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EXHIBIT 10.39
EXECUTION COPY
THIRD AMENDMENT, dated as of September 28, 1995, to the SECOND
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of August 30, 1994 (as amended
by the First Amendment thereto, dated as of March 29, 1995, and as further
amended by the Second Amendment thereto, dated as of June 28, 1995, the "Credit
Agreement"), among HOME SHOPPING NETWORK, INC., a Delaware corporation, as
borrower (the "Company"), HOME SHOPPING CLUB, INC., a Delaware corporation
("HSC"), HSN REALTY, INC., a Delaware corporation ("HSNR"; together with HSC,
the "Guarantors"), the banks signatory thereto (individually, a "Bank" and
collectively, the "Banks"), LTCB TRUST COMPANY, as Agent, THE BANK OF NEW YORK
COMPANY, INC., TORONTO DOMINION [TEXAS], INC. and BANK OF MONTREAL, each as a
Co-Agent (each in such capacity, a "Co-Agent"), LTCB TRUST COMPANY, as
Administrative Agent for the Banks (in such capacity, the "Administrative
Agent"), and LTCB TRUST COMPANY, as collateral agent for the Banks (in such
capacity, the "Collateral Agent").
WHEREAS, the Company and each of the Guarantors have
requested, and the Banks and the Administrative Agent are willing, to amend
certain provisions of the Credit Agreement to provide for (i) increases in the
availability of the Commitments of certain Banks, (ii) changes in the rate of
interest and certain fees, (iii) additional collateralization of the Company's
obligations under the Credit Agreement, including, without limitation, the
guarantee of HSNR and a pledge by the Company of a first priority security
interest in all its capital stock of HSC and HSNR to the Collateral Agent for
the benefit of the Banks, and (iv) certain other matters as provided herein.
NOW, THEREFORE, in consideration of the foregoing, and for
other good and valuable consideration the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
Section 1. Certain Defined Terms. Except as expressly set
forth in this Third Amendment, terms defined in the Credit Agreement and used
herein shall have their respective defined meanings when used herein.
Section 2. Amendments to the Credit Agreement. Subject to
the fulfillment of the conditions precedent set forth in Section 4 hereof, the
Credit Agreement is hereby amended as follows:
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(a) Section 1.1 of the Credit Agreement is hereby amended
by (i) deleting the reference in clause (ii)(a) of the definition of
"Applicable Margin" set forth in such Section to "2.125%" and replacing it with
"2.50%" and (ii) deleting the reference in clause (ii)(b) of such definition to
"1.125%" and replacing it with "1.50%".
(b) Section 1.1 of the Credit Agreement is hereby further
amended by deleting the definition of "Commitment" and replacing it with the
following:
"Commitment" shall mean, with respect to any Bank,
(a) at any time prior to the Third Amendment Effective Date, the
amount set forth opposite such Bank's name on the signature pages of
the First Amendment under the caption "Commitment", and (b) at any
time on or after the Third Amendment Effective Date, the amount set
forth opposite such Bank's name on the signature pages of the Third
Amendment under the caption "Commitment" (in either case as reduced
from time to time pursuant to Section 2.3 hereof or otherwise).
(c) Section 1.1 of the Credit Agreement is hereby further
amended by deleting the reference in clause (a) of the definition of
"Commitment Termination Date" to "August 30, 1997" and replacing it with "April
1, 1997".
(d) Section 1.1 of the Credit Agreement is hereby further
amended by deleting the first two rows of the grid appearing in the definition
of "Facility Fee Rate" and replacing them with the following:
Effective Total
Debt Ratio Facility Fee Rate
--------------- -----------------
Greater than 4.00 to 1 0.500%
Less than or equal to 4.00
to 1, but greater than
or equal to 3.50 to 1 0.375%
(e) Section 1.1 of the Credit Agreement is hereby further
amended by inserting the name "HSN Direct, Inc. (except for purposes of Section
9.7)" immediately after the name "HSN
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Mail Order, Inc." appearing in the sixth line of the definition of
"Material Subsidiary".
(f) Section 1.1 of the Credit Agreement is hereby further
amended by (i) inserting the words ", the Pledge Agreement" immediately after
the word "Notes" appearing in the fifth line of the definition of "Obligations"
and (ii) inserting the words ", Pledge Agreement" immediately after the word
"Notes" appearing in the sixth line of such definition.
(g) Section 1.1 of the Credit Agreement is hereby further
amended by inserting the words and punctuation ", a limited liability company"
immediately after the words "an unincorporated association" appearing in the
definition of "Person".
(h) Section 1.1 of the Credit Agreement is hereby further
amended by adding the following new definitions thereto in the appropriate
alphabetical position:
"BNY" shall mean The Bank of New York in its capacity
as the issuer of trade letters of credit under the BNY L/C Facility.
"BNY L/C Facility" shall mean a $25,000,000 committed
letter of credit facility, as evidenced by the Letter of Credit
Facility Agreement, dated as of September 28, 1995, as amended,
supplemented or modified from time to time in accordance with the
terms thereof and hereof (the "BNY Facility Agreement"), among HSC,
HSN Mail Order and HSN Direct, Inc., Inc., as applicants, the Company
and HSNR, as guarantors, BNY, as issuer, The Bank of New York Company,
Inc., as a participant, and BNY, as administrative agent.
"Collateral Agent" shall mean LTCB Trust Company in
its capacity as Collateral Agent under the Pledge Agreement.
"Guarantor" shall mean, unless the context provides
otherwise, HSC and HSNR; provided that references in this Agreement to
(i) "[E]ach of the Company and the Guarantor" shall mean "[E]ach of
the Company and each of HSC and HSNR" and (ii) "or the Guarantor" or
"and/or the
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Guarantor" shall mean "or either HSC or HSNR" or "and/or either HSC or
HSNR", as the case may be.
"HSC" shall mean Home Shopping Club, Inc., a Delaware
corporation.
"HSNR" shall mean HSN Realty, Inc., a Delaware
corporation.
"Intercreditor Agreement" shall mean the
Intercreditor Agreement, dated as of September 28, 1995, as amended,
supplemented or modified from time to time, among the Banks, the
Administrative Agent, the Collateral Agent, BNY, The Bank of New York
Company, Inc., BNY, as Administrative Agent under the BNY Facility
Agreement, and such other parties who from time to time either issue
or participate in unreimbursed drawings under Trade Letters of Credit
and become party thereto, substantially in the form of Annex D to the
Third Amendment.
"Pledge Agreement" shall mean the Pledge Agreement,
dated as of September 28, 1995, as amended, supplemented or modified
from time to time, executed and delivered by the Company in favor of
the Collateral Agent, substantially in the form of Annex B to the
Third Amendment.
"Pledged Securities" shall mean all of the shares of
capital stock of HSC and HSNR owned beneficially and of record by the
Company, together with all stock certificates, options and rights of
any nature that may be issued or granted by HSC and/or HSNR to the
Company while this Agreement is in effect.
"Third Amendment" shall mean the Third Amendment,
dated as of September 28, 1995, to this Agreement.
"Third Amendment Effective Date" shall have the
meaning assigned to that term in Section 4 of the Third Amendment.
"Trade Letters of Credit" shall mean (i) the letters
of credit issued under the BNY L/C Facility (or, if the commitments
under the BNY Facility Agreement are
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terminated, the commercial letters of credit issued under a trade
letter of credit agreement with the same covenants, events of default
and maturity date as this Agreement), (ii) a standby letter of credit
(the "Insurance Standby Letter of Credit") issued in substitution for
the standby letter of credit issued by The Chase Manhattan Bank, N.A.
for the account of the Company in favor of the State of Florida in
connection with the Company's self insurance program, the stated
amount of which is, as of the Third Amendment Effective Date, $347,879
and (iii) the outstanding letters of credit (but not extensions or
replacements thereof) as of the Third Amendment Effective Date issued
by The Chase Manhattan Bank, N.A. for the account of HSN Direct, Inc.
and the Company listed on Schedule 5 attached hereto.
(i) Section 2.7(a) of the Credit Agreement is hereby
amended by deleting the words "as originally in effect" appearing in the fifth
line thereof.
(j) Section 2.8 of the Credit Agreement is hereby amended
by (x) inserting "(a)" immediately before the words "The Company" appearing in
the first line thereof, (y) deleting each of the references to "(a)", "(b)" and
"(c) appearing after the proviso and inserting "(i)", "(ii)" and "(iii)" in
lieu thereof and (z) inserting the following new paragraph (b) at the end
thereof:
(b) If the Company or any of its Subsidiaries
shall receive net cash proceeds from (i) any sale, lease, assignment,
conveyance, transfer of title or other disposition (a "disposition")
of any right or interest in or to property of any kind whatsoever,
whether real, personal or mixed and whether tangible or intangible,
including, without limitation, any mortgage of real property and any
sale/ leaseback, but excluding the disposition of inventory in the
ordinary course of business (an "asset disposition"), or (ii) any
disposition of any shares, interests, participations or other
equivalents (however designated) of capital stock of any of its
Subsidiaries (other than HSC and HSNR), any equivalent ownership
interests in any of its Subsidiaries which are not organized as
corporations and any warrants or options to purchase any of the
foregoing (a "stock disposition"), the Company shall, in each such
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instance, apply 100% of such net cash proceeds in excess of $1,000,000
to prepay the Loans. Each such prepayment shall be made, in the case
of any stock disposition involving net cash proceeds of less than
$5,000,000, within 90 days after the date of such disposition and, in
the case of any asset disposition involving net cash proceeds of less
than $5,000,000, within 30 days after the date on which the aggregate
net cash proceeds of all asset dispositions equals $5,000,000 and, in
the case of any asset disposition or stock disposition involving net
cash proceeds of $5,000,000 or more, within 30 days after the date of
such disposition and shall be subject to the indemnity provisions of
Section 5.4 hereof. Any such prepayment shall not reduce the
Commitments as in effect on the Third Amendment Effective Date. For
purposes of this Section 2.8(b), "net cash proceeds" shall mean the
aggregate cash proceeds received by the Company or any of its
Subsidiaries in respect of a disposition (and any cash payments
received in respect of promissory notes or other non-cash
consideration delivered to the Company or any such Subsidiary in
respect of a disposition), less (without duplication) (i) all
reasonable fees and expenses incurred by the Company or such
Subsidiary that are payable to Persons which are not Affiliates or
Subsidiaries of the Company in connection with such disposition, (ii)
all taxes attributable to such disposition which are incurred by the
Company or such Subsidiary and (iii) the aggregate amount of reserves
required in accordance with GAAP to be maintained on the books of the
Company or any of its Subsidiaries in order to pay contingent
liabilities incurred by the Company or any of its Subsidiaries in
respect of such disposition.
(k) Section 3.2 of the Credit Agreement is hereby amended
by (i) deleting the word "and" appearing at the end of clause (a) thereof, (ii)
inserting the word "and" immediately after the semicolon appearing at the end
of clause (b) thereof and (iii) by deleting the reference to "2.625%" in the
proviso to clause (b) thereof and inserting in lieu thereof "3.0%".
(l) Section 4.6 of the Credit Agreement is hereby amended
by deleting each reference in the fourth, 16th and 28th lines thereof to "the
Guarantor" and replacing it with "such Guarantor".
