1
Exhibit 10.s
$300,000,000
REVOLVING CREDIT
AND LETTER OF CREDIT FACILITY AGREEMENT
Dated as of September 16, 1996
among
METRIS COMPANIES INC.,
THE LENDERS NAMED HEREIN,
NATIONSBANK, N.A., as Co-Agent,
BANK OF AMERICA ILLINOIS, as an Issuing Bank,
FIRST BANK NATIONAL ASSOCIATION, as an Issuing Bank,
NORWEST BANK MINNESOTA, N.A., as an Issuing Bank,
and
THE CHASE MANHATTAN BANK, as Administrative Agent
and an Issuing Bank
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TABLE OF CONTENTS
Page
ARTICLE I
Definitions . . . . . . . . . . . . . 5
SECTION 1.01. Defined Terms . . . . . . . . . . . . . . . . . . . 5
SECTION 1.02. Terms Generally . . . . . . . . . . . . . . . . . . 21
ARTICLE II
The Credits . . . . . . . . . . . . . 22
SECTION 2.01. Commitments . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.02. Loans . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.03. Competitive Bid Procedure . . . . . . . . . . . . . 23
SECTION 2.04. Standby Borrowing Procedure . . . . . . . . . . . . 26
SECTION 2.05. Refinancings, Continuances and Conversions of Loans 26
SECTION 2.06. Fees . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.07. Evidence of Debt; Repayment of Loans . . . . . . . . 28
SECTION 2.08. Interest on Loans . . . . . . . . . . . . . . . . . 29
SECTION 2.09. Default Interest . . . . . . . . . . . . . . . . . . 29
SECTION 2.10. Alternate Rate of Interest . . . . . . . . . . . . . 30
SECTION 2.11. Termination and Reduction of Commitments . . . . . . 30
SECTION 2.12. Prepayment . . . . . . . . . . . . . . . . . . . . . 31
SECTION 2.13. Reserve Requirements; Change in Circumstances . . . 31
SECTION 2.14. Change in Legality . . . . . . . . . . . . . . . . . 33
SECTION 2.15. Letters of Credit . . . . . . . . . . . . . . . . . 34
SECTION 2.16. Indemnity . . . . . . . . . . . . . . . . . . . . . 37
SECTION 2.17. Pro Rata Treatment . . . . . . . . . . . . . . . . . 37
SECTION 2.18. Sharing of Setoffs . . . . . . . . . . . . . . . . . 38
SECTION 2.19. Payments . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 2.20. Taxes . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE III
Representations and Warranties . . . . . . . . 41
SECTION 3.01. Organization; Powers . . . . . . . . . . . . . . . . 41
SECTION 3.02. Authorization . . . . . . . . . . . . . . . . . . . 41
SECTION 3.03. Enforceability . . . . . . . . . . . . . . . . . . . 41
SECTION 3.04. Governmental Approvals . . . . . . . . . . . . . . . 42
SECTION 3.05. Financial Statements . . . . . . . . . . . . . . . . 42
SECTION 3.06. No Material Adverse Change . . . . . . . . . . . . . 42
SECTION 3.07. Title to Properties; Possession Under Leases . . . . 42
SECTION 3.08. Subsidiaries . . . . . . . . . . . . . . . . . . . . 42
SECTION 3.09. Litigation; Compliance with Laws . . . . . . . . . . 42
SECTION 3.10. Agreements . . . . . . . . . . . . . . . . . . . . . 43
SECTION 3.11. Federal Reserve Regulations . . . . . . . . . . . . 43
SECTION 3.12. Investment Company Act; Public Utility Holding Company
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 3.13. Use of Proceeds . . . . . . . . . . . . . . . . . . 43
SECTION 3.14. Tax Returns . . . . . . . . . . . . . . . . . . . . 43
SECTION 3.15. No Material Misstatements . . . . . . . . . . . . . 43
SECTION 3.16. Employee Benefit Plans . . . . . . . . . . . . . . . 44
SECTION 3.17. Environmental Matters . . . . . . . . . . . . . . . 44
SECTION 3.18. Security Interests . . . . . . . . . . . . . . . . . 44
3
ARTICLE IV
Conditions of Lending . . . . . . . . . . . 45
SECTION 4.01. Conditions to Effectiveness . . . . . . . . . . . . 45
SECTION 4.02. Conditions to All Loans . . . . . . . . . . . . . . 46
ARTICLE V
Affirmative Covenants . . . . . . . . . . . 47
SECTION 5.01. Existence; Businesses and Properties . . . . . . . . 47
SECTION 5.02. Insurance . . . . . . . . . . . . . . . . . . . . . 47
SECTION 5.03. Obligations and Taxes . . . . . . . . . . . . . . . 48
SECTION 5.04. Financial Statements, Reports, etc . . . . . . . . . 48
SECTION 5.05. Litigation and Other Notices . . . . . . . . . . . . 49
SECTION 5.06. Employee Benefits . . . . . . . . . . . . . . . . . 49
SECTION 5.07. Maintaining Records; Access to Properties and
Inspections . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 5.08. Sale of Accounts . . . . . . . . . . . . . . . . . . 50
SECTION 5.09. Further Assurances . . . . . . . . . . . . . . . . . 50
ARTICLE VI
Negative Covenants . . . . . . . . . . . 51
SECTION 6.01. Liens . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 6.02. Sale and Lease-Back Transactions . . . . . . . . . . 52
SECTION 6.03. Mergers, Consolidations, Sales of Assets and
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 6.05. Leverage Ratio . . . . . . . . . . . . . . . . . . . 54
SECTION 6.06. Minimum Consolidated Net Worth . . . . . . . . . . . 54
SECTION 6.07. Minimum Excess Spread . . . . . . . . . . . . . . . 54
SECTION 6.08. Minimum Equity to Managed Assets Ratio. . . . . . . 54
SECTION 6.09. Limitations on Restrictions on Dividends . . . . . . 54
SECTION 6.10. Limitations on Lines of Business . . . . . . . . . . 55
ARTICLE VII
Events of Default . . . . . . . . . . . . 55
ARTICLE VIII
The Administrative Agent . . . . . . . . . . 59
4
ARTICLE IX
Miscellaneous . . . . . . . . . . . . . 61
SECTION 9.01. Notices . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 9.02. Survival of Agreement . . . . . . . . . . . . . . . 62
SECTION 9.03. Binding Effect . . . . . . . . . . . . . . . . . . . 62
SECTION 9.04. Successors and Assigns . . . . . . . . . . . . . . . 62
SECTION 9.05. Expenses; Indemnity . . . . . . . . . . . . . . . . 65
SECTION 9.06. Right of Setoff . . . . . . . . . . . . . . . . . . 66
SECTION 9.07. Applicable Law . . . . . . . . . . . . . . . . . . . 66
SECTION 9.08. Waivers; Amendment . . . . . . . . . . . . . . . . . 66
SECTION 9.09. Interest Rate Limitation . . . . . . . . . . . . . . 67
SECTION 9.10. Entire Agreement . . . . . . . . . . . . . . . . . . 67
SECTION 9.11. Waiver of Jury Trial . . . . . . . . . . . . . . . . 67
SECTION 9.12. Severability . . . . . . . . . . . . . . . . . . . . 68
SECTION 9.13. Counterparts . . . . . . . . . . . . . . . . . . . . 68
SECTION 9.14. Headings . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 9.15. Jurisdiction; Consent to Service of Process . . . . 68
SECTION 9.16. Confidentiality . . . . . . . . . . . . . . . . . . 68
Exhibits
Exhibit A-1 Form of Competitive Bid Request
Exhibit A-2 Form of Notice of Competitive Bid Request
Exhibit A-3 Form of Competitive Bid
Exhibit A-4 Form of Competitive Bid Accept/Reject Letter
Exhibit A-5 Form of Standby Borrowing Request
Exhibit B Form of Security Agreement
Exhibit C Form of Assignment and Acceptance
Exhibit D Borrower Pledge Agreement
Exhibit E Form of Subsidiary Guaranty
Exhibit F Form of Parent Guaranty
Exhibit G Form of Affiliate Guaranty
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Schedules
Schedule 2.01 Commitments
Schedule 3.08 Subsidiaries
Schedule 3.09 Litigation
Schedule 3.14 Tax Returns
Schedule 3.18 Security Agreement Filings
Schedule 6.01 Liens
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REVOLVING CREDIT AND LETTER OF CREDIT FACILITY
AGREEMENT dated as of September 16, 1996, among METRIS
COMPANIES INC., a Delaware corporation (the
"Borrower"), the lenders listed in Schedule 2.01
hereto (the "Lenders"), NATIONSBANK, N.A., as co-agent
for the Lenders (in such capacity, the "Co-Agent"),
BANK OF AMERICA ILLINOIS, as an issuing bank, FIRST
BANK NATIONAL ASSOCIATION, as an issuing bank, NORWEST
BANK MINNESOTA, N.A., as an issuing bank, and THE
CHASE MANHATTAN BANK, as administrative agent for the
Lenders and as an issuing bank.
The Borrower has requested the Lenders to extend credit to the
Borrower in an aggregate principal amount of up to $300,000,000, of which
(i) the full amount minus the LC Exposure (as defined herein) shall be
available in the form of revolving credit loans and competitive advances
(pursuant to a procedure under which the Borrower may invite the Lenders to bid
on an uncommitted basis on borrowings by the Borrower) and (ii) up to
$50,000,000 shall be available in the form of letters of credit. Such credit
will mature five years after the Closing Date (as hereinafter defined). The
proceeds of all such borrowings and such letters of credit are to be used by
the Borrower and its subsidiaries to provide working capital and for other
general corporate purposes. The Lenders are willing to extend such credit to
the Borrower on the terms and subject to the conditions herein set forth.
Accordingly, the Borrower, the Lenders and the Administrative
Agent agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR
Standby Loans.
"ABR Standby Loan" shall mean any Standby Loan bearing
interest at a rate determined by reference to the Alternate Base Rate.
"Accounts" shall mean all accounts (excluding credit
cardholder accounts but not excluding accounts receivable arising therefrom),
accounts receivable, other receivables, contract rights, chattel paper, and
related instruments and documents, insurance claims and proceeds, and notes,
whether now owned or hereafter acquired by the Borrower or any Subsidiary.
"Administrative Agent" shall mean The Chase Manhattan Bank,
together with its affiliates, as the arranger of the Commitments and as the
agent for the Lenders under this Agreement and the other Loan Documents.
"Administrative Agent Fees" shall have the meaning assigned to
such term in Section 2.06(b).
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"Affiliate" shall mean, when used with respect to a specified
Person, another Person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control with
the Person specified.
"Affiliate Guarantors" shall mean Fingerhut Corporation and
each other subsidiary of the Parent party to the Affiliate Guaranty.
"Affiliate Guaranty" shall mean the Guaranty to be executed
and delivered by each Affiliate Guarantor, substantially in the form of Exhibit
G hereto, as the same may be amended, supplemented, modified or restated from
time to time as permitted thereby or replaced by a comparable guaranty.
"Alternate Base Rate" shall mean, for any day, a rate per
annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in
effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect
on such day plus 1/2 of 1%. For purposes hereof, "Prime Rate" shall mean the
rate of interest per annum publicly announced from time to time by the
Administrative Agent as its prime rate in effect at its principal office in New
York City; each change in the Prime Rate shall be effective on the date such
change is publicly announced as effective. "Base CD Rate" shall mean the sum
of (a) the product of (i) the Three-Month Secondary CD Rate and (ii) Statutory
Reserves and (b) the Assessment Rate. "Three-Month Secondary CD Rate" shall
mean, for any day, the secondary market rate for three-month certificates of
deposit reported as being in effect on such day (or, if such day shall not be a
Business Day, the next preceding Business Day) by the Board through the public
information telephone line of the Federal Reserve Bank of New York (which rate
will, under the current practices of the Board, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day), or, if such
rate shall not be so reported on such day or such next preceding Business Day,
the average of the secondary market quotations for three-month certificates of
deposit of major money center banks in New York City received at approximately
10:00 a.m., New York City time, on such day (or, if such day shall not be a
Business Day, on the next preceding Business Day) by the Administrative Agent
from three New York City negotiable certificate of deposit dealers of
recognized standing selected by it. "Federal Funds Effective Rate" shall mean,
for any day, the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it. If for any reason the
Administrative Agent shall have determined (which determination shall be
presumed conclusive absent manifest error but subject to rebuttal by the
Borrower) that it is unable to ascertain the Base CD Rate or the Federal Funds
Effective Rate or both for any reason, including the inability or failure of
the Administrative Agent to obtain sufficient quotations in accordance with the
terms thereof, the Alternate Base Rate shall be determined without regard to
clause (b) or (c), or both, of the first sentence of this definition, as
appropriate, until the circumstances giving rise to such inability no longer
exist. Any change in the Alternate Base Rate due to a change in the Prime
Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective Rate
shall be effective on the effective date of such change in the Prime Rate, the
Three-Month Secondary CD Rate or the Federal Funds Effective Rate,
respectively.
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"Assessment Rate" shall mean for any date the annual rate
(rounded upwards, if necessary, to the next 1/100 of 1%) most recently
estimated by the Administrative Agent as the then current net annual assessment
rate that will be employed in determining amounts payable by the Administrative
Agent to the Federal Deposit Insurance Corporation (or any successor) for
insurance by such Corporation (or such successor) of time deposits made in
dollars at the Administrative Agent's domestic offices.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an assignee, and accepted by the
Administrative Agent, in the form of Exhibit C.
"Big Six Accounting Firm" shall mean any of Price Waterhouse &
Co., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., Ernst & Young, KPMG Peat Marwick LLP, Deloitte &
Touche and Coopers & ▇▇▇▇▇▇▇ or their respective successors.
"Board" shall mean the Board of Governors of the Federal
Reserve System of the United States.
"Borrower Pledge Agreement" shall mean the Pledge Agreement,
substantially in the form of Exhibit D hereto, made by the Borrower in favor of
the Administrative Agent, as such agreement may be amended, supplemented,
modified or restated from time to time as permitted thereby or replaced by a
comparable agreement.
"Borrowing" shall mean a group of Loans of a single Type made
by the Lenders (or, in the case of a Competitive Borrowing, by the Lender or
Lenders whose Competitive Bids have been accepted pursuant to Section 2.03) on
a single date and as to which a single Interest Period is in effect.
"Business Day" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York) on which banks are
permitted to open for business in New York City; provided, however, that, when
used in connection with a Eurodollar Loan, the term "Business Day" shall also
exclude any day on which banks are not open for dealings in dollar deposits in
the London interbank market.
"Capital Lease" shall have the meaning given such term in the
definition of Capital Lease Obligation.
"Capital Lease Obligations" of any Person shall mean the
obligations of such Person to pay rent or other amounts under any lease (a
"Capital Lease") of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are required to
be classified and accounted for as capital leases on a balance sheet of such
Person under GAAP consistently applied and, for the purposes of this Agreement,
the amount of such obligations at any time shall be the capitalized amount
thereof at such time determined in accordance with GAAP consistently applied.
A "Change in Control" shall be deemed to have occurred if
either (a) the Parent shall have ceased to own (directly or indirectly),
beneficially and of record, free and clear of all Liens, at least 51% (on a
fully diluted basis) of the economic and voting interest in the Borrower's
common stock or (b) any person (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) shall beneficially own (within the meaning of
Rule 13d-3 under the Exchange Act) shares representing more than 50% of the
aggregate ordinary voting power represented by the issued and outstanding
9
capital stock of the Parent or any Person directly or indirectly Controlling
the Parent or (c) at any time, individuals who on the Closing Date were
directors of the Parent (together with any replacement or additional directors
nominated or appointed by the majority of directors then in office) cease to
constitute a majority of the Board of Directors of the Parent.
"Change in Control Date" shall mean (a) in the case of a
Change in Control pursuant to clause (a) of the definition thereof, the date
on which such Change of Control shall have occurred and (b) in the case of a
Change in Control pursuant to either clause (b) or (c) of the definition
thereof, the date on which the Required Lenders shall have requested the
termination of the Commitments following the earlier of (i) the filing with the
Securities and Exchange Commission of a Schedule 13D (or any similar or
successor report or schedule) or any amendment thereto pursuant to
Regulation 13D or any similar or successor regulation promulgated under the
Exchange Act with respect to the Parent or any Person directly or indirectly
Controlling the Parent indicating that an event which constitutes such a Change
in Control has occurred, or (ii) the date on which the Parent becomes aware
that an event which constitutes such a Change in Control has occurred.
"Closing Date" shall mean September 16, 1996.
"Code" shall mean the Internal Revenue Code of 1986, as the
same may be amended from time to time.
"Collateral Documents" shall mean the Security Agreement and
the Borrower Pledge Agreement and the executed stock powers referred to
therein.
"Commitment" shall mean, with respect to each Lender, the
Commitment of such Lender to make Loans hereunder in an amount not in excess of
the amount set forth opposite such Lender's name in Schedule 2.01 hereto as
such Lender's Commitment may be permanently terminated or reduced from time to
time pursuant to Section 2.11 or adjusted from time to time pursuant to
Section 9.04.
"Commitment Percentage" shall mean, as to any Lender at any
time, the percentage which such Lender's Commitment then constitutes of the
aggregate Commitments.
"Competitive Bid" shall mean an offer by a Lender to make a
Competitive Loan pursuant to Section 2.03.
"Competitive Bid Accept/Reject Letter" shall mean a
notification made by the Borrower pursuant to Section 2.03(d) in the form of
Exhibit A-4 hereto.
"Competitive Bid Rate" shall mean, as to any Competitive Bid
made by a Lender pursuant to Section 2.03(b), (i) in the case of a Eurodollar
Competitive Loan, the Margin, and (ii) in the case of a Fixed Rate Loan, the
fixed rate of interest offered by the Lender making such Competitive Bid.
"Competitive Bid Request" shall mean a request made pursuant
to Section 2.03 in the form of Exhibit A-1 hereto.
"Competitive Borrowing" shall mean a borrowing consisting of a
Competitive Loan or concurrent Competitive Loans from the Lender or Lenders
10
whose Competitive Bids for such Borrowing have been accepted by the Borrower
under the bidding procedure described in Section 2.03.
"Competitive Loan" shall mean a Loan pursuant to the bidding
procedure described in Section 2.03. Each Competitive Loan shall be a Euro-
dollar Competitive Loan or a Fixed Rate Loan.
"Consolidated Net Worth" shall mean, as at any date of
determination, the consolidated stockholders' equity of the Borrower and its
consolidated Subsidiaries, as determined on a consolidated basis in conformity
with GAAP consistently applied.
"Consolidated Tangible Net Worth" shall mean, as at any date
of determination, Consolidated Net Worth less (to the extent reflected in
determining Consolidated Net Worth) (a) all write-ups subsequent to June 30,
1996 in the book value of any asset by the Borrower or any of its consolidated
Subsidiaries, (b) all investments in Persons that are not consolidated
Subsidiaries and (c) all unamortized debt discount and expense, unamortized
deferred charges, goodwill, patents, trademarks, service marks, trade names,
anticipated future benefit of tax loss carry-forwards, copyrights, organization
or developmental expenses and other intangible assets.
"Control" shall have the meaning given such term in Rule 12b-2
under the Exchange Act and "Controlling" and "Controlled" shall have meanings
correlative thereto.
"Credit Card Bank" shall mean Direct Merchants Credit Card
Bank, National Association, and any other Person that issues credit cards to be
formed or acquired by the Borrower or one of the Subsidiaries.
