Exhibit 99.1
EXECUTION COPY
SENIOR SECURED CREDIT AGREEMENT
among
METRIS COMPANIES INC.,
as Borrower,
THE LENDERS FROM TIME TO TIME PARTIES HERETO,
and
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Administrative Agent and as Collateral Agent
Dated as of May 6, 2004
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.........................................................1
Section 1.01. Defined Terms..............................................1
Section 1.02. Terms Generally...........................................20
ARTICLE II THE CREDITS.......................................................20
Section 2.01. Commitments...............................................20
Section 2.02. Eurodollar Term Loans.....................................20
Section 2.03. Fees......................................................20
Section 2.04. Evidence of Debt; Repayment of Term Loans.................21
Section 2.05. Interest on Term Loans....................................21
Section 2.06. Default Interest; Increased Interest......................21
Section 2.07. Alternate Rate of Interest................................22
Section 2.08. Optional Prepayments......................................23
Section 2.09. Mandatory Prepayments.....................................23
Section 2.10. Pro Rata Treatment........................................24
Section 2.11. Sharing of Setoffs........................................24
Section 2.12. Payments..................................................25
Section 2.13. Taxes.....................................................25
Section 2.14. Reserve Requirements; Change in Circumstances.............28
Section 2.15. Change in Legality........................................29
Section 2.16. Indemnity.................................................29
Section 2.17. Assignment of Term Loans Under Certain Circumstances......29
ARTICLE III REPRESENTATIONS AND WARRANTIES...................................30
Section 3.01. Organization; Powers......................................30
Section 3.02. Authorization.............................................30
Section 3.03. Enforceability............................................31
Section 3.04. Governmental Approvals; No Conflicts......................31
Section 3.05. Financial Statements......................................31
Section 3.06. No Material Adverse Effect................................31
Section 3.07. Title to Properties; Possession Under Leases..............32
Section 3.08. Subsidiaries..............................................32
Section 3.09. Litigation; Compliance with Laws..........................32
Section 3.10. Agreements................................................32
Section 3.11. Federal Reserve Regulations...............................33
Section 3.12. Investment Company Act; Public Utility Holding
Company Act...............................................33
Section 3.13. Use of Proceeds...........................................33
Section 3.14. Tax Returns...............................................33
Section 3.15. No Material Misstatements.................................33
Section 3.16. Employee Benefit Plans....................................34
Section 3.17. Environmental Matters.....................................35
Section 3.18. Security Interests........................................35
Section 3.19. Permitted Debt under Senior Note Indenture................35
Section 3.20. Regulatory Compliance.....................................35
ARTICLE IV CONDITIONS OF LENDING.............................................35
Section 4.01. Conditions to Effectiveness...............................35
ARTICLE V AFFIRMATIVE COVENANTS..............................................38
Section 5.01. Existence; Businesses and Properties......................38
Section 5.02. Insurance.................................................39
Section 5.03. Obligations and Taxes.....................................39
Section 5.04. Financial Statements, Reports, etc........................39
Section 5.05. Litigation and Other Notices..............................40
Section 5.06. Employee Benefits.........................................41
Section 5.07. Maintaining Records; Access to Properties and Inspections.42
Section 5.08. Further Assurances........................................43
Section 5.09. Information Regarding Collateral..........................44
Section 5.10. Sale of Accounts..........................................44
Section 5.11. Regulatory Compliance.....................................44
Section 5.12. Deposit and Securities Accounts...........................44
ARTICLE VI NEGATIVE COVENANTS................................................45
Section 6.01. Financial Covenants.......................................45
Section 6.02. Limitations on Indebtedness...............................46
Section 6.03. Liens.....................................................47
Section 6.04. Securities Account Pledge Agreement.......................49
Section 6.05. Mergers, Consolidations, and Sales of Assets..............49
Section 6.06. Investments, Loans, Advances and Guarantees...............50
Section 6.07. Restricted Payments; Certain Payments of Indebtedness.....52
Section 6.08. Disposition of Assets.....................................53
Section 6.09. Transactions with Affiliates..............................54
Section 6.10. Amendment of Material Documents...........................54
Section 6.11. Limitations on Restrictions on Dividends by Subsidiaries..54
Section 6.12. Limitation on Negative Pledge Clauses.....................54
Section 6.13. Changes in Fiscal Periods.................................55
Section 6.14. Limitations on Lines of Business, etc.....................55
Section 6.15. Certain Matters Related to Accounts.......................55
Section 6.16. Employee Benefit Plans....................................55
ARTICLE VII EVENTS OF DEFAULT................................................56
ARTICLE VIII THE AGENTS......................................................59
Section 8.01. The Administrative Agent and the Collateral Agent.........59
ARTICLE IX MISCELLANEOUS.....................................................63
Section 9.01. Notices...................................................63
Section 9.02. Survival of Agreement.....................................64
Section 9.03. Binding Effect............................................64
Section 9.04. Successors and Assigns....................................64
Section 9.05. Expenses; Indemnity.......................................67
Section 9.06. Right of Setoff...........................................68
Section 9.07. Applicable Law............................................69
Section 9.08. Waivers; Amendment........................................69
Section 9.09. Interest Rate Limitation..................................70
Section 9.10. Entire Agreement..........................................70
Section 9.11. Waiver of Jury Trial......................................70
Section 9.12. Severability..............................................70
Section 9.13. Counterparts..............................................71
Section 9.14. Headings..................................................71
Section 9.15. Jurisdiction; Consent to Service of Process...............71
Section 9.16. Confidentiality...........................................71
Section 9.17. Releases of Guarantees and Liens..........................72
Section 9.18. Mutual Drafting...........................................72
Exhibits
Exhibit A Form of Assignment and Acceptance
Exhibit B Form of Borrower Pledge Agreement
Exhibit C Form of Borrower Security Agreement
Exhibit D Form of MCS Pledge Agreement
Exhibit E Form of MDI Pledge Agreement
Exhibit F Form of Promissory Note for Term Loans
Exhibit G Form of Borrower Securities Account Pledge Agreement
Exhibit H Form of Subsidiary Guaranty
Exhibit I Form of Subsidiary Security Agreement
Exhibit J Form of Exemption Certificate
Exhibit K Form of Opinion of General Counsel
Exhibit L Form of Opinion of Xxxxxx & Xxxxxxx LLP
Schedules
Schedule 2.01 Commitments
Schedule 3.08 Subsidiaries
Schedule 3.09 Litigation
Schedule 3.14 Tax Returns
Schedule 3.18(b) UCC Filings
Schedule 3.18(c) Deposit Accounts and Securities Accounts
Schedule 5.04(f)-1 Metris Master Trust Monthly Report
Schedule 5.04(f)-2 Monthly Servicer Report
Schedule 5.12(a) List of Certain Accounts not Subject to a Control Agreement
Schedule 5.12(b) List of Certain Accounts not Subject to a Control Agreement
Schedule 6.02 Indebtedness
Schedule 6.03 Liens
Schedule 6.06 Investments
SENIOR SECURED CREDIT AGREEMENT
dated as of May 6, 2004 (this "Agreement"),
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") and DEUTSCHE BANK TRUST
COMPANY AMERICAS, as administrative agent
for the Lenders and as collateral agent for
the Lenders.
The Borrower has requested that the Lenders extend credit in an
aggregate principal amount of $300,000,000 to the Borrower in the form of term
loans, on the terms, and subject to the conditions, set forth in this Agreement.
The proceeds of the term loans will be used by the Borrower and its subsidiaries
to repay the Borrower's 10% Senior Notes due 2004 (together with accrued and
unpaid interest and prepayment premium due thereon) and to pay fees and
transaction expenses related to the term loans. The balance of the proceeds from
the term loans will be used by the Borrower and its Subsidiaries for 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 Lenders, the Administrative Agent and
the Collateral Agent agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms. As used in this Agreement, the
following terms shall have the meanings specified below:
"ABR Term Loan" shall mean any Term Loan that bears interest
at a rate determined by reference to the Alternate Base Rate.
"Accounts" shall mean all accounts (excluding credit
cardholder accounts but not excluding accounts receivable arising
therefrom), accounts receivable, other receivables, contract rights,
chattel paper, and related instruments and documents, insurance claims
and proceeds, and notes, whether now owned or hereafter acquired by the
Borrower or any Subsidiary.
"Acquisition Test Period" shall have the meaning set forth in
Section 6.06(g).
"Adjusted LIBO Rate" shall mean, with respect to any Interest
Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/100 of 1%) equal to the product of (a) the LIBO Rate in
effect for such Interest Period and (b) Statutory Reserves as in effect
during such Interest Period.
"Administrative Agent" shall mean Deutsche Bank Trust Company
Americas, 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 Deutsche Bank Trust Company Americas, in
its capacity either as the Administrative Agent or as the Collateral
Agent, as the context may require.
"Alternate Base Rate" shall mean, for any day, a rate per
annum equal to the greater of (a) the Prime Rate in effect on such day
and (b) the Federal Funds Effective Rate in effect on such day plus 1/2
of 1%. Any change in the Alternate Base Rate due to a change in the
Prime Rate or the Federal Funds Effective Rate shall be effective on
the effective date of such change in the Prime Rate or the Federal
Funds Effective Rate, respectively.
"Applicable Trigger Percentage" shall mean (a) 2.0% until the
date that is six months after the Effective Date and (b) 2.5% on or
after the date that is six months after the Effective Date.
"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 A.
"Available Cash Investment Basket" shall mean, as of any date
of determination, $10,000,000 minus the aggregate amount expended in
cash during the period after the Effective Date and 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, $50,000,000 minus the aggregate amount expended
(whether in the form of cash or Capital Stock of the Borrower) during
the period after the Effective Date and 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
dated as of the Effective Date, executed by the Borrower in favor of
the Collateral Agent (in the form of Exhibit B hereto), 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.
"Borrower Security Agreement" shall mean the Security
Agreement dated as of the Effective Date, executed by the Borrower in
favor of the Collateral Agent (in the form of Exhibit C hereto), 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.
"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. 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, with respect
to the Borrower and its Subsidiaries, "Capital Stock" (a) shall not
include any certificates or other interests in or issued by a trust or
other conduit in connection with a Receivables Transfer Program and (b)
shall include the T.H. Xxx Preferred Stock.
"Change in Control" shall mean the occurrence of any of the
following events (whether or not approved by the Board of Directors of
the Borrower):
(a) 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;
(b) 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;
(c) 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
(d) a Change of Control Triggering Event (as defined
in the Certificate of Designation relating to the Series C
Preferred Stock) occurs or the Borrower is required by the
holders of its Series C Preferred Stock to redeem the Series C
Preferred Stock upon the occurrence of a Change in Control (as
defined in the Certificate of Designation relating to the
Series C Preferred Stock).
"Change in Law" shall mean (a) the adoption of any law, rule
or regulation after the date of this Agreement, (b) any change in any
law, rule or regulation or in the interpretation or application thereof
by any Governmental Authority after the date of this Agreement or (c)
compliance by any Lender (or, for purposes of Section 2.14, by any
lending office of such Lender or by such Lender's holding company, if
any) with any request, guideline or directive (whether or not having
the force of law) of any Governmental Authority made or issued after
the date of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"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 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 (without duplication) (a) the consolidated
stockholders' equity of the Borrower and its Subsidiaries and (b) the
cost basis of the T.H. Xxx Preferred Stock, in each case as determined
on a consolidated basis in conformity with GAAP consistently applied.
"Consolidated Tangible Net Worth" shall mean, as at any date
of determination, (a) Consolidated Net Worth plus (b) 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 (b) 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 (b) shall be reduced by a
like amount) minus (c) to the extent reflected in determining
Consolidated Net Worth, the sum of (without duplication) (i) all
write-ups subsequent to December 31, 2003, 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 (c) above being referred to
herein as "Intangibles").
"Control" shall have the meaning given such term in Rule 12b-2
under the Exchange Act, and "Controlling" and "Controlled" shall have
meanings correlative thereto.
"Credit Card Bank" shall mean DMCCB and any other Person that
issues credit cards to be formed or acquired by the Borrower or one of
the Subsidiaries.
"Credit 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 March 31, 2004, 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.
"Deposit Account Control Agreement" shall mean any control
agreement, in a form reasonably satisfactory to the Collateral Agent,
among the applicable Loan Party, the Collateral Agent, and the
Depository Institution at which a deposit account or accounts are
maintained for the benefit of the applicable Loan Party, 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 Indebtedness
of the Borrower and its consolidated Subsidiaries that are (or, as of
such date, should be) accounted for as debt 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.
"dollars" or "$" shall mean lawful money of the United States
of America.
"Effective Date" shall have the meaning assigned to such term
in Section 4.01.
"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) at such time 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 are 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 minus Credit Loss Reserves at
such time.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"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.
"ERISA Event" shall mean (a) any Reportable Event with respect
to a Plan (other than an event for which the 30-day notice period is
waived); (b) the existence with respect to any Plan of an "accumulated
funding deficiency" (as defined in Section 412 of the Code or Section
302 of ERISA), whether or not waived; (c) the filing pursuant to
Section 412(d) of the Code or Section 303(d) of ERISA of an application
for a waiver of the minimum funding standard with respect to any Plan;
(d) the incurrence by the Borrower or any of its ERISA Affiliates of
any liability under Title IV of ERISA with respect to the termination
of any Plan or the withdrawal or partial withdrawal of the Borrower or
any of its ERISA Affiliates from any Plan or Multiemployer Plan; (e)
the receipt by the Borrower or any of its ERISA Affiliates from the
PBGC or a plan administrator of any notice relating to the intention to
terminate any Plan or Plans or to appoint a trustee to administer any
Plan; (f) the adoption of any amendment to a Plan that would require
the provision of security pursuant to Section 401(a)(29) of the Code or
Section 307 of ERISA; (g) the receipt by the Borrower or any of its
ERISA Affiliates of any notice, or the receipt by any Multiemployer
Plan from the Borrower or any of its ERISA Affiliates of any notice,
concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA; (h) the
occurrence of a "prohibited transaction" with respect to which the
Borrower or any of the Subsidiaries is a "disqualified person" (within
the meaning of Section 4975 of the Code) or with respect to which the
Borrower or any such Subsidiary could otherwise be liable; or (i) any
other event or condition with respect to a Plan or Multiemployer Plan
that could reasonably be expected to result in liability of the
Borrower or any Subsidiary.
"Eurodollar Term Loan" shall mean any Term Loan that bears
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" shall have the meaning assigned to such
term in Article VII.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Excluded Asset Sales" shall mean (a) sales of charged-off
receivables, (b) sales of receivables related to a Receivables Transfer
Program, (c) sales of assets by DMCCB, to the extent the Net Proceeds
thereof are retained by DMCCB, (d) 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
and (e) sales of assets by the Borrower or any of its Subsidiaries to
the extent Net Proceeds from any individual asset sale are less than
$25,000, except to the extent the Net Proceeds from all such individual
asset sales exceed $1,000,000 in any fiscal year.
"Excluded Subsidiaries" shall mean, as of any date, (a) any
Credit Card Bank, (b) any Receivables Transfer Subsidiary, (c) any
Subsidiary that is an insurance company or other regulated financial
institution or subsidiary thereof, in each case that is not permitted
by applicable law or regulation to guarantee or provide collateral to
secure the Obligations (which as of the date of this Agreement consist
of ICOM Limited and MES Insurance Agency, LLC), and (d) any Subsidiary
that is an Immaterial Subsidiary as of such date.
"FDIA" shall mean the Federal Deposit Insurance Act, as
amended.
"Federal Funds Effective Rate" shall mean, for any day, the
weighted average (rounded upwards, if necessary, to the next 1/100 of
1%) of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average (rounded upwards, if necessary, to the
next 1/100 of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three Federal funds brokers
of recognized standing selected by it.
"Fee Letter" shall mean the letter agreement dated May 6,
2004, between the Borrower and Deutsche Bank Trust Company Americas,
with regard to payment for its services as Administrative Agent and
Collateral Agent.
"Fees" shall mean any fees due under the Fee Letter or
pursuant to Section 2.03(a).
"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 or lease 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, however, 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.