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(m) Section 6 of the Credit Agreement is hereby deleted
in its entirety and the following is hereby inserted in lieu thereof:
Section 6. Guarantee.
6.1 Unconditional Guarantee. For valuable
consideration, receipt of which is hereby acknowledged, and to induce
the Banks to make Loans to the Company, each of the Guarantors hereby,
jointly and severally, unconditionally and irrevocably, guarantees to
the Administrative Agent, the Collateral Agent, the Agent, each of the
Co-Agents and each of the Banks the payment in full when due (whether
at stated maturity, by acceleration or otherwise) of all principal of
and interest on each Loan and all other amounts payable by the Company
hereunder and under the Notes and all other documents referred to
herein or therein, in accordance with the terms hereof and thereof,
and, in the case of any extension of time of payment, in whole or in
part, that all such amounts shall be paid in full when due (whether at
stated maturity, by acceleration or otherwise) in accordance with the
terms of such extension. Each of the Guarantors hereby
unconditionally agrees that upon default in the payment when due
(whether at stated maturity, by acceleration or otherwise) of any of
such principal, interest or other amounts, the Guarantors shall
forthwith pay and perform the same in the money and funds, at the
time, in the place and in the manner provided for such payment in this
Agreement, the Notes or other applicable document.
6.2 Validity. Each of the Guarantors hereby
agrees that the guarantee provided by this Section 6 is a continuing
guarantee of payment and not merely of collection, that it is a
primary, independent obligation of each of the Guarantors and that
each Guarantor's obligations hereunder shall be joint and several,
absolute, unconditional and irrevocable, irrespective of (a) any
invalidity, illegality, irregularity or unenforceability of, or defect
in or any change in this Agreement, the Notes, the Pledge Agreement or
any other document referred to herein or therein, (b) any amendment,
modification or waiver of any term or condition of this Agreement or
the Notes or the
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Pledge Agreement or any such other document, or any waiver or consent
by the Administrative Agent, the Collateral Agent or any Bank to any
departure from the terms hereof or thereof, (c) any sale, exchange,
release, surrender, realization upon or other dealings with any
security or guarantee for any of the obligations guaranteed hereby
(whether now or hereafter granted), (d) any settlement or compromise
of such obligations, (e) the absence of any action to demand or
enforce any of such obligations against the Company, (f) the recovery
of any judgment against the Company or any other Person, or any action
to enforce the same, (g) the recovery of any claim under any other
guarantee of or security for such obligations or under any applicable
insurance, or (h) any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor or
surety (other than full and strict compliance with and satisfaction of
such liabilities).
6.3 Waivers. Each of the Guarantors hereby
waives notice of acceptance of the guarantee provided by this Section
6, notice of the extension of any credit or financial accommodation,
notice of the making of any Loan or the incurrence of any other
Obligations, notice of any extension of any Commitment Termination
Date, demand of payment, filing of claims with a court in the event of
bankruptcy of the Company or any other Person, any right to require a
proceeding or the filing of a claim first against the Company, any
other guarantor, any other Person, any letter of credit, or any
security for any of the Obligations, presentment, protest, notice of
default, dishonor or nonpayment and any other notice and all demands
whatsoever. Each of the Guarantors hereby further waives all setoffs
and counterclaims against the Company, the Administrative Agent, the
Collateral Agent, the Agent, each of the Co-Agents and each of the
Banks.
6.4 Subordination and Subrogation. Each of the
Guarantors hereby subordinates all present and future claims, now held
or hereafter acquired, against the Company as a creditor or
contributor of capital, or otherwise, to the prior and final payment
in full to the Banks of all of the Obligations. If, without reference
to the provisions of this Section 6.4, either of the Guarantors would
at any time
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be or become entitled to receive any payment on account of any claim
against the Company, whether in insolvency, bankruptcy, liquidation or
reorganization proceedings, or otherwise, such Guarantor shall and
does hereby irrevocably direct that all such payments shall be made
directly to the Administrative Agent on account of the Banks until all
Obligations shall be paid in full. Should either of the Guarantors
receive any such payment, such Guarantor shall receive such amount in
trust for the Banks and shall immediately pay over to the
Administrative Agent such amount as provided in the preceding
sentence.
Anything contained in this Section 6 to the contrary
notwithstanding, the obligations of each of the Guarantors hereunder
shall be limited to a maximum aggregate amount equal to the largest
amount that would not render its obligations hereunder subject to
avoidance as a fraudulent transfer or conveyance under Section 548 of
Title 11 of the United States Code or any applicable provisions of
comparable state law (collectively, the "Fraudulent Transfer Laws"),
in each case after giving effect to all other liabilities of such
Guarantor, contingent or otherwise, that are relevant under the
Fraudulent Transfer Laws (specifically excluding, however, any
liabilities of such Guarantor in respect of intercompany indebtedness
to the Company or other Affiliates of the Company to the extent that
such indebtedness would be discharged in an amount equal to the amount
paid by such Guarantor hereunder) and after giving effect as assets to
the value (as determined under the applicable provisions of the
Fraudulent Transfer Laws) of any rights to subrogation or contribution
of such Guarantor pursuant to (i) applicable law or (ii) any agreement
providing for an equitable allocation among such Guarantor and other
Affiliates of Company of obligations arising under guaranties by such
parties.
Each of the Guarantors further agrees that any rights
of subrogation such Guarantor may have against the Company, and any
rights of contribution such Guarantor may have against Company, and
any rights of contribution such Guarantor may have against the other
Guarantor or any other guarantor of the Obligations hereunder, shall
be junior and subordinate to any rights the Administrative Agent or
the
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Banks may have against such other Guarantor or any such other
guarantor.
6.5 Acceleration. Each of the Guarantors agrees
that, as between the Company on the one hand, and the Administrative
Agent, the Collateral Agent, the Agent, the Co-Agents and the Banks,
on the other hand, the obligations of the Company guaranteed under
this Section 6 may be declared to be forthwith due and payable, or may
be deemed automatically to have been accelerated, as provided in
Section 10 hereof for purposes of this Section 6, notwithstanding any
stay, injunction or other prohibition (whether in a bankruptcy
proceeding affecting the Company or otherwise) preventing such
declaration as against the Company and that, in the event of such
declaration or automatic acceleration, such obligations (whether or
not due and payable by the Company) shall forthwith become due and
payable by such Guarantor for purposes of this Section 6.
6.6 Reinstatement. Each of the Guarantors
covenants that the guarantee provided by this Section 6 will not be
discharged except by complete and final payment of all of the
Obligations and all obligations of the Guarantors arising out of this
guarantee. In the event that any payment is made by the Company
hereunder or by either of the Guarantors under this guarantee, and is
thereafter required to be rescinded or otherwise restored or paid over
to the Company, such Guarantor or any other person (whether upon the
insolvency or bankruptcy of the Company or either Guarantor or
otherwise), each Guarantor's obligations hereunder shall immediately
and automatically be reinstated as though such payment had not been
made.
(n) Section 7.2(b) of the Credit Agreement is hereby
amended by deleting the words "date of the Second Amendment" wherever they
appear and replacing them with "date of the Third Amendment".
(o) Section 7.2 of the Credit Agreement is hereby further
amended by deleting the words "and the Guarantor" appearing in the last
sentence thereof and replacing them with "and each Guarantor".
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(p) Section 8.2 of the Credit Agreement is hereby amended
by (i) deleting the reference in the first sentence thereof to "March 31, 1995"
and replacing it with "June 30, 1995", (ii) inserting the word and punctuation
"two-" immediately before the words "Fiscal Quarter" appearing in the first
sentence thereof and (iii) deleting the reference in the last sentence thereof
to "the Second Amendment" and replacing it with "the Third Amendment".
(q) Sections 8.4, 8.5 and 8.6 of the Credit Agreement are
hereby amended in their entirety as follows:
8.4. No Breach. Neither the execution and delivery
of this Agreement, the Pledge Agreement and the Notes, nor the
consummation of the transactions contemplated hereby and thereby, nor
the compliance by the Company or either Guarantor with the terms and
provisions hereof or thereof will (a) conflict with or result in a
breach of, or require any consent or vote of any Person under, the
certificate of incorporation or bylaws of the Company or either
Guarantor, or any agreement or instrument to which the Company, either
Guarantor or any Subsidiary of any thereof is a party or to which it
is subject, (b) violate any applicable law, regulation, order, writ,
injunction or decree of any court or governmental authority or agency,
or (c) constitute a default or, except as set forth in the Pledge
Agreement, result in the imposition of any Lien on any of the assets,
revenues or other properties of the Company, either Guarantor or any
Subsidiary of any thereof under any such Agreement or instrument.
8.5. Corporate Action. The execution, delivery and
performance by each of the Company and each Guarantor of this
Agreement and the Notes, and the execution, delivery and performance
by the Company of the Pledge Agreement, and the consummation of the
transactions contemplated hereby and thereby, are within the scope of
its corporate powers, and have been duly authorized by all necessary
corporate action on the part of each of them. This Agreement
constitutes, and each of the Notes, when duly executed and delivered
will constitute, the legal, valid and binding obligation of the
Company and each Guarantor, and the Pledge Agreement constitutes the
legal, valid and binding obligation of the
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Company, enforceable against each of them, as the case may be, in
accordance with their respective terms, except as such enforceability
may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or other similar laws of general applicability affecting
the enforcement of creditors' rights and (b) the application of
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
8.6. Approvals. No authorizations, approvals or
consents of, and no filings or registrations with, any governmental or
regulatory authority or agency are necessary for the execution,
delivery of performance by the Company or either Guarantor of this
Agreement or the Notes or by the Company of the Pledge Agreement or
for the validity or enforceability hereof or thereof, or for the
consummation of the transactions contemplated hereby and thereby.
(r) Sections 8.7, 8.10 and 8.13 of the Credit Agreement
are hereby amended by deleting each reference therein to "the Guarantor" and
replacing it with "either Guarantor".
(s) Section 8.9(b) of the Credit Agreement is hereby
amended by (i) deleting the phrase "Each of the Company, the Guarantor" and
replacing it with "Each of the Company, each Guarantor" and (ii) deleting the
phrase "by the Company, the Guarantor" and replacing it with "by the Company,
either Guarantor".
(t) Section 8.11 of the Credit Agreement is hereby
amended by deleting the words "the Guarantor" and replacing them with "each
Guarantor".
(u) Section 8.14 of the Credit Agreement is hereby
amended by deleting the words "and the Guarantor" each time they appear in the
first sentence thereof and replacing them with "and each Guarantor".
(v) Section 8 of the Credit Agreement is hereby amended
by adding at the end thereof the following new Section 8.16:
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8.16. Pledge Agreement. By virtue of the execution
and delivery by the Company of the Pledge Agreement, when the stock
certificates representing the Pledged Securities owned by the
Company are delivered to the Collateral Agent in accordance with the
Pledge Agreement, the Collateral Agent will obtain and, so long as
the Collateral Agent maintains possession of the certificates
representing the Pledged Securities, will have and will continue to
have a valid and perfected first priority security interest in such
Pledged Securities, for the benefit of the Banks and the parties to
the BNY L/C Facility, as security for the repayment and performance in
full of the Secured Obligations (as defined in the Pledge Agreement),
prior to all other Liens thereon.