"Credit Event" shall mean each Borrowing, each issuance of a
Letter of Credit and each amendment of a Letter of Credit that increases the
principal amount thereof.
"Cumulative Consolidated Net Income" shall mean, as at any
date of determination, the aggregate net income, before consideration of any
gains or charges resulting from extraordinary items, of the Borrower and its
consolidated Subsidiaries, as determined on a consolidated basis in conformity
with GAAP consistently applied ("Net Operating Income"), for each fiscal
quarter of the Borrower (a) commencing with (i) at any time when clause (i) of
Section 6.06(a) is applicable, the fiscal quarter ended June 30, 1996 or (ii)
at any time when clause (ii) of Section 6.06(a) is applicable, the first fiscal
quarter immediately succeeding the last full fiscal quarter included in
determining IPO Consolidated Net Worth and (b) ending with the fiscal quarter
most recently ended on or prior to such date of determination, provided, that
"Cumulative Consolidated Net Income" shall be determined exclusive of any
fiscal quarter of the Borrower for which Net Operating Income is less than
zero.
"Default" shall mean any event or condition which upon notice,
lapse of time or both would constitute an Event of Default.
"Designated Debt" shall mean, as at any date, all obligations
of the Borrower and its consolidated Subsidiaries which are (or, as of such
date, should be) accounted for as indebtedness on a consolidated balance sheet
of the Borrower in conformity with GAAP consistently applied whether such
11
obligations are classified as long-term or short-term under GAAP consistently
applied.
"dollars" or "$" shall mean lawful money of the United States
of America.
"Equity to Managed Assets Ratio" shall mean, at any time, the
ratio (expressed as a percentage) of (a) Consolidated Tangible Net Worth at
such time to (b) Managed Assets at such time.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) that is a member of a group of which the Borrower is a member
and that is treated as a single employer under Section 414(b) or (c) of the
Code or, solely for purposes of Section 412 of the Code, that is treated as a
single employer under Section 414 of the Code.
"Eurodollar Borrowing" shall mean a Borrowing comprised of
Eurodollar Loans.
"Eurodollar Competitive Borrowing" shall mean a Borrowing
comprised of Eurodollar Competitive Loans.
"Eurodollar Competitive Loan" shall mean any Competitive Loan
bearing interest at a rate determined by reference to the LIBO Rate in
accordance with the provisions of Article II.
"Eurodollar Loan" shall mean any Eurodollar Competitive Loan
or Eurodollar Standby Loan.
"Eurodollar Standby Borrowing" shall mean a Borrowing composed
of Eurodollar Standby Loans.
"Eurodollar Standby Loan" shall mean any Standby Loan bearing
interest at a rate determined by reference to the LIBO Rate in accordance with
the provisions of Article II.
"Event of Default" shall have the meaning assigned to such
term in Article VII.
"Excess Spread" shall mean, for any three consecutive Monthly
Periods (a "Test Period"), the average of the Series Excess Spreads determined
in respect of such Test Period for each outstanding series of certificates
relating to the Metris Master Trust (which average shall be determined on a
weighted basis by reference to the average aggregate invested amount with
respect to each such series). As used in this definition, "Series Excess
Spread" means, with respect to any series referred to in the preceding
sentence, (a) the average of the Portfolio Yields for each of the three Monthly
Periods in the relevant Test Period minus (b) the weighted average Base Rates
for such three Monthly Periods.
In addition, as used in this definition, (i) with respect to
the series of certificates captioned 1995-1 or 1996-1 and issued pursuant to
the Metris Master Trust Pooling and Servicing Agreement dated as of May 26,
1995, "Base Rate" and "Portfolio Yield" shall have the respective meanings
12
assigned to such terms in the relevant supplement to such Pooling and Servicing
Agreement as in effect on the Closing Date, and (ii) with respect to any other
series of certificates relating to the Metris Master Trust, (x) "Base Rate"
shall mean, as of any Business Day, the average of the per annum certificate
rates applicable to such certificates on such Business Day weighted by the
unpaid principal amount of each respective class of certificates as of such
Business Day plus the product of the per annum servicing fee rate applicable to
such series times a fraction the numerator of which is the amount by reference
to which such servicing fee is payable and the denominator of which is the
aggregate invested amount in respect of such series and (y) "Portfolio Yield"
shall mean, for any Monthly Period, the annualized percentage equivalent of a
fraction, the numerator of which is an amount equal to the sum of the aggregate
amount of available finance charge collections allocated to such series for
such Monthly Period (excluding amounts on deposit in any reserve account
established for such series), calculated on a cash basis, minus the aggregate
amount allocated to such series for such Monthly Period in respect of defaulted
Accounts and amounts required to be deposited, but not deposited, in any excess
funding account in connection with the adjustment of an Account, and the
denominator of which is the average daily aggregate invested amount of the
certificates with respect to such series for such Monthly Period; provided,
however, that, for the purposes of this clause (ii), the Base Rate and
Portfolio Yield will instead be calculated in the manner set forth in the
documentation governing the relevant series of certificates so long as such
terms (or their equivalent) are defined in such documentation in a manner no
less favorable to the Lenders (i.e., that would be expected to materially
increase the reported Series Excess Spread) than the relevant definitions set
forth in the Pooling and Servicing Agreement referred to in clause (i) above.
"Exchange Act" shall mean the Securities Exchange Act of 1934.
"Facility Fee" shall have the meaning assigned to such term in
Section 2.06(a).
"Facility Fee Percentage" shall mean the applicable percentage
per annum set forth below based upon the ratings by S&P and ▇▇▇▇▇'▇,
respectively, applicable on such date to the Index Debt:
Rating Percentage
Category 1
A+/A1 .0800%
or above
Category 2
A, A-/A2, A3 .1000%
Category 3
BBB+/Baa1 .1250%
Category 4
BBB/Baa2 .1500%
Category 5
BBB-/Baa3 .1750%
Category 6
below BBB-/ .2500%
below Baa3
13
For purposes of the foregoing, (i) if at any time either S&P
or ▇▇▇▇▇'▇ shall not have in effect a rating for Index Debt (other than by
reason of the circumstances referred to in the last sentence of this
definition), then the Facility Fee Percentage shall be deemed to be .2500% per
annum; (ii) if the ratings established or deemed to have been established by
S&P or Moody's for the Index Debt shall fall within different Categories, the
Facility Fee Percentage shall be based on the numerically higher Category (with
Category 6 being the numerically highest Category); and (iii) if any rating
established or deemed to have been established by S&P or Moody's shall be
changed (other than as a result of a change in the rating system of S&P or
Moody's), such change shall be effective as of the date on which such change is
first announced by the applicable rating agency. Each change in the
Facility Fee Percentage shall apply during the period commencing on the
effective date of such change and ending on the date immediately preceding the
effective date of the next such change. If the rating system of S&P or Moody's
shall change, or if any such rating agency shall cease to be in the business of
rating corporate debt obligations, the Borrower and the Lenders shall negotiate
in good faith to amend this definition to reflect such changed rating system or
the nonavailability of ratings from such rating agency (and pending the
effectiveness of such amendment, the Facility Fee Percentage will be determined
by reference to the rating most recently in effect from such rating agency).
"Fees" shall mean the Facility Fee, the LC Fee, the Issuance
and Amendment Fees, and other fees referred to in paragraph (d) of Section 2.06
and the Administrative Agent Fees.
"Financial Officer" of any corporation shall mean the chief
financial officer, principal accounting officer, treasurer, assistant treasurer
or controller of such corporation.
"Fingerhut Liquidity Agreement" shall mean the Amended and
Restated Liquidity Agreement, dated as of May 26, 1995, among Fingerhut Owner
Trust, the lenders parties thereto and The Chase Manhattan Bank, as
Administrative Agent, as amended from time to time.
"Fingerhut Owner Trust" shall have the meaning given such term
in the definition of "Metris Master Trust".
"Fixed Rate Borrowing" shall mean a Borrowing comprised of
Fixed Rate Loans.
14
"Fixed Rate Loan" shall mean any Competitive Loan bearing
interest at a fixed percentage rate per annum (expressed in the form of a
decimal to no more than four decimal places) specified by the Lender making
such Loan in its related Competitive Bid.
"FRI" shall mean Fingerhut Receivables, Inc., a Delaware
special purpose corporation.
"GAAP" shall mean generally accepted accounting principles in
the United States.
"Governmental Authority" shall mean any Federal, state, local
or foreign court or governmental agency, authority, instrumentality or
regulatory body with jurisdiction over the Borrower, any Subsidiary or any
Lender, as the case may be.
"Guarantee" of or by any Person shall mean, without
duplication, any obligation, contingent or otherwise, of such Person
guaranteeing or having the economic effect of guaranteeing any Indebtedness of
any other Person (the "primary obligor") (or any other obligation of a primary
obligor if the anticipated liability of such guarantor shall have been reserved
against in the financial statements of such guarantor or quantified in the
notes thereto), including third party mortgages or third party security
interests, in any manner, whether directly or indirectly, and including any
obligation of such Person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation or to purchase (or to advance or supply funds for the purchase
of) any security for the payment of such Indebtedness or other obligation,
(b) to purchase property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment of such
Indebtedness or other obligation or (c) to maintain working capital, equity
capital or other financial statement condition or liquidity of the primary
obligor for purposes of enabling the primary obligor to pay such Indebtedness
or other obligation; provided, however, that the term Guarantee shall not
include endorsements for collection or deposit, in either case, in the ordinary
course of business. For purposes of determining compliance with any covenant
contained herein, the "amount" of any Guarantee shall be deemed to equal
(i) the lesser of the amount of the Indebtedness guaranteed or otherwise
benefited by such Guarantee or the maximum amount of the Borrower's or the
applicable Subsidiary's liability with respect to such Guarantee or (ii) if
such Guarantee shall not be a guarantee of Indebtedness, the amount of the
anticipated liability reserved against in connection with such Guarantee in the
most recent balance sheet of the guarantor or any anticipated liability of the
guarantor thereunder quantified in the notes accompanying such balance sheet.
"Guarantors" shall mean the Parent, each subsidiary of the
Parent party to the Affiliate Guaranty and each Subsidiary of the Borrower
party to the Subsidiary Guaranty.
"Indebtedness" of any Person shall mean, without duplication,
(a) all obligations of such Person for borrowed money or with respect to
deposits or advances of any kind, (b) all obligations of such Person evidenced
by bonds, debentures, notes or similar instruments, (c) all obligations of such
Person upon which interest charges are customarily paid, (d) all obligations of
such Person under conditional sale or other title retention agreements relating
to property or assets purchased by such Person, (e) all obligations of such
Person issued or assumed as the deferred purchase price of property or services
15
(other than trade payables and payroll expenses, so long as such trade payables
and payroll expenses are incurred in the ordinary course of business),
(f) Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed to the extent of the amount of
such Indebtedness or, if such Indebtedness is nonrecourse, to the extent of the
lesser of the amount of such Indebtedness and the value of the property
securing such Indebtedness, (g) all Guarantees by such Person of Indebtedness
of others, (h) all Capital Lease Obligations of such Person, and (i) all
obligations of such Person, actual or contingent, as an account party in
respect of letters of credit other than trade letters of credit and bankers'
acceptances. Notwithstanding the foregoing, Indebtedness shall exclude sales
of Accounts accounted for as sales under GAAP and obligations in respect of
Rate Protection Agreements. The Indebtedness of any Person shall include the
Indebtedness of any partnership (other than the Metris Master Trust) in which
such Person is a general partner.
"Index Debt" shall mean the senior unsecured, non-credit
enhanced long-term debt of the Parent.
"Initial Test Date" shall mean the earlier of December 31,
1996 and the IPO Date.
"Interest Payment Date" shall mean, with respect to any Loan,
the last day of the Interest Period applicable thereto and, in the case of a
Eurodollar Loan with an Interest Period of more than three months' duration or
a Fixed Rate Loan with an Interest Period of more than 90 days' duration, each
day that would have been an Interest Payment Date for such Loan had successive
Interest Periods of three months' duration or 90 days' duration, as the case
may be, been applicable to such Loan and, in addition, the date of any
refinancing or conversion of such Loan with or to a Loan of a different Type.
"Interest Period" shall mean (a) as to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing or on the last
day of the immediately preceding Interest Period applicable to such Borrowing,
as the case may be, and ending on the numerically corresponding day (or, if
there is no numerically corresponding day, on the last day) in the calendar
month that is 1, 2, 3 or 6 months thereafter, as the Borrower may elect, (b) as
to any ABR Borrowing, the period commencing on the date of such Borrowing and
ending on the earliest of (i) the next succeeding March 31, June 30,
September 30 and December 31, (ii) the Maturity Date and (iii) the date of
prepayment of such Borrowing and (c) as to any Fixed Rate Borrowing, the period
commencing on the date of such Borrowing and ending on the date specified in
the Competitive Bids in which the offer to make the Fixed Rate Loans comprising
such Borrowing was extended, which shall not be earlier than seven days after
the date of such Borrowing or later than 360 days after the date of such
Borrowing; provided, however, that, if any Interest Period would end on a day
other than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless, in the case of Eurodollar Loans only, such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day. Interest
shall accrue from and including the first day of an Interest Period to but
excluding the last day of such Interest Period.
"IPO Consolidated Net Worth" shall have the meaning assigned
to such term in Section 6.06.
16
"IPO Date" shall mean the date on which the initial public
offering of the Borrower's common stock shall have been consummated.
"Issuing Banks" shall mean The Chase Manhattan Bank, Bank of
America Illinois, Norwest Bank Minnesota, N.A., First Bank National Association
and one or more other Lenders which shall be designated in writing from time to
time by the Borrower with the consent of such Lender and the Administrative
Agent, which consent, in the case of the Administrative Agent, shall not be
unreasonably withheld.
"LC Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to acquire participations in Letters of Credit
hereunder as set forth in Section 2.15, in an amount not in excess of the
amount set forth opposite such Lender's name as its LC Commitment in
Schedule 2.01, as the same may be permanently reduced from time to time
pursuant to Section 2.11.
"LC Disbursement" shall mean any payment or disbursement made
by the Issuing Bank under or pursuant to a Letter of Credit.
"LC Exposure" shall mean, at any time, the sum of (a) the
aggregate undrawn amount of all Letters of Credit outstanding at such time and
(b) the aggregate amount of all LC Disbursements for which the Lenders have not
been reimbursed pursuant to Section 2.15 (and, when used with respect to a
particular Lender, shall mean such Lender's pro rata share, based upon its LC
Commitment, of such aggregate LC Exposure).
"LC Fee" shall have the meaning set forth in Section 2.06(c).
"Letter of Credit" shall mean any letter of credit issued
pursuant to the terms of Section 2.15(a).
"Leverage Ratio" shall mean, at any time, the ratio of
(a) Designated Debt of the Borrower at such time to (b) Consolidated Net Worth
at such time.
"LIBO Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the rate at which dollar
deposits approximately equal in principal amount to (i) in the case of a
Standby Borrowing, the Administrative Agent's portion of such Eurodollar
Borrowing and (ii) in the case of a Competitive Borrowing, a principal amount
that would have been the Administrative Agent's portion of such Competitive
Borrowing had such Competitive Borrowing been a Standby Borrowing, and for a
maturity comparable to such Interest Period are offered to the principal London
office of the Administrative Agent in immediately available funds in the London
interbank market at approximately 11:00 a.m., London time, two Business Days
prior to the commencement of such Interest Period.
"LIBOR Spread" shall mean, with respect to the LC Fee or the
Loans comprising any Eurodollar Standby Borrowing, the applicable percentage
per annum set forth below based upon the ratings by S&P and Moody's,
respectively, applicable on such date to the Index Debt:
17
Rating Percentage
Category 1
A+/A1
or above .1700%
Category 2
A, A-/A2, A3 .2000%
Category 3
BBB+/Baa1 .2250%
Category 4
BBB/Baa2 .2500%
Category 5
BBB-/Baa3 .3250%
Category 6
below BBB-/ .5000%
below Baa3
For purposes of the foregoing, (i) if at any time either S&P
or Moody's shall not have in effect a rating for the Index Debt (other than by
reason of the circumstances referred to in the last sentence of this
definition), then the LIBOR Spread shall be deemed to be .5000%; (ii) if the
ratings established or deemed to have been established by S&P or Moody's for
the Index Debt shall fall within different Categories, the LIBOR Spread shall
be based on the numerically higher Category (with Category 6 being the
numerically highest Category); and (iii) if any rating established or deemed to
have been established by S&P or Moody's shall be changed (other than as a
result of a change in the rating system of S&P or Moody's), such change shall
be effective as of the date on which such change is first announced by the
applicable rating agency. Each change in the LIBOR Spread shall apply during
the period commencing on the effective date of such change and ending on the
date immediately preceding the effective date of the next such change. If the
rating system of S&P or Moody's shall change, or if any such rating agency
shall cease to be in the business of rating corporate debt obligations, the
Borrower and the Lenders shall negotiate in good faith to amend this definition
to reflect such changed rating system or the nonavailability of ratings from
such rating agency (and pending the effectiveness of such amendment, the LIBOR
Spread will be determined by reference to the rating most recently in effect
from such rating agency).
"Lien" shall mean, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, encumbrance, charge or security interest in or on
such asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement relating to such asset
and (c) in the case of securities, any purchase option, call or similar right
of a third party with respect to such securities.
18
"Loan" shall mean a Competitive Loan or a Standby Loan,
whether made as a Eurodollar Loan, an ABR Standby Loan or a Fixed Rate Loan,
as permitted hereby.
"Loan Documents" shall mean this Agreement, the Parent
Guaranty, the Subsidiary Guaranty, the Affiliate Guaranty and the Collateral
Documents.
"Loan Parties" shall mean the Borrower and each Guarantor.
"Managed Assets" shall mean, at any time, the sum for the
Borrower and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP) of (a) all on-balance sheet assets and (b)
all securitized assets.
"Margin" shall mean, as to any Eurodollar Competitive Loan,
the margin (expressed as a percentage rate per annum in the form of a decimal
to no more than four decimal places) to be added to or subtracted from the
LIBO Rate in order to determine the interest rate applicable to such Loan, as
specified in the Competitive Bid relating to such Loan.
"Margin Stock" shall have the meaning given such term under
Regulation U.
"Material Adverse Effect" shall mean (a) a materially adverse
effect on the business, assets, operations or financial condition of the
Borrower and the Subsidiaries taken as a whole, (b) material impairment of the
ability of the Borrower or any Subsidiary to perform any material obligation
under any Loan Document to which it now is or hereafter becomes a party or
(c) material impairment of any of the material rights of or benefits available
to the Lenders under the Loan Documents.
"Maturity Date" shall mean September 16, 2001.
"Metris Master Trust" shall mean (i) the Metris Master Trust
(formerly the Fingerhut Financial Services Master Trust) formed pursuant to
that certain Pooling and Servicing Agreement dated as of May 26, 1995, among
Direct Merchants Credit Card Bank, National Association, as servicer, MRI as
transferor, and Bank of New York (Delaware), as trustee, as amended or
supplemented from time to time, (ii) the Fingerhut Owner Trust formed pursuant
to that certain Owner Trust Agreement between FRI, as depositor, and Wilmington
Trust Company, as owner trustee (the "Fingerhut Owner Trust") and (iii) any
other independent trust formed for the purpose of acquiring interests in the
accounts receivable of the Borrower or any of its Subsidiaries and issuing
certificates of beneficial interest in such receivables or commercial paper
pursuant to a Receivables Transfer Program.