"Immaterial Subsidiary" shall mean, as of any date, any
Subsidiary of the Borrower that, as of such date, together with all
other Immaterial Subsidiaries, owns or holds, directly or indirectly,
less than 5% of Consolidated Tangible Net Worth.
"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), that is controlled (within the meaning of 12
U.S.C. ss.1841 (or any successor provision), as amended) 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 (or, with respect to any Eurodollar Term Loan, such other
date on which an applicable Interest Period ends).
"Interest Period" shall mean, with respect to any Eurodollar
Term Loan, the period commencing on the first Business Day of each
month (or, in the case of the initial Interest Period or any other
Interest Period that does not commence on the first Business Day of any
month, the period commencing on such Business Day) and ending on the
first Business Day of the following month (or such shorter period as
the Administrative Agent may agree to in its sole discretion). Interest
shall accrue from and including the first day of an Interest Period to
but excluding the last day of such Interest Period.
"Investments" shall have the meaning assigned to such term in
Section 6.06.
"Lenders" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Leverage Ratio" shall mean, at any time, the ratio of (a)
Designated Debt (excluding deposits held by Depositary Institutions) at
such time to (b) Consolidated Tangible Net Worth (excluding Cumulative
Securitization Gains) at such time.
"LIBO Rate" shall mean, with respect to any Eurodollar Term
Loan, for any Interest Period, the rate appearing on Page 3750 of the
Dow Xxxxx Market Service (or on any successor or substitute page of
such Service, or any successor to or substitute for such Service,
providing rate quotations comparable to those currently provided on
such page of such Service, as determined by the Administrative Agent
from time to time for purposes of providing quotations of interest
rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, on the date that is two Business
Days prior to the commencement of such Interest Period by reference to
the British Bankers' Association Interest Settlement Rates for deposits
in dollars for a period equal to such Interest Period commencing on the
first day of such Interest Period; provided, however, that, to the
extent that an interest rate is not ascertainable, the "LIBO Rate"
shall be the interest rate per annum determined by the Administrative
Agent to be the average of the rates per annum at which deposits in
dollars are offered for such Interest Period commencing on the first
day of the such Interest Period to major banks in the London interbank
market in London, England by the Administrative Agent at approximately
11:00 a.m. (London time) on the date that is two Business Days prior to
the beginning of such Interest Period.
"Lien" shall mean, with respect to any asset, (a) any
mortgage, deed of trust, lien, pledge, encumbrance, charge or security
interest in or on such asset, (b) the interest of a vendor or a lessor
under any conditional sale agreement, capital lease or title retention
agreement relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to
such securities.
"Liquidity Amount" shall mean, with respect to the Borrower
and its Subsidiaries at any time, (a) the sum of (i) "Cash and cash
equivalents", (ii) "Liquidity reserve deposits" (or other restricted
cash), (iii) "Credit card loans held for sale", (iv) "Net credit card
loans" and (v) (A) 90% multiplied by (B) the portion of "Retained
interests in loans securitized" that constitutes the "Excess
transferor's interests" minus (b) the sum of (i) "Deposits" and (ii)
Indebtedness for borrowed money having scheduled principal payments or
a final maturity prior to the date that is 91 days after the Maturity
Date (other than the Indebtedness outstanding under this Agreement and
the other Loan Documents), in each case as such amounts would appear on
the Borrower's consolidated balance sheet as of such date in conformity
with GAAP consistently applied.
"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.
"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
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 such agreement may be amended, supplemented, modified or
restated from time to time.
"MasterCard" shall mean MasterCard International Incorporated.
"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 the third anniversary of the
Effective Date.
"MCS" shall mean Metris Card Services, Inc., a Delaware
corporation.
"MCS Pledge Agreement" shall mean the Pledge Agreement dated
as of the Effective Date, executed by MCS in favor of the Collateral
Agent (in the form of Exhibit D hereto), 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.
"MDI" shall mean Metris Direct, Inc., a Minnesota corporation.
"MDI Pledge Agreement" shall mean the Pledge Agreement dated
as of the Effective Date, executed by MDI in favor of the Collateral
Agent (in the form of Exhibit E hereto), 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.
"Metris Master Trust" shall mean (a) the Metris Master Trust
formed pursuant to the Master Trust Agreement and (b) 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, (a) with respect to any Series under the Metris Master
Trust (i) the Portfolio Yield for such Monthly Period minus (ii) the
Base Rate for such Monthly Period or (b) with respect to the Metris
Master Trust as a whole, (i) the weighted average Portfolio Yield for
all publicly issued Series under the Metris Master Trust for such
Monthly Period minus (ii) the weighted average Base Rate for all
publicly issued Series 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 Effective Date,
provided that with respect to any Series issued after the Effective
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 than the relevant definitions
existing on the Effective Date.
"Monthly Period" shall mean the period from and including the
first day of each calendar month 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" shall mean the aggregate cash proceeds received
by the Borrower or any Subsidiary in respect of any insurance
settlement, litigation award or 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 (a) 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), (b) any relocation expenses
incurred as a result thereof, (c) 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), (d) any
proceeds used by a Receivables Transfer Subsidiary in connection with a
Receivables Transfer Program and (e) 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 F 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 Loans when and as due, whether at maturity or upon any
Interest Payment Date, by acceleration, upon one or more dates set for
prepayment or otherwise, (b) all Fees, expenses, 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 Modified Operating
Agreement, dated as of December 11, 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 may be amended,
supplemented, modified or restated from time to time.
"Participant" shall have the meaning assigned to such term in
Section 9.04(f).
"PBGC" shall mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA.
"Permitted 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.
"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
and any other pledge agreements that may be executed pursuant to this
Agreement from time to time by the Borrower or any Subsidiary Guarantor
in favor of the Collateral Agent, for the ratable benefit of the
Lenders, as such agreements may be amended, supplemented, modified or
restated from time to time as permitted thereby or replaced by a
comparable agreement.
"Pledge Permitted Investments" shall have the meaning assigned
to such term in the Borrower Security Agreement.
"Prime Rate" shall mean the rate of interest per annum
publicly announced from time to time by the Administrative Agent or one
of its Affiliates as its prime rate in effect at its principal office
in New York City (or, in the absence of such rate, the rate that may be
published from time to time in The Wall Street Journal as the "Prime
Rate"). Each change in the Prime Rate shall be effective on the date
such change is publicly announced as being effective.
"Prior Credit Agreement" shall mean the Senior Secured Credit
Agreement dated as of June 5, 2003, among the Borrower, the lenders
party thereto and Deutsche Bank Trust Company Americas, as
administrative agent and collateral agent, as amended and restated by
the Amended and Restated Senior Secured Credit Agreement dated as of
June 18, 2003, as amended by First Amendment to Amended and Restated
Senior Secured Credit Agreement dated as of July 29, 2003, by Second
Amendment to Amended and Restated Senior Secured Credit Agreement dated
as of September 30, 2003, by Third Amendment to Amended and Restated
Senior Secured Credit Agreement dated as of November 19, 2003, by
Fourth Amendment to Amended and Restated Senior Secured Credit
Agreement dated as of December 19, 2003 and by Fifth Amendment to
Amended and Restated Senior Secured Credit Agreement dated as of
January 26, 2004.
"Prior Term Loan" shall mean the term loan under 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 any other Investments made
since the last day of such most recently ended fiscal quarter) and
related financings or other transactions had occurred on the first day
of the period for testing such compliance. If the amount of such
Investment or series of related Investments exceeds $5,000,000, then
the Borrower, prior to making such Investment or Investments, shall
deliver to the Administrative Agent an officers' certificate
demonstrating such compliance, together with all relevant financial
information for the Subsidiary or assets subject to such Investment or
Investments.
"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 (a) 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, as such
agreements may be amended, supplemented, modified or restated from time
to time, and (b) any other program under which the Borrower or any of
its Subsidiaries sell or transfer or may sell or transfer interests in
its Accounts (i) to one or more purchasers on a limited recourse basis
as determined in accordance with GAAP or (ii) 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 or any of its
Subsidiaries under clause (a) 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) that 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 three preceding Monthly Periods divided by three.
"Securities Account Control Agreement" shall mean a control
agreement, in a form reasonably satisfactory to the Collateral Agent,
among the applicable Loan Party, the Person with whom a 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
Securities Account Pledge Agreement dated as of the Effective Date,
made by the Borrower in favor of U.S. Bank National Association (in the
form of Exhibit G hereto), as such agreement may be amended,
supplemented, modified or restated or replaced from time to time as
permitted by Section 6.04.
"Security Interest Grantor" shall mean each Subsidiary of the
Borrower party to a Subsidiary Security Agreement.
"Senior Note Indebtedness" shall mean the Indebtedness of the
Borrower issued pursuant to the Senior Note Indenture.
"Senior Note Indenture" shall mean, collectively, (a) the
Indenture governing the Borrower's 10% Senior Notes due 2004 among the
Borrower, the guarantors parties thereto and the trustee named therein
and (b) the Indenture governing the Borrower's 10.125% Senior Notes due
2006 among the Borrower, the guarantors parties thereto and the trustee
named therein, as such Indentures may be amended, supplemented,
modified or restated from time to time as permitted thereby and by this
Agreement.
"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" shall mean 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 that 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).
"Statutory Reserves" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator
of which is the number one minus the aggregate of the maximum reserve
percentages (including any marginal, special, emergency or supplemental
reserves) expressed as a decimal established by the Board and any other
banking authority, domestic or foreign, to which any Lender (including
any branch, Affiliate, or other fronting office making or holding a
Loan) is subject for Eurocurrency Liabilities (as defined in Regulation
D of the Board). Eurodollar Term Loans shall be deemed to constitute
Eurocurrency Liabilities (as defined in Regulation D of the Board) and
to be subject to such reserve requirements without benefit of or credit
for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D. Statutory Reserves shall be
adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"Subsidiary" shall mean, with respect to any Person (the
"parent") at any date, any corporation, limited liability company,
partnership, association or other entity the accounts of which would be
consolidated with those of the parent in the parent's consolidated
financial statements if such financial statements were prepared in
accordance with GAAP as of such date, as well as any other corporation,
limited liability company, partnership, association or other entity (a)
of which securities or other ownership interests representing more than
50% of the equity or more than 50% of the ordinary voting power or, in
the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, controlled or held, or (b) that
is, as of such date, otherwise Controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent, other than, in the case of the Borrower,
the Metris Master Trust.
"Subsidiary Guarantors" shall mean each Subsidiary of the
Borrower party to a Subsidiary Guaranty.
"Subsidiary Guaranty" shall mean each Subsidiary Guaranty that
may be executed from time to time pursuant to this Agreement by a
Subsidiary Guarantor, substantially in the form of Exhibit H, in each
case as any such agreement may be amended, supplemented, modified or
restated from time to time as permitted thereby or replaced by a
comparable agreement.
"Subsidiary Security Agreement" shall mean each Subsidiary
Security Agreement that may be executed from time to time pursuant to
this Agreement by a Security Interest Grantor, substantially in the
form of Exhibit I hereto, in each case as any 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.
"Taxes" shall have the meaning given such term in Section
2.13(a).
"Term Loans" shall mean the loans extended by the Lenders to
the Borrower pursuant to Article II of 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 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.
"Voting Stock" of any Person as of any date shall mean 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".
In connection with references to dates, unless the context otherwise requires,
the words "from" shall mean from and including the date specified, the word "to"
shall mean to but excluding the date specified, and the word "through" shall
mean through and including the date specified. 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. Eurodollar Term Loans. Subject to Sections 2.07, 2.14 and
2.15, the Term Loans shall be comprised entirely of Eurodollar Term Loans.
Section 2.03. Fees.
(a) On the Effective Date, each Lender shall be paid an upfront
fee equal to 1.00% of the initial principal amount of its Term Loan.
Each Lender shall be entitled to offset its funding of its Term Loan
by the amount of such upfront fee.
(b) All Fees shall be paid on the dates due, in immediately
available funds, to the Lenders, the Administrative Agent or the
Collateral Agent, as applicable, in accordance with the Fee Letter or
this Agreement, as applicable.
Section 2.04. Evidence of Debt; Repayment of Term Loans.
(a) 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 each 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. 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 any Term Loan in accordance with its terms.
(b) The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Lender the then unpaid
principal amount of its Term Loan together with all other outstanding
Obligations on the Maturity Date.
(c) Any Lender may request that Term Loans made by it hereunder
be evidenced by a Note, substantially in the form of Exhibit F. In
such event, the Borrower shall execute and deliver to such Lender a
Note payable to such Lender and its registered assigns.
Notwithstanding any other provision of this Agreement, in the event
any Lender shall request and receive a Note, the interests represented
by such Note shall at all times (including after any assignment of all
or part of such interests pursuant to Section 9.04) be represented by
one or more Notes payable to the payee named therein or its registered
assigns.
Section 2.05. Interest on Term Loans. Subject to the provisions of
Sections 2.06 and 2.07, the Term Loans 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 Adjusted LIBO Rate for the applicable Interest Period
plus 9.50%. Interest on the Term Loans shall be payable in arrears on each
Interest Payment Date. The applicable Adjusted LIBO Rate for each Interest
Period or day within an Interest Period, as the case may be, shall be determined
by the Administrative Agent in accordance with the applicable provisions hereof,
and such determination shall be conclusive absent manifest error.
Section 2.06. Default Interest; Increased Interest.
(a) If the Borrower shall default in the payment of the principal
of or interest on any Term Loan or any other amount becoming due
hereunder, by acceleration or otherwise, or under any other Loan
Document, the Borrower shall on demand from time to time pay interest,
to the extent permitted by law, on such defaulted amount to but
excluding the date of actual payment (after as well as before
judgment) (a) in the case of overdue principal, at the rate otherwise
applicable to such Term Loan pursuant to Section 2.05 or 2.07 plus
2.00% per annum and (b) in all other cases, at a rate per annum
(computed on the basis of the actual number of days elapsed over a
year of 365 or 366 days, as the case may be, when determined by
reference to the Prime Rate and over a year of 360 days at all other
times) equal to the rate that would be applicable to an ABR Term Loan
plus 2.00%.
(b) If the Rolling Three Month Average Excess Spread Percentage
shall be less than the Applicable Trigger Percentage for the Metris
Master Trust as a whole, then the Term Loans 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 the rate otherwise applicable to such Term
Loan pursuant to Section 2.05 or 2.07 plus 2.00% per annum (for the
purposes of this Section 2.06(b), the "Increased Rate"). The minimum
time period that each Term Loan shall bear interest at the applicable
Increased 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 the Applicable Trigger Percentage, then
the Increased Rate shall no longer apply unless and until the Rolling
Three Month Average Excess Spread Percentage shall again go below the
Applicable Trigger Percentage.
(c) In no event will the interest rate applicable to any Term
Loan be increased pursuant to both Sections 2.06(a) and (b)
simultaneously (it being understood that the maximum additional
interest payable with respect to the Term Loans, whether as a result
of Section 2.06(a) or (b), will be 2.00% or, if less, the maximum rate
permitted by applicable law).
Section 2.07. Alternate Rate of Interest. In the event, and on each
occasion, that (a) on the day two Business Days prior to the commencement of any
Interest Period for the Eurodollar Term Loans the Administrative Agent shall
have determined that, or shall have received notice from the Required Lenders
that, (i) dollar deposits in the principal amounts of the Term Loans are not
generally available in the London interbank market, (ii) the rates at which such
dollar deposits are being offered will not adequately and fairly reflect the
cost to the Lenders of making or maintaining their Term Loans during such
Interest Period or (iii) reasonable means do not exist for ascertaining the
Adjusted LIBO Rate or (b) an Interest Period would end after the Maturity Date,
the Administrative Agent shall, as soon as practicable thereafter, give notice
of such determination to the Borrower and the Lenders. In the event of any such
determination, until the Administrative Agent shall have advised the Borrower
and the Lenders that the circumstances giving rise to such notice no longer
exist, the Term Loans shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 365 or 366 days, as the case may be, when
the Alternate Base Rate is determined by reference to the Prime Rate and over a
year of 360 days at all other times) at a rate per annum equal to the Alternate
Base Rate plus 8.50%. Each determination by the Administrative Agent under this
Section 2.07 shall be conclusive absent manifest error. The applicable Alternate
Base Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
Section 2.08. Optional Prepayments. The Borrower shall have the right at
any time and from time to time to prepay the Term Loans, 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 sum
of (a) the principal amount of the Term Loans being so prepaid, (b) interest
accrued at the applicable interest rate on such prepaid principal amount to the
date of prepayment, (c) any amounts due under Section 2.16 as a result of such
prepayment and (d) a prepayment premium equal to (i) five percent (5%) of the
principal amount prepaid if prepaid during the period from the Effective Date to
the first anniversary of the Effective Date, (ii) four percent (4%) of the
principal amount prepaid if prepaid during the period from the first anniversary
of the Effective Date to the second anniversary of the Effective Date or (iii)
two percent (2%) of the principal amount prepaid if prepaid during the period
from the second anniversary of the Effective Date to the date that is 30 months
after the Effective Date. No optional prepayment premium with respect to the
Term Loans shall be payable if the principal amount prepaid is prepaid on or
after the date that is 30 months after the Effective Date. Each Lender
acknowledges that same day payment by the Administrative Agent to such 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.