(w) Section 9.5 of the Credit Agreement is hereby amended
by (i) deleting the date "December 31, 1993" in clause (a) thereof and
replacing it with "December 31, 1994", (ii) deleting the words "Footnotes D and
G" in said clause (a) and replacing them with "Footnotes D and H", (iii)
deleting the reference to "Section 9.5(i)" in clause (b) thereof and replacing
it with "Section 9.5(j)", (iv) deleting the word "and" appearing immediately
after the semicolon at the end of clause (h) thereof, (v) relettering clause
(i) thereof as "(j)", (vi) adding a new clause (i) as follows:
(i) Liens on property of the Company or its Subsidiaries which
secure Indebtedness under the Trade Letters of Credit having an
aggregate principal amount not exceeding at any time $40,000,000;
provided that such Liens shall be limited to specified items of
collateral (and not a general Lien on all assets of the Company or its
Subsidiaries); and
and (vii) inserting the following phrase immediately before the period
appearing after the proviso:
, except for the Lien created pursuant to the Pledge Agreement
(x) Section 9.11 of the Credit Agreement is hereby
amended by deleting each of the provisos in their entirety and inserting the
following in lieu thereof:
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; provided that (i) the ratio for the four-Fiscal Quarter period ended
September 30, 1996 shall be 2.5:1 and (ii) the ratio for the
four-Fiscal Quarter period ended December 31, 1996 shall be 3.75:1,
and; provided, further, that the covenants in this Section 9.11 shall
not be in effect until September 30, 1996.
(y) Section 9.13 of the Credit Agreement is hereby
amended by (i) deleting the reference to "$175,000,000" and replacing it with
"$165,000,000" and (ii) deleting the date "June 30, 1994" appearing in the
fifth line thereof and replacing it with "September 30, 1995".
(z) Section 9.17 of the Credit Agreement is hereby
amended by (i) deleting the word "and" appearing at the end of clause (iv)
thereof, (ii) deleting the period appearing at the end of clause (v) thereof
and inserting "; and" in lieu thereof and (iii) inserting the following new
clause (vi) at the end thereof:
(vi) The joint and several liability of HSNR and the Company
for the obligations of HSC, HSN Mail Order, Inc. and HSN Direct, Inc.
under the BNY L/C Facility or the liability of the Company in
connection with the Insurance Standby Letter of Credit.
(aa) Section 9.20(a) of the Credit Agreement is hereby
amended by deleting the grid set forth therein in its entirety and inserting
the following in lieu thereof:
Fiscal Quarter
Ending On Minimum Operating Cash Flow
--------- ---------------------------
September 30, 1995 <$7,000,000>
December 31, 1995 <$3,000,000>
March 31, 1996 $0
June 30, 1996 $5,000,000
; provided that, for purposes of calculating Operating Cash Flow for
the Fiscal Quarter ending on either September 30, 1995 or December 31,
1995, Operating Cash Flow shall be calculated prior to giving effect
to up to $7,500,000 in the aggregate of severance and restructuring
charges.
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(bb) Section 9.20(b) of the Credit Agreement is hereby
deleted in its entirety and "[Reserved.]" is inserted in lieu thereof.
(cc) Section 9.20(c) of the Credit Agreement is hereby
deleted in its entirety and the following is inserted in lieu thereof:
(c) The Company shall maintain the Total Debt Ratio of the
Company and its Subsidiaries on a consolidated basis at less than (i)
5.0:1 at all times from and including September 30, 1996 to and
including ▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇) 4.0:1 at all times from and
including December 31, 1996 to and including March 30, 1997 and (iii)
3.0:1 at all times from and including March 31, 1997 to and including
April 1, 1997.
(dd) Section 9.20(d) of the Credit Agreement is hereby
amended by (i) deleting the date "March 31, 1995" and replacing it with "the
Third Amendment Effective Date", (ii) deleting the word "and" appearing before
"(ii)" and (iii) inserting "and (iii) Indebtedness of the Company and the
Guarantors under the BNY L/C Facility and in connection with the Insurance
Standby Letter of Credit" immediately after the reference to "Section 9.20(e)
hereof" appearing in the parenthetical set forth therein.
(ee) Section 9.20(e) of the Credit Agreement is hereby
amended by (i) deleting the date "March 31, 1996" appearing in the third line
thereof and replacing it with "September 29, 1996" and (ii) deleting the last
four entries in the grid contained therein in their entirety and inserting the
following in lieu thereof:
Maximum Aggregate
Period Principal Amount
------ -----------------
After June 30, 1995 and $105,000,000
at any time prior to the
Third Amendment Effective
Date
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At any time on or after $150,000,000
the Third Amendment
Effective Date and on or
prior to September 29,
1996
(ff) Section 9.20(f) of the Credit Agreement is hereby
amended by (i) deleting the parenthetical phrase "(as hereinafter defined)"
appearing in the first sentence thereof, (ii) deleting the last three entries
in the grid contained therein in their entirety and inserting the following in
lieu thereof:
Period Maximum Aggregate Amount
------ ------------------------
After June 30, 1995 $25,000,000
and on or prior to
September 29, 1996
and (iii) deleting the second sentence thereof in its entirety.
(gg) Section 9.20(g) of the Credit Agreement is hereby
amended by (i) inserting the phrase "unless otherwise provided in this Section
9.20 and" immediately after the first reference to "June 30, 1996," and (ii)
inserting the words "or later" immediately after the words "or such earlier"
appearing in the 14th line thereof.
(hh) Section 9.21 of the Credit Agreement is hereby
amended by adding the following proviso at the end thereof:
; provided that, for purposes of calculating current liabilities for
any Fiscal Quarter ended on or after September 30, 1995, any amounts
due within one year in respect of the principal of the Loans made
hereunder shall be excluded.
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17
(ii) Section 9 is hereby further amended by adding the
following new Sections 9.22 and 9.23:
9.22. Restricted Investments. The Company shall not, and
shall not permit either Guarantor or any of its other Subsidiaries to,
make any cash investments except for:
(i) investments (by way of capital contribution or
otherwise) in HSC and other Wholly-Owned Subsidiaries of the
Company existing as of the Third Amendment Effective Date and
identified on Schedule 4 to this Agreement and HSN Direct,
Inc. a Delaware corporation, ▇▇▇▇ Research, Inc., a Delaware
corporation, HSN Interactive, Inc., a Delaware corporation,
and Internet Software, Inc., a California corporation; and
(ii) investments in (a) commercial paper rated A-1 or
the equivalent thereof by Standard and Poor's Corporation or
P-1 or the equivalent thereof by ▇▇▇▇▇'▇ Investors Service,
Inc. and in each case maturing within six months after the
date of acquisition thereof,(b) eurodollar time deposits and
certificates of deposit with maturities of six months or less
from the date of acquisition, and overnight bank deposits, in
each case, with any Bank or with any domestic commercial bank
having capital and surplus in excess of $100,000,000 and (c)
securities issued or fully guaranteed or insured by the United
States Government or any agency or instrumentality thereof
having maturities of not more than six months from the date of
acquisition.
9.23. BNY Facility Agreement. The Company shall not amend,
modify, terminate or waive, and shall not permit any of its Subsidiaries to
agree to any amendment, modification, termination or waiver of, any of the
terms and conditions set forth in the BNY Facility Agreement in a manner that
would be more restrictive than the terms and conditions set forth in this
Agreement.
(jj) Section 10(d) of the Credit Agreement is hereby
amended by inserting "or the Pledge Agreement" immediately after
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18
the words "the provisions hereof" appearing in the fourth line thereof.
(kk) Sections 10(f), (g), (h), (i) and (j) of the Credit
Agreement are hereby amended by deleting each reference therein to "the
Guarantor" and replacing it with "either Guarantor".
(ll) Section 10 of the Credit Agreement is hereby further
amended by (i) inserting the word "or" immediately after the semicolon
appearing at the end of clause (l) thereof and (ii) adding the following new
clause (m):
(m) any material provision of the Pledge Agreement or Section
6 of this Agreement shall cease, for any reason, to be in full force
and effect, or the Company or either Guarantor shall so assert, or any
Lien created by the Pledge Agreement shall cease, for any reason other
than a change in applicable law, to be enforceable and of the same
effect and priority purported to be created thereby; provided that, in
the event any Lien created by the Pledge Agreement shall cease to be
enforceable and of the same effect and priority purported to be
created thereby solely as a result of a change in applicable law, such
unenforceability and effected priority shall not constitute an Event
of Default so long as the Company takes all necessary action under
such change to restore the enforceability and priority of such Lien
and delivers an opinion of counsel to such effect in form and
substance satisfactory to the Administrative Agent within 30 days of
the effectiveness of such change;
(mm) Section 12.1 of the Credit Agreement is hereby
amended by (i) inserting "the Collateral Agent," immediately before the words
"the Agent" appearing in the second line thereof and (ii) inserting ", the
Pledge Agreement" immediately after each reference therein to "this Agreement"
appearing therein.
(nn) Section 12.2 of the Credit Agreement is hereby
amended by inserting "or, in the case of HSNR, at the 'Address for Notices'
specified beneath its name on the signature pages of the Third Amendment"
immediately after the phrase "below its name on the signature pages hereof"
appearing in the seventh and eighth lines thereof.
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19
(oo) Section 12.3(b) of the Credit Agreement is hereby
amended by inserting the words and punctuation ", the Pledge Agreement"
immediately after the words "this Agreement" appearing in the fourth line
thereof.
(pp) Section 12.4 of the Credit Agreement is hereby
amended by (i) inserting the punctuation and words ", the Pledge Agreement"
immediately after the words "this Agreement" each time such words appear
therein, (ii) deleting the words "or release the Guarantor" appearing in the
21st line thereof and replacing them with "or release either Guarantor", (iii)
adding "or release any of the Pledged Securities," immediately before the
phrase "in each case without the prior written consent of all the Banks"
appearing at the end of clause (a) of the proviso and (iv) inserting "and the
Collateral Agent" immediately before the period appearing at the end of the
second sentence thereof.
(qq) Section 12.6(a) of the Credit Agreement is hereby
amended by deleting the words "nor the Guarantor" and replacing them with the
words "nor either Guarantor".
(rr) Section 12.6(b) of the Credit Agreement is hereby
amended by inserting the words "another Bank or" immediately after the words
"to any Person other than" appearing in the sixth line thereof.
(ss) The last sentence of Section 12.6(c) of the Credit
Agreement is hereby amended by (i) deleting the words "or release the
Guarantor" appearing in clause (iv) thereof and replacing them with "or release
either Guarantor" and (ii) adding "or (v) release any of the Pledged
Securities" immediately before the period appearing at the end thereof.
(tt) Exhibit A of the Credit Agreement is hereby amended
by (i) attaching Annex A hereto thereto as page A-4 and (ii) renumbering page
A-4 thereof as page A-5.
(uu) The Credit Agreement is further amended by attaching
Annex C hereto thereto as Schedule 4.
(vv) The Credit Agreement is further amended by attaching
Annex F hereto thereto as Schedule 5.
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(ww) References in the Credit Agreement to "this
Agreement" and the words "hereof", "herein", "hereto" and the like, shall refer
to the Credit Agreement as amended by the Third Amendment; provided that the
words "the date of this Agreement" and "the date hereof" shall continue to
refer to the date of the Credit Agreement (being August 30, 1994).
