liens, taxes, assessments and governmental charges levied, assessed or
imposed upon any of the Collateral unless and to the extent only that
(a) the same shall be contested in good faith and by appropriate
proceedings by the Grantor, (b) written notice of such contest shall
have been given to the Collateral Agent, (c) as a result of
undertaking such proceedings, the Collateral is not thereby subjected
to any sale, forfeiture or loss, and (d) the Grantor has established
or shall establish a reserve fund for all such contested amounts
satisfactory to the Collateral Agent;
(k) promptly notify the Collateral Agent of any Lien, claim,
security interest, right or other encumbrance arising out of or with
respect to the Collateral;
(l) keep and maintain the Collateral which consists of tangible
personal property in good condition, working order and repair, not
commit or suffer any waste of such Collateral, and make all repairs or
replacements to such Collateral which may be required in accordance
with prudent business practices, except that the Grantor shall not be
obligated to make any repair or replacement with respect to any
insured loss if the Collateral Agent has received all insurance
proceeds payable as a result of such loss;
(m) at the expense of the Grantor, allow the Collateral Agent
acting at the direction of the Required Lenders and its duly
authorized officers, agents and/or representatives upon reasonable
advance notice and during normal business hours, (a) to enter upon and
to examine and inspect the Collateral, (b) to discuss the Grantor's
affairs and finances with any Person and verify with any Person the
amount, quality, quantity, value and condition of, and any other
matter relating to, the Collateral, and (c) such right of access to
the Collateral as may be reasonably necessary for the proper
maintenance and repair of the Collateral consisting of tangible
personal property in the event of the failure by the Grantor to
perform its obligations under this Security Agreement or the other
Loan Documents;
(n) fully perform all of the Grantor's duties under and in
connection with each of the Loan Documents and each other document to
which the Collateral or any part thereof relates;
(o) observe and comply with all laws, regulations, ordinances,
rules, and orders of any federal, state, municipal or other
governmental authority relating to the Collateral and the use thereof;
and
(p) from time to time promptly execute and deliver to the
Collateral Agent all such further assurances, security agreements,
pledges, control agreements, assignments, certificates, supplemental
documents and other instruments of conveyance, transfer, mortgage,
pledge or change, and authorize financing statements, and do all other
acts or things as the Collateral Agent may reasonably request from
time to time in order to more fully create, evidence, perfect,
continue, maintain and preserve the priority of the security interest
in the Collateral.
5. Remedies.
5.1 Proceeds to be Turned Over To Collateral Agent. All Proceeds
(including all income and payments) received by the Grantor consisting of
cash, checks, notes, drafts, and other items of payment shall be held by
the Grantor in trust for the Collateral Agent and the Lenders, segregated
from other funds of the Grantor, and shall, if required by the Collateral
Agent, forthwith upon receipt by the Grantor, be turned over to the
Collateral Agent in the exact form received by the Grantor (duly endorsed
by the Grantor to the Collateral Agent, if required) and held by the
Collateral Agent in a Collateral Account maintained by or on behalf of, and
with control by, the Collateral Agent. All Proceeds (including income and
payments) while held by the Collateral Agent in a Collateral Account (or by
the Grantor in trust for the Collateral 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
5.2.
5.2 Application of Proceeds. If an Event of Default shall have
occurred and be continuing (irrespective of whether the Term Loan has been
accelerated), at any time at the Collateral Agent's election, the
Collateral Agent may apply all or any part of Proceeds (including income
and payments) held in any Collateral Account in payment of the Obligations
in such order as the Collateral Agent may elect, and any part of such funds
which the Collateral 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 Collateral Agent to the Grantor or to whomsoever may be
lawfully entitled to receive the same. Any balance of such Proceeds
(including income and payments) remaining after the Obligations shall have
been paid in full shall be paid over to the Grantor or to whomsoever may be
lawfully entitled to receive the same.