Section 2.09. Mandatory Prepayments.
(a) Subject to the provisions of Section 2.09(c), the Borrower
shall, within one Business Day of the occurrence of any of the
following events, prepay the Term Loans in an amount equal to:
(i) 100% of the Net Proceeds from (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) 75% of the Net Proceeds from any sale of assets
(other than Excluded Asset Sales) by the Borrower or any
Subsidiary; provided, however, that the Borrower shall not be
required to prepay the Term Loans unless, and then only to the
extent that, the Net Proceeds from the sale of assets in any
fiscal year exceeds $10,000,000.
(b) All prepayments under this Section 2.09 shall be accompanied
by (i) interest accrued at the applicable interest rate on such
prepaid principal amount to the date of prepayment and (ii) any
amounts due under Section 2.16 as a result of such prepayment;
provided, however, that, in the event any amounts would be due under
Section 2.16 as a result of such prepayment, the Borrower may elect to
prepay the Term Loans on the next scheduled Interest Payment Date (or,
if earlier, the Maturity Date) (subject to the requirement to deposit
any Net Proceeds in trust with the Collateral Agent as set forth in
Section 2.09(c)). The Borrower shall deliver prior written notice to
the Administrative Agent of any sale of assets (other than Excluded
Asset Sales) in which the Borrower or its Subsidiaries will receive
Net Proceeds in excess of $100,000, including sales that would not
otherwise cause a prepayment because of the $10,000,000 annual
exception.
(c) Any Lender may elect, by written notice to the Administrative
Agent by telecopy (confirmed by telephone) at least one Business Day
prior to a mandatory prepayment date, to decline all or any portion of
any prepayment of its Term Loans pursuant to this Section 2.09, in
which case the aggregate amount of the prepayment that would have been
applied to prepay such Lender's Term Loan but was so declined shall be
applied to prepay other Term Loans on a pro rata basis (subject to the
right of any Lender to reject any such additional prepayment). The
Borrower shall provide at least three Business Days' notice (to the
extent possible) to the Administrative Agent of any event that is
reasonably likely to result in a mandatory prepayment under this
Section 2.09. Notwithstanding the foregoing, any amounts received by
the Borrower that would be required to be used to prepay the Term
Loans in connection with a mandatory prepayment (calculated assuming
all Lenders fully accept any such mandatory prepayment) shall be
deposited in trust, within one Business Day of the occurrence of the
applicable prepayment event, with the Collateral Agent pending
allocation to the Lenders. So long as no Default or Event of Default
shall have occurred and be continuing, any amounts not used to prepay
Term Loans pursuant to this Section 2.09 shall be returned to the
Borrower following the completion of the applicable mandatory
prepayment. Any rejection of a mandatory prepayment by any Lender
shall not be deemed to be a waiver of any Default or Event of Default.
Section 2.10. Pro Rata Treatment. If at any time insufficient funds are
received by and available to the Administrative Agent to pay fully all amounts
of principal, interest, premium, Fees and any other amounts due under this
Agreement or any other Loan Document, such funds shall be applied (a) first,
towards payment of interest, premium, Fees and any other amounts (other than
principal) then due under this Agreement or the other Loan Documents, ratably
among the parties entitled thereto in accordance with the amounts of interest,
premium, Fees or such other amounts then due to such parties and (b) second,
towards payment of principal then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal then due to such
parties.
Section 2.11. 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 Loans 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 Loans 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 Loans 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 2.11
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 any 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 2.12. Payments.
(a) The Borrower shall make each payment (including principal of
or interest or premium on the Term Loans 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 premium or
interest on the Term Loans 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 2.13. Taxes.
(a) Any and all payments by the Borrower hereunder shall be made,
in accordance with this Section 2.13, 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, (x) 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 2.13) 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, (y) the Borrower shall make such
deductions and (z) the Borrower shall pay the full amount deducted to
the relevant taxing authority or other Governmental Authority in
accordance with applicable law; provided, however, that the Borrower
shall not be required to increase any such amounts payable to any
Lender with respect to any Taxes (A) that are attributable to such
Lender's failure to comply with the requirements of paragraph (f) of
this Section or (B) 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 2.13(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 that 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 2.13. 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
2.13, 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 2.13 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 2.13 shall survive the payment in full of the principal of and
interest on the Term Loans made hereunder.
(f) Each Lender or Participant that is not a United States person
as defined in Section 7701(a)(30) of the Code (a "Non-U.S. Lender")
shall, on or before the date it becomes a party to this Agreement or a
Participant, as the case may be, deliver to the Borrower and the
Administrative Agent, Internal Revenue Service Form W-8BEN, 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
J, 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 the Borrower
of such inability.
(g) Any Lender claiming any additional amounts payable pursuant
to this Section 2.13 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) 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.
Section 2.14. Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision of this Agreement, if any
Change in Law shall impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets of, deposits
with or for the account of or credit extended by any Lender (except
any such reserve requirement which is reflected in the Adjusted LIBO
Rate) or shall impose on such Lender or the London interbank market
any other condition affecting this Agreement or Eurodollar Term Loans
made by such Lender, and the result of any of the foregoing shall be
to increase the cost to such Lender of making or maintaining any
Eurodollar Term Loan or to reduce the amount of any sum received or
receivable by such Lender hereunder (whether of principal, interest or
otherwise) by an amount reasonably deemed by such Lender to be
material, then the Borrower will pay to such Lender upon demand such
additional amount or amounts as will compensate such Lender for such
additional costs incurred or reduction suffered.
(b) If any Lender shall have determined that any Change in Law
regarding capital adequacy has or would have the effect of reducing
the rate of return on such Lender's capital or on the capital of such
Lender's holding company, if any, as a consequence of this Agreement
or the Term Loans made by such Lender pursuant hereto to a level below
that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such
Lender's policies and the policies of such Lender's holding company
with respect to capital adequacy) by an amount deemed by such Lender
to be material, then from time to time the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such
Lender or such Lender's holding company for any such reduction
suffered.
(c) A certificate of a Lender setting forth in reasonable detail
a calculation of the amount or amounts necessary to compensate such
Lender or its holding company as specified in paragraph (a) or (b)
above shall be delivered to the Borrower and shall be conclusive
absent manifest error. The Borrower shall pay such Lender the amount
shown as due on any such certificate delivered by it within ten days
after its receipt of the same.
(d) Failure or delay on the part of any Lender to demand
compensation for any increased costs or reduction in amounts received
or receivable or reduction in return on capital shall not constitute a
waiver of such Lender's right to demand such compensation; provided,
however, that the Borrower shall not be under any obligation to
compensate any Lender under paragraph (a) or (b) above with respect to
increased costs or reductions with respect to any period prior to the
date that is 120 days prior to such request if such Lender knew or
could reasonably have been expected to know of the circumstances
giving rise to such increased costs or reductions and of the fact that
such circumstances would result in a claim for increased compensation
by reason of such increased costs or reductions. The protection of
this Section 2.14 shall be available to each Lender regardless of any
possible contention of the invalidity or inapplicability of the Change
in Law that shall have occurred or been imposed.
Section 2.15. Change in Legality.
(a) Notwithstanding any other provision of this Agreement, if any
Change in Law shall make it unlawful for any Lender to make or
maintain any Eurodollar Term Loan or to give effect to its obligations
as contemplated hereby with respect to any Eurodollar Term Loan, then,
by written notice to the Borrower and to the Administrative Agent,
such Lender may require that all outstanding Eurodollar Term Loans
made by it be converted to ABR Term Loans, in which event all such
Eurodollar Term Loans shall be automatically converted to ABR Term
Loans as of the effective date of such notice as provided in paragraph
(b) below.
(b) For purposes of this Section 2.15, a notice to the Borrower
by any Lender shall be effective as to each Eurodollar Term Loan made
by such Lender, if lawful, on the last day of the Interest Period then
applicable to such Eurodollar Term Loan or, if earlier, on the last
day on which such Lender may lawfully maintain Eurodollar Term Loans.
Section 2.16. Indemnity. The Borrower shall indemnify each Lender
against any loss or expense that such Lender may sustain or incur as a
consequence of (a) any event, other than a default by such Lender in the
performance of its obligations hereunder, which results in (i) such Lender
receiving or being deemed to receive any amount on account of the principal of
any Eurodollar Term Loan prior to the end of the Interest Period in effect
therefor, (ii) the conversion of any Eurodollar Term Loan to an ABR Term Loan,
or the conversion of the Interest Period with respect to any Eurodollar Term
Loan, in each case other than on the last day of the Interest Period in effect
therefor, or (iii) any Eurodollar Term Loan to be made by such Lender not being
made after notice of such Eurodollar Term Loan shall have been given by the
Borrower hereunder (any of the events referred to in this clause (a) being
called a "Breakage Event") or (b) any default in the making of any payment or
prepayment required to be made hereunder, except to the extent any such loss or
expense is the result of the gross negligence or willful misconduct of the
Administrative Agent. In the case of any Breakage Event, such loss shall include
an amount equal to the excess, as reasonably determined by such Lender, of (A)
its cost of obtaining funds for the Eurodollar Term Loan that is the subject of
such Breakage Event for the period from the date of such Breakage Event to the
last day of the Interest Period in effect (or that would have been in effect)
for such Eurodollar Term Loan over (B) the amount of interest reasonably likely
to be realized by such Lender in redeploying the funds released or not utilized
by reason of such Breakage Event for such period. A certificate of any Lender
setting forth in reasonable detail a calculation of any amount or amounts which
such Lender is entitled to receive pursuant to this Section 2.16 shall be
delivered to the Borrower and shall be conclusive absent manifest error.
Section 2.17. Assignment of Term Loans Under Certain Circumstances.
(a) In the event (i) any Lender delivers a certificate requesting
compensation pursuant to Section 2.14, (ii) any Lender delivers a
notice described in Section 2.15 or (iii) the Borrower is required to
pay any additional amount to any Lender or any Governmental Authority
on account of any Lender pursuant to Section 2.13, the Borrower may,
at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to transfer and assign,
without recourse (in accordance with and subject to the restrictions
contained in Section 9.04), all of its interests, rights and
obligations under this Agreement to an assignee that shall assume such
assigned obligations (which assignee may be another Lender, if a
Lender accepts such assignment), provided that (x) such assignment
shall not conflict with any law, rule or regulation or order of any
court or other Governmental Authority having jurisdiction and (y) such
Lender shall have received payment of an amount equal to the
outstanding principal of its Term Loans, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts).
(b) If (i) any Lender shall request compensation under Section
2.14, (ii) any Lender delivers a notice described in Section 2.15 or
(iii) the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority on account of any Lender pursuant
to Section 2.13, then such Lender shall use reasonable efforts (which
shall not require such Lender to incur an unreimbursed loss or
unreimbursed cost or expense or otherwise take any action inconsistent
with its internal policies or legal or regulatory restrictions or
suffer any disadvantage or burden reasonably deemed by it to be
significant) (x) to file any certificate or document reasonably
requested in writing by the Borrower or (y) to assign its rights and
delegate and transfer its obligations hereunder to another of its
offices, branches or affiliates, if such filing or assignment would
reduce its claims for compensation under Section 2.14 or enable it to
withdraw its notice pursuant to Section 2.15 or would reduce amounts
payable pursuant to Section 2.13, as the case may be, in the future.
The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such filing or
assignment, delegation and transfer.
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 of the Term Loans (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 as of and for the fiscal year ended December 31, 2003,
audited by and accompanied by the opinion of KPMG LLP, independent
public accountants. 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 December 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 at least three Business Days prior
to the Effective Date,
(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 Loans 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 Loans as set forth in the recitals to this Agreement.
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 the 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 the Borrower or any ERISA
Affiliate to be, incurred by the Borrower or any ERISA Affiliate. None of the
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 the Borrower, or ERISA
Affiliate to be imposed on the assets of the Borrower or any member ERISA
Affiliate. The Borrower is not a party to any collective bargaining agreement.
Neither the 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 date
hereof, the Borrower is not 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
the Borrower will constitute "plan assets" of one or more such plans for
purposes of Title I of ERISA. As of the date hereof, the Borrower is not a
"governmental plan" within the meaning of Section 3(3) of ERISA and the Borrower
will not be subject to state statutes applicable to the Borrower regulating
investments and fiduciary obligations, of the 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.
(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(b), and execution and delivery of the
control agreements included in the Collateral Documents (subject to
Section 5.12(a)), 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 Liens permitted by
this Agreement.
(c) Schedule 3.18(c) lists each deposit account and securities
account held by, or maintained for the benefit of, any Loan Party as
of the date hereof.
Section 3.19. Permitted Debt under Senior Note Indenture. The Loan
Documents and the Indebtedness and other Obligations created under the Loan
Documents constitute "Permitted Debt" within the meaning of the Senior Note
Indenture. For purposes of the Senior Note Indenture, including the definition
of "Credit Agreement" therein, this Agreement constitutes a replacement of such
Credit Agreement.
Section 3.20. Regulatory Compliance. The Borrower, and each Subsidiary
that is a party thereto, are in full compliance with the OCC Agreement.
ARTICLE IV
CONDITIONS OF LENDING
Section 4.01. Conditions to Effectiveness. This Agreement shall become
effective on the date (the "Effective Date"), and the obligation of any Lender
to fund its 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 May 6, 2004):
(a) The Administrative Agent shall have received this Agreement
and the Subsidiary Guaranties to be delivered on the Effective Date
executed and delivered by a duly authorized officer of the relevant
Loan Parties and each other party thereto. The Collateral Agent shall
have received each of the Collateral Documents (including certificates
for all pledged shares of stock and related stock powers or form
powers of attorney) to be delivered on the Effective Date executed and
delivered by a duly authorized officer of the relevant Loan Parties.
Lenders' counsel shall have received UCC financing statements covering
all of the Collateral.
(b) The Administrative Agent 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.
(c) The Administrative Agent shall have received true and
complete copies of the certificate of incorporation or similar
organizational document of each Loan Party, certified as of a recent
date by the applicable secretary of state or equivalent governmental
entity. The Administrative Agent shall have received a "long form"
certificate of good standing from the applicable secretary of state or
equivalent governmental entity for each Loan Party dated as of a
recent date. The Administrative Agent 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 or Excluded Subsidiary.
(d) The Administrative Agent shall have received an executed
legal opinion of general counsel to the Borrower, in the form of
Exhibit K hereto.
(e) The Administrative Agent shall have received an executed
legal opinion of Xxxxxx & Xxxxxxx LLP, special counsel to the
Borrower, in the form of Exhibit L hereto.
(f) All consents and approvals necessary to be obtained from any
Governmental Authority or other Person in connection with the
financing contemplated hereby and the continuing operation of the
Borrower and its Subsidiaries shall have been obtained and be in full
force and effect, and all applicable waiting periods and appeal
periods shall have expired, in each case without the imposition of any
burdensome conditions.
(g) Lenders' counsel 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.
(h) The Borrower shall have previously paid all of the principal,
interest, performance payments (including accelerated performance
payments), make-whole payments, fees and expenses accrued and
otherwise outstanding under the Prior Credit Agreement. The Lenders,
the Administrative Agent and the Collateral Agent shall have received
all Fees (due and payable pursuant to this Agreement and the Fee
Letter) and other amounts due and payable on or prior to the Effective
Date, including, to the extent invoiced, reimbursement or payment of
all out-of-pocket expenses (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.