(xx) Each reference in the Credit Agreement to the "Notes"
or to a "Note" shall, as of the Third Amendment Effective Date, be deemed to
include the new Notes issued pursuant to the Third Amendment.
(yy) Each reference in Sections 11 and 12.3 of the Credit
Agreement to the "Administrative Agent" shall also be deemed to refer to LTCB
Trust Company in its capacity as "Collateral Agent" under the Pledge Agreement.
Section 3. Representations and Warranties. To induce the
Administrative Agent and each Bank to enter into this Third Amendment, each of
the Company and the Guarantors hereby represents and warrants that each of the
representations and warranties set forth in Section 8 of the Credit Agreement
is true, correct and complete on and as of the date of this Third Amendment
(whether or not the Third Amendment Effective Date, as defined in Section 4
hereof, occurs), and on and as of the Third Amendment Effective Date, both
before and after giving effect to the amendments set forth in Section 2 of this
Third Amendment on either such date, as if each reference therein to "this
Agreement" were a reference to "this Agreement as amended by the Third
Amendment", except that the representations and warranties in the last sentence
of Section 8.2 and in Section 8.11 of the Credit Agreement shall, each time
when they are made under this Section 3, be deemed to have been amended as
provided in Section 2(i) of the Second Amendment and Section 2(p) of this Third
Amendment, in the case of Section 8.2, and Section 2(k) of the Second Amendment
and Section 2(t) of this Third Amendment, in the case of Section 8.11. Each of
the Company and the Guarantors further represents and warrants that, as of the
date of this Third Amendment and as of the Third Amendment Effective Date, no
Default or Event of Default has occurred and is continuing.
Section 4. Conditions to Effectiveness. The amendments set
forth in Section 2 of this Third Amendment shall become
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21
effective as of the date (the "Third Amendment Effective Date"), as specified
by the Administrative Agent, when counterparts hereof shall have been duly
executed and delivered by the Majority Banks, each of the Banks whose
Commitments are to be increased as of the Third Amendment Effective Date, the
Administrative Agent, the Company and each of the Guarantors, and when each of
the conditions precedent set forth in this Section 4 shall have been fulfilled
to the satisfaction of the Administrative Agent:
A. The Administrative Agent shall have received each
of the following documents, each of which shall be satisfactory to the
Administrative Agent in form and substance:
(1) New Notes, substantially in the form of
Exhibit A to the Credit Agreement, duly executed and delivered
by the Company to the order of each Bank whose Commitment is
either increasing or decreasing as of the Third Amendment
Effective Date and otherwise appropriately completed, bearing
the executed guarantee of each Guarantor, and dated the
earliest last date through which interest was paid on the
Loans (the "New Notes").
(2) A guarantee, substantially in the form of page
A-4 of Exhibit A to the Credit Agreement, as amended hereby,
duly executed and delivered by HSNR, of the Company's
obligations under each of the Notes that were issued by the
Company prior to the Third Amendment Effective Date to a Bank
whose Commitment shall not be increased or reduced as of the
Third Amendment Effective Date.
(3) The Pledge Agreement, substantially in the
form of Annex B hereto, duly executed and delivered by the
Company.
(4) Stock certificates evidencing all of the
Pledged Securities, together with an undated stock power for
each such certificate executed in blank by a duly authorized
officer of the Company and duly
-21-
22
completed and executed financing statements on Form UCC-1.
(5) Evidence of the fulfillment of all the
conditions precedent to the effectiveness of the BNY Facility
Agreement and the consummation of the closing contemplated
under the BNY L/C Facility.
(6) The Intercreditor Agreement, substantially in
the form of Annex D hereto, duly executed and delivered by the
Banks, the Administrative Agent, the Collateral Agent, BNY,
The Bank of New York Company, Inc. and BNY, as Administrative
Agent under the BNY Facility Agreement.
(7) Certified copies of the certificate of
incorporation and by-laws of the Company and each Guarantor
and all corporate action and (if necessary) stockholder action
taken by the Company and each Guarantor approving this Third
Amendment, the Credit Agreement, as amended hereby, and, in
the case of the Company, the Pledge Agreement and borrowings
by the Company under the Credit Agreement, as amended hereby,
the guarantee by each Guarantor hereunder and thereunder and
the consummation of the transactions contemplated hereby and
thereby (including, without limitation, a certificate setting
forth the resolutions of the Boards of Directors of the
Company and each Guarantor adopted in respect of the
transactions contemplated hereby and thereby).
(8) A certificate of each of the Company and each
Guarantor in respect of each of the officers (i) who is
authorized to sign this Third Amendment or the New Notes or,
in the case of HSNR, the guarantees relating to the Notes
issued prior to the Third Amendment Effective Date, on its
behalf and (ii) who will, until replaced by another officer or
officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and
giving notices and other communications in connection with the
Credit Agreement, as amended hereby, and the transactions
contemplated thereby and hereby. The Administrative
-22-
23
Agent, the Agent, the Co-Agents and the Banks may conclusively
rely on such certificate until the Administrative Agent
receives notice in writing from the Company or either
Guarantor, respectively, to the contrary.
(9) Certificates, as of a recent date, from the
appropriate authorities for each jurisdiction in which the
Company and each Guarantor are incorporated or qualified to do
business, as to the good standing of the Company and each
Guarantor, respectively, in each such jurisdiction.
(10) An opinion of Counsel to the Company and the
Guarantors, substantially in the form of Annex E hereto.
(11) A certificate of a senior officer of each of
the Company and each Guarantor to the effect set forth in
Section 4.D of this Third Amendment.
(12) Evidence of the payment of the fees provided
for in Sections 4.B and 4.C of this Third Amendment, and of
all other fees and expenses then payable, including, without
limitation, pursuant to Section 12.3 of the Credit Agreement.
(13) Evidence of payment (to the extent then
payable) of (a) all interest on the Loans outstanding under
the Credit Agreement and (b) all facility fees accrued through
the Third Amendment Effective Date.
(14) Such other documents and information as the
Administrative Agent or any Bank may reasonably request,
including, without limitation, all requisite governmental
approvals and filings.
B. The Company shall have paid to the Administrative
Agent, for the account of each Bank, a non-refundable amendment fee in an
amount equal to 0.25% of the amount of such Bank's Commitment as in effect
immediately prior to the Third Amendment Effective Date.
-23-
24
C. The Company shall have paid to the Administrative
Agent the fees provided for in each of the letters, dated September 13, 1995,
executed by the Company and HSC and delivered to the Administrative Agent, at
the times specified therein.
D. As of such date:
(1) No Default or Event of Default shall have occurred
and be continuing; and
(2) The representations and warranties made by the
Company and each of the Guarantors in Section 3 hereof and in any
other certificate or other document delivered in connection with this
Third Amendment or the Credit Agreement, as amended hereby, shall be
true, correct and complete on and as of each such date with the same
force and effect as if made on and as of such date.
The Administrative Agent will promptly notify the other parties of the
occurrence of the Third Amendment Effective Date.
Section 5. Miscellaneous.
A. This Third Amendment may be executed in any number of
counterparts, all of which taken together and when delivered to the
Administrative Agent shall constitute one and the same instrument, and any of
the parties hereto may execute this Third Amendment by signing any such
counterpart.
B. Each of the Company and each Guarantor hereby confirms its
obligation, pursuant to Section 12.3(a) of the Credit Agreement, to pay all of
the Administrative Agent's costs and expenses (including, without limitation,
the reasonable fees and expenses of all special counsels to the Administrative
Agent to the extent provided in that certain letter agreement, dated September
13, 1995, among the Company, HSC and the Administrative Agent) in connection
with this Third Amendment, whether or not the Third Amendment Effective Date
occurs.
C. THIS THIRD AMENDMENT AND THE CREDIT AGREEMENT AS AMENDED
HEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
-24-
25
D. Except as expressly set forth in this Third Amendment, the
Credit Agreement as amended prior to the date hereof shall remain unmodified
and in full force and effect.
E. HSNR HEREBY AGREES THAT:
(A) ANY SUIT, ACTION OR PROCEEDING AGAINST HSNR WITH
RESPECT TO THIS THIRD AMENDMENT, THE CREDIT AGREEMENT, AS AMENDED
HEREBY, THE STOCK PLEDGE, THE LOANS, THE NOTES OR ANY DOCUMENTS
RELATED HERETO OR ANY JUDGMENT ENTERED BY ANY COURT IN RESPECT
THEREOF MAY BE BROUGHT IN THE SUPREME COURT OF THE STATE OF NEW YORK,
COUNTY OF NEW YORK, IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, OR IN ANY STATE OR FEDERAL COURT
SITTING IN THE STATE OF FLORIDA (COLLECTIVELY, THE "SUBJECT COURTS"),
AS THE ADMINISTRATIVE AGENT, THE AGENT, EITHER CO-AGENT OR ANY BANK
MAY ELECT IN ITS SOLE DISCRETION AND HSNR HEREBY IRREVOCABLY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF EACH OF THE SUBJECT COURTS FOR
THE PURPOSE OF ANY SUCH SUIT, ACTION, PROCEEDING OR JUDGMENT. HSNR
HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN ANY SUIT,
ACTION OR PROCEEDING IN ANY OF THE SUBJECT COURTS BY THE MAILING
THEREOF BY THE ADMINISTRATIVE AGENT, THE AGENT, THE RESPECTIVE
CO-AGENT OR THE RESPECTIVE BANK BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO HSNR ADDRESSED AS PROVIDED IN SECTION 12.2 OF THE
CREDIT AGREEMENT, AS AMENDED HEREBY. NOTHING HEREIN SHALL IN ANY WAY
BE DEEMED TO LIMIT THE ABILITY OF THE ADMINISTRATIVE AGENT, THE AGENT,
EITHER CO-AGENT OR ANY BANK TO SERVE ANY SUCH WRITS, PROCESS OR
SUMMONSES IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO BRING
PROCEEDINGS AGAINST HSNR IN ANY COMPETENT COURT OF ANY OTHER
JURISDICTION OR JURISDICTIONS, AND IN SUCH MANNER, AS MAY BE PERMITTED
BY APPLICABLE LAW.
(B) HSNR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY
SUIT, ACTION OR PROCEEDING IN RESPECT OF THIS THIRD AMENDMENT, THE
CREDIT AGREEMENT, AS AMENDED HEREBY, THE NOTES OR ANY OTHER DOCUMENTS
IN CONNECTION HEREWITH, ANY OBJECTION TO THE LAYING OF VENUE IN ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY OF THE SUBJECT COURTS,
AND, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY CLAIM THAT SUCH SUIT,
ACTION OR PROCEEDING IN ANY OF THE SUBJECT COURTS HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM.
-25-
26
F. By executing this Third Amendment, each Bank
irrevocably appoints and authorizes LTCB Trust Company, in its capacity as
Collateral Agent under the Pledge Agreement, to act as its agent under the
Pledge Agreement with such powers as are specifically delegated to the
Collateral Agent by the terms of the Credit Agreement, as amended by this Third
Amendment, and the Pledge Agreement, together with such other powers as are
reasonably incidental thereto.
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27
[THIS PAGE INTENTIONALLY LEFT BLANK]
-27-
28
IN WITNESS WHEREOF, the parties hereto have caused this Third
Amendment to be duly executed as of the date first above written.