5.3 Other Remedies. If an Event of Default shall occur and be
continuing (irrespective of whether the Term Loan has been accelerated),
the Collateral Agent, on behalf of the Lenders, may exercise, in addition
to all other rights and remedies granted to them in this Agreement, the
other Loan Documents, or in any other instrument or agreement securing,
evidencing or relating to the Obligations, or at law or in equity, all
rights and remedies of a secured party under the Code. Without limiting the
generality of the foregoing, the Collateral 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 Grantor 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 Collateral 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 Collateral 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 Grantor, which right or equity is hereby waived or
released. The Grantor further agrees, at the Collateral Agent's request, to
assemble the Collateral and make it available to the Collateral Agent at
places which the Collateral Agent shall reasonably select, whether at the
Grantor's premises or elsewhere. The Collateral Agent shall apply the net
proceeds of any action taken by it pursuant to this Section 5.3, 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
Collateral 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 Collateral Agent may elect,
and only after such application and after the payment by the Collateral
Agent of any other amount required by any provision of law, need the
Collateral Agent account for the surplus, if any, to the Grantor. 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 ten (10) Business Days before such sale or other disposition.
5.4 The Collateral Agent shall have the right, without notice to the
Grantor, to enter upon and into the premises of the Grantor without
liability for trespass and to remove all of the Collateral and all books,
records, invoices and other documentation relating thereto. The Collateral
Agent may require the Grantor to assemble or package the Collateral and
make it available to the Collateral Agent at a place to be designated by
the Collateral Agent reasonably convenient to the parties, and in such
event the Grantor agrees to make available to the Collateral Agent all of
the Grantor's facilities for the purposes of removing or taking possession
of the Collateral or putting it in a saleable form. If the Collateral
requires preparation, repair, maintenance or further work in order to be in
a saleable form, the Collateral Agent shall have the right, but not the
obligation, to complete the work for such purpose, and the cost of such
preparation, repair, maintenance or further work shall be payable by the
Grantor. The completion of any such work shall not be a condition to the
right of the Collateral Agent to sell or other wise dispose of the
Collateral in accordance with the terms hereof.
5.5 The Collateral Agent may charge on its own behalf and pay to
others all reasonable amounts for expenses incurred and for services
rendered in connection with the exercise of the rights and remedies of the
Collateral Agent hereunder, including, without limiting the generality of
the foregoing, reasonable legal and accounting fees and expenses, and in
every such case the amounts so paid together with all costs, charges and
expenses incurred in connection therewith, with interest thereon from the
date of demand paid at an interest rate per annum equal to the lower of (i)
the Default Interest Rate and (ii) the maximum interest rate permitted by
law.
The Grantor agrees, to the fullest extent permitted by law, that it
shall not (and it hereby irrevocably waives its right to) at any time plead, or
claim the benefit or advantage of, any appraisement, value, stay, extension,
moratorium or redemption law now or hereafter in force, in order to prevent or
hinder the enforcement of this Agreement or the absolute sale of the Collateral
subject to this Agreement.
6. Collateral Agent's Appointment as Attorney-in-Fact; Collateral
Agent's Performance of Grantor's Obligations.
6.1 Powers. The Grantor hereby irrevocably constitutes and appoints
the Collateral 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 Grantor and in the name
of the Grantor 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 Grantor hereby gives the
Collateral Agent the power and right, on behalf of the Grantor, without
notice to or assent by the Grantor, to do any or all of the following:
(a) in the name of the Grantor or its own name, or otherwise,
take possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under
any Account 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 Collateral Agent for the
purpose of collecting any and all such moneys due under any Account 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 5.3, 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 Collateral Agent or as the
Collateral 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 from any Person; (3) sign and
endorse 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 Grantor 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
Collateral Agent may deem appropriate; (7) remove from any
premises where they may be located any and all documents,
instruments, files and records relating to the Collateral or the
Collateral and any receptacles and cabinets containing the same,
and at the Grantor's cost and expense, to use such of the
personnel, supplies and space of the Grantor at its place of
business as may be necessary to properly administer and control
the Collateral or the collections and realizations thereon; (8)
receive, open and dispose of all mail addressed to the Grantor
and to notify postal authorities to change the address for
delivery thereof to such address as that Collateral Agent may
designate; (9) collect or withdraw all sums of money or other
solvent credits the Grantor may have to its credit with any
banking institution; and (10) 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
Collateral Agent were the absolute owner thereof for all
purposes, and do, at the Collateral Agent's option and the
Grantor's expense, at any time, or from time to time, all acts
and things which the Collateral Agent deems necessary to protect,
preserve or realize upon the Collateral and the Collateral
Agent's security interests therein and to effect the intent of
this Agreement.