(i) No Trust Pay Out Event, Series 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.
(j) 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 Loans.
(k) No default or event of default shall exist under the Senior
Note Indenture or any other material Indebtedness of the Borrower and
the Subsidiaries.
(l) The Agents and Lenders shall have received such additional
documents, information and materials as they may reasonably request.
(m) The Collateral Agent shall have received from the Borrower a
copy of the Securities Account Pledge Agreement, and all Schedules and
Exhibits thereto, each of which shall be in form and substance
satisfactory to the Lenders.
(n) The Administrative Agent shall have received from the
Borrower a solvency certificate executed by a Financial Officer of the
Borrower, in form and substance satisfactory to the Lenders.
(o) The Administrative Agent shall have received from the
Borrower certified copies of (i) all indentures to the Senior Note
Indebtedness and (ii) the agreements identified in clause (a) of the
definition of the Receivables Transfer Program, in each case certified
as of the Effective Date.
(p) The Administrative Agent shall have received from the
Borrower a certificate of the Borrower's Financial Officer (i)
certifying that the attached covenant calculation certificate attached
thereto demonstrates compliance with the covenants set forth in
Section 6.01 as of March 31, 2004 and (ii) certifying that the
financial statements of DMCCB as of December 31, 2003, as publicly
published, were prepared in accordance with applicable regulatory
accounting principles and are true, accurate and complete. The
Administrative Agent shall have received from the Borrower a
certificate of the Borrower's Responsible Officer that the
representations and warranties set forth in this Agreement or in any
other Loan Document are true, accurate and complete as of the
Effective Date (except to the extent that any such representations or
warranties expressly apply to an earlier date, in which case such
certification shall be as of such earlier date).
(q) The Borrower shall simultaneously issue an irrevocable
redemption notice to the trustee for all of its outstanding 10% Senior
Notes due 2004, on the terms specified therefor under the applicable
Senior Note Indenture.
(r) The cash, cash equivalents and other assets, if any, held in
the Credit Agreement Reserve Securities Account (as defined in the
Prior Credit Agreement) shall have been transferred to a deposit
account or a securities account that is subject to a Deposit Account
Control Agreement or Securities Account Control Agreement, as
applicable.
(s) Lenders' counsel shall have received a payoff letter with
respect to the Prior Credit Agreement, and such payoff letter shall be
reasonably satisfactory to Lenders' counsel.
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
or premium on the Term Loans, any Fees, 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 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
(i) as otherwise expressly permitted under Section 6.05 and (ii)
Immaterial Subsidiaries may be liquidated or dissolved if the Borrower
reasonably determines that doing so would not be disadvantageous to
the Lenders in any material respect.
(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 (i) as permitted
pursuant to Section 6.05 and (ii) with respect to Immaterial
Subsidiaries, where the Borrower reasonably determines that the
failure to take any such action would not be disadvantageous to the
Lenders in any material respect); 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) (i) 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 (ii)
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) except
to the extent prohibited by applicable law or regulation, 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 and 5.04(f)-2; and
(g) as soon as reasonably practicable, from time to time, such
other information regarding the operations, business affairs and
financial condition of the Borrower or any Subsidiary, or compliance
with the terms of any Loan Document, as the Administrative Agent or
any Lender may reasonably request.
Section 5.05. Litigation and Other Notices. Furnish to the
Administrative Agent prompt written notice of the following promptly after a
Responsible Officer of the Borrower or any Subsidiary becomes aware of the same:
(a) any Event of Default or Default (provided that, in the case
of a Default, such notice may be oral, unless requested to be in
writing by the Administrative Agent), specifying the nature and extent
thereof and the corrective action (if any) proposed to be taken with
respect thereto;
(b) the filing or commencement of, or receipt of notice of
intention of any Person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any
Governmental Authority, against the Borrower or any Affiliate thereof
which would be materially likely to result in a Material Adverse
Effect;
(c) 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
(d) 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 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 the 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 the Borrower with
respect to an Employee Benefit Plan which includes a qualified
accountant's opinion, in any such case in clause (v) which could
result in a liability in excess of $500,000 either alone or in the
aggregate.
(b) Deliver to the Administrative Agent such certifications or other
evidence from time to time throughout the term of the Term Loans, as
reasonably requested by the Administrative Agent or any Lender in its
sole discretion, that (i) the 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) the Borrower is not subject to state statutes applicable
to the Borrower regulating investments and fiduciary obligations of the
Borrower with respect to governmental plans and (iii) at least one of
the following circumstances is true:
(A) Equity interests in Borrower are publicly offered
securities, within the meaning of 29 C.F.R. ss.
2510.3-101(b)(2);
(B) Less then 25 percent of each outstanding class of
equity interests in the Borrower are held by "benefit plan
investors" within the meaning of 29 C.F.R. ss.
2510.3-101(f)(2); or
(C) The 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 5.07 shall be made through and
coordinated by the Agents 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 such 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 H 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. Furnish to the
Collateral Agent prompt written notice of any change (a) 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, (b) in the jurisdiction of
organization or formation of any Loan Party, (c) in any Loan Party's identity or
corporate structure or (d) 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 or
related to 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 (a) at least "adequately capitalized" for
purposes of 12 U.S.C. ss.1831o, as amended, 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 (b) 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. Deposit and Securities Accounts.
(a) With respect to each account specified on Schedule 5.12(a),
within 30 days of the Effective Date, the Borrower shall either (i)
cause such account to become subject to a control agreement, in form
and substance reasonably satisfactory to the Collateral Agent, or (ii)
close such account. Prior to taking the action specified in the prior
sentence, each account listed on Schedule 5.12(a) shall be a
"zero-balance account" or a "controlled disbursement account" (i.e.,
any balance remaining in any such account as of the end of any day
shall be transferred at the end of such day to another account of the
Borrower or any Subsidiary that is subject to a control agreement in
favor of the Collateral Agent). In addition, at no time shall the
amount of cash or other assets deposited or transferred into the
accounts set forth on Schedule 5.12(a) (until such accounts become
subject to control agreements as set forth above) exceed, in the
aggregate, $5 million on any day or $10 million in any calendar month.
(b) With respect to each account specified on Schedule 5.12(b),
within 30 days of the Effective Date, the Borrower shall either (i)
cause such account to become subject to a control agreement, in form
and substance reasonably satisfactory to the Collateral Agent, or (ii)
close such account. The Borrower shall not, and shall not permit any
Subsidiary to, deposit or transfer any cash or other assets into any
account listed on Schedule 5.12(b) until such account becomes subject
to a control agreement as set forth above. In addition, at no time
shall the amount of cash or other assets on deposit in the accounts
set forth on Schedule 5.12(b) (until such accounts become subject to
control agreements as set forth above) exceed, in the aggregate, $2
million at any time.
(c) With respect to the Borrower and each Subsidiary (other than
an Excluded Subsidiary), deliver a control agreement, in form and
substance reasonably satisfactory to the Collateral Agent, prior to
the establishment of any deposit account or securities account
established on or after the Effective Date, other than (i) deposit
accounts or securities accounts exclusively related to Receivables
Transfer Programs and (ii) only to the extent of the first Five
Hundred Thousand Dollars ($500,000) credited thereto, that certain
securities account described as Money Market Fund A/C 5820-1737 held
by U.S. Bancorp in the name of Metris Warranty Services of Florida,
Inc., or any replacement thereof (the "MWSF Regulatory Compliance
Account"). The Borrower agrees to promptly delivery or cause to be
delivered to the Administrative Agent a copy of all statements,
confirmations and correspondence concerning the MWSF Regulatory
Compliance Account.
(d) Within seven days of the Effective Date, the Borrower will
deposit an amount of net proceeds of the Term Loans equal to the
amount required to redeem such securities, including accrued and
unpaid interest to the date of redemption and any applicable premium,
into an account under the exclusive control of the Collateral Agent
pending such redemption.
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
or premium on the Term Loans, 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 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 6%.
(d) 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.
(e) 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%.
(f) Available Liquidity Covenant. In the case of the Borrower,
permit the Liquidity Amount to be less than $325,000,000 at any time.
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
at any one time outstanding not to exceed (A) $250,000,000 until the
earlier of (x) the redemption of the Borrower's 10% Notes due 2004 and
(y) June 30, 2004, and (B) $150,000,000 thereafter 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), other than
Indebtedness under the Senior Note Indenture relating to the
Borrower's 10% Senior Notes due 2004, (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 respect of 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 the Borrower and its Subsidiaries
maturing on or after the date that is 91 days after the Maturity Date
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, however,
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, however, 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).
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 and (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) and 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 or other obligations of
the Borrower or any Subsidiary, so long as after giving effect thereto
the aggregate outstanding principal amount of Indebtedness or other
obligations secured by such Liens under this Section 6.03(i) does not
exceed $10,000,000 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 $16,500,000 (which $16,500,000 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); and
(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; provided, however,
that the Borrower may amend the Securities Account Pledge Agreement to provide
for the issuance of letters of credit up to $15,000,000 in aggregate stated
amount and to provide for cash collateralization therefor in amount not in
excess of 110% of the stated amount of outstanding letters of credit.
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
or a Wholly Owned Subsidiary Guarantor in a transaction in which the
Borrower or a Wholly Owned Subsidiary Guarantor is the surviving
corporation or (B) transfer assets to the Borrower or to a Security
Interest Grantor that is a Wholly Owned Subsidiary 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 (A) in which no
Person other than the Borrower or a Wholly Owned Subsidiary Guarantor
receives any consideration and (B) 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, however, 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, however, 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 (A) any amounts
required under the OCC Agreement and (B) 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, 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, however, that the aggregate
amount of Investments made by the Borrower and its Subsidiaries 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, however, 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 may be 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) the Borrower may distribute rights to all of its
shareholders and may purchase, redeem or otherwise acquire
or retire equity interests issued pursuant to any
shareholder rights plan of the Borrower, as the same may be
adopted, amended, supplemented, modified or restated from
time to time or replaced by a comparable agreement, provided
that the aggregate amount of the Restricted Payments made
pursuant to this clause (iv) after the Effective Date does
not exceed $1,000,000,
(v) the Borrower may make declare and pay dividends,
provided that the aggregate amount of such dividend (A)
shall be allowed under existing law, (B) shall not cause a
default or event of default under the Senior Note Indenture
or any other material Indebtedness and (C) shall not exceed
$.01 per share of the Borrower's Capital Stock in any fiscal
quarter or $4,000,000 in any fiscal year, and
(vi) the Borrower may issue 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) 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, however, that the aggregate
fair market value of all assets sold, transferred or otherwise
disposed of in reliance upon this clause (c) 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, however, 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 2.09; provided further, however, that such 85% cash
requirement shall not apply to sales, transfers, leases and other dispositions
that constitute Excluded Asset Sales. The notice provisions of Section 2.09
shall apply with respect to any sale under this Section 6.08.
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 Administrative Agent 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 (a) the payment of dividends or other distributions by
any Subsidiary or (b) the making of advances or other cash payments by any
Subsidiary to the Borrower, except, in either case, (i) as specifically set
forth in this Agreement, (ii) as may be required under a Receivables Transfer
Program with respect to the frequency of dividends from any Receivables Transfer
Subsidiary or (iii) 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
Subsidiary Guarantor, its obligations under the applicable Subsidiary Guaranty,
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, (g) any restrictions on encumbrances on property
imposed by applicable requirements of law, the OCC Agreement or by any Bank
Regulatory Authority and (h) the restrictions applicable to the MWSF Regulatory
Compliance Account (as defined in Section 5.12 hereof), provided that the
Borrower shall not, nor shall it permit or cause any Subsidiary to, xxxxx x Xxxx
on the MWSF Regulatory Compliance Account or any property or deposit therein or
credited thereto, except to the Collateral Agent to the extent permitted by
applicable laws and regulations.
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 (a) 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 (b) in the
case of the Borrower or any other Subsidiary, (i) 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 (ii) 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 (b)(i).
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 (a) to a Receivables Transfer Subsidiary whose Capital Stock has
been pledged pursuant to a Pledge Agreement, (b) directly into a Receivables
Transfer Program, (c) to a Subsidiary Guarantor or (d) as permitted by Section
6.08(d), (e) and (f).
Section 6.16. Employee Benefit Plans. The 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 any
Term Loan when and as the same shall become due and payable, whether
at the due date thereof or at a date fixed for prepayment thereof or
by acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on any
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 (3) 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(d) 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 (other
than Section 5.05(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) (i)(A) 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, however, that this clause (A) 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 (B)
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)(A) of this paragraph (h); (ii) an involuntary
proceeding shall be commenced or an involuntary petition shall be
filed in a court of competent jurisdiction seeking (A) 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, (B) 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 (C) 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;
(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, event of default, early 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) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other such ERISA
Events, could reasonably be expected to result in liability of the
Borrower and its ERISA Affiliates in an aggregate amount exceeding
$5,000,000;
(m) 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);
(n) a Change in Control shall occur;
(o) (i) 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; or
(p) 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 (ii) 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 Loans then outstanding to be forthwith due and payable in whole
or in part, whereupon the principal of the Term Loans so declared to be due and
payable, together with accrued interest thereon and any unpaid accrued Fees and
all other liabilities of the Borrower accrued hereunder and under any other Loan
Document, shall become forthwith due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived by the Borrower, anything contained herein or in any other Loan Document
to the contrary notwithstanding; and in any event with respect to the Borrower
described in clause (ii) of paragraph (h) or in paragraph (i) or (j) above, the
principal of the Term Loans then outstanding, together with accrued interest
thereon and any unpaid accrued Fees and all other liabilities of the Borrower
accrued hereunder and under any other Loan Document, shall automatically become
due and payable, without presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived by the Borrower, anything
contained herein or in any other Loan Document to the contrary notwithstanding.
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 any 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, (i) to receive on
behalf of the Lenders all payments of principal of and interest on the
Term Loans 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, (ii) 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, (iii) 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 (iv) 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, (A) 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, (B) 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 that 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, (C) 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 (D) 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 Loans 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 Loans. 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, however, 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.
(n) Each of the parties hereto acknowledges and agrees that the
Collateral Agent and its affiliates are permitted to receive
compensation that could be deemed to be in such Agent's economic
self-interest for (i) serving as investment adviser, administrator,
shareholder servicing agent, custodian or sub-custodian with respect
to certain of the Permitted Investments, (ii) using affiliates to
effect transactions in certain Permitted Investments and (iii)
effecting transactions in Permitted Investments.
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. (000) 000-0000);
(b) if to the Administrative 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);
(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 Loans, regardless of any investigation made by the Lenders or on
their behalf, and shall continue in full force and effect as long as the
principal of or any accrued interest on the Term Loans 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 its Term Loan and the Note related
thereto), 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, 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 clause (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 Note 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 any 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 Note); 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 2.13 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 its 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 Loans 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 Loans 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, any Lender may at any time assign or pledge all or any portion
of its rights under this Agreement to a Federal Reserve Bank or to
secure such Lender's obligations to any third party, in each case
without the prior written consent of the Borrower, the Collateral
Agent or 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 F
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 either 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 Loans made hereunder, including (i) the
reasonable fees and disbursements of outside counsel to Lenders, the
Administrative Agent and 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 Loans or (iii) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any Indemnitee is a
party thereto; provided, however, 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 further, 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 (x) 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,
(y) 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 (z) 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 Loans, the invalidity or
unenforceability of any term or provision of this Agreement or any
other Loan Document, or any investigation made by or on behalf of 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, or interest or
premium 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, or interest or premium thereon, or fees, such benefited
Lender shall purchase for cash from such other Lenders such portion of
each such other Lenders' Term Loans, 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 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 or any other Loan
Party 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 a Term Loan (or any
Note), or waive or excuse any such payment or any part thereof, or
decrease the rate of interest on a Term Loan (or any Note), without
the prior written consent of each Lender affected thereby, (ii) amend
or modify the provisions of this Section 9.08 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 a Lender or an Agent under any Loan Document, without the
prior written consent of each Lender or Agent affected thereby, (iv)
change Section 2.10 in a manner that would alter the pro rata sharing
of payments required thereby, without the written consent of each
Lender, or (v) 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) in each case without the prior written
consent of each Lender; provided further, however, 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 9.08, and
any consent by any Lender or holder of a Term Loan pursuant to this
Section 9.08 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, the other Loan Documents
and the Fee Letter 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), (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 and (f) to any other
party to this Agreement. 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 (i) 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, (ii) 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 (iii) 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 Loans 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
or release letter, as applicable (in form and substance satisfactory
to the Agents 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.