HOME SHOPPING NETWORK, INC.,
as Borrower
By
------------------------------------------
Title:
HOME SHOPPING CLUB, INC.,
as a Guarantor
By
------------------------------------------
Title:
HSN REALTY, INC.,
as a Guarantor
By
------------------------------------------
Title:
Address For Notices:
-------------------
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Finance Department
with a copy to:
Legal Department
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
The Banks
---------
Commitment
----------
$37,783,333.33 LTCB TRUST COMPANY, as a Bank and
as Agent
By
--------------------------------------------
-28-
29
Title:
$21,633,333.33 THE BANK OF NEW YORK COMPANY, INC.,
as a Bank and as a Co-Agent
By
--------------------------------------------
Title:
$33,933,333.33 TORONTO DOMINION [TEXAS], INC.,
as a Bank and as a Co-Agent
By
--------------------------------------------
Title:
$25,500,000.00 BANK OF MONTREAL, as a Bank and as a
Co-Agent
By
--------------------------------------------
Title:
$11,900,000.00 FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By
--------------------------------------------
Title:
$9,800,000.00 PNC BANK, KENTUCKY, INC.
By
--------------------------------------------
Title:
-29-
30
$9,450,000.00 THE DAIWA BANK, LIMITED
By
--------------------------------------------
Title:
By
-------------------- --------------------------------------------
Total: $150,000,000 Title:
The Administrative Agent
------------------------
LTCB TRUST COMPANY,
as Administrative Agent
By
--------------------------------------------
Title:
The Collateral Agent
--------------------
LTCB TRUST COMPANY,
as Collateral Agent
By
--------------------------------------------
Title:
-30-
31
ANNEX A
-------
GUARANTEE
The undersigned HSN REALTY, INC., a Delaware corporation (the
"Guarantor"), hereby unconditionally and irrevocably guarantees the payment in
full when due (whether at stated maturity, by acceleration or otherwise) of the
principal of and interest on this Note and all other amounts payable hereunder,
in accordance with the terms hereof and of Section 6 of the Credit Agreement,
and, in the case of any extension of time of payment, in whole or in part, that
all such amounts shall be paid in full when due (whether at stated maturity, by
acceleration or otherwise) in accordance with the terms of such extension. In
addition, the Guarantor hereby unconditionally agrees that upon default in the
payment when due (whether at stated maturity, by acceleration or otherwise) of
any of such principal, interest or other amounts, the Guarantor shall forthwith
pay and perform the same in the money and funds, at the time, in the place and
in the manner provided for such payment in the Credit Agreement. This
guarantee is a continuing guarantee of payment and not merely of collection; it
is a primary, independent obligation of the Guarantor; and the Guarantor's
obligations hereunder shall be absolute, unconditional and irrevocable,
irrespective of any and all circumstances whatsoever. The Guarantor hereby
waives diligence, presentment, protest, notice of default, dishonor or
nonpayment and any other notice and all demands whatsoever. The Guarantor
hereby further waives all setoffs and counterclaims against the Company, the
Administrative Agent, the Agent, each of the Co-Agents and each of the Banks.
HSN REALTY, INC.
By
--------------------------------------------
Title:
A-4
32
ANNEX B
-------
FORM OF PLEDGE AGREEMENT
------------------------
33
EXECUTION COPY
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of September 28, 1995 (as amended,
supplemented or modified from time to time, this "Agreement"), made by HOME
SHOPPING NETWORK, INC., a Delaware corporation (the "Pledgor"), in favor of
LTCB TRUST COMPANY, a New York trust company, as collateral agent (in such
capacity, the "Collateral Agent") for (i) the Banks party to the Second Amended
and Restated Credit Agreement, dated as of August 30, 1994 (as amended by the
First Amendment, dated as of March 29, 1995, as further amended by the Second
Amendment, dated as of June 28, 1995, as further amended by the Third
Amendment, dated as of September 28, 1995, and as further amended, supplemented
or modified from time to time, the "Credit Agreement"), among the Pledgor, as
borrower, Home Shopping Club, Inc. ("HSC") and HSN Realty, Inc. ("HSNR"), as
guarantors, LTCB Trust Company, as Agent, the Banks and Co-Agents named
therein, LTCB Trust Company, as administrative agent, and the Collateral Agent,
and (ii) the L/C Issuer and the L/C Participant party to the Letter of Credit
Facility Agreement, dated as of September 28, 1995 (as amended, supplemented or
modified from time to time, the "BNY Facility Agreement"), among HSC, HSN Mail
Order, Inc. and HSN Direct, Inc., as applicants (collectively, the "L/C
Applicants"), the Pledgor and HSNR, as guarantors, The Bank of New York, as
issuer (the "L/C Issuer"), The Bank of New York Company, Inc., as a participant
(the "L/C Participant"), and The Bank of New York, as administrative agent (the
"L/C Administrative Agent").
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Banks have
agreed to make extensions of credit to the Pledgor upon the terms and subject
to the conditions set forth therein;
WHEREAS, pursuant to the Third Amendment, dated as of
September 28, 1995 (the "Third Amendment"), to the Credit Agreement and at the
request of the Pledgor, HSC and HSNR, the Banks have agreed to amend certain
provisions of the Credit Agreement to provide for (i) increases in the
availability of the Commitments (as defined in the Credit Agreement) of certain
Banks, (ii) changes in the rate of interest and certain fees, (iii) additional
collateralization of the Pledgor's obligations under the
34
Credit Agreement and (iv) certain other matters provided for therein;
WHEREAS, pursuant to the BNY Facility Agreement, the L/C
Issuer has agreed to issue trade letters of credit (the "Letters of Credit")
for the account of the L/C Applicants, and the L/C Participant has agreed to
participate in unreimbursed drawings under such Letters of Credit, upon the
terms and subject to the terms and conditions set forth therein;
WHEREAS, the Pledgor is the legal and beneficial owner of the
shares of Pledged Securities (as hereinafter defined) issued by each of the
Issuers (as hereinafter defined); and
WHEREAS, it is a condition precedent to (i) the agreement of
the Banks to provide for the increased availability under the Credit Agreement
and the effectiveness of the amendments to the Credit Agreement contemplated by
the Third Amendment and (ii) the agreement of the L/C Issuer to issue the
Letters of Credit and the L/C Participant to participate in unreimbursed
drawings under such Letters of Credit and the effectiveness of the BNY Facility
Agreement that the Pledgor shall have executed and delivered this Agreement to
the Collateral Agent for the benefit of the Banks, the L/C Issuer and the L/C
Participant.
NOW, THEREFORE, in consideration of the premises, and other
good and valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, and to induce the Banks to increase the availability of
credit under the Credit Agreement and to give effect to the amendments
contemplated by the Third Amendment and to induce the L/C Issuer and the L/C
Participant to enter into the BNY Facility Agreement, the Pledgor hereby agrees
with the Collateral Agent, for the benefit of the Banks, the L/C Issuer and the
L/C Participant as follows:
SECTION 1. Definitions. (a) Capitalized terms used but not
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement.
(b) The following terms, as used herein, shall have the
following meanings:
"Collateral" shall have the meaning assigned to such term in
Section 2.
-2-
35
"Issuers" shall mean Home Shopping Club, Inc. and HSN Realty,
Inc., each a Delaware corporation.
"Loan Documents" shall mean this Agreement, the Credit
Agreement, the Notes, the BNY Facility Agreement and the Letters of Credit.
"Pledged Securities" shall have the meaning assigned to such
term in Section 2.
"Proceeds" shall have the meaning assigned to such term under
the UCC and, in any event, shall include (i) any and all proceeds of any
guarantee, insurance or indemnity payable to the Pledgor from time to time with
respect to any of the Collateral, (ii) any and all payments (in any form
whatsoever) made or due and payable to the Pledgor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental authority
and (iii) any and all other amounts from time to time paid or payable with
respect to or in connection with any of the Collateral, including all dividends
or other income from the Pledged Securities, collections thereon or
distributions with respect thereto.
"Secured Obligations" shall mean, collectively, (a) the
principal of and interest (including interest accruing after the date of any
filing by the Pledgor of any petition in bankruptcy or the commencement of any
bankruptcy, insolvency or similar proceedings with respect to the Pledgor,
whether or not allowed as a claim in such proceeding under all applicable law,
principles of equity and orders, decisions, judgments and decrees of all courts
and arbitrators) on the Loans, the Notes, unreimbursed drawings under the
Letters of Credit and the stated amount of all outstanding Letters of Credit
under which drawings have not yet been made and all liabilities of the Pledgor
from time to time owing to the Collateral Agent, the Administrative Agent, any
Bank, the L/C Issuer, the L/C Participant or the L/C Administrative Agent
(including all facility and other fees) under or in respect of the Loan
Documents; and (b) all other obligations of the Pledgor to the Collateral
Agent, the Administrative Agent, any Bank, the L/C Issuer, any L/C Participant
or the L/C Administrative Agent under this Agreement and any of the other Loan
Documents.
-3-
36
"UCC" shall mean the Uniform Commercial Code from time to time
in effect in the State of New York.
(c) Unless otherwise defined herein or in the Credit
Agreement, or unless the context otherwise requires, all terms used herein that
are defined in the UCC shall have the meanings therein stated.
(d) The words "include," "includes" and "including" as
used in this Agreement shall be deemed in each case to be followed by the
phrase "without limitation." References to Sections and Schedules shall be
deemed references to Sections of and Schedules to this Agreement, unless
otherwise specified.
SECTION 2. Pledge. As security for the prompt payment and
performance in full when due (whether at the stated maturity, by acceleration
or otherwise) of the Secured Obligations, the Pledgor hereby hypothecates,
pledges, assigns, grants, sets over and delivers to the Collateral Agent, for
the benefit of the Banks, the L/C Issuer and the L/C Participant, a continuing
first priority security interest in all its right, title and interest in, to
and under the following, whether now owned or hereafter acquired:
(i) all of the shares of capital stock owned by the
Pledgor listed on Schedule 1, and any additional shares of capital
stock of each of the Issuers (or successors thereto) obtained in the
future by the Pledgor, and, in each case, all stock certificates
representing such shares and, in each case, all options, warrants or
rights of any nature whatsoever and all stock or other securities
which may hereafter be received, receivable or distributed in respect
of, or exchanged for, any of the foregoing (all of the foregoing being
collectively referred to herein as the "Pledged Securities"); and
(ii) subject to the provisions of Section 5, all Proceeds
of the Pledged Securities, including all cash or securities at any
time and from time to time acquired, receivable or otherwise
distributed in respect of, or in exchange for, any of or all such
stock (all of the items referred to herein in clauses (i) and (ii)
being collectively referred to as the "Collateral").
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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 for the benefit of the Banks, the L/C Issuer
and the L/C Participant and their successors and assigns, forever; subject,
however, to the terms, covenants and conditions hereinafter set forth.
SECTION 3. Delivery of Collateral. (a) Contemporaneously
with the execution of this Agreement, the Pledgor shall deliver or cause to be
delivered to the Collateral Agent (i) any and all certificates and other
instruments evidencing the Pledged Securities, along with undated stock powers
duly executed in blank (with, if the Collateral Agent so requests, signatures
properly guaranteed) or other instruments of transfer covering each such
certificate satisfactory to the Collateral Agent and endorsed in blank and such
other instruments and documents as the Collateral Agent may reasonably request
to effect the purposes contemplated hereby and (ii) any and all certificates or
other instruments or documents representing any of the Collateral.