"Monthly Period" shall mean the period from and including the
first day of each fiscal month of the Borrower to and including the last day of
such fiscal month.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc., and its
successors.
"MRI" shall mean Metris Receivables, Inc. (formerly Fingerhut
Financial Services Receivables, Inc.), a Delaware special purpose corporation,
or its successors.
19
"Multiemployer Plan" shall mean a multiemployer plan as
defined in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate (other than one considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Section 414 of the Code) is making or accruing an
obligation to make contributions, or has within any of the preceding five
plan years made or accrued an obligation to make contributions.
"Note Purchase Agreement" shall mean, collectively, (a) the
Purchase Agreement dated January 14, 1991, between the Parent and each of the
purchasers listed on Schedule 1 thereto, with respect to the Parent's 10.12%
Senior Notes, Series B, and (b) the Purchase Agreement dated as of June 15,
1992, between the Parent and each of the purchasers listed in Schedule 1
thereto, in each case, as the same may be amended, supplemented, modified or
restated from time to time as permitted thereby.
"Obligations" shall mean (a) the Borrower's obligations in
respect of the due and punctual payment of principal of and interest on the
Loans when and as due, whether at maturity or upon any Interest Payment Date,
by acceleration, upon one or more dates set for prepayment or otherwise,
(b) all amounts required to be paid by the Borrower under Section 2.15 or
otherwise in respect of any LC Disbursement, (c) all Fees, expenses,
indemnities, reimbursements and other obligations, monetary or otherwise, of
the Borrower under this Agreement or any other Loan Document and (d) all
obligations, monetary or otherwise, of each Subsidiary under each Loan Document
to which it is a party.
"Parent" shall mean Fingerhut Companies, Inc., a Minnesota
corporation.
"Parent Facility" shall have the meaning assigned to such term
in Section 4.01(g).
"Parent Guaranty" shall mean the Guaranty, substantially in
the form of Exhibit F hereto, made by the Parent in favor of the Administrative
Agent, as the same may be amended, supplemented, modified or restated from time
to time as permitted thereby or replaced by a comparable guaranty.
"Parent Receivables Transfer Program" shall mean (i) the
structured receivables program conducted pursuant to that certain Purchase
Agreement dated as of June 29, 1994, between Fingerhut Corporation and FRI and
that certain Pooling and Servicing Agreement dated as of June 29, 1994, among
FRI, Fingerhut Corporation and Bank of New York (Delaware), each as amended and
supplemented from time to time or replaced by a similar agreement and related
agreements; (ii) the owner trust commercial paper program conducted pursuant to
an owner trust agreement between FRI, as depositor, and Wilmington Trust
Company, as Owner Trustee, a liquidity agreement among the Fingerhut Owner
Trust, The Chase Manhattan Bank, as agent, and the lenders party thereto, and
related agreements under which the Fingerhut Owner Trust would issue commercial
paper and (iii) any other program under which the Parent and/or any of its
subsidiaries sell interests in its Accounts to one or more purchasers on a
limited-recourse basis as determined in accordance with GAAP, but excluding any
sales of Accounts made in conjunction with any sale of other assets of the
Parent or any of its subsidiaries.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA.
20
"Person" shall mean any natural person, corporation, limited
liability company, business trust, joint venture, association, company,
partnership or government, or any agency or political subdivision thereof.
"Plan" shall mean any pension plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
which is maintained for employees of the Borrower or any ERISA Affiliate.
"Private Placement Indebtedness" shall mean the indebtedness
of the Parent issued pursuant to the Note Purchase Agreement.
"Rate Protection Agreements" shall mean interest rate
protection or exchange rate hedging agreements, foreign currency exchange
agreements or other interest or exchange rate hedging, cap or collar
arrangements.
"Receivables Transfer Subsidiary" shall mean (i) MRI and (ii)
any other special purpose Subsidiary formed pursuant to a Receivables Transfer
Program.
"Receivables Transfer Program" shall mean (i) the structured
receivables program conducted pursuant to that certain Bank Receivables
Purchase Agreement dated as of May 26, 1995, between Direct Merchants Credit
Card Bank, National Association, and the Borrower (as assignee of the Parent),
that certain Purchase Agreement dated as of May 26, 1995, between the Borrower
(as assignee of the Parent) and MRI and that certain Pooling and Servicing
Agreement dated as of May 26, 1995, among MRI, Direct Merchants Credit Card
Bank, National Association, and Bank of New York (Delaware), each as amended
and supplemented from time to time or replaced by a similar agreement and
related agreements; (ii) the owner trust commercial paper program conducted
pursuant to an owner trust agreement between FRI, as depositor, and Wilmington
Trust Company, as owner trustee, a liquidity agreement among the Fingerhut
Owner Trust, The Chase Manhattan Bank, as agent, and the lenders party thereto,
and related agreements under which the Owner Trust would issue commercial paper
and (iii) any other program under which the Borrower and/or any of its
Subsidiaries sell interests in its Accounts to one or more purchasers on a
limited recourse basis as determined in accordance with GAAP, but excluding any
sales of Accounts made in conjunction with any sale of other assets of the
Borrower or any of the Subsidiaries. Interests in Accounts sold by the
Borrower and/or any of its Subsidiaries under clause (i) above will for all
purposes be deemed sold pursuant to a Receivables Transfer Program as of the
date the Accounts are initially transferred to the relevant Receivables
Transfer Subsidiary.
"Register" shall have the meaning given such term in
Section 9.04(d).
"Regulation D" shall mean Regulation D of the Board as from
time to time in effect and all official rulings and interpretations thereunder
or thereof.
"Regulation G" shall mean Regulation G of the Board as from
time to time in effect and all official rulings and interpretations thereunder
or thereof.
21
"Regulation U" shall mean Regulation U of the Board as from
time to time in effect and all official rulings and interpretations thereunder
or thereof.
"Regulation X" shall mean Regulation X of the Board as from
time to time in effect and all official rulings and interpretations thereunder
or thereof.
"Replacement Letter of Credit" shall mean a letter of credit
issued by a bank with a rating of at least A by both Moody's and S&P, for the
benefit of the Administrative Agent to secure the repayment of any future
drawings under any outstanding Letters of Credit issued hereunder.
"Reportable Event" shall mean any reportable event as defined
in Section 4043(b) of ERISA or the regulations issued thereunder with respect
to a Plan (other than a Plan maintained by an ERISA Affiliate that is
considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Code).
"Required Lenders" shall mean, (i) at any time, Lenders having
Commitments representing at least a majority of the Total Commitment or
(ii) for purposes of acceleration of the Loans pursuant to clause (ii) of the
last paragraph of Article VII and for purposes of any demands in respect of the
Parent Guaranty, the Affiliate Guaranty or the Subsidiary Guaranty, Lenders
holding Loans and having LC Exposures representing a majority of the aggregate
principal amount of the Loans and the aggregate LC Exposure then outstanding.
"Responsible Officer" of any corporation shall mean any
executive officer or Financial Officer of such corporation and any other
officer or similar official thereof responsible for the administration of the
obligations of such corporation in respect of this Agreement.
"Sale-Leaseback Transaction" shall have the meaning given such
term in Section 6.02.
"S&P" shall mean Standard & Poor's Ratings Services and its
successors.
"Security Agreement" shall mean the Security Agreement,
substantially in the form of Exhibit B hereto, made by the Borrower in favor of
the Administrative Agent, as such agreement may be amended, supplemented,
modified or restated from time to time as permitted thereby or replaced by a
comparable agreement.
"Standby Borrowing" shall mean a borrowing consisting of
simultaneous Standby Loans from each of the Lenders.
"Standby Borrowing Request" shall mean a request made pursuant
to Section 2.04 in the form of Exhibit A-5 hereto.
"Standby Commitment" shall mean, with respect to each Lender,
the commitment of such Lender to make Standby Loans hereunder as set forth in
Schedule 2.01, as such commitment may be permanently terminated or reduced from
time to time pursuant to Section 2.11.
22
"Standby Loans" shall mean the revolving loans made by the
Lenders to the Borrower pursuant to Section 2.01. Each Standby Loan shall be a
Eurodollar Standby Loan or an ABR Standby Loan.
"Statutory Reserves" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board and any other banking authority to which
the Administrative Agent is subject for new negotiable nonpersonal time
deposits in dollars of over $100,000 with maturities approximately equal to
three months. Statutory Reserves shall be adjusted automatically on and as of
the effective date of any change in any reserve percentage.
"subsidiary" shall mean, with respect to any Person (herein
referred to as the "parent"), any corporation, limited liability company,
partnership, association or other business entity of which securities or other
ownership interests representing more than 50% of the ordinary voting power or
more than 50% of the general partnership or membership interests are, at the
time any determination is being made, owned, controlled or held by the parent
and/or one or more subsidiaries of the parent.
"Subsidiary" shall mean any subsidiary of the Borrower
including any subsidiary of the Borrower created or acquired by the Borrower
after the date hereof other than Metris Master Trust.
"Subsidiary Guarantors" shall mean each Subsidiary of the
Borrower party to the Subsidiary Guaranty.
"Subsidiary Guaranty" shall mean the Guaranty to be executed
and delivered by each Subsidiary Guarantor, substantially in the form of
Exhibit E hereto, as the same may be amended, supplemented, modified or
restated from time to time as permitted thereby or replaced by a comparable
guaranty.
"Total Commitment" shall mean, at any time, the aggregate
amount of Commitments of all the Lenders, as in effect at such time.
"Total LC Commitment" shall mean, at any time, the aggregate
amount of the Lenders' LC Commitments, as in effect at such time.
"Transactions" shall have the meaning assigned to such term in
Section 3.02.
"Type", when used in respect of any Loan or Borrowing, shall
refer to the Rate by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined. For purposes hereof, "Rate" shall
include the LIBO Rate, the Alternate Base Rate and any Competitive Bid Rate.
"Withdrawal Liability" shall mean liability to a Multiemployer
Plan as a result of a complete or partial withdrawal from such Multiemployer
Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions in
Section 1.01 shall apply equally to both the singular and plural forms of the
terms defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include",
23
"includes" and "including" shall be deemed to be followed by the phrase
"without limitation". All references herein to Articles, Sections, Exhibits
and Schedules shall be deemed references to Articles and Sections of, and
Exhibits and Schedules to, this Agreement unless the context shall otherwise
require. Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP, as
in effect from time to time; provided, however, that, for purposes of
determining compliance with any covenant set forth in Article VI, such terms
shall be construed in accordance with GAAP as in effect on the date of this
Agreement applied on a basis consistent with the application used in preparing
the Borrower's audited financial statements referred to in Section 3.05.
ARTICLE II
The Credits
SECTION 2.01. Commitments. (a) Subject to the terms and
conditions and relying upon the representations and warranties herein set
forth, each Lender agrees, severally and not jointly, to make Standby Loans to
the Borrower, at any time and from time to time on and after the Closing Date
and until the earlier of the Maturity Date and the termination of the
Commitment of such Lender, in an aggregate principal amount at any time out-
standing not to exceed such Lender's Commitment minus the amount by which the
Competitive Loans outstanding at such time and the LC Exposure at such time
shall be deemed to have used such Lender's Commitment pursuant to Section 2.17,
subject, however, to the condition that at all times the outstanding aggregate
principal amount of all Standby Loans made by each Lender shall equal the
product of (A) the percentage which its Commitment represents of the Total
Commitment times (B) the outstanding aggregate principal amount of all Standby
Loans made pursuant to Section 2.04 (except as a result of a default by any
Lender in its obligation to make any Standby Loan). Each Lender's Commitment
is set forth opposite its respective name in Schedule 2.01. Such Commitments
may be terminated or reduced from time to time pursuant to Section 2.11.
(b) Within the foregoing limits, the Borrower may borrow, pay
or prepay and reborrow hereunder, on and after the Closing Date and prior to
the Maturity Date, subject to the terms, conditions and limitations set forth
herein.
SECTION 2.02. Loans. (a) Each Standby Loan shall be made as
part of a Borrowing consisting of Loans made by the Lenders ratably in
accordance with their Commitments; provided, however, that the failure of any
Lender to make any Standby Loan shall not in itself relieve any other Lender of
its obligation to lend hereunder (it being understood, however, that no Lender
shall be responsible for the failure of any other Lender to make any Loan
required to be made by such other Lender). Each Competitive Loan shall be made
in accordance with the procedures set forth in Section 2.03. The Standby Loans
or Competitive Loans comprising any Borrowing shall be (i) in the case of
Competitive Loans, in an aggregate principal amount which is an integral
multiple of $1,000,000 and not less than $5,000,000 and (ii) in the case of
Standby Loans, in an aggregate principal amount which is an integral multiple
of $1,000,000 and not less than $5,000,000 (or an aggregate principal amount
equal to the remaining balance of the available Commitments). At no time shall
(A) the sum of (I) the outstanding aggregate principal amount of all Standby
Loans made by all Lenders, (II) the outstanding aggregate principal amount of
24
all Competitive Loans made by all Lenders and (III) the LC Exposure exceed (B)
the Total Commitment.
(b) Each Standby Borrowing shall be comprised entirely of
Eurodollar Standby Loans or ABR Standby Loans and each Competitive Borrowing
shall be comprised entirely of Eurodollar Competitive Loans or Fixed Rate Loans
as the Borrower may request pursuant to Section 2.03 or 2.04, as applicable.
Each Lender may at its option make any Eurodollar Loan by causing any domestic
or foreign branch or Affiliate of such Lender to make such Loan; provided that
any exercise of such option shall not affect the obligation of the Borrower to
repay such Loan in accordance with the terms of this Agreement. Borrowings of
more than one Type may be outstanding at the same time; provided, however, that
the Borrower shall not be entitled to request any Borrowing which, if made,
would result in an aggregate of more than 10 separate Standby Loans of any
Lender being outstanding at any one time. For purposes of the foregoing,
Standby Loans having different Interest Periods, regardless of whether they
commence on the same date, shall be considered separate Standby Loans.
(c) Each Lender shall make each Loan to be made by it
hereunder on the proposed date thereof by wire transfer of immediately
available funds to the Administrative Agent in New York, New York, not later
than 2:00 p.m., New York City time, and the Administrative Agent shall by
3:00 p.m., New York City time, credit the amounts so received to the general
deposit account of the Borrower with the Administrative Agent or, if a
Borrowing shall not occur on such date because any condition precedent herein
specified shall not have been met, return the amounts so received to the
respective Lenders. Competitive Loans shall be made by the Lender or Lenders
whose Competitive Bids therefor are accepted pursuant to Section 2.03 in the
amounts so accepted and Standby Loans shall be made by the Lenders pro rata in
accordance with their Commitments, subject to Section 2.17. Unless the
Administrative Agent shall have received notice from a Lender prior to the date
of any Borrowing that such Lender will not make available to the Administrative
Agent such Lender's portion of such Borrowing, the Administrative Agent may
assume that such Lender has made such portion available to the Administrative
Agent on the date of such Borrowing in accordance with this paragraph (c) and
the Administrative Agent may, in reliance upon such assumption, make available
to the Borrower on such date a corresponding amount. If and to the extent that
such Lender shall not have made such portion available to the Administrative
Agent, such Lender and the Borrower severally agree to repay to the
Administrative Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made available
to the Borrower until the date such amount is repaid to the Administrative
Agent at (i) in the case of the Borrower, the interest rate applicable at the
time to the Loans comprising such Borrowing and (ii) in the case of such
Lender, the Federal Funds Effective Rate. If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount shall constitute
such Lender's Loan as part of such Borrowing for purposes of this Agreement but
without interest being payable to such Lender prior to the date such amounts
shall have been repaid by it.
(d) Notwithstanding any other provision of this Agreement,
the Borrower shall not be entitled to request any Borrowing if the Interest
Period requested with respect thereto would end after the Maturity Date.
SECTION 2.03. Competitive Bid Procedure. (a) In order to
request Competitive Bids, the Borrower shall hand-deliver or telecopy to the
Administrative Agent a duly completed Competitive Bid Request in the form of
25
Exhibit A-1 hereto, to be received by the Administrative Agent (i) in the case
of a Eurodollar Competitive Borrowing, not later than 10:00 a.m., New York City
time, four Business Days before a proposed Competitive Borrowing and (ii) in
the case of a Fixed Rate Borrowing, not later than 10:00 a.m., New York City
time, one Business Day before a proposed Competitive Borrowing. No ABR Standby
Loan shall be requested in, or made pursuant to, a Competitive Bid Request. A
Competitive Bid Request that does not conform substantially to the format of
Exhibit A-1 may be rejected in the Administrative Agent's sole discretion, and
the Administrative Agent shall promptly notify the Borrower of such rejection
by telecopier. Such request shall in each case refer to this Agreement and
specify (x) whether such Borrowing is to be a Eurodollar Borrowing or a Fixed
Rate Borrowing, (y) the date of such Borrowing (which shall be a Business Day)
and the aggregate principal amount thereof which shall be in a minimum
principal amount of $5,000,000 and in an integral multiple of $1,000,000, and
(z) the Interest Period with respect thereto (which may not end after the
Maturity Date). Promptly after its receipt of a Competitive Bid Request that
is not rejected as aforesaid, the Administrative Agent shall invite by
telecopier (in the form set forth in Exhibit A-2) the Lenders to bid, on the
terms and conditions of this Agreement, to make Competitive Loans pursuant to
the Competitive Bid Request.
(b) Each Lender may, in its sole discretion, make one or more
Competitive Bids to the Borrower responsive to a Competitive Bid Request. Each
Competitive Bid by a Lender must be received by the Administrative Agent via
telecopier, in the form of Exhibit A-3, (i) in the case of a Eurodollar
Competitive Borrowing, not later than 10:00 a.m., New York City time, three
Business Days before a proposed Competitive Borrowing and (ii) in the case of a
Fixed Rate Borrowing, not later than 10:00 a.m., New York City time, on the day
of a proposed Competitive Borrowing. Multiple bids will be accepted by the
Administrative Agent. Competitive Bids that do not conform substantially to
the format of Exhibit A-3 may be rejected by the Administrative Agent after
conferring with, and upon the instruction of, the Borrower, and the
Administrative Agent shall notify the Lender making such nonconforming bid of
such rejection as soon as practicable. Each Competitive Bid shall refer to
this Agreement and specify (x) the principal amount (which shall be in a
minimum principal amount of $5,000,000 and in an integral multiple of
$1,000,000 and which may equal the entire principal amount of the Competitive
Borrowing requested by the Borrower) of the Competitive Loan or Loans that the
Lender is willing to make to the Borrower, (y) the Competitive Bid Rate or
Rates at which the Lender is prepared to make the Competitive Loan or Loans and
(z) the Interest Period (which shall be the Interest Period set forth in the
applicable Competitive Bid Request) and the last day thereof. If any Lender
shall elect not to make a Competitive Bid, such Lender shall so notify the
Administrative Agent via telecopier (I) in the case of Eurodollar Competitive
Loans, not later than 10:00 a.m., New York City time, three Business Days
before a proposed Competitive Borrowing, and (II) in the case of Fixed Rate
Loans, not later than 10:00 a.m., New York City time, on the day of a proposed
Competitive Borrowing; provided, however, that failure by any Lender to give
such notice shall not cause such Lender to be obligated to make any Competitive
Loan as part of such Competitive Borrowing. A Competitive Bid submitted by a
Lender pursuant to this paragraph (b) shall be irrevocable.
(c) The Administrative Agent shall promptly notify the
Borrower by telecopier of all the Competitive Bids made, the Competitive Bid
Rate and the principal amount of each Competitive Loan in respect of which a
Competitive Bid was made and the identity of the Lender that made each bid.