Anything in this Section 6.1 to the contrary notwithstanding, the
Collateral Agent agrees that it will not exercise any rights under the
power of attorney provided for in this Section 6.1 unless an Event of
Default shall have occurred and be continuing, or as permitted by Section
6.2 hereof.
6.2 Performance by Collateral Agent of Grantor's Obligations. If the
Grantor fails to perform or comply with any of its agreements contained
herein, the Collateral 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 Grantor).
6.3 Grantor's Reimbursement Obligation. The expenses of the Collateral
Agent and any Lender incurred in connection with actions undertaken as
provided in this Agreement shall be secured by the Collateral as provided
in the Credit Agreement and shall be payable by the Grantor to the
Collateral Agent, for the benefit of the Persons entitled to such payments,
within 10 Business Days of demand therefor, with such amounts constituting
Obligations hereunder and under the Credit Agreement, payable in accordance
with Section 2.05 of the Credit Agreement.
6.4 Ratification; Power Coupled With An Interest. The Grantor 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.
7. Duty of Collateral Agent. The Collateral 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 Collateral deals with similar property
for its own account. Except as expressly required by the Code, none of the
Collateral Agent or 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 Grantor 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
Collateral Agent and the Lenders hereunder are solely to protect the Collateral
Agent's and the Lenders' interests in the Collateral and shall not impose any
duty upon the Collateral Agent or any Lender to exercise any such powers. The
Collateral 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 Grantor for any act or failure to act hereunder, except for their own
gross negligence or willful misconduct. Notwithstanding the foregoing, neither
the Grantor, the Collateral Agent nor any Lender shall be liable for any
special, indirect, consequential or punitive damages, even if it has been
advised of the possibility of such damages.
8. Execution of Financing Statements. Pursuant to Section 9-509 of the
Code, the Grantor authorizes the Collateral Agent to file financing statements
with respect to the Collateral without the signature of the Grantor in such form
and in such filing offices as the Collateral Agent reasonably determines
appropriate to perfect the security interests of the Collateral Agent under this
Agreement.
9. Authority of Collateral Agent. The Grantor acknowledges that the
rights and responsibilities of the Collateral Agent under this Agreement with
respect to any action taken by the Collateral Agent or the exercise or
non-exercise by the Collateral 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 Collateral 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
Collateral Agent and the Grantor, the Collateral Agent shall be conclusively
presumed to be acting as agent for the Administrative Agent and the Lenders with
full and valid authority so to act or refrain from acting, and the Grantor shall
be under no obligation, or entitlement, to make any inquiry respecting such
authority.
10. Notices. All notices, requests and demands to or upon the Collateral
Agent or the Grantor hereunder shall be effected in the manner provided for in
Section 9.01 of the Credit Agreement.
11. 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.
12. Entire Agreement; Amendments in Writing; No Waiver; Cumulative
Remedies; Grantor Waivers.
12.1 Entire Agreement. This Agreement and the other Loan Documents
contain and constitute the entire agreement among the parties hereto, the
Collateral Agent and the Lenders and supersede any and all prior
negotiations, agreements, correspondence and understandings and
communications respecting the subject matter hereof.
12.2 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.
12.3 No Waiver by Course of Conduct. None of the Collateral Agent or
any Lender shall by any act (except by a written instrument pursuant to
Section 12.2), 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 Collateral 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 Collateral 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 Collateral Agent or such Lender would
otherwise have on any future occasion.
12.4 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.