(b) If the Pledgor shall become entitled to receive or
shall receive any shares of stock (including shares of Pledged Securities
acquired after the date of this Agreement), options, warrants, rights or other
similar property (including any certificate representing a stock dividend, or
any distribution in connection with any recapitalization, reclassification or
increase or reduction of capital, or issued in connection with any
reorganization of any Issuer) in respect of the Pledged Securities (whether as
an addition to, in substitution of, or in exchange for, such Pledged Securities
or otherwise), the Pledgor agrees:
(i) to accept the same as the agent of the Collateral
Agent;
(ii) to hold the same in trust on behalf of and for the
benefit of the Collateral Agent for the benefit of the Banks, the L/C
Issuer and the L/C Participant; and
(iii) to deliver any and all certificates or instruments
evidencing the same to the Collateral Agent on or before the close of
business on the seventh Business Day following the receipt thereof by
the Pledgor, in the exact form received,
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with the endorsement in blank of the Pledgor when necessary and with
appropriate undated stock powers duly executed in blank (with, if the
Collateral Agent so requests, signatures properly guaranteed), to be
held by the Collateral Agent, for the benefit of the Banks, the L/C
Issuer and the L/C Participant, subject to the terms of this
Agreement, as additional Collateral.
SECTION 4. Registration in Nominee Name. Upon the occurrence
and during the continuance of an Event of Default and the declaration of
acceleration or demand for payment, the Collateral Agent shall have the right
(in its sole and absolute discretion and without prior notice to the Pledgor)
to transfer to or to register the Pledged Securities in its own name or the
name of its nominee, for the benefit of the Banks, the L/C Issuer and the L/C
Participant. After any such registration or transfer, the Collateral Agent
shall provide notice thereof to the Pledgor.
SECTION 5. Voting Rights, etc. (a) Unless and until an
Event of Default shall have occurred and be continuing and a declaration of
acceleration or demand for payment shall have been made:
(i) the Pledgor shall be entitled to exercise any and all
voting and/or consensual rights and powers accruing to an owner of the
Pledged Securities or any part thereof for any purpose not prohibited
by the terms of this Agreement, the Credit Agreement or the BNY
Facility Agreement;
(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; and
(iii) the Pledgor shall be entitled to receive, subject to
the provisions of Section 2, and retain any and all cash dividends
paid on the Pledged Securities to the extent and only to the extent
that such dividends are not prohibited by the terms and conditions of
the Credit Agreement or the BNY
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Facility Agreement. Except for cash dividends that the Pledgor shall
be entitled to receive and retain pursuant to the preceding sentence,
all noncash dividends, stock or dividends paid or payable in cash or
otherwise in connection with a partial or total liquidation or
dissolution, instruments, securities, other distributions in property,
return of capital, capital surplus or paid-in surplus or other
distributions made on or in respect of Pledged Securities, whether
paid or payable in cash or otherwise, whether resulting from a
subdivision, combination or reclassification of the outstanding
capital stock of any Issuer or from any bankruptcy or reorganization
of any Issuer or received in exchange for the Pledged Securities or
any part thereof, or in redemption thereof, as a result of any merger,
consolidation, acquisition or other exchange of assets to which any
Issuer may be a party or otherwise, shall be and become part of the
Collateral, and, if received by the Pledgor, shall not be commingled
by the Pledgor with any of its other funds or property but shall be
held separate and apart therefrom, shall be held in trust for the
benefit of the Collateral Agent, for the benefit of the Banks, the L/C
Issuer and the L/C Participant, and shall be forthwith delivered to
the Collateral Agent in the same form as so received (with any
necessary endorsements).
(b) Upon the occurrence and during the continuance of an
Event of Default, and, in the case of an Event of Default other than one
referred to in clause (f), (g) or (h) of Section 10 of the Credit Agreement, if
so specified by the Collateral Agent in a notice to the Pledgor, all rights of
the Pledgor to exercise the voting and consensual rights and powers which the
Pledgor is entitled to exercise pursuant to Section 5(a)(i) 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 the Pledgor shall execute and deliver to
the Collateral Agent all such documents and instruments (including proxies) as
the Collateral Agent shall reasonably request in order to effect the purposes
of this Section 5(b).
SECTION 6. Representations; Warranties and Covenants. The
Pledgor hereby represents, warrants and covenants to and with the Collateral
Agent, the Administrative Agent, each Bank, the
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L/C Issuer, the L/C Participant and the L/C Administrative Agent that:
(a) Except for the security interest granted to the
Collateral Agent hereunder and except as expressly permitted by Section 9.7 of
the Credit Agreement, the Pledgor (i) is and will at all times continue to be
the direct owner, beneficially and of record, of the Pledged Securities, (ii)
holds and will at all times continue to hold the Collateral free and clear of
all Liens of every kind and nature, (iii) will make no assignment, pledge,
hypothecation or transfer of, or create or suffer to exist any Lien on, the
Collateral and (iv) subject to Section 5, will cause any and all Collateral,
whether for value paid by the Pledgor or otherwise, to be forthwith deposited
with the Collateral Agent, for the benefit of the Banks, the L/C Issuer, the
L/C Participant and the L/C Administrative Agent, and pledged or assigned
hereunder.
(b) The Pledgor (i) has, and at all times will have, the
right and legal authority to pledge the Collateral in the manner hereby done or
contemplated, and (ii) will defend its and the Collateral Agent's respective
title and interest thereto or therein against any and all attachments, Liens,
claims or other impediments of any nature, however arising, of all Persons
whomsoever.
(c) No authorization, consent or approval, or other
action by, and no notice to or filing with, any governmental authority
(including any securities exchange) not previously obtained is required (i) for
the pledge by the Pledgor of the Collateral pursuant to this Agreement or the
perfection therein of the Collateral Agent's security interest created hereby,
other than the filing of appropriate Uniform Commercial Code financing
statements in the office of the Secretary of State in each of the States of
Delaware and Florida, and in the office of the County Clerk in each of New
Castle County, Delaware, and Pinellas County, Florida, (ii) for the execution,
delivery or performance of this Agreement by the Pledgor or (iii) for the
exercise by the Collateral Agent of the rights provided for in this Agreement
or the remedies in respect of the Collateral pursuant to this Agreement, other
than compliance with applicable Federal and state securities laws in connection
with the acquisition and sale
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or other disposition of the Pledged Securities in accordance with the terms of
this Agreement.
(d) By virtue of the execution and delivery by the
Pledgor of this Agreement, when the stock certificates representing the Pledged
Securities owned by the Pledgor are delivered to the Collateral Agent in
accordance with this Agreement, the Collateral Agent will obtain and, so long
as the Collateral Agent maintains possession of the certificates representing
the Pledged Securities, will have and will continue to have a valid and
perfected first priority security interest in such Pledged Securities, for the
benefit of the Banks, the L/C Issuer and the L/C Participant, as security for
the repayment and performance in full of the Secured Obligations, prior to all
other Liens thereon.
(e) The Pledged Securities constitute, and at all times
will constitute, all of the issued and outstanding shares of capital stock of
the Issuers.
(f) All of the representations and warranties contained
in this Agreement shall survive the execution, delivery and performance of this
Agreement.
(g) This Agreement constitutes the legal, valid and
binding obligation of the Pledgor, enforceable in accordance with its terms
(subject as to enforceability to applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting creditors' rights generally
and to general principles of equity).
(h) The execution, delivery and performance in accordance
with its respective terms by the Pledgor of this Agreement do not and will not
(a) require any governmental approval or any other consent or approval, other
than governmental approvals and other consents and approvals that have been
obtained, are in full force and effect and are final and not subject to review
on appeal or to collateral attack and other than compliance with applicable
Federal and state securities laws in connection with the acquisition and sale
or other disposition of the Pledged Securities in accordance with the terms of
this Agreement, or (b) violate, conflict with, result in a breach of or
constitute a default under, or, except as expressly contemplated by this
Agreement, result in or require the creation
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of any Lien upon any assets of the Pledgor under, (i) any contract to which the
Pledgor is a party or by which it or its property may be bound or (ii) any
applicable law.
(i) The Pledged Securities have been duly authorized and
validly issued, are fully paid and non- assessable and have been duly and
validly pledged hereunder in accordance with applicable law.
(j) There are no contractual restrictions upon the voting
rights or upon the transfer of any of the shares of the Pledged Securities
other than as referred to herein or in the Credit Agreement or the BNY Facility
Agreement.
(k) The Pledgor represents and warrants that it has made
its own arrangements for keeping informed of changes or potential changes
affecting the Collateral (including rights to convert, rights to subscribe,
payment of dividends, reorganization or other exchanges, tender offers and
voting rights), and the Pledgor agrees that neither the Collateral Agent, the
Administrative Agent, any Bank, the L/C Issuer, the L/C Participant nor the L/C
Administrative Agent shall have any responsibility or liability for informing
the Pledgor of any such changes or potential changes.
(l) The Pledgor shall not (i) permit or suffer any Issuer
to voluntarily dissolve or liquidate, retire any of its capital stock, reduce
its capital or merge or consolidate with any other entity if such action would
violate the provisions of the Credit Agreement or the BNY Facility Agreement or
(ii) vote any of the Pledged Securities in favor of any of the foregoing.
(m) The Pledgor shall pay, and save the Collateral Agent,
the Administrative Agent, each Bank, the L/C Issuer, the L/C Participant and
the L/C Administrative Agent harmless from, any and all liabilities with
respect to, or resulting from any delay in paying, any and all stamp, excise,
sales or other taxes which may be payable or determined to be payable (i) with
respect to any of the Collateral or (ii) in connection with any of the
transactions contemplated by this Agreement.
SECTION 7. Issuance of Additional Stock. The Pledgor agrees
that it will not (a) permit any Issuer to issue any stock
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or other securities (including warrants, options and other similar agreements),
whether in addition to, by stock dividend or other distribution upon, or in
substitution for, the Pledged Securities or otherwise (unless such issuance is
not prohibited by the Credit Agreement or the BNY Facility Agreement and such
stock or other securities are effectively pledged hereunder in a manner
reasonably satisfactory to the Collateral Agent) or (b) sell, assign, transfer,
exchange or otherwise dispose of, or grant any option with respect to, the
Collateral, or create, incur or permit to exist any Lien or option in favor of,
or any claim of any Person with respect to, any of the Collateral, or any
interest therein, except for the Lien provided for by this Agreement and as
otherwise expressly permitted under Section 9.7 of the Credit Agreement.
SECTION 8. Remedies Upon Default. (a) If an Event of Default
shall have occurred and be continuing and upon the declaration of acceleration
or demand for payment, the Collateral Agent, for the benefit of the Banks, the
L/C Issuer and the L/C Participant, shall have, in addition to any other rights
and except as otherwise provided herein, all of the rights and remedies with
respect to the Collateral of a secured party under the UCC. In addition and
subject to all applicable law, the Collateral Agent, on behalf of the Banks,
the L/C Issuer and the L/C Participant may, and upon the request of the
Majority Banks, shall (without any obligation to seek performance of any
guarantee or to resort to any other security, right or remedy granted to it
under any other instrument or agreement, including the Credit Agreement and/or
the BNY Facility Agreement) sell the Collateral, or any part thereof, at public
or private sale or at any broker's board or on any securities exchange, for
cash, upon credit or for future delivery as the Collateral Agent shall deem
appropriate. 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. Each such purchaser at any such sale shall
hold the property so sold absolutely, free from any claim or right on the part
of the Pledgor (other than rights that the Pledgor may have
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against such purchaser generally and without regard to this Agreement or such
sale), and the Pledgor hereby waives (to the extent permitted by law) all
rights of redemption, stay and appraisal which the Pledgor may now have or may
at any time in the future have under any applicable law now existing or
hereafter enacted.