The Administrative Agent shall send a copy of all Competitive Bids to the
26
Borrower for its records as soon as practicable after completion of the bidding
process set forth in this Section 2.03.
(d) The Borrower may in its sole and absolute discretion,
subject only to the provisions of this paragraph (d), accept or reject any
Competitive Bid referred to in paragraph (c) above. The Borrower shall notify
the Administrative Agent by telephone, confirmed by telecopier in the form of a
Competitive Bid Accept/ Reject Letter in the form of Exhibit A-4, whether and
to what extent it has decided to accept or reject any of or all the bids
referred to in paragraph (c) above, (x) in the case of a Eurodollar Competitive
Borrowing, not later than 11:00 a.m., New York City time, three Business Days
before a proposed Competitive Borrowing, and (y) in the case of a Fixed Rate
Borrowing, not later than 11:00 a.m., New York City time, on the day of a
proposed Competitive Borrowing; provided, however, that (i) the failure by the
Borrower to give such notice shall be deemed to be a rejection of all the bids
referred to in paragraph (c) above, (ii) the Borrower shall not accept a bid
made at a particular Competitive Bid Rate if the Borrower has decided to reject
a bid made at a lower Competitive Bid Rate, (iii) the aggregate amount of the
Competitive Bids accepted by the Borrower shall not exceed the principal amount
specified in the Competitive Bid Request, (iv) if the Borrower shall accept a
bid or bids made at a particular Competitive Bid Rate but the amount of such
bid or bids shall cause the total amount of bids to be accepted by the Borrower
to exceed the amount specified in the Competitive Bid Request, then the
Borrower shall accept a portion of such bid or bids in an amount equal to the
amount specified in the Competitive Bid Request less the amount of all other
Competitive Bids accepted with respect to such Competitive Bid Request, which
acceptance, in the case of multiple bids at such Competitive Bid Rate, shall be
made pro rata in accordance with the amount of each such bid at such
Competitive Bid Rate, and (v) except pursuant to clause (iv) above, no bid
shall be accepted for a Competitive Loan unless such Competitive Loan is in a
minimum principal amount of $5,000,000 and an integral multiple of $1,000,000;
provided further, however, that if a Competitive Loan must be in an amount less
than $5,000,000 because of the provisions of clause (iv) above, such
Competitive Loan may be for a minimum of $1,000,000 or any integral multiple
thereof, and in calculating the pro rata allocation of acceptances of portions
of multiple bids at a particular Competitive Bid Rate pursuant to clause (iv)
the amounts shall be rounded to integral multiples of $1,000,000 in a manner
which shall be in the discretion of the Borrower. A notice given by the
Borrower pursuant to this paragraph (d) shall be irrevocable.
(e) The Administrative Agent shall promptly notify each
bidding Lender whether or not its Competitive Bid has been accepted (and if so,
in what amount and at what Competitive Bid Rate) by telecopier sent by the
Administrative Agent, and each successful bidder will thereupon become bound,
subject to the other applicable conditions hereof, to make the Competitive Loan
in respect of which its bid has been accepted.
(f) A Competitive Bid Request shall not be made within five
Business Days after the date of any previous Competitive Bid Request.
(g) If the Administrative Agent shall elect to submit a
Competitive Bid in its capacity as a Lender, it shall submit such bid directly
to the Borrower one quarter of an hour earlier than the latest time at which
the other Lenders are required to submit their bids to the Administrative Agent
pursuant to paragraph (b) above.
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(h) All Notices required by this Section 2.03 shall be given
in accordance with Section 9.01.
SECTION 2.04. Standby Borrowing Procedure. In order to
request a Standby Borrowing, the Borrower shall hand deliver or telecopy to the
Administrative Agent a borrowing request in the form of Exhibit A-5 hereto
(a) in the case of a Eurodollar Borrowing, not later than 12:00 noon, New York
City time, three Business Days before any such proposed Borrowing and (b) in
the case of an ABR Borrowing, not later than 12:00 noon, New York City time
(except that the Borrower shall use its best efforts to make such request by
11:00 a.m., New York City time), on the day of such proposed Standby Borrowing.
No Fixed Rate Loan shall be requested or made pursuant to a Standby Borrowing
Request. Such notice shall be irrevocable and shall in each case specify
(i) whether such Borrowing is to be a Eurodollar Borrowing or an ABR Borrowing,
(ii) the date of such Borrowing (which shall be a Business Day) and the amount
thereof and (iii) if such Borrowing is to be a Eurodollar Borrowing, the
Interest Period with respect thereto. If no election as to the Type of
Borrowing is specified in any such notice, then the requested Borrowing shall
be an ABR Borrowing. If no Interest Period with respect to any Eurodollar
Borrowing is specified in any such notice, then the Borrower shall be deemed to
have selected an Interest Period of one month's duration. If the Borrower
shall not have given notice in accordance with this Section 2.04 of its
election to refinance, continue or convert a Standby Borrowing prior to the end
of the Interest Period in effect for such Borrowing, then the Borrower shall
(unless such Borrowing is repaid at the end of such Interest Period) be deemed
to have given notice of an election to convert or continue such Borrowing with
an ABR Borrowing. The Administrative Agent shall promptly advise the Lenders
of any notice given pursuant to this Section 2.04 and of each Lender's portion
of the requested Borrowing.
SECTION 2.05. Refinancings, Continuances and Conversions of
Loans. (a) The Borrower may refinance all or any part of any Competitive
Borrowing at the end of the Interest Period thereof with a Borrowing of the
same or a different Type made pursuant to Section 2.03 or Section 2.04, and the
Borrower may refinance all or any part of a Standby Borrowing with a
Competitive Borrowing of the same or a different Type made pursuant to Section
2.04, in each case subject to the conditions and limitations set forth herein
and elsewhere in this Agreement. Any Borrowing or part thereof so refinanced
shall be deemed to be repaid in accordance with Section 2.07 with the proceeds
of a new Borrowing hereunder and the proceeds of the new Borrowing, to the
extent they do not exceed the principal amount of the Borrowing being
refinanced, shall not be paid by the Lenders to the Administrative Agent or by
the Administrative Agent to the Borrower pursuant to Section 2.02(c); provided,
however, that (i) if the principal amount extended by a Lender in a refinancing
is greater than the principal amount extended by such Lender in the Borrowing
being refinanced, then such Lender shall pay such difference to the
Administrative Agent for distribution to the Lenders described in (ii) below,
(ii) if the principal amount extended by a Lender in the Borrowing being
refinanced is greater than the principal amount being extended by such Lender
in the refinancing, the Administrative Agent shall return the difference to
such Lender out of amounts received pursuant to (i) above, and (iii) to the
extent any Lender fails to pay the Administrative Agent amounts due from it
pursuant to (i) above, any Loan or portion thereof being refinanced shall not
be deemed repaid in accordance with Section 2.07 and shall be payable by the
Borrower.
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(b) The Borrower shall have the right at any time upon prior
irrevocable notice to the Administrative Agent (i) not later than 12:00 (noon),
New York City time, one Business Day prior to conversion, to convert any
Eurodollar Standby Borrowing into an ABR Borrowing, (ii) not later than 10:00
a.m., New York City time, three Business Days prior to conversion or
continuation, to convert any ABR Borrowing into a Eurodollar Standby Borrowing
or to continue any Eurodollar Standby Borrowing as a Eurodollar Standby Borrow-
ing for an additional Interest Period, (iii) not later than 10:00 a.m., New
York City time, three Business Days prior to conversion, to convert the
Interest Period with respect to any Eurodollar Standby Borrowing to another
permissible Interest Period and (iv) not later than 10:00 a.m. New York City
time, on the date of such proposed Borrowing, to continue any ABR Borrowing for
an additional Interest Period, subject in each case to the following:
(i) each conversion or continuation shall be made pro rata
among the Lenders in accordance with the respective principal amounts
of the Loans comprising the converted or continued Standby Borrowing,
as the case may be;
(ii) if less than all the outstanding principal amount of
any Standby Borrowing shall be converted or continued, the aggregate
principal amount of such Standby Borrowing converted or continued shall
be an integral multiple of $1,000,000 and not less than $5,000,000;
(iii) if any Eurodollar Standby Borrowing is converted at a
time other than the end of the Interest Period applicable thereto, the
Borrower shall pay, upon demand, any amounts due to the Banks pursuant
to Section 2.16;
(iv) any portion of a Standby Borrowing maturing or
required to be repaid in less than one month may not be converted into
or continued as a Eurodollar Standby Borrowing;
(v) any portion of a Eurodollar Standby Borrowing which
cannot be converted into or continued as a Eurodollar Standby Borrowing
by reason of clause (iv) above shall be automatically converted at the
end of the Interest Period in effect for such Borrowing into an ABR
Borrowing; and
(vi) no Interest Period may be selected for any Eurodollar
Standby Borrowing that would end later than the Maturity Date.
Each notice pursuant to this Section 2.05(b) shall be
irrevocable and shall refer to this Agreement and specify (i) the identity and
amount of the Standby Borrowing that the Borrower requests be converted or
continued, (ii) whether such Standby Borrowing is to be converted to or
continued as a Eurodollar Standby Borrowing or an ABR Borrowing, (iii) if such
notice requests a conversion, the date of such conversion (which shall be a
Business Day) and (iv) if such Standby Borrowing is to be converted to or
continued as a Eurodollar Standby Borrowing, the Interest Period with respect
thereto. If no Interest Period is specified in any such notice with respect to
any conversion to or continuation as a Eurodollar Standby Borrowing, the
Borrower shall be deemed to have selected an Interest Period of one month's
duration. The Administrative Agent shall promptly advise the other Lenders of
any notice given pursuant to this Section 2.05(b) and of each Lender's portion
of any converted or continued Standby Borrowing. If the Borrower shall not
have given notice in accordance with this Section 2.05(b) to continue any
29
Standby Borrowing into a subsequent Interest Period (and shall not otherwise
have given notice in accordance with this Section 2.05(b) to convert such
Standby Borrowing), such Standby Borrowing shall, at the end of the Interest
Period applicable thereto (unless repaid pursuant to the terms hereof),
automatically be continued into a new Interest Period as an ABR Borrowing.
SECTION 2.06. Fees. (a) The Borrower agrees to pay to each
Lender, through the Administrative Agent, on each March 31, June 30,
September 30 and December 31, and on the date on which the Commitment of such
Lender shall be terminated as provided herein, a facility fee (the "Facility
Fee") equal to the Facility Fee Percentage in effect from time to time on the
amount of the Commitment of such Lender, whether used or unused, during the
quarter then ended (or shorter period commencing with the Closing Date or
ending with the Maturity Date or any date on which the Commitment of such
Lender shall be terminated). The Facility Fee shall be computed on the basis
of the actual number of days elapsed in a year of 365 or 366 days, as the case
may be. The Facility Fee due to each Lender shall commence to accrue on the
Closing Date and shall cease to accrue on the earlier of (I) the Maturity Date
and (II) the termination of the Commitment of such Lender as provided herein.
(b) To the extent not paid by the Parent, the Borrower agrees
to pay to the Administrative Agent the fees (the "Administrative Agent Fees")
relating to this Agreement at the times and in the amounts agreed upon in the
letter agreement dated July 1, 1996, between the Parent and The Chase Manhattan
Bank.
(c) The Borrower agrees to pay each Lender, through the
Administrative Agent, on each March 31, June 30, September 30 and December 31,
and on the date on which the Commitment of such Lender shall be terminated as
provided herein, a fee (the "LC Fee") equal to a percentage per annum equal to
the LIBOR Spread in effect on such date on such Lender's pro rata share, based
upon its Commitment, of the average daily amount of all Letters of Credit
outstanding during the preceding quarter (or shorter period commencing with the
Closing Date or ending with the earlier of the Maturity Date and any date on
which the Commitment of such Lender shall be terminated). The LC Fee shall be
computed on the basis of the actual number of days elapsed in a year of 365 or
366 days, as the case may be. The LC Fee due to each Lender shall commence to
accrue on the Closing Date and shall cease to accrue on the date on which the
Commitment of such Lender shall have terminated as provided herein.
(d) The Borrower agrees to pay to each Issuing Bank its
issuance and amendment fees (the "Issuance and Amendment Fees") as agreed upon
from time to time in connection with the issuance of and amendment of the
Letters of Credit. Each Issuing Bank has furnished or will furnish to the
Borrower a schedule of the Issuance and Amendment Fees in effect on the Closing
Date. The Borrower agrees to pay each Issuing Bank such other fees as may be
agreed upon by the Borrower and such Issuing Bank.
(e) All Fees shall be paid on the dates due, in immediately
available funds, to the Administrative Agent for distribution, if and as
appropriate, among the Lenders. Once paid, none of the Fees shall be
refundable under any circumstances.
SECTION 2.07. Evidence of Debt; Repayment of Loans. (a) Each
Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness to such Lender resulting from each Loan
made by it from time to time, including the amounts of principal and interest
30
payable and paid to such Lender from time to time under this Agreement. The
Administrative Agent shall maintain accounts in which it will record (i) the
amount of each Loan made hereunder, the Type of each Loan and each Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder
and (iii) the amount of any sum received by the Administrative Agent hereunder
from the Borrower and each Lender's share thereof. The entries made in the
accounts maintained pursuant to this paragraph (a) shall, to the extent
permitted by applicable law, be prima facie evidence of the existence and
amounts of the obligations therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligations of the
Borrower to repay the Loans in accordance with their terms.
(b) The outstanding principal balance of each Competitive
Loan and Standby Loan shall be payable (i) in the case of a Competitive Loan,
on the earlier of the last day of the Interest Period applicable to such Loan
and on the Maturity Date and (ii) in the case of a Standby Loan, on the
Maturity Date.
SECTION 2.08. Interest on Loans. (a) Subject to the
provisions of Sections 2.09 and 2.10, the Loans comprising each Eurodollar
Borrowing shall bear interest (computed on the basis of the actual number of
days elapsed over a year of 360 days) at a rate per annum equal to (i) in the
case of each Eurodollar Competitive Loan, the LIBO Rate for the Interest Period
in effect for such Borrowing plus the Margin offered by the Lender making such
Loan and accepted by the Borrower pursuant to Section 2.03 and (ii) in the case
of each Eurodollar Standby Loan, the LIBO Rate for the Interest Period in
effect for such Borrowing plus the LIBOR Spread. Interest on each Eurodollar
Borrowing shall be payable on each applicable Interest Payment Date. The LIBO
Rate for each Interest Period shall be determined by the Administrative Agent,
and such determination shall be conclusive absent manifest error. The
Administrative Agent shall promptly advise the Borrower and each Lender of such
determination.
(b) Subject to the provisions of Section 2.09, the Loans
comprising each ABR Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of (i) 365 or 366 days, as the case
may be, during any period in which the Alternate Base Rate is based on the
Prime Rate, and (ii) 360 days, during any period in which the Alternate Base
Rate is based on the Base CD Rate or the Federal Funds Effective Rate) at a
rate per annum equal to the Alternate Base Rate. Interest on each ABR
Borrowing shall be payable on each applicable Interest Payment Date. The
Alternate Base Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error. The Administrative
Agent shall promptly advise the Borrower and each Lender of such determination.
(c) Subject to the provisions of Section 2.09, each Fixed
Rate Loan shall bear interest at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 360 days) equal to the fixed rate
of interest offered by the Lender making such Loan and accepted by the Borrower
pursuant to Section 2.03. Interest on each Fixed Rate Loan shall be payable on
the Interest Payment Dates applicable to such Loan except as otherwise provided
in this Agreement.
SECTION 2.09. Default Interest. If the Borrower shall
31
default in the payment of the principal of or interest on any Loan, or any
reimbursement obligation in respect of an LC Disbursement, becoming due
hereunder, whether by scheduled maturity, notice of prepayment, acceleration or
otherwise, the Borrower shall on demand from time to time from the
Administrative Agent or the Required Lenders pay interest, to the extent
permitted by applicable law, on such defaulted amount up to (but not including)
the date of actual payment (after as well as before judgment) at a rate per
annum (computed on the basis of the actual number of days elapsed over a year
of 360 days) equal to the Alternate Base Rate plus 2%.
SECTION 2.10. Alternate Rate of Interest. In the event, and
on each occasion, that on the day two Business Days prior to the commencement
of any Interest Period for a Eurodollar Borrowing the Administrative Agent
shall have determined that dollar deposits in the principal amounts of the
Eurodollar Loans comprising such Borrowing are not generally available in the
London interbank market, or that the rates at which such dollar deposits are
being offered will not adequately and fairly reflect the cost to the Lenders of
making or maintaining Eurodollar Loans during such Interest Period, or that
reasonable means do not exist for ascertaining the LIBO Rate, the
Administrative Agent shall, as soon as practicable thereafter, give written
notice of such determination to the Borrower and the Lenders. In the event of
any such determination, until the Administrative Agent shall have advised the
Borrower and the Lenders that the circumstances giving rise to such notice no
longer exist, (i) any request by the Borrower for a Eurodollar Competitive
Borrowing pursuant to Section 2.03 shall be of no force and effect and shall be
rejected by the Administrative Agent and (ii) any request by the Borrower for a
Eurodollar Standby Borrowing pursuant to Section 2.04 shall be deemed to be a
request for an ABR Borrowing. The Administrative Agent agrees to give written
notice to the Borrower promptly after it determines that the conditions giving
rise to any notice under the first sentence of this paragraph shall no longer
be in effect. Each determination by the Administrative Agent hereunder shall
be presumed conclusive absent manifest error but subject to rebuttal by the
Borrower.
SECTION 2.11. Termination and Reduction of Commitments.
(a) The Commitments and the LC Commitments shall be automatically terminated
on the earlier of (i) the Maturity Date and (ii) the Change in Control Date.
(b) Upon at least three Business Days' prior irrevocable
written notice to the Administrative Agent, the Borrower may at any time in
whole permanently terminate, or from time to time in part permanently reduce,
the Total Commitment or the Total LC Commitment; provided, however, that
(i) each partial reduction of the Total Commitment or the Total LC Commitment,
as the case may be, shall be in an integral multiple of $1,000,000 and in a
minimum principal amount of $5,000,000; (ii) no such termination or reduction
shall be made which would reduce the Total Commitment to an amount less than
the sum of the aggregate outstanding principal amount of the Loans and the
LC Exposure, (iii) no such termination or reduction shall be made which would
reduce the Total Commitment below the Total LC Commitment and (iv) no such
termination or reduction shall be made which would reduce the Total LC
Commitment below the LC Exposure.
(c) Each reduction in the Total Commitment or the Total
LC Commitment hereunder shall be made ratably among the Lenders in accordance
with their respective Commitments or LC Commitments, as applicable. The
Borrower shall pay to the Administrative Agent for the account of the Lenders,
on the date of each termination or reduction hereunder, the Facility Fee on the
32
amount of the Commitments so terminated or reduced accrued through the date of
such termination or reduction.
SECTION 2.12. Prepayment. (a) The Borrower shall have the
right at any time and from time to time to prepay any Standby Borrowing, in
whole or in part, upon giving written notice (or telephone notice promptly
confirmed by written notice) to the Administrative Agent: (i) before
12:00 noon, New York City time, three Business Days prior to prepayment, in the
case of Eurodollar Loans and before 12:00 noon, New York City time, one Busi-
ness Day prior to prepayment, in the case of ABR Standby Loans; provided,
however, that each partial prepayment shall be in an amount which is an
integral multiple of $1,000,000 and not less than $5,000,000. The Borrower
shall not have the right to prepay any Competitive Borrowing.