[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
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Administrative Agent and as Collateral
Agent for the Lenders,
By:/s/Xxxxxxx X Xxxxxxxxxx
Name: Xxxxxxx X Xxxxxxxxxx
Title: Vice President
XXXXXXX XXXXX CREDIT PARTNERS L.P., as Lender,
By:/s/Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title:Authorized Signatory
EXHIBIT A
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Senior Secured Credit Agreement, dated as of
May 6, 2004 (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"),
Deutsche Bank Trust Company Americas, as administrative agent for the Lenders
(in such capacity, the "Administrative Agent"), and 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 2.13(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 B
FORM OF PLEDGE AGREEMENT
(Metris Companies Inc.)
THIS PLEDGE AGREEMENT, dated as of May __, 2004, is made and given by
METRIS COMPANIES INC., a Delaware 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 the Pledgor subject to
the terms and conditions specified in the Senior Secured Credit Agreement, dated
as of May __, 2004, among the Pledgor, the Lenders, the Collateral Agent and
Deutsche Bank Trust Company Americas, 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"). 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 Pledgor of (i) the principal of and interest on the Term Loan 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 Pledgor to the Collateral
Agent and the Lenders, in each case, as applicable, under the Credit Agreement
and the other Loan Documents, and (iii) all expenses, indemnities,
reimbursements and other obligations, monetary or otherwise, of the Pledgor to
the Collateral Agent and the Lenders, in each case, as applicable, under the
Loan Documents (all of the foregoing obligations being collectively called 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,
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, except for Metris Card
Services, LLC ("MCS") of which the Pledgor owns one (1) percent of the
issued and outstanding units;
(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 Pledgor 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 Metris Direct, Inc.
("MDI") consist of 25,000 shares of common stock, par value $1.00 per
share, of which 1,000 shares are issued and outstanding and constitute
a portion of the Pledged Stock; and the authorized equity securities
of MCS consist of 100 member units, with no par value, of which 100
units are issued and outstanding, of which 1 unit constitutes a
portion of the Pledged Stock. The Pledgor owns all of the issued and
outstanding voting shares of MDI and one (1) percent of the issued and
outstanding voting units of MCS. 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 MDI or MCS or any other
Subsidiary (other than the OCC Agreements pertaining to Direct
Merchants Credit Card Bank, N.A.). 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.
IN WITNESS WHEREOF, the parties hereto have duly executed this Pledge
Agreement, or caused this Pledge Agreement to be duly executed on their behalf,
as of the day and year first above written.
METRIS COMPANIES INC., as Pledgor
By_________________________________
Its_______________________________
DEUTSCHE BANK TRUST COMPANY
AMERICAS, as Collateral Agent
By_________________________________
Its_______________________________
SCHEDULE 1
PLEDGED SECURITIES
Name of Company Certificate Number Number of Shares
Metris Direct, Inc. 4 1,000
Metris Card Services, LLC 3 1
EXHIBIT C
FORM OF BORROWER SECURITY AGREEMENT
BORROWER SECURITY AGREEMENT, dated as of May __, 2004, 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 Senior Secured Credit Agreement, dated as of
May __, 2004, among the Borrower, the Lenders, Deutsche Bank Trust Company
Americas, 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 (i) any
Excluded Assets, and (ii) the right, title and interest of the Borrower in
securities account number 386000012 established in the name of the Borrower with
U.S. Bank National Association (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 as set forth
in Section 2.06 of the Credit Agreement 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 2.06 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.
[The remainder of this page intentionally left blank]
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
EXHIBIT D
FORM OF PLEDGE AGREEMENT
(Metris Card Services, LLC)
THIS PLEDGE AGREEMENT, dated as of May __, 2004, is made and given by
METRIS CARD SERVICES, LLC, a Delaware limited liability company (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 Senior
Secured Credit Agreement, dated as of May __, 2004, among the Borrower, the
Lenders, the Collateral Agent and Deutsche Bank Trust Company Americas, 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"). The Pledgor 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. 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 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) the Pledgor 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 the Pledgor 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 "Pledgor 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,
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 Metris Credit Card
Services, Inc. ("MCCS") consist of 1,000 shares of common stock, par
value $0.01 per share, of which 1,000 shares are issued and
outstanding and constitute the Pledged Stock. The Pledgor owns all of
the issued and outstanding voting shares of MCCS. 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 MCCS or
any other Subsidiary. 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 expresslywaived 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.
METRIS CARD SERVICES, LLC, as
Pledgor
By_________________________________
Its_______________________________
DEUTSCHE BANK TRUST COMPANY
AMERICAS, as Collateral Agent
By_________________________________
Its_______________________________
SCHEDULE 1
PLEDGED SECURITIES
Name of Company Certificate Number Number of Shares
Metris Credit Card Services, Inc. 2 1,000
EXHIBIT E
FORM OF PLEDGE AGREEMENT
(Metris Direct, Inc.)
THIS PLEDGE AGREEMENT, dated as of May __, 2004, is made and given by
METRIS DIRECT, INC., a Minnesota 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 Senior
Secured Credit Agreement, dated as of May __, 2004, among the Borrower, the
Lenders, the Collateral Agent and Deutsche Bank Trust Company Americas, 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"). The Pledgor 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 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) the Pledgor 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 the
Pledgor 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 "Pledgor 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,
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, except for Metris Card
Services, LLC ("MCS") of which the Pledgor owns ninety nine (99)
percent of the issued and outstanding units;
(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 Metris Travel Services
Inc. ("MTS") consist of 3,000 shares of common stock, par value $0.01
per share, of which 1,000 shares are issued and outstanding and
constitute a portion of the Pledged Stock; the authorized equity
securities of Metris Warranty Services of Florida, Inc. ("MWSF")
consist of 1,000 shares of common stock, par value $1.00 per share, of
which 1,000 shares are issued and outstanding and constitute a portion
of the Pledged Stock; the authorized equity securities of Metris
Receivables, Inc. ("MRI") consist of 1,000 shares of common stock,
with no par value, of which 100 shares are issued and outstanding and
constitute a portion of the Pledged Stock; the authorized equity
securities of Metris Direct Services, Inc. ("MDSI") consist of 1,000
shares of common stock, par value $1.00 per share, of which 1,000
shares are issued and outstanding and constitute a portion of the
Pledged Stock; the authorized equity securities of Metris Funding Co.
("MFC") consist of 1,000 shares of common stock, with no par value, of
which 100 shares are issued and outstanding and constitute a portion
of the Pledged Stock; the authorized equity securities of Direct
Merchants Credit Card Bank, N.A. ("DMCCB") consist of 100,000 shares
of common stock, par value $50.00 per share, of which 24,000 shares
are issued and outstanding and constitute a portion of the Pledged
Stock; the authorized equity securities of Metris Asset Funding Co.
("MAFC") consist of 1,000 shares of common stock, with no par value,
of which 1,000 shares are issued and outstanding and constitute a
portion of the Pledged Stock; the authorized equity securities of
magnUS Services, Inc. ("MSI") consist of 1,000 shares of common stock,
with no par value, of which 1,000 shares are issued and outstanding
and constitute a portion of the Pledged Stock; the authorized equity
securities of Metris Warranty Services, Inc. ("MWSI") consist of 1,000
shares of common stock, par value $0.01 per share, of which 1,000
shares are issued and outstanding and constitute a portion of the
Pledged Stock; the authorized equity securities of Crescent Ridge
Aviation, Inc. ("CRAI") consist of 1,000 shares of common stock, par
value $0.01 per share, of which 1,000 shares are issued and
outstanding and constitute a portion of the Pledged Stock; the
authorized equity securities of MCS consist of 100 member units, with
no par value, of which 100 units are issued and outstanding, of which
99 units constitute a portion of the Pledged Stock; the authorized
equity securities of Metris Club Services, Inc. ("MCSI") consist of
1,000 shares of common stock, par value $0.01 per share, of which
1,000 shares are issued and outstanding and constitute a portion of
the Pledged Stock; and the authorized equity securities of Metris
Financial Services, Inc. ("MFSI") consist of 1,000 shares of common
stock, par value $0.01 per share, of which 1,000 shares are issued and
outstanding and constitute a portion of the Pledged Stock. The Pledgor
owns all of the issued and outstanding voting shares of MWSF, MTS,
MRI, MDSI, MFC, DMCCB, MAFC, MSI, MWSI, CRAI, MCSI, MFSI and ninety
nine (99) percent of the issued and outstanding voting units of MCS.
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 any 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 CollateralAgent 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.
METRIS DIRECT, INC., as Pledgor
By_________________________________
Its_______________________________
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Collateral Agent
By_________________________________
Its_______________________________
SCHEDULE 1
PLEDGED SECURITIES
Name of Company Certificate Number Number of Shares
Metris Travel Services Inc. 1 1,000
Metris Warranty Services of
Florida, Inc. 1 1,000
Metris Receivables, Inc. 5 100
Metris Direct Services, Inc. 1 1,000
Metris Funding Co. 2 100
Metris Asset Funding Co. 1 1,000
magnUS Services, Inc. 1 1,000
Metris Warranty Services, Inc. 1 1,000
Crescent Ridge Aviation, Inc. 1 1,000
Metris Card Services, LLC 4 99
Metris Club Services, Inc. 2 1,000
Metris Financial Services, Inc. 2 1,000
Direct Merchants Credit Card Bank,
National Association 6 24,000
Exhibit F
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 Senior Secured Credit Agreement dated as of May 6, 2004 (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 G
AMENDED AND RESTATED
SECURITIES ACCOUNT PLEDGE AGREEMENT
THIS AMENDED AND RESTATED SECURITIES ACCOUNT PLEDGE AGREEMENT (this
"Agreement"), dated as of June 18, 2003, is by and between Metris Companies
Inc., a Delaware corporation (the "Applicant") and U.S. Bank National
Association, a national banking association (the "Bank").
RECITALS
1. The parties hereto are parties to a Securities Account Pledge
Agreement dated as of March 17, 2003 (the "Original Agreement"), which secured
certain of the Applicant's obligations relating to letters of credit issued
under the Credit Agreement (as defined in the Original Agreement).
2. The Applicant intends, contemporaneously with the execution and
delivery of this Agreement, to refinance the indebtedness outstanding under the
Credit Agreement, but wishes to leave the letters of credit issued under the
Credit Agreement outstanding. In connection therewith, the parties hereto are
entering into a Continuing Reimbursement Agreement for Standby Credits of even
date herewith (as the same may be amended, supplemented or otherwise modified
from time to time, together with all Applications referenced therein, the
"Reimbursement Agreement"), under which the outstanding letters of credit will
be governed on an ongoing basis and under which the Bank may from time to time
at its discretion issue various additional letters of credit (each, together
with each existing letter of credit as described above, a "Credit").
3. The parties hereto wish to amend the Original Agreement to provide
for certain changes in circumstances and new arrangements among themselves.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein contained, from and after the date hereof the Original Agreement
shall be amended and restated in its entirety to read as follows:
1. Definitions. Capitalized terms used but not otherwise defined herein
shall have the meanings assigned thereto in the Reimbursement Agreement.
Furthermore, the following term shall have the following meaning when used
herein:
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
amount of all Credits outstanding at such time and (B) the aggregate
amount of drawings under the credits for which Bank or the relevant
Other Issuer has not received reimbursement in accordance with the
Reimbursement Agreement.
2. Securities Account.
(a) The Applicant has established securities account number 386000012
at the Bank (together with any investments credited thereto from time to time,
the "Pledged Securities Account"). On and after the date hereof, the Applicant
agrees to maintain in the account, at all times, financial assets having a value
(as determined by the Bank) of at least 110% of the then-current LC Exposure
(the "Minimum Margin Amount"). The Applicant and the Bank agree that all amounts
and investments credited to the Pledged Securities Account (whether investment
property, cash, securities, instruments or other property) will constitute
"financial assets" for purposes of the Uniform Commercial Code as in effect in
the State of Minnesota. Subject to clause (b) below, all investments credited to
the Pledged Securities Account shall be comprised of uncertificated,
non-negotiable certificates of deposit issued by United States branches of
commercial banks with credit quality acceptable to the Bank and with maturities
of one year or less, or such other investments as may be selected by Applicant
and approved by Bank in its sole discretion.
(b) All earnings on amounts deposited in or investments credited to the
Pledged Securities Account shall be credited to and retained in the Pledged
Securities Account pending disbursement as otherwise described in this
Agreement. The Bank and the Applicant may by mutual agreement arrange for
substitutions for the financial assets credited to the Pledged Securities
Account from time to time so long as the Minimum Margin Amount is maintained and
the Bank is satisfied in its sole discretion with the credit quality of the
proposed substitutions. If at any time the value of the financial assets
credited to the Pledged Securities Account (as determined by the Bank) exceeds
the Minimum Margin Amount, the Applicant may request the release, and the Bank
promptly shall release, such excess so long as no Default or Event of Default
shall have occurred and be continuing. Furthermore, three Business Days after
the date on which all Credits shall have expired or otherwise shall have been
terminated, all pending demands for payment with respect to any of the Credits
have been processed and finally resolved in the view of both the Bank and each
applicable beneficiary, and all Reimbursement Obligations shall have been paid
in full, the Bank shall release to the Applicant the financial assets remaining
in the Pledged Securities Account (if any), subject to any applicable early
withdrawal penalties. The Applicant shall not have any right to withdraw any
amount deposited in or credited to the Pledged Securities Account except as
provided in this clause (b). The Applicant hereby represents and warrants that
the amounts deposited into the Pledged Securities Account do not constitute
proceeds of any property in which another Person enjoys a Lien.
(c) The Applicant acknowledges that it, and not the Bank, shall select
the investments to be made with amounts credited to the Pledged Securities
Account, and that any investment losses relating to the Pledged Securities
Account shall be for its own account. In the absence of timely, written
investment instructions delivered to the Bank, amounts credited to the Pledged
Securities Account will not be invested.
3. Assignment of Pledged Securities Account. The Applicant hereby
assigns, sets over and transfers to the Bank, and grants the Bank a security
interest in and control over, the Pledged Securities Account, all right, title
and interest of the Applicant in and to the Pledged Securities Account and all
financial assets and other investment property from time to time credited
thereto, including all earnings of every kind and description which may now or
hereafter accrue thereon, and all proceeds of all of the foregoing, for the
purpose of securing the prompt payment and performance of all of the Applicant's
obligations to the Bank and to each Other Issuer under or in connection with the
Reimbursement Agreement and/or the Credits, whether now existing or hereafter
created or incurred, direct or indirect, due or to become due, or absolute or
contingent (collectively, the "Reimbursement Obligations"). The Applicant hereby
irrevocably authorizes and empowers the Bank at any time when any Reimbursement
Obligations are due and payable, in its own name or in the name of the
Applicant, to demand, apply for withdrawal, receipt and give acquittance for any
and all sums which are or will become due and payable under the Pledged
Securities Account, to exercise any and all rights and privileges and receive
all benefits accorded to the Pledged Securities Account, and to execute any and
all instruments required therefor, and to apply such moneys towards payment of
the Reimbursement Obligations in such order of application as the Bank may
determine, all without advance notice to the Applicant. The Bank agrees to
provide subsequent notice of such any such action to the Applicant in the manner
described in the Reimbursement Agreement, but any failure to do so shall not
affect the effectiveness of any such action.
4. Miscellaneous.
(a) This Agreement shall be binding upon and inure to the benefit of
the Applicant, the Bank and their successors and assigns. This Agreement can be
waived, amended, terminated, or discharged only explicitly in a writing signed
by each party hereto. A writing so signed shall be effective only in a specific
instance and for the purpose given. The Original Agreement, as amended and
restated hereby, is hereby ratified and confirmed and shall remain in full force
and effect.