(b) The Collateral Agent shall give the Pledgor at least
ten Business Days' written notice (which the Pledgor agrees is reasonable
notice within the meaning of Section 9-504(3) of the UCC) of the Collateral
Agent's intention to make any sale of Collateral. Such notice, in the case of
a public sale, shall state the time of and place where such sale is to be made
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 any 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 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, and in no event shall any portion of the proceeds of any such
sale be credited against payment of the costs, expenses and obligations set
forth in Section 9 until cash payment for the Collateral so sold has been
received by the Collateral Agent. At
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any private sale of Collateral of a type customarily sold in a recognized
market, and at any public sale made pursuant to this Section 8, the Collateral
Agent, in its individual capacity, any Bank, the L/C Issuer and the L/C
Participant 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 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, in its individual capacity, such Bank, the L/C Issuer or the
L/C Participant by the Pledgor under or pursuant to the Credit Agreement or the
BNY Facility Agreement, as the case may be, as a credit, up to an amount equal
to the amount the Collateral Agent, in its individual capacity, such Bank, the
L/C Issuer or the L/C Participant would otherwise be entitled to receive
pursuant to Section 9 in connection with such sale, against the purchase price.
For purposes hereof, in the case of any such sale pursuant to a written
agreement to purchase the Collateral or any portion thereof, the Collateral
Agent shall be free to carry out such sale pursuant to such agreement, and the
Pledgor shall not 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 Secured Obligations paid in full. 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 this 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.
(c) If the Collateral Agent shall have instituted any
proceeding to enforce any right or remedy hereunder, and such proceeding shall
have been discontinued or abandoned for any reason, or shall have been
determined adversely to the Collateral Agent, the Collateral Agent shall,
subject to any determination in any such proceeding, be restored to its former
position hereunder, and thereafter, subject as aforesaid, all rights and
remedies of the Collateral Agent shall continue as though no such proceeding
had been instituted.
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SECTION 9. Application of Proceeds of Sale. The
proceeds of any sale of, or other realization upon, all or any part of the
Collateral pursuant to Section 8, as well as any Collateral consisting of cash,
shall be applied by the Collateral Agent as follows:
FIRST, to the payment of all costs and expenses reasonably
incurred by the Collateral Agent in connection with such sale or
otherwise in connection with this Agreement or any of the Secured
Obligations, including, without limitation, a reasonable allocation of
salaries and wages of officers and employees and related overhead of
the Collateral Agent who are involved in such sale, all court costs
and the reasonable fees and expenses of its agents and legal counsel,
the repayment of all advances plus any interest thereon made hereunder
by the Collateral Agent on behalf of the Pledgor and any other costs
or expenses reasonably incurred in connection with the exercise of any
right or remedy hereunder;
SECOND, to the payment in full of the Secured Obligations pro
rata as among the holders of the Secured Obligations in accordance
with the amounts of monetary Secured Obligations owed to them and
outstanding (whether or not then due and payable, at maturity, by
acceleration or otherwise) as of the date of such payment, until all
the Secured Obligations have been paid in full; and
THIRD, any balance remaining to the Pledgor, its successors or
assigns, or as a court of competent jurisdiction may otherwise direct.
SECTION 10. Collateral Agent Appointed Attorney-in-Fact;
Indemnity.
(a) The Pledgor hereby appoints the Collateral Agent as
its true and lawful agent and attorney-in- fact for the purpose of carrying out
the provisions of this Agreement and taking any action and executing any
instrument which the Collateral Agent may deem necessary or advisable to
accomplish the purposes hereof, in each case upon the occurrence and during the
continuance of an Event of Default and the declaration of acceleration or
demand for payment, which appointment is irrevocable and
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coupled with an interest and any proxy or proxies heretofore given by the
Pledgor to any other person that is inconsistent herewith are hereby revoked.
Without limiting the generality of the foregoing, the Collateral Agent shall
have the right, upon the occurrence and during the continuance of an Event of
Default and the declaration of acceleration or demand for payment, with full
power of substitution either in the Collateral Agent's name or in the name of
the Pledgor, to ask for, demand, ▇▇▇ for, collect, receive, receipt and give
acquittance for any and all moneys due or to become due under and by virtue of
any Collateral, to endorse checks, drafts, orders and other instruments for the
payment of money payable to the Pledgor representing any interest or dividend
or other distribution payable in respect of the Collateral or any part thereof
or on account thereof and to give full discharge for the same, to settle,
compromise, prosecute or defend any action, claim or proceeding with respect
thereto, and to sell, assign, endorse, pledge, transfer and make any agreement
respecting, or otherwise deal with, the same; provided, however, that nothing
herein contained shall be construed as requiring or obligating the Collateral
Agent, the Administrative Agent, any Bank, the L/C Issuer, the L/C Participant
or the L/C Administrative Agent to take any action, including requiring or
obligating the Collateral Agent, the Administrative Agent, any Bank, the L/C
Issuer, the L/C Participant or the L/C Administrative Agent to make any
commitment or to make any inquiry as to the nature or sufficiency of any
payment received by the Collateral Agent, the Administrative Agent, any Bank,
the L/C Issuer, the L/C Participant or the L/C Administrative Agent or to
present or file any claim or notice, or to take any action with respect to the
Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby, and no action taken by the Collateral
Agent, the Administrative Agent, any Bank, the L/C Issuer, the L/C Participant
or the L/C Administrative Agent or omitted to be taken by any of them with
respect to the Collateral or any part thereof shall give rise to any defense,
counterclaim or offset in favor of the Pledgor or to any claim or action
against the Collateral Agent, the Administrative Agent, any Bank, the L/C
Issuer, the L/C Participant or the L/C Administrative Agent in the absence of
the gross negligence or willful misconduct of the Collateral Agent, the
Administrative Agent, any Bank, the L/C Issuer, the L/C Participant or the L/C
Administrative Agent, as the case may
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be, as shall have been determined in a final, nonappealable judgment of a court
of competent jurisdiction.
(b) The Pledgor hereby agrees to assume liability for,
and does hereby agree to indemnify, protect, save and keep harmless the
Collateral Agent and its directors, officers, employees and agents from and
against, any and all liabilities, obligations, losses, damages, penalties,
claims, actions, suits and reasonable costs and expenses of whatsoever kind or
nature, imposed on, incurred by or asserted against the Collateral Agent or its
directors, officers, employees or agents, in any way relating to or arising out
of this Agreement, including the enforcement hereof, or the acceptance,
rejection, ownership, delivery, possession, sale or return of any Collateral
(other than by reason of a material breach by the Collateral Agent of its
obligations under this Agreement or the respective indemnitees' own gross
negligence or willful misconduct and, solely to the extent any such costs,
liabilities and expenses do not in any way relate to any representation,
warranty or covenant of the Pledgor under this Agreement, or any act or
omission by the Pledgor). Without limiting the generality of the foregoing,
the Pledgor hereby agrees to reimburse the Collateral Agent for all costs,
liabilities or expenses reasonably incurred by it pursuant to any of the duties
hereby created or in the exercise of any duty, right, remedy or power herein
imposed or conferred upon it (other than any such costs, liabilities and
expenses resulting from a material breach by the Collateral Agent of its
obligations under this Agreement or the Collateral Agent's gross negligence or
willful misconduct and, solely to the extent any such costs, liabilities and
expenses do not in any way relate to any representation, warranty or covenant
of the Pledgor under this Agreement, or any act or omission by the Pledgor).
The obligations of the Pledgor contained in this Section 10(b) shall survive
the termination of this Agreement and the discharge of the Pledgor's other
obligations hereunder and under the other Loan Documents.
SECTION 11. No Waiver; Remedies Cumulative. No failure on
the part of the Collateral Agent, the Administrative Agent, any Bank, the L/C
Issuer, the L/C Participant or the L/C Administrative Agent to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
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power or remedy by the Collateral Agent, the Administrative Agent, any Bank,
the L/C Issuer, the L/C Participant or the L/C Administrative Agent preclude
any other or further exercise thereof or the exercise of any other right, power
or remedy. All remedies hereunder are cumulative and are not exclusive of any
other remedies provided by law or otherwise. The Collateral Agent, the
Administrative Agent, the Banks, the L/C Issuer, the L/C Participant or the L/C
Administrative Agent shall not be deemed to have waived any rights hereunder or
under any other agreement or instrument unless such waiver shall be in writing
and signed by the Collateral Agent.
SECTION 12. (a) 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 amended (the "Securities Act"), or any similar or successor
Federal securities law (together with the Securities Act, the "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 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.
(b) Anything herein to the contrary notwithstanding, and
in view of restrictions specified in paragraph (a) of this Section 12, the
Pledgor agrees that, if an Event of Default shall exist under the Credit
Agreement, the Collateral Agent may, from time to time, attempt to sell all or
any part of the Pledged Securities by means of a private placement, restricting
the bidders and prospective purchasers to those who will represent or agree as
to their investment intent or method of resale or both in a manner reasonably
required by the Collateral Agent to assure compliance with applicable
securities laws. In so doing, the Collateral Agent may solicit offers to buy
such Pledged Securities or any part thereof, for cash, from a limited number
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of investors deemed by the Collateral Agent, in its exclusive judgment, to be
responsible parties who might be interested in purchasing such Pledged
Securities.
SECTION 13. Security Interest Absolute; Waivers by Pledgor.
(a) All rights of the Collateral Agent, the Administrative Agent, the Banks,
the L/C Issuer, the L/C Participant and the L/C Administrative Agent hereunder,
the grant of a security interest in the Collateral and all obligations of the
Pledgor hereunder, shall be absolute and unconditional irrespective of (i) any
lack of validity or enforceability of the Credit Agreement, the BNY Facility
Agreement, any other agreement with respect to any of the Secured Obligations
or any other agreement or instrument relating to any of the foregoing, (ii) any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Secured Obligations, or any other amendment or waiver of or any
consent to any departure from the Credit Agreement, the BNY Facility Agreement
or any other agreement or instrument (other than payment in full of the Secured
Obligations or, in the case of rights predicated on the existence of an Event
of Default, a cure or waiver of such Event of Default), (iii) any exchange,
release or nonperfection of any other collateral, or any release or amendment
or waiver of or consent to or departure from any guarantee, for all or any of
the Secured Obligations (other than payment in full of the Secured Obligations
or, in the case of rights predicated on the existence of an Event of Default, a
cure or waiver of such Event of Default), (iv) any failure by the Collateral
Agent, the Administrative Agent, any Bank, the L/C Issuer, the L/C Participant
or the L/C Administrative Agent to demand payment or performance by the Pledgor
and/or either of the L/C Applicants and/or any of the Guarantors (as defined in
each of the Credit Agreement and the BNY Facility Agreement) of any of the
Secured Obligations or to exercise or enforce any right or remedy in respect
thereof or (v) any other circumstance (other than payment in full of the
Secured Obligations or, in the case of rights predicated on the existence of an
Event of Default, a cure or waiver of such Event of Default) which might
otherwise constitute a defense available to, or a discharge of, the Pledgor or
any other person in respect of the Secured Obligations or in respect of this
Agreement. The Pledgor hereby acknowledges that neither the Collateral Agent,
the Administrative Agent, any Bank, the L/C Issuer, the L/C Participant nor the
L/C Administrative Agent shall be under any obliga-
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tion to marshal any assets in favor of the Pledgor or against or in payment of
any or all of the Secured Obligations.