(b) On the date of any termination or reduction of the
Commitments pursuant to Section 2.11(a) or (b), (i) in the case of Section
2.11(a), the Borrower shall pay or prepay the principal of all Loans then out-
standing, together with accrued interest thereon and any unpaid accrued Fees
and all other liabilities of the Borrower accrued hereunder and under any other
Loan Document, and the Borrower shall forthwith deposit cash with the
Administrative Agent in an amount equal to the aggregate LC Exposure or shall
deliver to the Administrative Agent a Replacement Letter of Credit drawable
without condition and in a face amount equal to the aggregate LC Exposure and
otherwise satisfactory in all respects to the Administrative Agent, which
Letter of Credit or cash deposit shall serve as collateral security for the
repayment of any further drawings under the Letters of Credit, and (ii) in the
case of Section 2.11(b), the Borrower shall pay or prepay so much of the
Standby Borrowings as shall be necessary in order that the sum of the aggregate
principal amount of the Competitive Loans and Standby Loans outstanding and the
LC Exposure will not exceed the Total Commitment, after giving effect to such
termination or reduction.
(c) Each notice of prepayment shall specify the prepayment
date and the principal amount of each Borrowing (or portion thereof) to be
prepaid, shall be irrevocable and shall commit the Borrower to prepay such
Borrowing (or portion thereof) by the amount stated therein on the date stated
therein. All prepayments under this Section 2.12 shall be subject to
Section 2.16 but otherwise without premium or penalty. All prepayments under
this Section 2.12 shall be accompanied by accrued interest on the principal
amount being prepaid to the date of payment.
SECTION 2.13. Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision herein, if after the Closing Date, any
change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the inter-
pretation or administration thereof (whether or not having the force of law)
shall change the basis of taxation of payments to any Lender or such Issuing
Bank of the principal of or interest on any Eurodollar Loan or Fixed Rate Loan
made by such Lender or any Fees or other amounts payable hereunder, including
reimbursement of drawings under the Letters of Credit (other than changes in
respect of taxes imposed on the overall net income of such Lender by any
Governmental Authority as a result of a present or former connection between
the jurisdiction of the Governmental Authority imposing such tax on such Lender
(except a connection arising solely from such Lender having executed, delivered
or performed its obligations or received a payment under, or enforced, this
Agreement)), or shall impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
33
account of or credit extended by such Lender, or shall impose on such Lender or
the London interbank market any other condition affecting this Agreement or any
Eurodollar Loan or Fixed Rate Loan made by such Lender, and the result of any
of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurodollar Loan or Fixed Rate Loan or to reduce the amount of
any sum received or receivable by such Lender hereunder (whether of principal,
interest or otherwise) in respect thereof by an amount deemed by such Lender to
be material, then the Borrower will pay to such Lender upon demand such addi-
tional amount or amounts as will compensate such Lender for such additional
costs incurred or reduction suffered. Notwithstanding the foregoing, no Lender
shall be entitled to request compensation under this paragraph with respect to
any Competitive Loan if it shall have been aware of the change giving rise to
such request and of the impact of such change on the cost of making such
Competitive Loans at the time of submission of the Competitive Bid pursuant to
which such Competitive Loan shall have been made.
(b) If any Lender shall have determined that the adoption
after the Closing Date of any other law, rule, regulation or guideline
regarding capital adequacy, or any change in any of the foregoing or in the
interpretation or administration of any of the foregoing by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or any lending office of
such Lender) or any Lender's holding company with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on such Lender's capital or on the capital of such
Lender's holding company, if any, as a consequence of this Agreement or the
Loans made by such Lender pursuant hereto to a level below that which such
Lender or such Lender's holding company could have achieved but for such
adoption, change or compliance (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from
time to time the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender or such Lender's holding company for any
such reduction suffered after the date hereof.
(c) A certificate of a Lender setting forth such amount or
amounts, along with the Lender's method of computation of such amounts, as
shall be necessary to compensate such Lender (or participating banks or other
entities pursuant to Section 9.04) as specified in paragraph (a) or (b) above,
as the case may be, shall be delivered to the Borrower and shall be presumed
conclusive absent manifest error but subject to rebuttal by the Borrower. The
Borrower shall pay each Lender the amount shown as due on any such certificate
delivered by it within 10 days of its receipt of the same. In the event any
Lender delivers such a certificate, the Borrower may, at its own expense,
require such Lender to transfer and assign in whole or in part, without
recourse (in accordance with Section 9.04) all or part of its interests, rights
and obligations under this Agreement to an assignee which shall assume such
assigned obligations (which assignee may be another Lender, if a Lender accepts
such assignment); provided that (i) such assignment shall not conflict with any
law, rule or regulation or order of any court or other Governmental Authority,
(ii) the Borrower shall have received a written consent of the Administrative
Agent in the case of an entity that is not a Lender, which consent shall not
unreasonably be withheld, and (iii) the Borrower or such assignee shall have
paid to the assigning Lender in immediately available funds the principal of
and interest accrued to the date of such payment on the Loans made by it here-
under and all other amounts owed to it hereunder as of such date. Any Lender
34
claiming any additional amounts payable pursuant to this Section 2.13 shall use
reasonable efforts (consistent with legal and regulatory restrictions) to file
any certificate or document requested by the Borrower or to change the
jurisdiction of its applicable lending office if the making of such a filing or
change would avoid the need for or reduce the amount of any additional amount
which may thereafter accrue and would not, in the sole determination of such
Lender, be otherwise disadvantageous to such Lender.
(d) Failure on the part of any Lender to demand compensation
for any increased costs or reduction in amounts received or receivable or
reduction in return on capital with respect to any period shall not constitute
a waiver of such Lender's right to demand compensation with respect to such
period or any other period; provided, however, that no Lender shall be entitled
to compensation for any such increased costs or reductions unless it shall have
submitted a certificate under paragraph (c) above with respect thereto not more
than 90 days after the date that such Lender knows that such increased costs
have been incurred or such reduction suffered. Notwithstanding any other
provision of this Section 2.13, no Lender shall demand compensation for any
increased cost or reduction referred to above if it shall not at the time be
the general policy of such Lender to demand such compensation in similar
circumstances under comparable provisions of other credit agreements, and each
Lender shall in good faith endeavor to allocate increased costs or reductions
fairly among all of its affected commitments and credit extensions (whether or
not it seeks compensation from all affected borrowers). The protection of this
Section 2.13 shall be available to each Lender regardless of any possible
contention of the invalidity or inapplicability of the law, rule, regulation,
guideline or other change or condition which shall have occurred or been
imposed.
SECTION 2.14. Change in Legality. (a) Notwithstanding any
other provision herein contained, if any change in any law or regulation or in
the interpretation thereof by any Governmental Authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written
notice to the Borrower and to the Administrative Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made
by such Lender hereunder, whereupon such Lender shall not submit a
Competitive Bid in response to a request for Eurodollar Competitive
Loans and any request by the Borrower for a Eurodollar Standby Borrow-
ing shall, as to such Lender only, be deemed a request for an
ABR Standby Loan unless such declaration shall be subsequently
withdrawn; and
(ii) require that all outstanding Eurodollar Loans made by it
be converted to ABR Standby Loans, in which event all such Eurodollar
Loans shall be automatically converted to ABR Standby Loans as of the
effective date of such notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal which would otherwise have been applied
to repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Standby Loans made by such Lender in lieu of, or resulting from the
conversion of, such Eurodollar Loans.
35
(b) For purposes of this Section 2.14, a notice to the
Borrower by any Lender shall be effective as to each Eurodollar Loan, if
lawful, on the last day of the Interest Period currently applicable to such
Eurodollar Loan; in all other cases such notice shall be effective on the date
of receipt by the Borrower. The Administrative Agent agrees to give written
notice to the Borrower promptly after it determines that the conditions giving
rise to any notice under paragraph (a) above shall no longer be in effect.
(c) Each Lender agrees to use reasonable efforts (consistent
with legal and regulatory restrictions) to file any certificate or document
requested by the Borrower or to change the jurisdiction of its applicable
lending office if the making of such filing or change would enable such Lender
to legally make or maintain any Eurodollar Loan referred to in paragraph (a) of
this Section 2.14; provided, however, that (i) such Lender shall not be
required to make such filing or change if, in the sole determination of such
Lender, such action would be otherwise disadvantageous to such Lender and (ii)
until such time as such Lender shall have determined that it can make or
maintain such Eurodollar Loan, the Lender may take the actions referred to in
Section 2.14(a).
SECTION 2.15. Letters of Credit. (a) Subject to the terms
and conditions and relying upon the representations and warranties herein set
forth, each Issuing Bank shall issue and deliver to the Borrower at any time
and from time to time on or after the Closing Date and prior to the fifth
Business Day before the Maturity Date, Letters of Credit for the account of the
Borrower or any Subsidiary in an aggregate undrawn amount at any one time
outstanding not to exceed $50,000,000; provided, however, that such Issuing
Bank shall not issue any Letter of Credit if, immediately after giving effect
to such issuance, the LC Exposure at such time would exceed the Total
LC Commitment or if the sum of the LC Exposure and the aggregate principal
amount of the outstanding Loans would exceed the Total Commitment. Each Letter
of Credit (x) shall be in form as shall have been agreed upon in writing by the
Borrower, the Administrative Agent and such Issuing Bank, (y) shall be in a
minimum principal amount of $2,000 and (z) shall permit drawings upon the
presentation of one or more sight drafts and such other documents as shall be
specified by the Borrower in the applicable notice delivered pursuant to
paragraph (b) below and shall expire on a date not later than the fifth
Business Day prior to the Maturity Date, except that Letters of Credit may
expire on a date later than the Maturity Date (but in any event no later than
the first anniversary of the Maturity Date), subject to the conditions set
forth in Section 2.15(g).
(b) The Borrower shall give such Issuing Bank written or
telecopy notice or notice via computer modem not later than 10:00 a.m., New
York City time, one Business Day (or such shorter period as shall be acceptable
to such Issuing Bank and the Administrative Agent) prior to any proposed
issuance of a Letter of Credit. Each such notice shall refer to this Agreement
and shall specify (i) the date on which such Letter of Credit is to be issued
(which shall be a Business Day), the account party on the Letter of Credit and
the face amount thereof (which shall be an amount in dollars), (ii) the name
and address of the beneficiary, (iii) whether such Letter of Credit shall
permit a single drawing or multiple drawings, (iv) the form of the sight draft
and any other documents required to be presented at the time of any drawing
(together with the exact wording of such documents or copies thereof) and
(v) the expiry date of such Letter of Credit. Such Issuing Bank shall give the
Administrative Agent, which shall in turn give to each Lender, prompt written
36
or telecopy advice of any notice received from the Borrower pursuant to this
Section 2.15.
(c) By the issuance of a Letter of Credit and without any
further action on the part of such Issuing Bank or the Lenders in respect
thereof, such Issuing Bank hereby grants to each Lender, and each Lender hereby
acquires from such Issuing Bank, a participation in such Letter of Credit equal
to such Lender's pro rata percentage, based upon its LC Commitment, of the face
amount of such Letter of Credit, effective upon the issuance of such Letter of
Credit; provided, however, that no Lender shall be required to acquire
participations in Letters of Credit that would result in its pro rata
percentage, based upon its LC Commitment, of the LC Exposure exceeding its
LC Commitment, as the same may be reduced from time to time in accordance with
Section 2.11. In consideration and in furtherance of the foregoing, each
Lender hereby absolutely and unconditionally agrees severally and not jointly
to pay to the Administrative Agent, on behalf of such Issuing Bank, in
accordance with paragraph (e) below, such Lender's pro rata percentage, based
upon its LC Commitment, of each unreimbursed LC Disbursement made by such
Issuing Bank; provided, however, that the Lenders shall not be obligated to
make any such payment with respect to any payment or disbursement made under
any Letter of Credit as a result of the gross negligence or wilful misconduct
of such Issuing Bank. Notwithstanding the foregoing, if, as permitted by
Section 2.15(f), an Issuing Bank has separately agreed with the Borrower that
the Issuing Bank will be held to a higher standard of care, such standard shall
govern as between the Issuing Bank and the Lenders.
(d) Each Lender acknowledges and agrees that its acquisition
of participations pursuant to paragraph (c) above in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any circum-
stance whatsoever, including the occurrence and continuance of any Default or
Event of Default hereunder, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
(e) Promptly after it shall have ascertained that any draft
and any accompanying documents presented under a Letter of Credit appear to be
in conformity with the terms and conditions of such Letter of Credit, such
Issuing Bank shall give written or telecopy notice to the Borrower and the
Administrative Agent of the receipt and amount of such draft and the date on
which payment thereon will be made. If the Administrative Agent shall not have
received from the Borrower the payment required pursuant to paragraph (f) below
by 12:00 noon, New York City time, on the date on which payment of a draft
presented under any Letter of Credit has been made, the Administrative Agent
shall promptly notify such Issuing Bank and each Lender of the LC Disbursement
and, in the case of each Lender, its pro rata percentage, based upon its
LC Commitment of such LC Disbursement. Each Lender shall pay to the
Administrative Agent, not later than 2:00 p.m., New York City time, on such
date, such Lender's percentage of such LC Disbursement, which the
Administrative Agent shall promptly pay to such Issuing Bank. The
Administrative Agent will promptly remit to each Lender such Lender's
percentage of any amounts subsequently received by the Administrative Agent
from the Borrower in respect of such LC Disbursement; provided that amounts so
received for the account of any Lender prior to payment by such Lender of
amounts required to be paid by it hereunder in respect of any LC Disbursement
shall be remitted to such Issuing Bank.
(f) If such Issuing Bank shall pay any draft presented under
37
a Letter of Credit, the Borrower shall pay to such Issuing Bank or to the
Administrative Agent for the account of such Issuing Bank or, if the
Administrative Agent shall have received the payments provided in paragraph (e)
above with respect to such drawing, for the accounts of the Lenders, an amount
equal to the amount of such draft before 12:00 noon, New York City time, on the
date of payment of such draft. The obligations of the Borrower under this
paragraph (f) shall be absolute, unconditional and irrevocable and shall be
satisfied strictly in accordance with their terms irrespective of:
(i) any lack of validity or enforceability of any Letter of
Credit;
(ii) the existence of any claim, setoff, defense or other right
which the Borrower or any other Person may at any time have against the
beneficiary under any Letter of Credit, the Administrative Agent, such
Issuing Bank or any other Lender (other than the defense of payment in
accordance with the terms of this Agreement or a defense based on the
gross negligence or wilful misconduct of the Administrative Agent or
such Issuing Bank) or any other Person in connection with this
Agreement or any other transaction;
(iii) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect; provided that payment by such Issuing Bank under such Letter
of Credit against presentation of such draft or document shall not have
constituted gross negligence, wilful misconduct or breached any other
standard agreed to in writing by the applicable Issuing Bank;
(iv) payment by such Issuing Bank under a Letter of Credit
against presentation of a draft or other document which does not comply
in any immaterial respect with the terms of such Letter of Credit;
provided that such payment shall not have constituted gross negligence
or wilful misconduct; or
(v) any other circumstance or event whatsoever, whether or not
similar to any of the foregoing; provided that such other circumstance
or event shall not have been the result of gross negligence or wilful
misconduct of such Issuing Bank.
It is understood that in making any payment under a Letter of
Credit (x) such Issuing Bank's exclusive reliance on the documents presented to
it under such Letter of Credit as to any and all matters set forth therein,
including reliance on the amount of any draft presented under such Letter of
Credit, whether or not the amount due to the beneficiary equals the amount of
such draft and whether or not any document presented pursuant to such Letter of
Credit proves to be insufficient in any respect, if such document on its face
appears to be in order, and whether or not any other statement or any other
document presented pursuant to such Letter of Credit proves to be forged or
invalid or any statement therein proves to be inaccurate or untrue in any
respect whatsoever, and (y) any noncompliance in any immaterial respect of the
documents presented under a Letter of Credit with the terms thereof shall, in
either case, not be deemed wilful misconduct or gross negligence of such
Issuing Bank. Notwithstanding the foregoing, to the extent such Issuing Bank
has separately agreed with the Borrower to a standard of care which varies from
that set forth above, such standard shall govern as between the Borrower and
such Issuing Bank.
38
(g) In the event any Letters of Credit shall have an expiry
date after the Maturity Date, the Borrower shall, prior to the Business Day
before the Maturity Date, forthwith deposit cash with the Administrative Agent,
in an amount equal to the aggregate LC Exposure, or deliver to the
Administrative Agent a Replacement Letter of Credit drawable without condition
and in a face amount equal to the aggregate LC Exposure and otherwise
satisfactory in all respects to the Administrative Agent, which cash deposit or
Replacement Letter of Credit shall serve as collateral security for the
repayment of any future drawings under such Letters of Credit.
(h) Each Issuing Bank hereby agrees to share, pro rata in
accordance with its LC Exposure, with all of the Lenders, its security interest
in all documents and goods in which it will have a security interest in
connection with the issuance of any Letter of Credit and to share on the same
basis all amounts recovered by such Issuing Bank in connection with any such
security interest.
SECTION 2.16. Indemnity. The Borrower shall indemnify each
Lender against any loss or reasonable expense which such Lender may sustain or
incur as a consequence of (a) any failure by the Borrower to fulfill on the
date of any Borrowing hereunder the applicable conditions set forth in
Article IV, (b) any failure by the Borrower to borrow or to refinance, convert
or continue any Loan hereunder after irrevocable notice of such Borrowing,
refinancing, conversion or continuation has been given pursuant to
Section 2.03, 2.04 or 2.05, (c) any payment, prepayment or conversion of a
Eurodollar Loan required by any other provision of this Agreement or otherwise
made or deemed made on a date other than the last day of the Interest Period
applicable thereto or (d) the occurrence of any Event of Default, including, in
each such case, any loss or reasonable expense sustained or incurred or to be
sustained or incurred in liquidating or employing deposits from third parties
acquired to effect or maintain such Loan or any part thereof as a Eurodollar
Loan. Such loss or reasonable expense shall include an amount equal to the
excess, if any, as reasonably determined by such Lender, of (i) its cost of
obtaining the funds for the Loan being paid, prepaid, converted, continued or
not borrowed (based on the LIBO Rate or, in the case of a Fixed Rate Loan, the
fixed rate of interest applicable thereto) for the period from the date of such
payment, prepayment or failure to borrow to the last day of the Interest Period
for such Loan (or, in the case of a failure to borrow, the Interest Period for
such Loan which would have commenced on the date of such failure) over (ii) the
amount of interest (as reasonably determined by such Lender) that would be
realized by such Lender in reemploying the funds so paid, prepaid or not bor-
rowed for such period or Interest Period, as the case may be. A certificate of
any Lender setting forth any amount or amounts which such Lender is entitled to
receive pursuant to this Section 2.16 and the method of calculation employed by
such Lender shall be delivered to the Borrower and shall be presumed conclusive
absent manifest error but subject to rebuttal by the Borrower.