(b) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF MINNESOTA, WHICH SHALL BE THE BANK'S JURISDICTION
FOR PURPOSES OF ARTICLES 8 AND 9 OF THE UNIFORM COMMERCIAL CODE. EACH PARTY
HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. AT THE OPTION OF THE
BANK, THIS AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR ANY MINNESOTA STATE
COURT SITTING IN HENNEPIN COUNTY, MINNESOTA; AND THE APPLICANT CONSENTS TO THE
JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN
SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE APPLICANT COMMENCES ANY ACTION
IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING
DIRECTLY OR INDIRECTLY FROM THE PLEDGED DEPOSIT ACCOUNT OR THE RELATIONSHIP
CREATED BY THIS AGREEMENT, THE BANK AT ITS OPTION SHALL BE ENTITLED TO HAVE THE
CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF
SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE
DISMISSED WITHOUT PREJUDICE.
(c) If any provision or application of this Agreement is held unlawful
or unenforceable in any respect, such illegality or unenforceability shall not
affect other provisions or applications which can be given effect, and this
Agreement shall be construed as if the unlawful or unenforceable provision or
application had never been contained therein.
(d) This Agreement may be executed by one or more of the parties to
this Agreement on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
METRIS COMPANIES INC.
By:
Name: Xxxxx Xxxxxxxx
Title: Senior Vice President and Treasurer
U.S. BANK NATIONAL ASSOCIATION
By:
Name: Xxxx X. Xxxxx
Title: Banking Officer
AMENDMENT XX. 0
XXXXXXXXX XX. 0, dated as of June 26, 2003 (this "Amendment"),
to the AMENDED AND RESTATED SECURITIES ACCOUNT PLEDGE AGREEMENT (the
"Agreement"), dated as of June 18, 2003, is by and between Metris Companies
Inc., a Delaware corporation (the "Applicant") and U.S. Bank National
Association, a national banking association (the "Bank").
WITNESSETH:
WHEREAS, the Applicant has requested, and, upon this Amendment
becoming effective, the Bank has agreed, to amend the Agreement on the terms and
conditions contained herein.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the
premises contained herein, the parties hereto hereby agree as follows:
SECTION I. AMENDMENT
1.1 Defined Terms. Unless otherwise defined herein,
capitalized terms used herein but not defined herein have the meanings set forth
in the Agreement.
1.2 Amendments. The Bank and the Applicant hereby agree
that upon the effectiveness of this Amendment the Agreement is amended as
follows:
A. Section 2. Section 2 of the Agreement is hereby
amended by inserting the words "but in no event greater than
Eleven Million Dollars ($11,000,000)" between the
parenthetical clause "(the "Minimum Margin Amount")" and the
period ending the sentence.
B. Section 4. Section 4(a) of the agreement shall be
amended by deleting the existing language in its entirety
and replacing it with the following:
4. Miscellaneous.
(a) This Agreement shall be binding upon and inure to
the benefit of the Applicant, the Bank and their successors
and assigns. Subject to the second paragraph of this Section
4, this Agreement can be waived, amended, terminated, or
discharged only explicitly in a writing signed by each party
hereto. A writing so signed shall be effective only in a
specific instance and for the purpose given.
In connection with the refinancing of the
indebtedness under the Credit Agreement (as defined in the
Original Agreement), each party hereby acknowledges and agrees
that pursuant to the New Credit Agreement (as defined below),
the Applicant has granted a security interest in all of its
right, title and interest in, to and under all of its assets
except for certain enumerated assets including the Pledged
Securities Account and all financial assets credited thereto
from time to time in accordance with this Agreement.
Accordingly, any amendment, supplement or modification in any
way to increase the Eleven Million Dollar limitation set forth
in Section 2 of this Agreement without the prior written
consent of the Required Lenders (as such term is defined in
the Amended and Restated Senior Secured Credit Agreement dated
June 18, 2003 among the Applicant, the Lenders from time to
time party thereto, Xxxxxxx Sach's Credit L.P. as
Administrative Agent and Deutsche Bank Trust Company Americas
as Collateral Agent as the same may be amended from time to
time) (the "New Credit Agreement") shall be void.
SECTION II. MISCELLANEOUS
2.1 Conditions to Effectiveness of Amendment. This
Amendment shall become effective, as of the date first set forth above, when
counterparts hereof shall have been executed and delivered by the parties
hereto, and the New Credit Agreement has concurrently become effective, and
thereafter shall be binding on the parties hereto and their respective
successors and assigns.
2.2 Counterparts. This Amendment may be executed by one or
more of the parties to this Amendment on any number of separate counterparts
(including by facsimile transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.
2.3 Continuing Effect; No Other Amendments. Except to the
extent expressly stated herein, all of the terms and provisions of the Agreement
are and shall remain in full force and effect and are not waived in any respect.
2.4 Amendment; Waiver. This Amendment may not be amended,
waived, terminated or discharged except in an express writing executed by each
of the parties hereto and the Required Lenders (as defined in Section 1.2B of
this Amendment).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective proper and duly
authorized officers as of the day and year first above written.
METRIS COMPANIES INC.
By: ________________________________
Name: Xxxxx Xxxxxxxx
Title: Senior Vice President and Treasurer
U.S. BANK NATIONAL ASSOCIATION
By: ________________________________
Name: Xxxx X. Xxxxx
Title: Banking Officer
AMENDMENT XX. 0
XXXXXXXXX XX. 0, dated as of May 6, 2004 (this "Amendment"),
to the AMENDED AND RESTATED SECURITIES ACCOUNT PLEDGE AGREEMENT, dated as of
June 18, 2003, as amended by Amendment No. 1 dated as of June 26, 2003 (the
"Agreement") is by and between Metris Companies Inc., a Delaware corporation
(the "Applicant") and U.S. Bank National Association, a national banking
association (the "Bank").
WITNESSETH:
WHEREAS, the Applicant has requested, and, upon this Amendment
becoming effective, the Bank has agreed, to amend the Agreement on the terms and
conditions contained herein.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the
premises contained herein, the parties hereto hereby agree as follows:
SECTION I. AMENDMENT
1.1 Defined Terms. Unless otherwise defined herein,
capitalized terms used herein but not defined herein have the meanings set forth
in the Agreement.
1.2 Amendments. The Bank and the Applicant hereby agree
that upon the effectiveness of this Amendment the Agreement is amended as
follows:
C. Section 2. Section 2 of the Agreement is hereby
amended by substituting "Sixteen Million Five Hundred
Thousand Dollars ($16,500,000)" for "Eleven Million Dollars
($11,000,000)" therein.
D. Section 4. The second paragraph of Section 4(a) of
the Agreement is hereby amended in its entirety and
replacing it with the following:
In connection with the Senior Secured Credit Agreement
dated as of May 6, 2004 (together with any amendment,
modification or restatement thereof or supplement thereto,
the "Credit Agreement") among the Applicant, the lenders
party thereto and Deutsche Bank Trust Company Americas, as
administrative agent and collateral agent, each party hereby
acknowledges and agrees that the Applicant has granted a
security interest in all of its right, title and interest
in, to and under all of its assets except for certain
enumerated assets including the Pledged Securities Account
and all financial assets credited thereto from time to time
in accordance with this Agreement. Accordingly, any
amendment, supplement or other modification in any way to
increase the Sixteen Million Five Hundred Thousand Dollar
limitation set forth in Section 2 of this Agreement without
the prior written consent of the "Required Lenders" (as such
term is defined in the Restated Credit Agreement) shall be
void.
SECTION II. MISCELLANEOUS
2.1 Conditions to Effectiveness of Amendment. This Amendment
shall become effective, as of the date first set forth above, when counterparts
hereof shall have been executed and delivered by the parties hereto, and
thereafter shall be binding on the parties hereto and their respective
successors and assigns.
2.2 Counterparts. This Amendment may be executed by one or
more of the parties to this Amendment on any number of separate counterparts
(including by facsimile transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.
2.3 Continuing Effect; No Other Amendments. Except to the
extent expressly stated herein, all of the terms and provisions of the Agreement
are and shall remain in full force and effect and are not waived in any respect.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective proper and duly
authorized officers as of the day and year first above written.
METRIS COMPANIES INC.
By: ________________________________
Name: Xxxxx Xxxxxxxx
Title: Senior Vice President and Treasurer
U.S. BANK NATIONAL ASSOCIATION
By: ________________________________
Name: _____________________________
Title: _____________________________
EXHIBIT H
FORM OF SUBSIDIARY GUARANTY
SUBSIDIARY GUARANTY, dated as of [ ], 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 Senior Secured Credit Agreement, dated as of
May __, 2004 (as amended, modified, extended or restated from time to time, the
"Credit Agreement"), among Metris Companies Inc. (the "Borrower"), the Lenders,
Deutsche Bank Trust Company Americas, 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 I
FORM OF SUBSIDIARY SECURITY AGREEMENT
( )
SUBSIDIARY SECURITY AGREEMENT, dated as of May __, 2004, made by
__________________________, a _____________ (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 Senior Secured Credit Agreement, dated as of
May __, 2004 (as amended, modified, extended or restated from time to time, the
"Credit Agreement"), among Metris Companies Inc. (the "Borrower"), the Lenders,
Deutsche Bank Trust Company Americas, as administrative agent for the Lenders
(in such capacity, the "Administrative Agent"), and the Collateral Agent, 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, 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 ______________
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 __________ 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 2.06 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.
[ ]
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
EXHIBIT J
FORM OF EXEMPTION CERTIFICATE
Reference is made to the Senior Secured Credit Agreement, dated as of
May 6, 2004 (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"),
Deutsche Bank Trust Company Americas, as administrative agent for the Lenders
(in such capacity, the "Administrative Agent"), and 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.
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 2.13(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________________________________
Dated_____________________________
Exhibit K
[FORM OF OPINION OF GENERAL COUNSEL]
[_________________, 2004]
To: The Parties Listed on Schedule 1 Attached Hereto
Re: Legal Opinion
Ladies and Gentlemen:
As Executive Vice President, General Counsel of Metris Companies Inc.
("Company") and Executive Vice President, General Counsel of Metris Direct, Inc.
("MDI"), I am familiar with the affairs of the Company and the direct and
indirect Subsidiaries of the Company and MDI (the Company, MDI and their
respective Subsidiaries are collectively referred to as the "Metris Entities"),
as they relate to the Credit Agreement and the other Loan Documents each as
defined below. This opinion is being delivered pursuant to Section 4.01 of the
Senior Secured Credit Agreement, dated as of ________________ ("Credit
Agreement") among Metris Companies Inc., the several financial institutions from
time to time parties thereto ("Lenders"), Deutsche Bank Trust Company Americas,
as administrative agent ("Administrative Agent") and Deutsche Bank Trust Company
Americas, as collateral agent for the Lenders ("Collateral Agent"). Capitalized
terms used herein but not otherwise defined herein shall have the meaning given
to them in the Credit Agreement.
In connection with this opinion, I or other attorneys on the legal
staff of the Metris Entities have examined and relied on originals or copies
(certified or otherwise identified to our satisfaction) of all such documents,
records, financial statements and papers of the Metris Entities, certificates or
comparable documents of public officials and officers, have consulted with such
representatives of the Metris Entities, and have made such investigations of
fact and law as were deemed relevant or necessary as the basis for the opinions
hereinafter expressed and have also examined executed originals of the following
documents:
(a) the Credit Agreement;
(b) (i) the Pledge Agreement dated as of ____________ made by
the Company in favor of the Collateral Agent, (ii) the Pledge Agreement
dated as of ________________ made by MDI in favor of the Collateral
Agent , and (iii) the Pledge Agreement dated as of _______________ made
by Metris Card Services, LLC ("MCS") in favor of the Collateral Agent,
(each a "Pledge Agreement" and collectively the "Pledge Agreements");
(c) the Borrower Security Agreement dated as of
__________________ made by the Company in favor of the Collateral Agent
("Borrower Security Agreement");
(d) the Subsidiary Security Agreement made by MDI in favor of
the Collateral Agent, the Subsidiary Security Agreement made by Metris
Warranty Services of Florida, Inc. in favor of the Collateral Agent,
the Subsidiary Security Agreement made by Metris Travel Services, Inc.
in favor of the Collateral Agent, the Subsidiary Security Agreement
made by Metris Direct Services, Inc. in favor of the Collateral Agent,
the Subsidiary Security Agreement made by magnUS Services, Inc. in
favor of the Collateral Agent, the Subsidiary Security Agreement made
by Metris Warranty Services, Inc. in favor of the Collateral Agent, the
Subsidiary Security Agreement made by Metris Card Services, LLC in
favor of the Collateral Agent, the Subsidiary Security Agreement made
by Metris Credit Card Services, Inc. in favor of the Collateral Agent,
the Subsidiary Security Agreement made by Metris Club Services, Inc. in
favor of the Collateral Agent, the Subsidiary Security Agreement made
by Metris Financial Services, Inc. in favor of the Collateral Agent,
and the Subsidiary Security Agreement made by Crescent Ridge Aviation
Inc. in favor of the Collateral Agent in each case, dated as of the
date hereof (each a "Subsidiary Security Agreement" and collectively,
the "Subsidiary Security Agreements");
(e) the Subsidiary Guaranty dated as of __________________
from each Subsidiary Guarantor in favor of the Collateral Agent
(collectively the "Subsidiary Guaranties"); and
The Credit Agreement, the Pledge Agreements, the Subsidiary Security
Agreements, the Subsidiary Guaranties, and the Borrower Security Agreement are
herein collectively referred to as the "Loan Documents."
In rendering the opinions expressed below, I have assumed, with the
Administrative Agent's, the Collateral Agent's, and the Lenders' permission and
without verification:
(a) the authenticity of all documents submitted as originals;
(b) the genuineness of all signatures (except with regard to
any of the Metris Entities);
(c) the legal capacity of natural persons executing any of the
Loan Documents on behalf of any party; and
(d) the conformity to originals of all documents submitted to
me as copies and the authenticity of the originals of such copies.
Based upon the foregoing, and subject to the qualifications set forth
below, I am of the opinion that:
1. Each of the Metris Entities is a corporation (or, in the
case of MCS, a limited liability company) duly organized, validly
existing and in good standing under the laws of the state of its
organization, and each is qualified to do business in every
jurisdiction where such qualification is required, except where the
failure to so qualify is not likely to result in a Material Adverse
Effect. Each of the Metris Entities has all requisite power and
authority to own its property and assets and to carry on its respective
businesses as currently conducted and as currently proposed to be
conducted.
2. Each of the Loan Parties has the power and authority, as
applicable, to execute, deliver and perform its obligations under each
of the Loan Documents to which it is a party, including without
limitation, in the case of the Company, to borrow under the Credit
Agreement. Such execution, delivery and performance of the Loan
Documents, including without limitation, the borrowings under the
Credit Agreement:
(a) have been duly authorized by all requisite action
of the Loan Parties;
(b) do not violate any provision of the articles of
incorporation, certificate of formation, operating agreement
or bylaws (as the case may be), in each case as amended to
date, of the Loan Parties, or require approval of their
respective equityholders;
(c) (i) to the best of my knowledge will not violate
any order, statute, regulation, judgment or decree of any
Governmental Authority, (ii) will not violate, result in a
breach or acceleration of or constitute (alone or with lapse
of time or both) a default under the terms of any indenture,
agreement, or other material instrument to which any of the
Loan Parties is a party, or by which any of them or any of
their property is bound and (iii) will not result in the
creation or imposition of any Lien upon, or with respect to,
any of the properties or assets of any of the Loan Parties
other than pursuant to the Pledge Agreements, the Borrower
Security Agreement and the Subsidiary Security Agreements.
3. The Loan Documents each have been duly authorized,
executed, and delivered by the Loan Part party thereto, as applicable.
4. No action, consent or approval of, registration,
qualification or filing with, or any other action by, any Governmental
Authority is required by any Loan Party in connection with the
execution and delivery of and performance by any such Loan Party of
each of the Loan Documents to which it is a party and in connection
with the Loans under the Credit Agreement.
5. None of the Metris Entities is an "investment company" as
defined in or subject to regulation under the Investment Company Act of
1940 or a "holding company" as defined in or subject to regulation
under the Public Utility Holding Company Act of 1935 as amended.