12.5 Grantor Waivers. The Grantor waives presentment, demand, notice,
protest, notice of acceptance of this Agreement, notice of loans made,
credit extended, collateral received or delivered or other action taken in
reliance hereon and all other demands and notices of any description. With
respect to Obligations, the Loan Documents and the Collateral, the Grantor
assents to any extension or postponement of the time of payment or any
other indulgence, to any substitution, exchange or release of Collateral,
to the addition or release of any party or person primarily or secondarily
liable, to the acceptance of partial payments thereon and the settlement,
compromising or adjusting of any thereof, all in such manner and at such
time or times as the Collateral Agent may deem advisable. Except as may be
required by the Code, the Collateral Agent shall have no duty to the
Grantor as to the collection or protection of Collateral or any income
thereon, nor as to the preservation of rights against prior parties, nor as
to the preservation of any rights pertaining thereto beyond the safe
custody thereof.
The Collateral Agent shall not, under any circumstances or in any
event whatsoever, have any liability to the Grantor for any error or
omission or delay of any kind occurring in the liquidation of or
realization upon any of the Collateral, including any instrument received
in payment thereof, or any damage resulting therefrom. Without limiting any
indemnity or other rights of the Collateral Agent or any of the Lenders
hereunder or under the Loan Documents, the Grantor shall indemnify and hold
harmless (on an after tax basis) the Collateral Agent and the Lenders
against any claim, loss, expense or damage arising out of the liquidation
of or realization upon any of the Collateral, including, without
limitation, any instrument received in payment thereof.
THE GRANTOR ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS AGREEMENT
IS A PART IS A COMMERCIAL TRANSACTION, AND HEREBY VOLUNTARILY AND KNOWINGLY
WAIVES ITS RIGHTS TO NOTICE AND HEARING AS ALLOWED UNDER DELAWARE LAW, OR
OTHERWISE UNDER ANY STATE OR FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT
REMEDY WHICH THE COLLATERAL AGENT MAY DESIRE TO USE.
12.6 To the extent permitted by law, all rights of the Collateral
Agent under this Agreement and the other Loan Documents may be enforced by
the Collateral Agent without the possession of any promissory note or any
other instrument or document evidencing any Obligation or the production
thereof in any proceeding.
13. Subject to Credit Agreement. Any and all rights granted to the
Collateral Agent under this Agreement are to be held and exercised by the
Collateral Agent as collateral agent and as secured party for the benefit of the
Lenders pursuant to the provisions of the Credit Agreement. Each of the Lenders
shall be a beneficiary of the terms of this Agreement. Any and all obligations
under this Agreement of the parties to this Agreement, and the rights and
indemnities granted to the Collateral Agent under this Agreement, are created
and granted subject to, and in furtherance (and not in limitation) of, the terms
of the Credit Agreement and the rights and indemnities of the Collateral Agent
contained therein shall apply equally to this Agreement. Nothing in this
Agreement expressed or implied is intended or shall be construed to give to any
Person other than the Grantor, the Borrower, the other Loan Parties, the Lenders
and the Collateral Agent any legal or equitable right, remedy, or claim under or
in respect of this Agreement or any covenant, condition, or provision herein
contained; and all such covenants, conditions and provisions are and shall be
held to be for the sole and exclusive benefit of the Grantor, the Borrower, the
other Loan Parties, the Lenders and the Collateral Agent. Notwithstanding
anything herein to the contrary, the Collateral Agent shall exercise its rights
and powers subject to the direction and indemnity of the Lenders, the Grantor
and the other Loan Parties, as the case may be, as provided in the Credit
Agreement.
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 Grantor and shall inure to the benefit of the
Collateral 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 (WITHOUT
REGARD TO THE CONFLICT OF LAW PRINCIPLES OTHER THAN SECTION 5-1401 AND SECTION
5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
17. 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 Agreement.
18. Effective Date. This Agreement shall be effective on the Effective
Date.
19. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO
A TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY OR ARISING HEREUNDER OR THEREUNDER.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed and delivered as of the date first above written.
METRIS COMPANIES INC.
By
Its
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Collateral Agent
By
Its
Schedule 1
Location of Collateral Books and Records
00000 Xxxxxxx Xxxxxxxxx, Xxxxxxxxxx, XX 00000
00000 X. Xxxxxxxxx Xxxxx, Xxxxxxxxxx, XX 00000