(b) The Pledgor hereby waives notice of acceptance of
this Agreement. The Pledgor further waives presentment and demand for payment
of any of the Secured Obligations, protest and notice of dishonor or default
with respect to any of the Secured Obligations, and all other notices to which
the Pledgor might otherwise be entitled, except as otherwise expressly provided
in this Agreement, the Credit Agreement or the BNY Facility Agreement. The
Pledgor (to the extent that it may lawfully do so) covenants that it shall not
at any time insist upon or plead, or in any manner claim or take the benefit or
advance of, any stay (except in connection with a pending appeal), valuation,
appraisal, redemption or extension law now or at any time hereafter in force
that, but for this waiver, might be applicable to any sale made under any
judgment, order or decree based on this Agreement, the Credit Agreement or the
BNY Facility Agreement; and the Pledgor (to the extent that it may lawfully do
so) hereby expressly waives and relinquishes all benefit and advance of any and
all such laws and hereby covenants that it will not hinder, delay or impede the
execution of any power in this Agreement or therein granted and delegated to
the Collateral Agent, but that it will suffer and permit the execution of every
such power as though no such law or laws had been made or enacted.
SECTION 14. 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 UCC or otherwise,
shall be to hold the Collateral for safekeeping and deal with it in the same
manner as the Collateral Agent deals with similar securities and property for
its own account. To the extent that any of the Collateral is comprised of
cash, the Collateral Agent shall have no obligation to invest such funds in any
collateral account and may hold the same as demand deposits. None of the
Collateral Agent, the Administrative Agent, any Bank, the L/C Issuer, the L/C
Participant, the L/C Administrative Agent or any of their respective directors,
officers, 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
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the Pledgor or any other Person or to take any action whatsoever with respect
to the Collateral or any part thereof.
SECTION 15. Termination. This Agreement, and the
assignments, pledges and security interests created or granted hereby, shall
terminate with respect to all Collateral, when (i) all the Secured Obligations
shall have been paid in full in cash, and (ii) the Commitment Termination Date
has passed, in each case, at which time the Collateral Agent shall reassign and
deliver to the Pledgor, or to such Person or Persons as the Pledgor shall
designate in writing, 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, in any case, together
with appropriate instruments of reassignment and release, all without any
recourse to, or warranty whatsoever by, the Collateral Agent, the
Administrative Agent, any Bank, the L/C Issuer, the L/C Participant or the L/C
Administrative Agent, and at the sole cost and expense of the Pledgor. Upon
any termination of any of the security interests or release of any Collateral
pursuant to this Section 15, the Collateral Agent will, at the Pledgor's
expense, execute and deliver to the Pledgor such documents as the Pledgor shall
reasonably request to evidence the termination of the security interests in
such Collateral.
SECTION 16. Notices. Notices and other communications
provided for herein shall be in writing and shall be delivered or mailed (or
delivered by facsimile equipment, the receipt of which is promptly confirmed by
telephone) addressed,
(a) if to the Pledgor, to it at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopier number: (▇▇▇) ▇▇▇-▇▇▇▇, telephone
number: (▇▇▇) ▇▇▇-▇▇▇▇, attention: Finance Department, with a copy to Legal
Department, telecopier number: (▇▇▇) ▇▇▇-▇▇▇▇; and
(b) if to the Collateral Agent, to it at the address of
the Administrative Agent set forth in or determined pursuant to the Credit
Agreement.
Except as specifically provided in Section 21, all notices and other
communications given to any party hereto in accordance with the provisions of
this Agreement shall be deemed to have been
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53
given at the time determined pursuant to Section 12.2 of the Credit Agreement.
SECTION 17. Further Assurances. The Pledgor agrees to do or
cause to be done all such further acts, and to execute and deliver, or cause to
be executed and delivered, such additional conveyances, stock powers, proxies,
assignments, agreements, financing statements and other instruments, at the
Pledgor's sole expense, as the Collateral Agent may at any time reasonably
request in connection with the administration and enforcement of this Agreement
or with respect to the Collateral or any part thereof or in order better to
assure and confer unto the Collateral Agent, the Administrative Agent, the
Banks, the L/C Issuer, the L/C Participant and the L/C Administrative Agent,
their respective rights and remedies hereunder; provided that the Pledgor shall
not be obligated under this Section to deliver additional collateral to the
Collateral Agent. The Pledgor further agrees that a breach of any of the
covenants contained in this Section will cause irreparable injury to the
Collateral Agent, the Administrative Agent, the Banks, the L/C Issuer, the L/C
Participant and the L/C Administrative Agent that the Collateral Agent, the
Administrative Agent, the Banks, the L/C Issuer, the L/C Participant and the
L/C Administrative Agent have no adequate remedy at law in respect of such
breach and, as a consequence, that each and every covenant contained in this
Section shall be specifically enforceable against the Pledgor, and the Pledgor
hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants except for a defense that no Event of
Default has occurred under the Credit Agreement and/or the BNY Facility
Agreement.
SECTION 18. Successors and Assigns. In the event of
assignment of all or a portion of any of the Indebtedness under the Credit
Agreement by a Bank or the BNY Facility Agreement by the L/C Issuer or the L/C
Participant, the rights of or on behalf of such Bank, the L/C Issuer or the L/C
Participant, as the case may be, hereunder, to the extent applicable to the
Indebtedness so assigned, shall be transferred with such Indebtedness and the
term "Bank", "L/C Issuer" or "L/C Participant", as the case may be, when used
herein shall be deemed to include any such assignee. This Agreement is binding
on the Pledgor and its successors but none of them shall be permitted to assign
this
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Agreement, any of its obligations hereunder or any interest herein or in the
Collateral, or any part thereof, or otherwise pledge, encumber or grant any
option with respect to the Collateral, or any part thereof, or any cash or
property held by the Collateral Agent as Collateral under this Agreement except
as expressly permitted by this Agreement, the Credit Agreement or the BNY
Facility Agreement.
SECTION 19. Changes in Writing. Neither this Agreement nor
any provision hereof may be changed, waived, discharged or terminated orally,
but only by a statement or instrument in writing signed by the party against
which enforcement of the change, waiver, discharge or termination is sought.
Any waiver shall be effective only in the specific instance and for the
specific purpose for which made or given.
SECTION 20. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(WITHOUT GIVING EFFECT TO ITS CHOICE OF LAW PRINCIPLES).
SECTION 21. Judicial Proceedings; Waiver of Jury. Any
judicial proceeding brought against the Pledgor with respect to any claim in
any way arising out of, related to or connected with this Agreement may be
brought in any court of competent jurisdiction in the City of New York, and, by
execution and delivery of this Agreement, the Pledgor (a) accepts, generally
and unconditionally, the nonexclusive jurisdiction of such courts and any
related appellate court and irrevocably agrees to be bound by any judgment
rendered thereby in connection with any such claim, and (b) irrevocably waives
any objection it may now or hereafter have as to the venue of any such
proceeding brought in such a court or that such a court is an inconvenient
forum. The Pledgor hereby waives personal service of process and consents that
service of process upon it may be made by certified or registered mail, return
receipt requested, at its address specified or determined in accordance with
the provisions of Section 16, and service so made shall be deemed completed on
the third business day in St. Petersburg, Florida after such service is
deposited in the mail. Nothing herein shall affect the right of the Collateral
Agent, the Administrative Agent, any Bank, the L/C Issuer, the L/C Participant
or the L/C Administrative Agent to serve process in any other manner permitted
by law or shall limit the right of the
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Collateral Agent, the Administrative Agent, any Bank, the L/C Issuer, the L/C
Participant or the L/C Administrative Agent to bring proceedings against the
Pledgor in the courts of any other jurisdiction. To the extent permitted in
accordance with applicable law (including applicable law relating to
jurisdiction and venue), any judicial proceeding by the Pledgor against the
Collateral Agent, the Administrative Agent, any Bank, the L/C Issuer, the L/C
Participant or the L/C Administrative Agent involving any such claim shall be
brought only in a court located in the City and State of New York. THE
PLEDGOR, THE COLLATERAL AGENT, THE ADMINISTRATIVE AGENT, EACH BANK, THE L/C
ISSUER, THE L/C PARTICIPANT AND THE L/C ADMINISTRATIVE AGENT HEREBY WAIVE TRIAL
BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING ANY SUCH CLAIM.
SECTION 22. Governmental Regulation. The Collateral Agent
will not, solely by reason of the execution, delivery and performance (other
than the enforcement of remedies) of this Agreement or any other instrument or
agreement referred to herein, be subject to the regulation or control of either
the Federal Communications Commission, any other Federal regulatory authority
or agency regulating the public utilities commission of any state.
SECTION 23. 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 in such
jurisdiction, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 24. Headings. Section headings used herein are for
convenience only and are not to affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 25. Immunities of the Collateral Agent. The
Collateral Agent's performance of its duties hereunder shall in all respects be
subject to and governed by the Credit Agreement. Nothing contained herein
shall be construed to enlarge the degree of responsibility or discretion or the
duty of care to be
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exercised by the Collateral Agent beyond those expressly set forth in the
Credit Agreement. Without limiting the generality of the foregoing, the
Pledgor hereby acknowledges and agrees that the Collateral Agent shall, with
respect to all of its rights, obligations and duties under this Agreement, be
entitled to all of its rights, protections and immunities provided for under
Section 11 of the Credit Agreement as fully and to the same extent as if such
provisions were set forth in full herein.
IN WITNESS WHEREOF, the Pledgor and the Collateral Agent have
duly executed this Agreement as of the day and year first above written.
HOME SHOPPING NETWORK, INC., as Pledgor
By
-------------------------------------
Name:
Title:
LTCB TRUST COMPANY, as Collateral Agent
By
-------------------------------------
Name:
Title:
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SCHEDULE 1 TO THE
PLEDGE AGREEMENT
PLEDGED SECURITIES
ISSUER SHARES PLEDGED SHARES AUTHORIZED CERTIFICATE NUMBER(S) PLEDGOR
------ -------------- ----------------- --------------------- -------
Home Shopping Club, Inc. 1,000 1,000 Home Shopping Network,Inc.
HSN Realty, Inc. 1,000 1,000 Home Shopping Network,Inc.
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ANNEX C
-------
SCHEDULE 4
LIST OF WHOLLY-OWNED SUBSIDIARIES
OF THE COMPANY AS OF THE THIRD
AMENDMENT EFFECTIVE DATE FOR
PURPOSES OF SECTION 9.22(i)
---------------------------
59
ANNEX D
-------
FORM OF INTERCREDITOR AGREEMENT
-------------------------------
60
ANNEX E
-------
Form of Opinion of Counsel to the
Company and the Guarantors
---------------------------------