6. None of the Metris Entities is in default (alone or with
the lapse of time) under any provision of any indenture, loan agreement
or other agreement or instrument evidencing Indebtedness, or any other
material agreement or instrument to which it is party or by which it or
any of its properties or assets are bound, where such default has, or
would result in, a Material Adverse Effect.
7. There are no actions, suits or proceedings at law or in
equity or by or before any Governmental Authority now pending, or to
the best of my knowledge after due inquiry, threatened against or
affecting any of the Loan Parties or any property or rights of the Loan
Parties (i) which assert the invalidity of any of the Loan Documents;
(ii) which seek to prevent the consummation of any of the transactions
contemplated by the Loan Documents, or (iii) as to which there is a
reasonable probability of an adverse determination and which, if
adversely determined, would individually or in the aggregate materially
impair the ability of the Loan Parties to perform its obligations under
the terms of the Loan Documents to which they are a party, or otherwise
to carry on the business substantially as now being conducted by the
Loan Parties, or would result in any material adverse change in the
business, assets, operations or financial condition of the Loan
Parties.
The opinions expressed above are limited to the laws of the State of
Minnesota, the Delaware General Corporation Law and the federal laws of the
United States of America. The opinions expressed herein are solely for the
benefit of the Administrative Agent, the Collateral Agent, and the Lenders and
any participants or permitted assigns, as specified in Section 9.04 of the
Credit Agreement, in connection with the transactions contemplated by the Credit
Agreement and may not be relied upon by any other person or quoted or otherwise
referred to in any manner without my prior written consent. The opinions
expressed herein are rendered as of the date hereof, and I assume no obligation
to advise you of any change in the future, material or otherwise, in any matter
addressed herein.
Sincerely,
XXXXXXX X. XXXXX
Executive Vice President
and General Counsel
EXHIBIT L
FORM OF OPINION OF XXXXXX & WHITNEY LLP
May 6, 2004
Deutsche Bank Trust Company Americas,
as Administrative Agent and Collateral Agent
for the Lenders party to the Credit Agreement
described below
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
We have acted as special counsel to Metris Companies Inc., a Delaware
corporation (the "Company") and the other Loan Parties defined below, in
connection with the Senior Secured Credit Agreement dated as of the date hereof
(the "Credit Agreement"), among the Company, the Lenders party thereto, and
Deutsche Bank Trust Company Americas, as Administrative Agent and Collateral
Agent, and the other Loan Documents defined below. Capitalized terms used herein
and not otherwise defined herein shall have the meanings given to them in the
Credit Agreement. This opinion is being rendered to you pursuant to Section
4.01(e) of the Credit Agreement.
In rendering the opinions expressed below, we have examined:
(i) the Credit Agreement;
(ii) the Pledge Agreement dated as the date hereof between the Company
and the Collateral Agent (the "Borrower Pledge Agreement") and copies of
the executed stock powers referred to therein;
(iii) the Pledge Agreement dated as of the date hereof between Metris
Direct, Inc., a Delaware corporation ("MDI") and the Collateral Agent (the
"MDI Pledge Agreement") and copies of the executed stock powers referred to
therein;
(iv) the Pledge Agreement dated as of the date hereof between Metris
Card Services, LLC, a Delaware limited liability company ("MCS") and the
Collateral Agent (the "MCS Pledge Agreement" and, collectively with the
Borrower Pledge Agreement and the MDI Pledge Agreement, the "Pledge
Agreements" and each a "Pledge Agreement") and copies of the executed stock
powers referred to therein;
(v) the Borrower Security Agreement dated as of the date hereof, made
by the Company in favor of the Collateral Agent (the "Borrower Security
Agreement");
(vi) the Subsidiary Guaranty dated as of the date hereof, made by MDI
in favor of the Collateral Agent (the "MDI Guaranty");
(vii) the Subsidiary Guaranty dated as of the date hereof, made by
magnUS Services, Inc., a Delaware corporation ("MSI") in favor of the
Collateral Agent (the "MSI Guaranty");
(viii) the Subsidiary Guaranty dated as of the date hereof, made by
Crescent Ridge Aviation, Inc., a Delaware corporation ("Crescent") in favor
of the Collateral Agent (the "Crescent Guaranty");
(ix) the Subsidiary Guaranty dated as of the date hereof, made by MCS
in favor of the Collateral Agent (the "MCS Guaranty");
(x) the Subsidiary Guaranty dated as of the date hereof, made by
Metris Credit Card Services, Inc., a Delaware corporation ("MCCS") in favor
of the Collateral Agent (the "MCCS Guaranty");
(xi) the Subsidiary Guaranty dated as of the date hereof, made by
Metris Financial Services, Inc., a Delaware corporation ("MFSI" and,
collectively with MDI, MSI, Crescent, MCS and MCCS, the "Subsidiary
Guarantors" and each a "Subsidiary Guarantor") in favor of the Collateral
Agent (the "MFSI Guaranty" and, collectively with the MDI Guaranty, the MSI
Guaranty, the Crescent Guaranty, the MCS Guaranty and the MCCS Guaranty,
the "Subsidiary Guaranties" and each a "Subsidiary Guaranty");
(xii) the Subsidiary Security Agreement dated as of the date hereof,
made by MDI in favor of the Collateral Agent (the "MDI Security
Agreement");
(xiii) the Subsidiary Security Agreement dated as of the date hereof,
made by Metris Travel Services, Inc., a Delaware corporation ("MTS"), in
favor of the Collateral Agent (the "MTS Security Agreement");
(xiv) the Subsidiary Security Agreement dated as of the date hereof,
made by Metris Warranty Services of Florida, Inc., a Florida corporation
("MWSF") in favor of the Collateral Agent (the "MWSF Security Agreement");
(xv) the Subsidiary Security Agreement dated as of the date hereof,
made by Metris Direct Services, Inc., a Delaware corporation ("MDSI") in
favor of the Collateral Agent (the "MDSI Security Agreement");
(xvi) the Subsidiary Security Agreement dated as of the date hereof,
made by MSI in favor of the Collateral Agent (the "MSI Security
Agreement");
(xvii) the Subsidiary Security Agreement dated as of the date hereof,
made by Metris Warranty Services, Inc., a Delaware corporation ("MWSI") in
favor of the Collateral Agent (the "MWSI Security Agreement");
(xviii) the Subsidiary Security Agreement dated as of the date hereof,
made by MCS in favor of the Collateral Agent (the "MCS Security
Agreement");
(xix) the Subsidiary Security Agreement dated as of the date hereof,
made by MCCS in favor of the Collateral Agent (the "MCCS Security
Agreement");
(xx) the Subsidiary Security Agreement dated as of the date hereof
made by Crescent in favor of the Collateral Agent (the "Crescent Security
Agreement");
(xxi) the Subsidiary Security Agreement dated as of the date hereof,
made by Metris Club Services, Inc., a Delaware corporation ("MCSI" and,
collectively with MDI, MTS, MWSF, MDSI, MSI, MWSI, MCS, MCCS, MCSI, MFSI
and Crescent, the "Subsidiary Security Interest Grantors" and each a
"Subsidiary Security Interest Grantor") in favor of the Collateral Agent
(the "MCSI Security Agreement");
(xxii) the Subsidiary Security Agreement dated as of the date hereof,
made by MFSI in favor of the Collateral Agent (the "MFSI Security
Agreement" and, collectively with the MDI Security Agreement, the MTS
Security Agreement, the MWSF Security Agreement, the MDSI Security
Agreement, the MSI Security Agreement, the MWSI Security Agreement, the MCS
Security Agreement, the MCCS Security Agreement, the MCSI Security
Agreement, and the Crescent Security Agreement, the "Subsidiary Security
Agreements" and each a "Subsidiary Security Agreement");
(xxiii) the Letter Agreement Concerning Account (Securities Account)
dated as of the date hereof, among the Company, the Collateral Agent and
U.S. Bank National Association (the "USB Account Agreement");
(xxiv) the Blocked Account Control Agreement (Deposit Account) dated
as of the date hereof, among the Company, the Collateral Agent and U.S.
Bank National Association (the "Borrower Deposit Account Control
Agreement");
(xxv) the Blocked Account Control Agreement (Deposit Account) dated as
of the date hereof, among MDI, the Collateral Agent and U.S. Bank National
Association (the "MDI Deposit Account Control Agreement");
(xxvi) the financing statement to be filed with the Secretary of State
of Delaware in the form attached hereto as Exhibit A (the "Borrower
Security Agreement Financing Statement"), naming the Company as debtor, and
the Collateral Agent as the secured party, and describing the Collateral
defined in the Borrower Security Agreement;
(xxvii) the financing statement to be filed with the Secretary of
State of Delaware in the form attached hereto as Exhibit B (the "Borrower
Pledge Agreement Financing Statement" and, together with the Borrower
Security Agreement Financing Statement, the "Borrower Financing
Statements"), naming the Company as debtor, and the Collateral Agent as the
secured party, and describing the Collateral defined in the Borrower Pledge
Agreement;
(xxviii) the financing statement to be filed with the Secretary of
State of Minnesota in the form attached as Exhibit C (the "MDI Security
Agreement Financing Statement"), naming MDI as debtor and the Collateral
Agent as the secured party, and describing the Collateral as defined in the
MDI Security Agreement;
(xxix) the financing statement to be filed with the Secretary of State
of Minnesota in the form attached as Exhibit D (the "MDI Pledge Agreement
Financing Statement" and, together with the MDI Security Agreement
Financing Statement, the "MDI Financing Statements"), naming MDI as debtor,
and the Collateral Agent as the secured party, and describing the
Collateral defined in the MDI Pledge Agreement;
(xxx) the financing statement to be filed with the Secretary of State
of Delaware in the form attached as Exhibit E (the "MTS Financing
Statement"), naming MTS as debtor and the Collateral Agent as the secured
party, and describing the Collateral as defined in the MTS Security
Agreement;
(xxxi) the financing statement to be filed with the Secretary of State
of Florida in the form attached as Exhibit F (the "MWSF Financing
Statement"), naming MWSF as debtor and the Collateral Agent as the secured
party, and describing the Collateral as defined in the MWSF Security
Agreement;
(xxxii) the financing statement to be filed with the Secretary of
State of Delaware in the form attached as Exhibit G (the "MDSI Financing
Statement"), naming MDSI as debtor and the Collateral Agent as the secured
party, and describing the Collateral as defined in the MDSI Security
Agreement;
(xxxiii) the financing statement to be filed with the Secretary of
State of Delaware in the form attached as Exhibit H (the "MSI Financing
Statement"), naming MSI as debtor and the Collateral Agent as the secured
party, and describing the Collateral as defined in the MSI Security
Agreement;
(xxxiv) the financing statement to be filed with the Secretary of
State of Delaware in the form attached as Exhibit I (the "MWSI Financing
Statement"), naming MWSI as debtor and the Collateral Agent as the secured
party, and describing the Collateral as defined in the MWSI Security
Agreement;
(xxxv) the financing statement to be filed with the Secretary of State
of Delaware in the form attached of Exhibit J (the "MCS Pledge Agreement
Financing Statement"), naming MCS as debtor and the Collateral Agent as the
secured party, and describing the Collateral as defined in the MCS Pledge
Agreement;
(xxxvi) the financing statement to be filed with the Secretary of
State of Delaware in the form attached as Exhibit K (the "MCS Financing
Statement"), naming MCS as debtor and the Collateral Agent as the secured
party, and describing the Collateral as defined in the MCS Security
Agreement;
(xxxvii) the financing statement to be filed with the Secretary of
State of Delaware in the form attached as Exhibit L (the "MCSI Financing
Statement"), naming MCSI as debtor and the Collateral Agent as secured
party, and describing the Collateral as defined in the MCSI Security
Agreement;
(xxxviii) the financing statement to be filed with the Secretary of
State of Delaware in the form attached as Exhibit M (the "MCCS Financing
Statement"), naming MCCS as debtor and the Collateral Agent as the secured
party, and describing the Collateral as defined in the MCCS Security
Agreement;
(xxxix) the financing statement to be filed with the Secretary of
State of the State of Delaware in the form attached as Exhibit N (the
"Crescent Financing Statement"), naming Crescent as debtor and the
Collateral Agent as the secured party, and describing the Collateral as
defined in the Crescent Security Agreement;
(xl) the financing statement to be filed with the Secretary of State
of Delaware in the form attached as Exhibit O (the "MFSI Financing
Statement" and, collectively with the MDI Financing Statements, the MTS
Financing Statement, the MWSF Financing Statement, the MDSI Financing
Statement, the MSI Financing Statement, the MWSI Financing Statement, the
MCS Financing Statement, the MCS Pledge Agreement Financing Statement, the
MCCS Financing Statement, the MCSI Financing Statement and the Crescent
Financing Statement, the "Subsidiary Financing Statements"), naming MFSI as
a debtor and the Collateral Agent as the secured party, and describing the
Collateral as defined in the MFSI Security Agreement; and
(xli) the UCC search reports referenced in paragraph (K) below.
The Company, the Subsidiary Guarantors and the Subsidiary Security
Interest Grantors are collectively referred to herein as the "Loan Parties." The
Credit Agreement, the Borrower Pledge Agreement, the Borrower Security
Agreement, the USB Account Agreement, and the Borrower Deposit Account Control
Agreement are herein collectively referred to as the "Company Loan Documents."
The MDI Pledge Agreement, the MDI Deposit Account Control Agreement, the MCS
Pledge Agreement, the Subsidiary Guaranties and the Subsidiary Security
Agreements are herein collectively referred to here as the "Subsidiary
Documents" and together with the Company Loan Documents are collectively
referred to as the "Loan Documents." The Borrower Financing Statements and the
Subsidiary Financing Statements are collectively referred to herein as the
"Financing Statements." The Subsidiary Financing Statements other than the MDI
Financing Statements and the MWSF Financing Statements are collectively referred
to herein as the "Delaware Financing Statements." The Uniform Commercial Code as
in effect in the State of New York is referred to herein as the "New York UCC,"
the Uniform Commercial Code as in effect in the State of Minnesota is referred
to herein as the "Minnesota UCC," the Uniform Commercial Code as in effect in
the state of Delaware is referred to herein as the "Delaware UCC," and the
Uniform Commercial Code as in effect in the State of Florida is referred to
herein as the "Florida UCC." The New York UCC, the Minnesota UCC, the Delaware
UCC or the Florida UCC, as applicable, is sometimes referred to herein as the
"UCC." References herein to the Collateral refers to the "Collateral" as defined
in the Borrower Security Agreement, "Collateral" as defined in the Subsidiary
Security Agreements, and "Collateral" as defined in the Pledge Agreements, as
applicable.
In addition, we have investigated such questions of law and received
such certificates from officers and representatives of the Loan Parties as we
have deemed necessary or appropriate for the purposes of this opinion. As to
various questions of fact relevant to such opinions, including, without
limitation, the identification of agreements or instruments to which a Loan
Party is a party or by which any Loan Party may be bound that contain provisions
limiting the incurrence of Indebtedness, the identification of agreements or
instruments to which the Loan Parties are parties or by which the Loan Parties
may be bound pursuant to which long-term Indebtedness in an amount in excess of
$5,000,000 is outstanding, and the determination of the compliance by the Loan
Parties with any financial test covenants contained in any such agreements or
instruments, we have relied exclusively, without investigation, upon the
certificate of officers or employees of the Company attached as Exhibit P (the
"Officer's Certificate").