SECTION 2.17. Pro Rata Treatment. Except as required under
Section 2.14, each Standby Borrowing, each payment or prepayment of principal
of any Standby Borrowing, each payment of interest on the Standby Loans, each
payment of the Facility Fee, each payment of the LC Fees, each reduction of the
Commitments and each refinancing of any Borrowing with a Standby Borrowing of
any Type, shall be allocated pro rata among the Lenders in accordance with
their respective Commitments (or, if such Commitments shall have expired or
been terminated, in accordance with the respective principal amounts of their
outstanding Standby Loans). Each payment of principal of any Competitive
Borrowing shall be allocated pro rata among the Lenders participating in such
39
Borrowing in accordance with the respective principal amounts of their
outstanding Competitive Loans comprising such Borrowing. Each payment of
interest on any Competitive Borrowing shall be allocated pro rata among the
Lenders participating in such Borrowing in accordance with the respective
amounts of accrued and unpaid interest on their outstanding Competitive Loans
comprising such Borrowing. For purposes of determining the available
Commitments of the Lenders at any time, each outstanding Competitive Borrowing
shall be deemed to have utilized the Commitments of the Lenders (including
those Lenders which shall not have made Loans as part of such Competitive
Borrowing) pro rata in accordance with such respective Commitments. Each
Lender agrees that in computing such Lender's portion of any Borrowing to be
made hereunder, the Administrative Agent may, in its discretion, round each
Lender's percentage of such Borrowing to the next higher or lower whole dollar
amount.
SECTION 2.18. Sharing of Setoffs. Each Lender agrees that if
it shall, through the exercise of a right of banker's lien, setoff or counter-
claim against the Borrower, or pursuant to a secured claim under Section 506 of
Title 11 of the United States Code or other security or interest arising from,
or in lieu of, such secured claim, received by such Lender under any applicable
bankruptcy, insolvency or other similar law or otherwise, or by any other
means, obtain payment (voluntary or involuntary) in respect of any Standby Loan
or Loans as a result of which the unpaid principal portion of the Standby Loans
made by it shall be proportionately less than the unpaid principal portion of
the Standby Loans of any other Lender, it shall be deemed simultaneously to
have purchased from such other Lender at face value, and shall promptly pay to
such other Lender the purchase price for, a participation in the Standby Loans
of such other Lender, so that the aggregate unpaid principal amount of the
Standby Loans and participations in Standby Loans held by each Lender shall be
in the same proportion to the aggregate unpaid principal amount of all Standby
Loans then outstanding as the principal amount of its Standby Loans, prior to
such exercise of banker's lien, setoff or counterclaim or other event was to
the principal amount of all Standby Loans outstanding prior to such exercise of
banker's lien, setoff or counterclaim or other event; provided, however, that,
if any such purchase or purchases or adjustments shall be made pursuant to this
Section 2.18 and the payment giving rise thereto shall thereafter be recovered,
such purchase or purchases or adjustments shall be rescinded to the extent of
such recovery and the purchase price or prices or adjustment restored without
interest. The Borrower expressly consents to the foregoing arrangements and
agrees that any Lender holding a participation in a Standby Loan deemed to have
been so purchased may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by the Borrower to such
Lender by reason thereof as fully as if such Lender had made a Standby Loan
directly to the Borrower in the amount of such participation.
SECTION 2.19. Payments. (a) The Borrower shall make each
payment (including principal of or interest on any Borrowing or any Fees (other
than the fees referred to in paragraph (d) of Section 2.06) or other amounts)
hereunder and under any other Loan Document not later than 12:00 noon, New York
City time, on the date when due in dollars to the Administrative Agent at its
offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, in immediately available funds.
(b) Whenever any payment (including principal of or interest
on any Borrowing or any Fees or other amounts) hereunder or under any other
Loan Document shall become due, or otherwise would occur, on a day that is not
a Business Day, such payment may be made on the next succeeding Business Day,
40
and such extension of time shall in such case be included in the computation of
interest, if applicable.
SECTION 2.20. Taxes. (a) Any and all payments by the
Borrower hereunder shall be made, in accordance with Section 2.19, free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding taxes imposed on or measured by the net income or earnings
of the Administrative Agent or any Lender (or any transferee or assignee
thereof, including a participation holder (any such entity being called a
"Transferee")) and franchise taxes imposed by any Governmental Authority on the
Administrative Agent or any Lender (or Transferee) as a result of a present or
former connection between the jurisdiction of the Governmental Authority
imposing such tax on the Administrative Agent or such Lender (except a
connection arising solely from the Administrative Agent or such Lender having
executed, delivered or performed its obligations or received a payment under,
or enforced, this Agreement) (all such nonexcluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder to the Lenders (or any Transferee)
or the Administrative Agent, (i) the sum payable shall be increased by the
amount necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.20) such
Lender (or Transferee) or the Administrative Agent (as the case may be) shall
receive an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant taxing
authority or other Governmental Authority in accordance with applicable law;
provided, however, that no Transferee of any Lender shall be entitled to
receive any greater payment under this paragraph (a) than such Lender would
have been entitled to receive with respect to the rights assigned, participated
or otherwise transferred unless such assignment, participation or transfer
shall have been made at a time when the circumstances giving rise to such
greater payment did not exist.
(b) In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies which arise from any payment made hereunder or from
the execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as "Other
Taxes").
(c) The Borrower will indemnify each Lender (or Transferee)
and the Administrative Agent for the full amount of Taxes and Other Taxes paid
by such Lender (or Transferee) or the Administrative Agent, as the case may be,
and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes
were correctly or legally asserted by the relevant taxing authority or other
Governmental Authority. Such indemnification shall be made within 30 days
after the date any Lender (or Transferee) or the Administrative Agent, as the
case may be, makes written demand therefor. If a Lender (or Transferee) or the
Administrative Agent shall become aware that it is entitled to receive a refund
in respect of Taxes or Other Taxes as to which it has been indemnified by the
Borrower pursuant to this Section 2.20, it shall promptly notify the Borrower
of the availability of such refund and shall, within 30 days after receipt of a
request by the Borrower, apply for such refund at the Borrower's expense. If
any Lender (or Transferee) or the Administrative Agent receives a refund in
41
respect of any Taxes or Other Taxes as to which it has been indemnified by the
Borrower pursuant to this Section 2.20, it shall promptly notify the Borrower
of such refund and shall, within 30 days after receipt of a request by the
Borrower (or promptly upon receipt, if the Borrower has requested application
for such refund pursuant hereto), repay such refund to the Borrower (to the
extent of amounts that have been paid by the Borrower under this Section 2.20
with respect to such refund), net of all out-of-pocket expenses of such Lender
and without interest (except to the extent such refund includes any interest);
provided that the Borrower, upon the request of such Lender (or Transferee) or
the Administrative Agent, agrees to return such refund (plus penalties, inter-
est or other charges) to such Lender (or Transferee) or the Administrative
Agent in the event such Lender (or Transferee) or the Administrative Agent is
required to repay such refund. Nothing contained in this paragraph (c) shall
require any Lender (or Transferee) or the Administrative Agent to make
available any of its tax returns (or any other information relating to its
taxes which it deems to be confidential).
(d) Within 30 days after the date of any payment of Taxes or
Other Taxes withheld by the Borrower in respect of any payment to any Lender
(or Transferee) or the Administrative Agent, the Borrower will furnish to the
Administrative Agent, at its address referred to in Section 9.01, the original
or a certified copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 2.20
shall survive the payment in full of the principal of and interest on all Loans
made hereunder.
(f) Upon the written request of the Borrower, each Lender (or
Transferee) that is organized under the laws of a jurisdiction outside the
United States shall, if legally able to do so, prior to the immediately
following due date of any payment by the Borrower hereunder, deliver to the
Borrower such certificates, documents or other evidence, as required by the
Code or Treasury Regulations issued pursuant thereto, including Internal
Revenue Service Form 1001 or Form 4224 and any other certificate or statement
of exemption required by Treasury Regulation Section 1.1441-1, 1.1441-4 or
1.1441-6(c) or any subsequent version thereof or successors thereto, properly
completed and duly executed by such Lender (or Transferee) establishing that
such payment is (i) not subject to United States Federal withholding tax under
the Code because such payment is effectively connected with the conduct by such
Lender (or Transferee) of a trade or business in the United States or
(ii) totally exempt from United States Federal withholding tax, or subject to a
reduced rate of such tax under a provision of an applicable tax treaty. Unless
the Borrower and the Administrative Agent have received forms or other docu-
ments satisfactory to them indicating that such payments hereunder are not
subject to United States Federal withholding tax or are subject to such tax at
a rate reduced by an applicable tax treaty, the Borrower or the Administrative
Agent shall withhold taxes from such payments at the applicable statutory rate.
(g) The Borrower shall not be required to pay any additional
amounts to any Lender (or Transferee) in respect of United States Federal
withholding tax pursuant to paragraph (a) above if the obligation to pay such
additional amounts would not have arisen but for a failure by such Lender (or
Transferee) to comply with the provisions of paragraph (f) above; provided,
however, the Borrower shall be required to pay those amounts to any Lender (or
Transferee) it was required to pay hereunder prior to the failure of such
Lender (or Transferee) to comply with the provisions of paragraph (f).
42
(h) Any Lender (or Transferee) claiming any additional
amounts payable pursuant to this Section 2.20 shall use reasonable efforts
(consistent with legal and regulatory restrictions) to file any certificate or
document requested by the Borrower or to change the jurisdiction of its appli-
cable lending office if the making of such a filing or change would avoid the
need for or reduce the amount of any such additional amounts which may there-
after accrue and would not, in the sole determination of such Lender, be other-
wise disadvantageous to such Lender (or Transferee).
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to each of the Lenders
that:
SECTION 3.01. Organization; Powers. Each of the Borrower and
the Subsidiaries (a) is a corporation duly incorporated, validly existing and
in good standing under the laws of the jurisdiction of its organization,
(b) has all requisite power and authority to own its property and assets and to
carry on its business as now conducted and as proposed to be conducted, (c) is
qualified to do business in every jurisdiction where such qualification is
required, except where the failure so to qualify is not materially likely to
result in a Material Adverse Effect, and (d) has the corporate power and
authority to execute, deliver and perform its obligations under each of the
Loan Documents and each other agreement or instrument contemplated thereby to
which it is or will be a party and to borrow hereunder.
SECTION 3.02. Authorization. The execution, delivery and
performance by the Borrower and each Subsidiary Guarantor of each of the Loan
Documents to which it is a party, the Borrowings and issuances of Letters of
Credit (collectively, the "Transactions") (a) have been duly authorized by all
requisite corporate and, if required, stockholder action and (b) will not
(i) violate (A) any provision of law, statute, rule or regulation, or of the
certificate or articles of incorporation or other constitutive documents or
by-laws of the Borrower or any Subsidiary, (B) any order of any Governmental
Authority or (C) any provision of any material indenture, agreement or other
instrument to which the Borrower or any Subsidiary is a party or by which any
of them or any of their property is or may be bound, (ii) result in a breach of
or constitute (alone or with notice or lapse of time or both) a default under
any such indenture, agreement or other instrument or (iii) result in the crea-
tion or imposition of any Lien upon or with respect to any property or assets
now owned or hereafter acquired by the Borrower or any Subsidiary other than
pursuant to the Collateral Documents.
SECTION 3.03. Enforceability. This Agreement has been duly
executed and delivered by the Borrower and constitutes, and each other Loan
Document to which the Borrower or any Subsidiary Guarantor is a party, when
executed and delivered by the Borrower or such Subsidiary Guarantor, as the
case may be, will constitute, a legal, valid and binding obligation of the
Borrower or such Subsidiary Guarantor, as the case may be, enforceable against
the Borrower or such Subsidiary Guarantor, as the case may be, in accordance
with its terms (subject, as to the enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium and similar laws affecting
creditors' rights generally and to general principles of equity).
43
SECTION 3.04. Governmental Approvals. No action, consent or
approval of, registration or filing with or any other action by any
Governmental Authority is or will be required by the Borrower or any of the
Subsidiaries in connection with the Transactions, except such as have been made
or obtained and are in full force and effect.
SECTION 3.05. Financial Statements. The Borrower has hereto-
fore furnished to the Lenders its balance sheets and statements of earnings and
statements of cash flows (a) as of and for the fiscal year ended December 31,
1995, audited by and accompanied by the opinion of KPMG Peat Marwick LLP,
independent public accountants, and (b) as of and for the six-month period
ended June 30, 1996. Such financial statements present fairly the financial
condition and results of operations of the Borrower and its Subsidiaries as of
such dates and for such periods. Such financial statements and the notes
thereto were prepared in accordance with GAAP applied on a consistent basis,
except as disclosed in such statements and notes.
SECTION 3.06. No Material Adverse Change. There has been no
material adverse change in the business, assets, operations or financial
condition of the Borrower and the Subsidiaries, taken as a whole, since
December 31, 1995.
SECTION 3.07. Title to Properties; Possession Under Leases.
(a) Each of the Borrower and the Subsidiaries has good and marketable title
to, or valid, subsisting and enforceable leasehold interests in, all its
material properties and assets, except for minor defects in title that do not
interfere with its ability to conduct its business as currently conducted or to
utilize such properties and assets for their intended purposes. All such
material properties and assets are free and clear of Liens, other than Liens
expressly permitted by Section 6.01.
(b) Each of the Borrower and the Subsidiaries has complied
with all material obligations under all material leases to which it is a party
and all such leases are in full force and effect. Each of the Borrower and the
Subsidiaries enjoys peaceful and undisturbed possession under all such material
leases.
SECTION 3.08. Subsidiaries. Schedule 3.08 sets forth as of
the Closing Date a list of all Subsidiaries of the Borrower and the percentage
of the shares of each class of capital stock owned beneficially or of record by
the Borrower therein.
SECTION 3.09. Litigation; Compliance with Laws. (a) Except
as set forth in Schedule 3.09, there are not any actions, suits or proceedings
at law or in equity or by or before any Governmental Authority pending or, to
the knowledge of the Borrower, threatened against or affecting the Borrower or
any Subsidiary or any business, property or rights of any such Person (i) which
involve any Loan Document or the Transactions or (ii) which would be materially
likely to result in a Material Adverse Effect.
(b) Neither the Borrower nor any of the Subsidiaries is in
violation of any law, rule or regulation, or in default with respect to any
judgment, writ, injunction or decree of any Governmental Authority, where such
violation or default would be materially likely to result in a Material Adverse
Effect.
44
SECTION 3.10. Agreements. (a) Neither the Borrower nor any
of the Subsidiaries is a party to any agreement or instrument or subject to any
corporate restriction that would be materially likely to result in a Material
Adverse Effect.
(b) Neither the Borrower nor any of its Subsidiaries is in
default in any manner under any provision of any indenture or other agreement
or instrument evidencing Indebtedness, or any other material agreement or
instrument to which it is a party or by which it or any of its properties or
assets are or may be bound, where such default would be materially likely to
result in a Material Adverse Effect.
SECTION 3.11. Federal Reserve Regulations. (a) Neither the
Borrower nor any of its Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately,
(i) to purchase or carry Margin Stock or to extend credit to others for the
purpose of purchasing or carrying Margin Stock or to refund indebtedness
originally incurred for such purpose, or (ii) for any purpose which entails a
violation of, or which is inconsistent with, the provisions of the regulations
of the Board, including Regulation G, U or X.
SECTION 3.12. Investment Company Act; Public Utility Holding
Company Act. Neither the Borrower nor any Subsidiary is (a) an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.
SECTION 3.13. Use of Proceeds. The Borrower will use the
proceeds of the Loans and the Letters of Credit only for working capital, the
purchase of goods and services by the Borrower and the Subsidiaries and other
general corporate purposes.
SECTION 3.14. Tax Returns. Except as described in
Schedule 3.14, each of the Borrower and the Subsidiaries has filed or caused to
be filed all Federal, state and material local tax returns required to have
been filed. When required or elected, the Borrower and the Subsidiaries have
been included in the Federal, state and material local consolidated or combined
tax returns of the Parent and its subsidiaries. All such Parent returns have
been filed or caused to be filed. In any case, each of the Parent, the
Borrower and the Subsidiaries have paid or caused to be paid all taxes shown to
be due and payable on such returns or on any assessments received by it, except
taxes or assessments that are being contested in good faith by appropriate
proceedings and for which the Borrower shall have set aside on its books
whatever reserves are required in accordance with GAAP consistently applied.
SECTION 3.15. No Material Misstatements. (a) No report,
financial statement, schedule or other information relating to historical
events or conditions furnished to the Lenders or the Administrative Agent by
the Borrower, in connection with this Agreement contains any material
misstatement of fact or omitted or omits to state any material fact necessary
to make the statements therein, when taken as a whole, not misleading.
45
(b) Based upon all information currently available to the
Borrower, any report, projection, schedule or other information relating to
forecast of future events or conditions furnished to the Lenders or the
Administrative Agent by the Borrower in connection with this Agreement has been
prepared on a reasonable basis based upon reasonable assumptions.
SECTION 3.16. Employee Benefit Plans. The Borrower and each
of its ERISA Affiliates is in compliance in all material respects with the
applicable provisions of ERISA and the Code and the regulations and published
interpretations thereunder with respect to the employee benefit plans (as
defined in Section 3(3) of ERISA) of the Borrower and its ERISA Affiliates. No
Reportable Event has occurred in respect of any Plan of the Borrower or any
ERISA Affiliate. The present value of all benefit liabilities under each Plan
(based on those assumptions used to fund such Plan) did not, as of the last
annual valuation date applicable thereto, exceed by more than $5,000,000 the
value of the assets of such Plan, and the present value of all benefit
liabilities of all underfunded Plans (based on those assumptions used to fund
each such Plan) did not, as of the last annual valuation dates applicable
thereto, exceed $20,000,000. Neither the Borrower nor any ERISA Affiliate has
incurred any Withdrawal Liability that would be materially likely to have a
Material Adverse Effect. Neither the Borrower nor any ERISA Affiliate has
received any notification that any Multiemployer Plan is in reorganization or
has been terminated, within the meaning of Title IV of ERISA, and no Multi-
employer Plan is reasonably expected to be in reorganization or to be
terminated, where such reorganization or termination would be materially likely
to result, through increases in the contributions required to be made to such
Plan or otherwise, in a Material Adverse Effect.
SECTION 3.17. Environmental Matters. Each of the Borrower
and the Subsidiaries has complied in all material respects with all material
Federal, state, local and other statutes, ordinances, orders, judgments,
rulings and regulations relating to environmental pollution or to environmental
regulation or control. Neither the Borrower nor any Subsidiary has received
notice of any failure so to comply which alone or together with any other such
failure is materially likely to result in a Material Adverse Effect. The
Borrower's and the Subsidiaries' plants do not manage any hazardous wastes,
hazardous substances, hazardous materials, toxic substances or toxic
pollutants, as those terms are used in the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response Compensation and Liability Act,
the Hazardous Materials Transportation Act, the Toxic Substance Control Act,
the Clean Air Act, the Clean Water Act or any other applicable law, in
violation of any such law or any regulations promulgated pursuant thereto or in
any other applicable law where such violation is materially likely to result,
individually or together with other violations, in a Material Adverse Effect.
SECTION 3.18. Security Interests. (a) At all times after
execution and delivery of the Borrower Pledge Agreement by the Borrower, the
Administrative Agent will have a valid, first priority, perfected security
interest in the Pledged Stock (as defined in the Borrower Pledge Agreement),
subject to no other Liens.
(b) At all times after execution and delivery of the Security
Agreement by the Borrower and completion of the filings listed on Schedule
3.18, the security interests created in favor of the Administrative Agent, for
the ratable benefit of the Lenders, pursuant to the Security Agreement will
constitute valid, perfected security interests in the collateral subject
thereto, subject to no other Liens (it being understood that the foregoing
46
representation shall not apply to any such collateral sold in accordance with
this Agreement).