In rendering our opinions expressed below, we have assumed, with your
permission and without independent verification:
(A) the authenticity of all documents submitted to us as originals;
(B) the genuineness of all signatures;
(C) the conformity to originals of all documents submitted to us as
copies and the authenticity of the originals of such copies;
(D) the legal capacity of natural persons;
(E) that each of the parties to the Loan Documents has the requisite
corporate or limited liability company power to enter into and perform its
obligations under the Loan Documents to which it is a party;
(F) the due authorization, execution, and delivery of each of the Loan
Documents and all other agreements or documents executed and delivered in
connection therewith by all of the parties thereto;
(G) that each of the Loan Documents and each other agreement or
document executed and delivered in connection therewith (i) constitutes the
valid and binding obligations of all the parties thereto other than the
Loan Parties, and (ii) is enforceable in accordance with its terms against
all of the parties thereto other than the Loan Parties;
(H) the accuracy as to factual matters of the representations and
warranties of the Loan Parties set forth in each of the Loan Documents;
(I) that all conditions precedent to the effectiveness of the Loan
Documents have been satisfied or waived (other than delivery of this
opinion letter);
(J) that each of the Financing Statements contains the current address
of the Collateral Agent from which information concerning the Collateral
Agent's security interest in the Collateral described therein can be
obtained;
(K) that each of the Financing Statements will be duly filed in the
applicable offices as listed on Schedule 3.18 of the Credit Agreement;
(L) that the Pledged Securities (as defined in the Pledge Agreements)
consist only of certificated securities within the meaning of the New York
UCC;
(M) that the security interest in the Pledged Securities has been
acquired for value and in good faith and that none of the Administrative
Agent, the Collateral Agent nor any of the Lenders has notice prior to or
on the date the security interest in the Pledged Securities attaches of any
security interest or adverse claims (as defined in Section 8-102 of the New
York UCC) with respect to the Pledged Securities;
(N) that the Company and each of the Subsidiary Security Interest
Grantors has rights in the respective Collateral under the Pledge
Agreements, the Borrower Security Agreement and the Subsidiary Security
Agreements, and that the Lenders have given value pursuant to the Loan
Documents; and
(O) that each party to a Loan Document is entering into such Loan
Document in the ordinary course of its business.
Based upon the foregoing, we are of the opinion that:
1. The Company Loan Documents constitute the valid and binding
obligations of the Company, enforceable against the Company in accordance
with their terms. Each of the MDI Pledge Agreement and the MDI Deposit
Account Control Agreement constitutes the valid and binding obligation of
MDI, enforceable against MDI in accordance with its terms. The MCS Pledge
Agreement constitutes the valid and binding obligation of MCS, enforceable
against MCS in accordance with its terms. Each Subsidiary Guaranty
constitutes the valid and binding obligations of the Subsidiary Guarantor
which is a party thereto, enforceable against such Subsidiary Guarantor in
accordance with its terms. Each Subsidiary Security Agreement constitutes
the valid and binding obligations of the Subsidiary Security Interest
Grantor which is a party thereto, enforceable against such Subsidiary
Security Interest Grantor in accordance with its terms.
2. The provisions of the Borrower Security Agreement, the Subsidiary
Security Agreements and the Pledge Agreements are each sufficient to create
a valid security interest in favor of the Collateral Agent for the benefit
of the Lenders in the Collateral (as defined therein) as security for the
Obligations.
3. After delivery to the Collateral Agent in New York of the
certificates evidencing the Pledged Securities (as defined in the Pledge
Agreements), and assuming (i) continued possession of such certificates
evidencing the Pledged Securities by the Collateral Agent in State of New
York, (ii) that none of the Collateral Agent, the Administrative Agent nor
any Lender has notice prior to or on the date of the delivery of such
Pledged Securities of any adverse claim within the meaning of Article 8 of
the New York UCC, and (iii) that the Collateral Agent, as agent for the
Lenders, has taken such Pledged Securities for value, the security interest
of the Collateral Agent in the Pledged Securities so delivered constitutes
a valid and perfected security interest as security for the Obligations,
and the Collateral Agent's security interest in the Pledged Securities will
have priority over any other security interest therein.
4. The security interest of the Collateral Agent in the Collateral
described in the MDI Security Agreement and the MDI Pledge Agreement
constitutes a valid and perfected security interest in such Collateral to
the extent a security interest in such Collateral may be perfected under
the UCC by filing financing statements.
5. The security interests of the Collateral Agent in the Collateral
described in the Borrower Security Agreement and the Borrower Pledge
Agreement, the MTS Security Agreement, the MDSI Security Agreement, the MSI
Security Agreement, the MWSI Security Agreement, the MCS Security
Agreement, the MCS Pledge Agreement, the MCCS Security Agreement, the MCSI
Security Agreement, the MFSI Security Agreement and the Crescent Security
Agreement, constitute a valid and perfected security interest in such
Collateral to the extent a security interest in such Collateral may be
perfected under the UCC by filing financing statements.
6. The security interest of the Collateral Agent in the Collateral
described in the MWSF Security Agreement constitutes a valid and perfected
security interest in such Collateral to the extent a security interest in
such Collateral may be perfected under the UCC by filing financing
statements.
7. Each Deposit Account Control Agreement is sufficient to establish
"control" (within the meaning of Section 9-104 of the UCC) and upon
attachment of the security interests granted by the Borrower Security
Agreement and the MDI Security Agreement (as the case may be), will be
sufficient to perfect the security interests in the deposit accounts
described therein in favor of the Collateral Agent for the benefit of the
Lenders.
8. The execution and delivery of the Loan Documents executed by the
Company and the borrowing and repayment of debt and providing of security
for such borrowing pursuant to the Loan Documents will not violate or cause
a breach of the Senior Note Indentures or any other agreements and
instruments of the Company set forth in the Officers' Certificate (other
than any violations of any financial test or covenant contained in any such
agreement or instrument of the Company contained therein as to which we
render no opinion) identified (and copies of which have been provided to
us) by the Company as all agreements or instruments in effect on the date
hereof pursuant to which indebtedness of the Company for borrowed money in
an amount in excess of $5,000,000 is outstanding.
9. Neither the Company nor any Subsidiary is a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" within the meaning of the Public Utility Holding Company Act of
1935, as amended.
10. Neither the Company nor any Subsidiary is an "investment company"
or a company controlled by an "investment company" within the meaning of
the Investment Company Act of 1940.
11. No consent from or 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 does not violate applicable federal or State of
Minnesota law, rules or regulations.
The opinions set forth above are subject to the following
qualifications and exceptions:
(a) Our opinions are subject to the effect of bankruptcy, insolvency,
reorganization, arrangement, moratorium, fraudulent transfer, statutes of
limitation, or other similar laws and judicial decisions affecting or
relating to the rights of creditors generally, and are further subject to
the effect of general principles of equity, including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing,
election of remedies, estoppel and other similar doctrines affecting the
enforceability of agreements generally (regardless of whether considered in
a proceeding in equity or at law). In addition, the availability of
specific performance, injunctive relief, the appointment of a receiver or
other equitable remedies is subject to the discretion of the tribunal
before which any proceeding therefore may be brought.
(b) Our opinions are further subject to other laws and judicial
decisions affecting the rights of creditors and secured creditors
generally, including without limitation, the following:
(i) We express no opinion as to the enforceability of provisions
of the Loan Documents to the extent they contain:
(A) forum selection or choice of law provisions,
(B) waivers by the Company or any other Loan Party of any
statutory or constitutional rights or remedies,
(C) grants to an Agent of powers of attorney,
(D) cumulative remedies to the extent such cumulative
remedies purport to compensate, or would have the effect of
compensating, the party entitled to the benefits thereof in an
amount in excess of the actual loss suffered by such party,
(E) obligations of the Company to pay any prepayment
premium, default interest rate, early termination fee or other
form of liquidated damages, if the payment of such premium,
interest rate, fee or damages may be construed as unreasonable in
relation to actual damages or disproportionate to actual damages
suffered by the Lenders as a result of such prepayment, default
or termination,
(F) terms which excuse any Person from liability for, or
require a Loan Party to indemnify such Person against such
Person's gross negligence or willful misconduct;
(G) terms purporting to establish evidentiary standards, or
(H) terms to the effect that provisions in the Loan
Documents may not be waived or modified except in writing may be
limited under certain circumstances.
(ii) The enforceability of the remedies, covenants or other
provisions of the Loan Documents and the availability of equitable
remedies may be limited where a court having competent jurisdiction
finds that such remedies, covenants or provisions were at the time
made, or are in application, unconscionable as a matter of law or
public policy.
(iii) Except as set forth in paragraph 8, above, the grant of a
security interest in Collateral under the Loan Documents, or the
transfer of rights in such security interest or Collateral may, in
some instances, require or be conditioned upon receipt of consent of
third parties, but such requirements or conditions may not be
effective as to assignments or grants of security interests in certain
types of Collateral, including accounts, chattel paper, payment
intangibles, promissory notes, leasehold or landlord's residual
interests, certain general intangibles and letter of credit rights, as
provided in Sections 9-404 through 9-409 of the New York UCC.
(iv) Restrictions in the Loan Documents on the voluntary or
involuntary transfer of a Person's rights in such Person's assets may
be limited as provided in Section 9-401 of the New York UCC;
(v) The rights of debtors, guarantors and other secured parties
to receive notices under Section 9-602 of the New York UCC may not be
varied or waived, subject to Section 9-624 of the New UCC; and
(vi) Notwithstanding any language of the Loan Documents to the
contrary, the Agents and Lenders may be limited to recovery of only
reasonable expenses, including, without limitation, reasonable
attorneys' fees and legal expenses, with respect to the retaking,
holding, preparing for sale, selling, pledging, hypothecating or
otherwise transferring Collateral.
(c) Our opinions in paragraph 1, above, insofar as they relate to the
enforceability of indemnification provisions set forth in the Loan
Documents, are subject to the effect of federal and state securities laws
and public policy relating thereto.
(d) Our opinions in paragraphs 4, 5, 6 and 7, above, as to perfection
of the security interests of the Collateral Agent in the Collateral are
further subject to the following additional qualifications:
(i) we express no opinion as to Collateral which consists of or
will consist of consumer goods or accounts resulting from the sale
thereof, beneficial interests in a trust or decedent's estate, deposit
accounts, commercial tort claims, letters of credit or letter of
credit rights, goods subject to certificates of title (including,
without limitation, motor vehicles), fixture, interests in real
property, equipment to be used in farming operations, farm products,
agricultural or farm property, accounts or general intangibles arising
from or relating to the sale of farm products, crops, timber,
minerals, oil, gas or the like, or items which are subject to a
statute or treaty of the United States which provides for a national
or international certificate of title for the perfection of a security
interest therein or which specifies a place of filing different from
that specified in the New York UCC for filing to perfect such security
interest, or in the case of the sale of any of the foregoing,
accounts, promissory notes or general intangibles arising with respect
thereto;
(ii) we express no opinion as to matters excluded from Article 9
of the UCC by Section 9-109 of the UCC;
(iii) the effect of Section 9-315 of the UCC as to proceeds of
Collateral and Sections 9-320 and 9-330 of the UCC as to buyers and
purchasers of Collateral in certain circumstances;
(iv) the requirement that continuation statements with respect to
the Financing Statements be filed within six months prior to the
fifth, tenth, fifteenth, etc. anniversaries of the original filing of
the Financing Statements;
(v) the security interest of the Collateral Agent in the
Collateral may become unperfected if a Loan Party changes its name,
jurisdiction of formation or its status therein, or identity or entity
structure;
(vi) we express no opinion as to the validity or perfection of
any security interest purported to be granted in that portion of the
Collateral that constitutes an interest or claim in or under a policy
of insurance (except as provided in Section 9-9-315 of the UCC with
respect to proceeds), a right represented by a judgment, a right of
setoff, a claim arising out of tort or an interest in any deposit
account (except as set forth in the paragraph 7 above, and except as
provided in Section 9-315 of the UCC with respect to proceeds);
(vii) in the case of Collateral consisting of money, the security
interests granted pursuant to the Borrower Security Agreement and the
Subsidiary Security Agreements cannot be perfected by filing the
Financing Statements but can only be perfected if possession thereof
is obtained;
(viii) we express no opinion with respect to the perfection of
the Collateral Agent's security interest in any patents, patent
applications, patents pending, copyrights, trademarks, trade names,
trademark registrations or other interests subject to federal patent,
trademark or copyright laws; and
(ix) except as set forth in paragraph 7 above, we express no
opinion with respect to the perfection of the Collateral Agent's
security interest in any Collateral which may only be perfected by
"control" within the meaning given to such term in the UCC.
(e) We express no opinion concerning the Company's or any other Loan
Party's rights in or title to, or (except as set forth in paragraph 3
above) the priority of any security interest, or the pledge, lien, mortgage
or other similar interest in, any real or personal property. Except as
specifically set forth in paragraphs 2 through 6 above, we express no
opinion concerning the validity or perfection of any security interest,
pledge, lien, mortgage or other similar interest in any real or personal
property.
(f) We express no opinion as to compliance or the effect of
noncompliance by the Administrative Agent, the Collateral Agent or any
Lender with any state or federal laws or regulations applicable to any such
Person in connection with the transactions described in the Loan Documents.
In addition, the sale of Collateral consisting of stock of an Insured
Institution - including without limitation, the stock of DMCCB- is subject
to restrictions on bank ownership by certain Persons including under the
Bank Holding Company Act of 1956, as amended, and the Change in Bank
Control Act of 1978, as amended.
(g) We express no opinion as to the enforceability of any Subsidiary
Guaranty as a primary obligation rather than as a surety, as set forth in
the first sentence of Section 2(a) of the Subsidiary Guaranty, and our
opinions in paragraph 1 above with respect to the Subsidiary Guaranties are
subject to the defenses available to a guarantor under applicable law, but
the waivers of such defenses set forth in the Subsidiary Guaranties are
enforceable, subject to the other exceptions and qualifications set forth
herein.
(h) We express no opinions on the enforceability of the provisions of
the Loan Documents regarding the rights of setoff to the extent that the
rights provided to the Lenders or an Agent thereunder are inconsistent with
the statutory rights of banks under applicable law to effect setoffs.
(i) We express no opinion as to the enforceability of the following
provisions contained in the Loan Documents: (i) waivers contained in
clauses (ii), (vii, (xiv) and (xv) of the ninth paragraph of Section 2(a)
of each of the Subsidiary Guaranties; (ii) clause (g) of the tenth
paragraph of Section 2(a) of each of the Subsidiary Guaranties; and (iii)
waivers contained in the last paragraph of Section 12.5 of the Borrower
Security Agreement and the Subsidiary Security Agreements.
(j) We express no opinions as to any deposit accounts or securities
accounts referenced in any control agreement that may have been closed
prior to the date hereof.
(k) Section 290.371, subd. 4, of the Minnesota Statutes provides that
any corporation required to file a Notice of Business Activities Report
does not have a cause of action upon which it may bring suit under
Minnesota law unless the corporation has filed a Notice of Business
Activities Report and that the use of the courts of the State of Minnesota
for all contracts executed and all causes of actions that arose before the
end of any period for which a corporation failed to file a required report
is precluded. Insofar as the foregoing opinion may relate to the
enforceability of any agreement under Minnesota law or in a Minnesota
court, we have assumed that any party seeking to enforce the agreement has
at all times been, and will continue at all times to be, exempt from the
requirement of filing a Notice of Business Activities Report or, if not
exempt, has duly filed, and will continue to duly file, all Notice of
Business Activities Reports.
Our opinions expressed above are given with the understanding that they
will be interpreted in accordance with the Special Report of the Tribar Opinion
Committee on U.C.C. Security Interest Opinions, 49 Bus. L. 359 (1993).
Our opinions expressed above are limited to the laws of the United
States of America and the State of New York, except that (i) our opinion in
paragraph 11 above is under the laws of the United States of America and the
State of Minnesota, and as to Collateral for which Minnesota law applies under
Section 9-301 of the New York UCC, we are also opining in paragraph 4 above as
to perfection of such security interests under the laws of the State of
Minnesota, (ii) as to Collateral for which Delaware law applies under Section
9-301 of the New York UCC, we are also opining in paragraph 5 above as to
perfection of such security interests under the Delaware UCC as published in CCH
Secured Transaction Reports, and (iii) as to Collateral for which Florida law
applies under Section 9-301 of the New York UCC, we are also opining in
paragraph 6 above, as to perfection of such security interests under the Florida
UCC as published in CCH Secured Transaction Reports.
The foregoing opinions are being furnished in connection with the
transactions referred to in the Loan Documents solely for the benefit of the
Administrative Agent, the Collateral Agent, the Lenders and any participants or
assigns as specified in Section 9.04 of the Credit Agreement, and may not be
relied upon by any such Person for any other purpose or relied upon by any other
Person without our prior written consent.
Very truly yours,
SVD/SMD/SEC