ARTICLE IV
Conditions of Lending
SECTION 4.01. Conditions to Effectiveness. The obligations
of the Lenders to make Loans hereunder and of the Issuing Banks to issue
Letters of Credit hereunder, and the effectiveness of any amendment to a Letter
of Credit that increases the principal amount thereof, shall not become
effective until the date on which each of the following conditions is
satisfied:
(a) The Administrative Agent shall have received (i) this
Agreement, executed and delivered by a duly authorized officer of the
Borrower, with a counterpart for each Lender, (ii) the Borrower Pledge
Agreement, executed and delivered by a duly authorized officer of the
Borrower, with a counterpart or a conformed copy for each Lender, (iii)
each of the Parent Guaranty, the Affiliate Guaranty and the Subsidiary
Guaranty, each executed and delivered by a duly authorized officer of
the relevant Loan Parties, with a counterpart or a conformed copy for
each Lender, and (iv) the Security Agreement, executed and delivered by
a duly authorized officer of the Borrower, with a counterpart or a
conformed copy for each Lender.
(b) The Administrative Agent shall have received, with a
counterpart for each Lender, a copy of the resolutions of the Board of
Directors of each Loan Party authorizing the execution, delivery and
performance of the Loan Documents to which such Loan Party is a party
certified by the Secretary or an Assistant Secretary of such Loan Party
as of the Closing Date, which certificate shall state that the
resolutions thereby certified have not been amended, modified, revoked
or rescinded.
(c) The Administrative Agent shall have received, with a
counterpart for each Lender, true and complete copies of the
certificate of incorporation and by-laws of each Loan Party, certified
as of the Closing Date as complete and correct copies thereof by the
Secretary or an Assistant Secretary of such Loan Party.
(d) The Administrative Agent shall have received, with a
counterpart for each Lender, an executed legal opinion of counsel to
the Loan Parties (which may be in-house), in form and substance
reasonably satisfactory to the Administrative Agent.
(e) The Administrative Agent shall have received the results
of a recent search of the Uniform Commercial Code, judgment and tax
lien filings which may have been filed with respect to the Borrower,
and the results of such search shall be satisfactory to the
Administrative Agent.
(f) The Administrative Agent shall have received audited
financial statements of the Borrower and its Subsidiaries for the year
ended December 31, 1995, and unaudited financial statements of the
Borrower and its Subsidiaries for each fiscal quarter in 1996 ending
47
more than 45 days prior to the Closing Date, prepared in accordance
with GAAP applied on a consistent basis.
(g) An amendment and restatement of the Parent's revolving
credit and letter of credit facility, pursuant to which, among other
things, the aggregate commitments thereunder shall be reduced from
$400,000,000 to $200,000,000, shall have become effective (as so
amended and restated, and as further amended, supplemented or
otherwise modified from time to time, the "Parent Facility").
(h) A $400,000,000 increase in the Fingerhut Liquidity
Agreement and concurrent increases in the Class B, Class C and Owner
Trust Certificates associated therewith shall have become effective.
SECTION 4.02. Conditions to All Loans. The obligations of
the Lenders to make any Loans hereunder and of the Issuing Banks to issue any
Letters of Credit hereunder are subject to the satisfaction of the conditions
that, on the date of each Credit Event, including each Borrowing in which Loans
are refinanced as contemplated by Section 2.05(a), but excluding each Borrowing
in which Loans are continued or converted as contemplated in Section 2.05(b):
(a) In the case of a Borrowing, the Administrative Agent shall
have received a notice of such Borrowing as required by Section 2.03 or
Section 2.04, as applicable, or, in the case of an issuance of a Letter
of Credit, the Issuing Bank shall have received a notice in accordance
with Section 2.15(b).
(b) The representations and warranties set forth in Article III
hereof, Section 3 of the Borrower Pledge Agreement, Section 3 of the
Security Agreement, Section 3 of the Affiliate Guaranty (to the extent
applicable to Persons that are parties to the Affiliate Guaranty on the
date of such Credit Event), Section 3 of the Subsidiary Guaranty (to
the extent applicable to Persons that are parties to the Subsidiary
Guaranty on the date of such Credit Event) and Section 3 of the Parent
Guaranty (except, in the case of a refinancing of a Standby Borrowing
with a new Standby Borrowing that does not increase the aggregate
principal amount of the Loans of any Lender outstanding or in the case
of an issuance of a Letter of Credit that does not increase the
aggregate LC Exposure, the representations set forth in Sections 3.06
and 3.09(a)) shall be true and correct in all material respects on and
as of the date of such Credit Event with the same effect as though made
on and as of such date, except to the extent such representations and
warranties expressly relate to an earlier date.
(c) The Borrower shall be in compliance with all the terms and
provisions set forth herein and in each other Loan Document on its part
to be observed or performed, and at the time of and immediately after
such Credit Event no Event of Default or Default shall have occurred
and be continuing.
(d) In the case of any Credit Event at any time when, or after
giving effect to which, the aggregate principal amount of Loans and LC
Exposure shall be in excess of $200,000,000, for any such amount in
excess of $200,000,000, the Borrower or its Subsidiaries, directly or
through a Parent- or Borrower- sponsored vehicle, shall have available
(and shall maintain to the extent of such excess amount while such
excess amount is outstanding) an equal amount of (a) unutilized
48
commitments allocable to the Metris Master Trust under the Fingerhut
Liquidity Agreement, any replacement liquidity facility having
comparable terms and conditions (including any such liquidity facility
supporting only commercial paper associated with the Metris Master
Trust) or any other liquidity facility approved by the Required Lenders
or (b) cash in connection with a pre-funded asset-backed term security.
Each Credit Event, excluding each Borrowing in which Loans are continued or
converted as contemplated in Section 2.05(b), shall be deemed to constitute a
representation and warranty by the Borrower (or any other relevant Loan Party,
as the case may be), on the date of such Borrowing as to the matters specified
in paragraphs (b), (c) and (d) of this Article IV.
ARTICLE V
Affirmative Covenants
The Borrower covenants and agrees with each Lender and the
Administrative Agent that, so long as this Agreement shall remain in effect,
the principal of or interest on any Loan, any Fees or any other expenses or
amounts payable under any Loan Document shall be unpaid or any Letter of Credit
shall remain outstanding, unless the Required Lenders shall otherwise consent
in writing, the Borrower will, and will cause each of the Subsidiaries to:
SECTION 5.01. Existence; Businesses and Properties. (a) Do
or cause to be done all things necessary to preserve, renew and keep in full
force and effect its legal existence, except as otherwise expressly permitted
under Section 6.03 and with regard to any Subsidiary which has no significant
assets and no significant liabilities.
(b) Do or cause to be done all things necessary to obtain,
preserve, renew, extend and keep in full force and effect the rights, licenses,
permits, franchises, authorizations, patents, copyrights, trademarks and trade
names material to the conduct of its business; maintain and operate such
business in substantially the manner in which it is presently conducted and
operated (except as permitted pursuant to Section 6.03); comply in all material
respects with all applicable laws, rules, regulations and orders of any
Governmental Authority, whether now in effect or hereafter enacted, the failure
to comply with which would be materially likely to result in a Material Adverse
Effect; and at all times maintain and preserve all property material to the
conduct of such business and keep such property in good repair, working order
and condition and from time to time make, or cause to be made, all needful and
proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith may be
properly conducted at all times.
SECTION 5.02. Insurance. Keep its insurable properties
adequately insured at all times by financially sound and reputable insurers;
maintain such other insurance, to such extent and against such risks, including
fire and other risks insured against by extended coverage, as is customary with
companies in the same or similar businesses, including public liability
insurance against claims for personal injury or death or property damage
occurring upon, in, about or in connection with the use of any properties
owned, occupied or controlled by it; and maintain such other insurance as may
be required by law.
49
SECTION 5.03. Obligations and Taxes. Pay its Indebtedness
and other obligations promptly and in accordance with their terms and pay and
discharge promptly when due all taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits or in respect of its
property, before the same shall become delinquent or in default, as well as all
lawful claims for labor, materials and supplies or otherwise which, if unpaid,
might give rise to a Lien upon such properties or any part thereof; provided,
however, that such payment and discharge shall not be required with respect to
any such tax, assessment, charge, levy or claim so long as the validity or
amount thereof shall be contested in good faith by appropriate proceedings and
the Borrower shall have set aside on its books whatever reserves are required
in accordance with GAAP.
SECTION 5.04. Financial Statements, Reports, etc. In the case
of the Borrower, furnish to the Administrative Agent and each Lender (by
delivery of a regular or periodic report filed under the Exchange Act
containing such items or otherwise):
(a) within 100 days after the end of each fiscal year, its
consolidated balance sheets and related statements of earnings and cash
flows showing the financial condition of the Borrower and its
consolidated Subsidiaries as of the close of such fiscal year and the
results of its operations and the operations of such Subsidiaries
during such year, audited by KPMG Peat Marwick LLP or any other Big Six
Accounting Firm and accompanied by an opinion of such accountants
(which shall not be qualified in any material respect) to the effect
that such consolidated financial statements fairly present the
financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied (except for changes concurred in by the
Borrower's independent public accountants and disclosed in such
statements or the notes thereto);
(b) within 50 days after the end of each of the first three
fiscal quarters of each fiscal year (commencing with the first fiscal
quarter of the 1997 fiscal year), its consolidated balance sheets and
related statements of earnings and cash flow showing the financial
condition of the Borrower and its consolidated subsidiaries as of the
close of such fiscal quarter and the results of its operations and the
operations of such Subsidiaries during such fiscal quarter and the then
elapsed portion of the fiscal year, all certified by one of its ▇▇▇▇▇-
cial Officers, as fairly presenting the financial condition and results
of operations of the Borrower on a consolidated basis in accordance
with GAAP consistently applied (except for changes concurred in by the
Borrower's independent public accountants and disclosed in such
statements or the notes thereto, subject to normal year-end audit
adjustments;
(c) concurrently with any delivery of financial statements
under (a) and (b) above, (x) a certificate of the accounting firm, in
the case of (a), or Financial Officer, in the case of (b), referred to
in the applicable paragraph certifying that no Event of Default or
Default has occurred or, if such an Event of Default or Default has
occurred, specifying the nature and extent thereof and any corrective
action taken or proposed to be taken with respect thereto and (y) a
certificate of a Financial Officer setting forth computations in
reasonable detail satisfactory to the Administrative Agent
50
demonstrating compliance with the covenants contained in Sections 6.05,
6.06, 6.07 (as of the last day of each calendar month included in the
relevant fiscal period) and 6.08;
(d) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials
filed by it with the Securities and Exchange Commission, or any Govern-
mental Authority succeeding to any of or all the functions of said
Commission, or with any national securities exchange, or distributed to
its shareholders, as the case may be; and
(e) as soon as reasonably practicable, from time to time, such
other information regarding the operations, business affairs and
financial condition of the Borrower or any Subsidiary, or compliance
with the terms of any Loan Document, as the Administrative Agent or any
Lender may reasonably request.
SECTION 5.05. Litigation and Other Notices. Furnish to the
Administrative Agent and each Lender prompt written notice of the following
promptly after a Responsible Officer of the Borrower or any Subsidiary becomes
aware of the same:
(a) any Event of Default or Default, specifying the nature and
extent thereof and the corrective action (if any) proposed to be taken
with respect thereto;
(b) the filing or commencement of, or receipt of notice of
intention of any Person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any
Governmental Authority, against the Borrower or any Affiliate thereof
which would be materially likely to result in a Material Adverse
Effect;
(c) any development affecting or relating to the Borrower or
any Subsidiary that in the reasonable judgment of the Borrower has
resulted in, or is materially likely to result in, a Material Adverse
Effect referred to in clause (a) of the definition of such term; and
(d) the occurrence of any event which constitutes a Change in
Control.
SECTION 5.06. Employee Benefits. (a) Comply in all material
respects with the applicable provisions of ERISA and the Code with respect to
the employee benefit plans (as defined in Section 3(3) of ERISA) of the
Borrower and the ERISA Affiliates and (b) furnish to the Administrative Agent
(i) as soon as possible after, and in any event within 30 days after any
Responsible Officer of the Borrower or any ERISA Affiliate knows or has reason
to know that any Reportable Event has occurred that alone or together with any
other Reportable Event could reasonably be expected to result in liability of
the Borrower or any ERISA Affiliate to the PBGC in an aggregate amount
exceeding $5,000,000, a statement of a Financial Officer setting forth details
as to such Reportable Event and the action that the Borrower or such ERISA
Affiliate proposes to take with respect thereto, together with a copy of the
notice, if any, of such Reportable Event to the PBGC, (ii) promptly after
receipt thereof, a copy of any notice that the Borrower or any ERISA Affiliate
may receive from the PBGC relating to the intention of the PBGC to terminate
any Plan or Plans (other than a Plan maintained by an ERISA Affiliate that is
51
considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Code) or to appoint a trustee to administer any such Plan,
(iii) within 10 days after the due date for filing with the PBGC pursuant to
Section 412(n) of the Code a notice of failure to make a required installment
or other payment with respect to a Plan, a statement of a Financial Officer
setting forth details as to such failure and the action that the Borrower
proposes to take with respect thereto, together with a copy of any such notice
given to the PBGC and (iv) promptly and in any event within 30 days after
receipt thereof by the Borrower or any ERISA Affiliate from the sponsor of a
Multiemployer Plan, a copy of each notice received by the Borrower or any ERISA
Affiliate concerning (A) the imposition of Withdrawal Liability or (B) a
determination that a Multiemployer Plan is, or is expected to be, terminated or
in reorganization, both within the meaning of Title IV of ERISA.
SECTION 5.07. Maintaining Records; Access to Properties and
Inspections. Maintain or cause to be maintained at all times true and complete
books and records of its financial operations and permit the Administrative
Agent or any Lender and their designated representatives reasonable access
after reasonable notice to all such books and records and to any of the
properties or assets of the Borrower and the Subsidiaries during regular
business hours in order that the Administrative Agent and the Lenders may make
such examinations and make abstracts from such books and records and may
discuss the affairs, finances and accounts with, and be advised as to the same
by, Financial Officers and, after consultation with the Borrower, the
independent accountants of the Borrower or any Subsidiary, all as the
Administrative Agent or any Lender may reasonably deem appropriate for the
purpose of verifying the accuracy of the various reports delivered by the
Borrower or any Subsidiary thereof to the Administrative Agent and/or the
Lenders pursuant to this Agreement or for otherwise ascertaining compliance
with this Agreement. Except during the continuance of any Event of Default,
all requests by Lenders under this Section shall be made through and
coordinated by the Administrative Agent with a view to minimizing inconvenience
to the Borrower and its Subsidiaries.
SECTION 5.08. Sale of Accounts. Cause each Credit Card Bank
to sell all of such Credit Card Bank's Accounts to the Borrower or directly, or
indirectly through a Receivables Transfer Subsidiary, into any Receivables
Transfer Program (except in connection with sales of credit cardholder accounts
permitted by Section 6.03).
SECTION 5.09. Further Assurances. (a) Promptly perform or
cause to be performed any and all such acts and execute or cause to be
executed, at the cost and expense of the Borrower, any and all documents under
the provisions of any applicable law, rule or regulation of any Governmental
Authority, which are necessary from time to time, in order to grant, maintain,
preserve and protect in favor of the Administrative Agent, for the benefit of
the Lenders, the security interest in and pledge of the collateral under the
Security Agreement and the Borrower Pledge Agreement, including the perfection
and priority thereof, all as provided in the Security Agreement and the
Borrower Pledge Agreement.
(b) With respect to any Person that, subsequent to the Closing
Date, becomes a Subsidiary (other than a Credit Card Bank), promptly (i)
execute and deliver to the Administrative Agent, for the benefit of the
Lenders, a new pledge agreement or such amendments or supplements to the
Borrower Pledge Agreement as the Administrative Agent shall deem necessary or
advisable to grant to the Administrative Agent, for the benefit of the Lenders,
52
a Lien on all of the capital stock of such Subsidiary owned directly or
indirectly by the Borrower, and (ii) deliver to the Administrative Agent the
certificates representing such capital stock, together with undated stock
powers executed and delivered in blank by a duly authorized officer of the
parent company of such Subsidiary.
(c) With respect to any Person that, subsequent to the Closing
Date, becomes a Subsidiary (other than a Receivables Transfer Subsidiary or a
Credit Card Bank), cause such Subsidiary to execute and deliver to the
Administrative Agent one or more instruments (as the Administrative Agent shall
request and satisfactory to the Administrative Agent in form and substance)
pursuant to which such Subsidiary shall undertake the obligations of a
Subsidiary Guarantor under the Subsidiary Guaranty.
ARTICLE VI
Negative Covenants
The Borrower covenants and agrees with each Lender and the
Administrative Agent that, so long as this Agreement shall remain in effect,
the principal of or interest on any Loan, any Fees or any other expenses or
amounts payable under any Loan Document shall be unpaid or any Letter of Credit
shall remain outstanding, unless the Required Lenders shall otherwise consent
in writing, the Borrower will not, and will not cause or permit any of the
Subsidiaries to:
SECTION 6.01. Liens. Create, incur, assume or permit to
exist any Lien on any property or assets, including stock or other securities
of any Person (other than assets sold pursuant to the Receivables Transfer
Program) now owned or hereafter acquired or assign or convey any rights to or
security interests in any future revenue; provided, that, notwithstanding the
foregoing, the following Liens shall be permitted so long as, in each case,
such Liens do not apply to the capital stock of any Credit Card Bank:
(a) Liens on property or assets of the Borrower and its
Subsidiaries existing on the Closing Date which (with the exception of
existing Liens consisting of the interests of lessors under Capital
Leases) are set forth in Schedule 6.01; provided that such Liens shall
secure only those obligations which they secure on the Closing Date;
(b) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary; provided that
(i) such Lien is not created in contemplation of or in connection with
such acquisition and (ii) such Lien does not apply to any other
property or assets of the Borrower or any Subsidiary;
(c) Liens for taxes not yet due or which are being contested
in compliance with Section 5.03 and judgment liens securing judgments
which have not given rise to Events of Default;
(d) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business and securing obligations that are not due or that are being
contested in compliance with Section 5.03;
53
(e) pledges and deposits made in the ordinary course of
business in compliance with workmen's compensation, unemployment
insurance and other social security laws or regulations;
(f) deposits to secure the performance of bids, trade
contracts (other than for Indebtedness), leases (other than Capital
Lease Obligations), statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(g) zoning restrictions, easements, rights-of-way,
restrictions on use of real property and other similar encumbrances
incurred in the ordinary course of business which, in the aggregate,
are not substantial in amount and do not materially detract from the
value of the property subject thereto or interfere with the ordinary
conduct of the business of the Borrower or any of its Subsidiaries;
(h) Liens on Accounts and on credit cardholder accounts owned
by the Borrower or any of its Subsidiaries, in each case securing
Indebtedness incurred to finance the acquisition thereof so long as (i)
such Liens do not at any time encumber any asset other than the
Accounts and credit cardholder accounts financed by such Indebtedness
and (ii) recourse for repayment of such Indebtedness is limited to the
Accounts and credit cardholder accounts so financed (subject to
customary limited recourse to the Borrower and its Subsidiaries
relating to representations and warranties made with respect to such
Accounts and credit cardholder accounts in connection with the
incurrence of such Indebtedness);
(i) other Liens to secure Indebtedness of the Borrower and/or
any Subsidiary, so long as after giving effect thereto, the sum of
(A) the aggregate outstanding principal amount of Indebtedness secured
by Liens under this Section 6.01(i) and (B) the aggregate outstanding
capitalized amount of the obligations of the Borrower and the
Subsidiaries to pay rent or other amounts as a result of all Sale-
Leaseback Transactions permitted under Section 6.02 does not exceed 25%
of Consolidated Net Worth at such time;
(j) the interest of any lessor under any Capital Lease and
purchase money security interests in real property, improvements
thereto or equipment hereafter acquired (or, in the case of
improvements, constructed) by the Borrower or any Subsidiary and
financed with Indebtedness; provided that (i) such lessor's interests
or security interests secure only Indebtedness, (ii) such security
interests are incurred, and the Indebtedness secured thereby is
created, within 90 days after such acquisition (or construction) and
(iii) such security interests do not apply to any other property or
assets; and
(k) Liens created by the Collateral Documents.
SECTION 6.02. Sale and Lease-Back Transactions. Enter into
any arrangement, directly or indirectly, with any Person whereby it shall sell
or transfer any property, real or personal, used or useful in its business,
whether now owned or hereafter acquired, and thereafter rent or lease such
property or other property which it intends to use for substantially the same
purpose or purposes as the property being sold or transferred (a "Sale-
54
Leaseback Transaction"), except that the Borrower and the Subsidiaries at any
time may enter into any Sale-Leaseback Transaction so long as after giving
effect thereto, the sum of (a) the aggregate outstanding capitalized amount of
the obligations of the Borrower and the Subsidiaries to pay rent or other
amounts as a result of such all Sale-Leaseback Transactions and (b) the
aggregate outstanding principal amount of Indebtedness referred to in
Section 6.01(i) does not exceed 25% of Consolidated Net Worth at such time.
SECTION 6.03. Mergers, Consolidations, Sales of Assets and
Acquisitions. Merge into or consolidate with any other Person, or permit any
other Person to merge into or consolidate with it, or, except for sales of
accounts receivable pursuant to the Receivables Transfer Program, sell,
transfer, lease or otherwise dispose of (in one transaction or in a series of
transactions) all or any substantial part of its assets (whether now owned or
hereafter acquired) or sell, transfer, lease or otherwise dispose of any
capital stock of any Subsidiary, or purchase, lease or otherwise acquire (in
one transaction or a series of transactions) all or any substantial part of the
assets of any other Person, except that:
(a) if immediately after giving effect thereto no Event of
Default or Default shall have occurred and be continuing (i) any wholly
owned Subsidiary may (A) merge or consolidate into the Borrower in a
transaction in which the Borrower is the surviving corporation or
(B) transfer assets to the Borrower, (ii) any wholly owned Subsidiary
may merge into or consolidate with or transfer assets to or acquire
assets from any other wholly owned Subsidiary in a transaction in which
the surviving entity is a wholly owned Subsidiary and no Person other
than the Borrower or a wholly owned Subsidiary receives any consider-
ation and (iii) the Borrower may merge or consolidate with or into the
Parent if the Parent (A) is the continuing or surviving corporation and
(B) shall expressly assume the obligations of the Borrower hereunder
pursuant to a written agreement in form and substance reasonably
satisfactory to the Administrative Agent;
(b) if at the time thereof and immediately after giving effect
thereto no Event of Default or Default shall have occurred and be
continuing, the Borrower or any Subsidiary at any time may sell,
transfer or otherwise dispose of all or any part of the assets of any
Subsidiary (including the outstanding capital stock of such Subsidiary)
to any Person, provided that (i) the consideration in respect of such
disposition is at least equal to the fair market value of such assets
and (ii) the book value of such assets (or capital stock), when added
to the aggregate book value of all other assets (or capital stock)
previously disposed of pursuant to this paragraph (b), does not exceed
25% of Consolidated Net Worth at such time (immediately prior to giving
effect to such disposition);
(c) if at the time thereof and immediately after giving effect
thereto no Default or Event of Default shall have occurred and be
continuing and subject to the further conditions set forth below, the
Borrower or any Subsidiary may acquire all or any part of the assets or
capital stock or equity interest of any other Person or may merge or
consolidate with such Person in a transaction in which the Borrower or
such Subsidiary is the surviving corporation; provided, however, that
prior to the consummation of such transaction, the Borrower shall have
provided to the Administrative Agent a certificate in reasonable detail
demonstrating that such merger, acquisition, or consolidation will not,
55
on a pro forma basis, cause a breach of the covenants contained in any
of Sections 6.05, 6.06, 6.07 or 6.08 hereof and will not otherwise
cause a breach of any other covenant required to be performed or
observed by the Borrower or any Subsidiary hereunder;
(d) any Credit Card Bank may sell credit cardholder accounts
(and the related Accounts) of Fingerhut Corporation customers at fair
market value to any Affiliate of the Parent or any other Person
designated by the Parent; and
(e) any Credit Card Bank may sell credit cardholder accounts
(and the related Accounts) so long as, after giving effect to such
sale, the aggregate number of such accounts sold pursuant to this
paragraph (e) during the twelve-month period ending on the date of such
sale shall not exceed 10% of the number of such accounts (excluding
credit cardholder accounts of Fingerhut Corporation customers) owned by
the Borrower and its Subsidiaries immediately prior to giving effect to
such sale.
SECTION 6.04. Limitations on Indebtedness. Create, incur,
assume or suffer to exist any Indebtedness, except (a) Indebtedness of the
Borrower or any Subsidiary Guarantor under this Agreement or the Subsidiary
Guaranty and (b) other Indebtedness of the Borrower or any of its Subsidiaries
so long as, on the date of incurrence thereof, after giving effect thereto, the
aggregate outstanding principal amount of Indebtedness incurred pursuant to
this clause (b) shall not exceed 15% of Consolidated Net Worth.
SECTION 6.05. Leverage Ratio. In the case of the Borrower,
permit the Leverage Ratio at any time on or after the Initial Test Date to
exceed 9.0 to 1.0.
SECTION 6.06. Minimum Consolidated Net Worth. In the case of
the Borrower, permit Consolidated Net Worth at any time on or after the Initial
Test Date to be less than the sum of (a) (i) prior to the IPO Date, $60,159,000
(it being understood that this clause (i) shall be applicable only if the
Initial Test Date precedes the IPO Date) or (ii) on or after the IPO Date, 75%
of Consolidated Net Worth on the IPO Date after giving effect to the
consummation of the offering referred to in the definition of "IPO Date" ("IPO
Consolidated Net Worth") and (b) 25% of Cumulative Consolidated Net Income as
of the last day of the fiscal quarter of the Borrower most recently ended.
SECTION 6.07. Minimum Excess Spread. In the case of the
Borrower, permit Excess Spread determined in respect of any three consecutive
Monthly Periods to be less than 1%.
SECTION 6.08. Minimum Equity to Managed Assets Ratio. In the
case of the Borrower, permit the Equity to Managed Assets Ratio at any time on
or after the Initial Test Date to be less than 4%.
SECTION 6.09. Limitations on Restrictions on Dividends by
Subsidiaries. Permit or place, or permit any Subsidiary to permit or place,
any restriction, directly or indirectly on (i) the payment of dividends or
other distributions by any Subsidiary to the Borrower or (ii) the making of
advances or other cash payments by any Subsidiary to the Borrower, except, in
either case, (x) as specifically set forth in this Agreement, (y) as may be
required under a Receivables Transfer Program with respect to the frequency of
56
dividends from any Receivables Transfer Subsidiary and (z) as may be required
by non-consensual restrictions imposed by applicable requirements of law.
SECTION 6.10. Limitations on Lines of Business, etc. (a)
Enter into any business or business activity other than (i) in the case of any
Receivables Transfer Subsidiary, the purchasing, holding, owning and selling of
the Accounts of the Borrower and its Subsidiaries and any activities incidental
to and necessary or convenient for the accomplishment of such purposes and (ii)
in the case of the Borrower or any other Subsidiary, marketing and providing
financial services, including, but not limited to, consumer credit products,
extended service plans and fee-based products, (b) except in the case of a
Credit Card Bank, originate any Accounts relating to credit cardholder accounts
or acquire any Accounts relating to credit cardholder accounts from any Person
other than the Borrower or a Credit Card Bank; provided, however, that any
Subsidiary may originate or acquire Accounts not relating to credit cardholder
accounts or (c) in the case of the Borrower, sell, transfer or otherwise
dispose of any Accounts owned by it to any Person except (i) to a Receivables
Transfer Subsidiary whose capital stock has been pledged pursuant to the
Borrower Pledge Agreement or (ii) directly into a Receivables Transfer Program.
ARTICLE VII
Events of Default
In case of the happening of any of the following events
("Events of Default"):
(a) any representation or warranty made or deemed made in or
in connection with any Loan Document or the borrowings hereunder, or
any representation, warranty, statement or information contained in any
report, certificate, financial statement or other instrument furnished
in connection with or pursuant to any Loan Document, shall prove to
have been false or misleading in any respect material to the interests
of the Lenders when so made, deemed made or furnished;
(b) default shall be made in the payment of any principal of
any Loan when and as the same shall become due and payable, whether at
the due date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise, or default shall be made in the
payment of any reimbursement obligation in respect of any Letter of
Credit when and as the same shall become due and payable;
(c) default shall be made in the payment of any interest on
any Loan or any Fee (other than an amount referred to in (b) above) due
under any Loan Document, when and as the same shall become due and
payable, and such default shall continue unremedied for a period of
three Business Days;
(d) default shall be made in the due observance or performance
of any covenant, condition or agreement contained in Section 5.01(a),
Section 5.05(a) or Article VI (other than Section 6.01) of this
Agreement or Section 4(a)(i) (but only with respect to the Parent, any
Guarantor or any Significant Subsidiary (as defined in the Parent
Guaranty)), Section 4(e)(i) or Section 5 (other than Section 5(a)) of
the Parent Guaranty;
57
(e) default shall be made in the due observance or performance
of any covenant, condition or agreement contained in Section 5.05(b),
(c) or (d) or Section 6.01 of this Agreement or Section 4(e)(ii), (iii)
or (iv) or Section 5(a) of the Parent Guaranty, and such default shall
continue unremedied for a period of 10 Business Days;
(f) default shall be made in the due observance or performance
of any covenant, condition or agreement contained in any Loan Document
(other than those specified in clause (b), (c), (d) or (e) above) and
such default shall continue unremedied for a period of 30 Business Days
after notice thereof from the Administrative Agent or the Required
Lenders to the Borrower;
(g) the Borrower, the Parent or any of their respective
subsidiaries shall (i) fail to pay any principal or interest,
regardless of amount, due in respect of any Indebtedness in a principal
amount in excess of $10,000,000 or fail to pay any amount in excess of
$10,000,000 due in respect of any Rate Protection Agreement, in each
case when and as the same shall become due and payable (after giving
effect to any applicable period of grace specified in the instrument
evidencing or governing such Indebtedness or Rate Protection
Agreement), (ii) fail to observe or perform any other term, covenant,
condition or agreement contained in any agreement or instrument evi-
dencing or governing any such Indebtedness in a principal amount in
excess of $10,000,000 after giving effect to any applicable period of
grace specified in the instrument evidencing or governing such
Indebtedness, if the effect of any failure referred to in this
clause (ii) is to cause such Indebtedness to become due prior to its
stated maturity, or (iii) in the case of the Parent, fail to observe or
perform any term, covenant, condition or agreement contained in the
Note Purchase Agreement or any other agreement or instrument evidencing
or governing any of the Private Placement Indebtedness if the effect of
any failure referred to in this clause (iii) is to cause, or to permit
the holder or holders of such Private Placement Indebtedness (or any
Person acting on their behalf) to cause, with the giving of notice if
required, all or any portion of such Private Placement Indebtedness to
become due prior to its stated maturity;
(h) (i) an event of default, termination event or similar event
shall occur which results in the suspension or termination of the
ability of the Borrower, the Parent or any of their respective
subsidiaries to sell receivables for cash pursuant to the Receivables
Transfer Program or the Parent Receivables Transfer Program, as the
case may be; provided, however, this clause (i) will not be applicable,
in the case of any such event with respect to a Receivables Transfer
Program, so long as the Borrower obtains a commitment for an
alternative Receivables Transfer Program (for a comparable or greater
amount) within 30 days after the occurrence of such event and such
commitment is maintained throughout the remaining scheduled term of the
affected Receivables Transfer Program, or (ii) the Borrower, the Parent
or any of their respective subsidiaries shall fail to maintain the
existence of the Receivables Transfer Program or the Parent Receivables
Transfer Program, as the case may be, for a period of 30 consecutive
days other than as a result of an event or condition described in
clause (i) of this paragraph (h).
58
(i) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Borrower, the Parent
or any of their respective subsidiaries, or of a substantial part of
the property or assets of the Borrower, the Parent or any of their
respective subsidiaries, under Title 11 of the United States Code, as
now constituted or hereafter amended, or any other Federal or state
bankruptcy, insolvency, receivership or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower, the Parent or any of
their respective subsidiaries or for a substantial part of the property
or assets of the Borrower, the Parent or any of their respective
subsidiaries or (iii) the winding-up or liquidation of the Borrower,
the Parent or any of their respective subsidiaries; and such proceeding
or petition shall continue undismissed for 60 days or an order or
decree approving or ordering any of the foregoing shall be entered;
(j) the Borrower, the Parent or any of their respective
subsidiaries shall (i) voluntarily commence any proceeding or file any
petition seeking relief under Title 11 of the United States Code, as
now constituted or hereafter amended, or any other Federal or state
bankruptcy, insolvency, receivership or similar law, (ii) consent to
the institution of, or fail to contest in a timely and appropriate
manner, any proceeding or the filing of any petition described in
paragraph (i) above, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar
official for the Borrower, the Parent or any of their respective
subsidiaries or for a substantial part of the property or assets of the
Borrower, the Parent or any of their respective subsidiaries, (iv) file
an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for
the benefit of creditors, (vi) become unable, admit in writing its
inability or fail generally to pay its debts as they become due or
(vii) take any action for the purpose of effecting any of the fore-
going;
(k) one or more judgments for the payment of money in an
aggregate amount in excess of $10,000,000 shall be rendered against the
Borrower, the Parent, any of their respective subsidiaries or any
combination thereof (unless such judgment is covered by insurance and
the insurer has offered to defend such judgment or acknowledged, in
writing, its liability with respect thereto) and the same shall remain
undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken
by a judgment creditor to levy upon assets or properties of the
Borrower, the Parent or any of their respective subsidiaries to enforce
any such judgment (unless the Borrower, the Parent or the relevant
subsidiary, as applicable, has previously established reserves under
GAAP consistently applied for the full amount of such judgment);
(l) a Reportable Event or Reportable Events, or a failure to
make a required installment or other payment (within the meaning of
Section 412(n)(1) of the Code) shall have occurred with respect to any
Plan or Plans that reasonably could be expected to result in liability
of the Borrower to the PBGC or to a Plan in an aggregate amount
exceeding $10,000,000 and, within 30 days after the reporting of any
such Reportable Event to the Administrative Agent or after the receipt
59
by the Administrative Agent of the statement required pursuant to
Section 5.06(b)(iii) hereof, the Administrative Agent shall have
notified the Borrower in writing that (i) the Required Lenders have
made a determination that, on the basis of such Reportable Event or
Reportable Events or the failure to make a required payment, there are
reasonable grounds (A) for the termination of such Plan or Plans by the
PBGC, (B) for the appointment by the appropriate United States district
court of a trustee to administer such Plan or Plans or (C) for the
imposition of a lien in favor of a Plan and (ii) as a result thereof an
Event of Default exists hereunder; or a trustee shall be appointed by a
United States district court to administer any such Plan or Plans; or
the PBGC shall institute proceedings (including giving notice of intent
thereof) to terminate any such Plan or Plans;
(m)(i) the Borrower or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan, (ii) the Borrower or
such ERISA Affiliate does not have reasonable grounds for contesting
such Withdrawal Liability or is not contesting such Withdrawal
Liability in a timely and appropriate manner and (iii) the amount of
such Withdrawal Liability specified in such notice, when aggregated
with all other amounts required to be paid to Multiemployer Plans in
connection with Withdrawal Liabilities (determined as of the date or
dates of such notification) either (A) exceeds $10,000,000 or requires
payments exceeding $5,000,000 in any year or (B) is less than
$10,000,000 but any Withdrawal Liability payment remains unpaid 30 days
after such payment is due;
(n) the Borrower or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of
Title IV of ERISA, if solely as a result of such reorganization or
termination the aggregate annual contributions of the Borrower and its
ERISA Affiliates to all Multiemployer Plans that are then in
reorganization or have been or are being terminated have been or will
be increased over the amounts required to be contributed to such Multi-
employer Plans for their most recently completed plan years by an
amount exceeding $5,000,000; or
(o) any Collateral Document shall not be in full force and
effect, enforceable in accordance with its terms, or the security
interest purported to be created by any Collateral Document shall not
be a valid and enforceable perfected first priority security interest
in any collateral subject thereto (except, in the case of the Security
Agreement, in connection with releases of collateral thereunder in
accordance with the terms thereof);
then, and in every such event (other than an event with respect to the Borrower
described in paragraph (i) or (j) above), and at any time thereafter during the
continuance of such event, the Administrative Agent, at the request of the
Required Lenders, shall, by notice to the Borrower, take any of the following
actions, at the same or different times: (i) terminate forthwith the
Commitments; (ii) declare the Loans then outstanding to be forthwith due and
payable in whole or in part, whereupon the principal of the Loans so declared
to be due and payable, together with accrued interest thereon and any unpaid
accrued Fees and all other liabilities of the Borrower accrued hereunder and
under any other Loan Document, shall become forthwith due and payable, without
60
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Borrower, anything contained herein or in any
other Loan Document to the contrary notwithstanding and (iii) require that the
Borrower deposit cash with the Administrative Agent, in an amount equal to the
aggregate LC Exposure, as collateral security for the repayment of any future
drawings under the Letters of Credit; and in any event with respect to the
Borrower described in paragraph (i) or (j) above, the Commitments shall auto-
matically terminate and the principal of the Loans then outstanding, together
with accrued interest thereon and any unpaid accrued Fees and all other
liabilities of the Borrower accrued hereunder and under any other Loan Docu-
ment, shall automatically become due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived by the Borrower, anything contained herein or in any other Loan Document
to the contrary notwithstanding, and the Borrower shall forthwith be required
to deposit cash with the Administrative Agent in an amount equal to the
aggregate LC Exposure or shall deliver to the Administrative Agent a
Replacement Letter of Credit drawable without condition and in a face amount
equal to the aggregate LC Exposure and otherwise satisfactory in all respects
to the Administrative Agent, which Letter of Credit or cash deposit shall serve
as collateral security for the repayment of any further drawings under the
Letters of Credit.
ARTICLE VIII
The Administrative Agent
In order to expedite the transactions contemplated by this
Agreement, the Administrative Agent is hereby appointed to act as agent on
behalf of the Lenders. Each of the Lenders, and each subsequent holder of any
Loan by its acceptance thereof, hereby irrevocably authorizes the
Administrative Agent to take such actions on behalf of such Lender or holder
and to exercise such powers as are specifically delegated to the Administrative
Agent by the terms and provisions hereof, together with such actions and powers
as are reasonably incidental thereto. The Administrative Agent is hereby
expressly authorized by the Lenders, without hereby limiting any implied
authority, (a) to receive on behalf of the Lenders all payments of principal of
and interest on the Loans and all other amounts due to the Lenders hereunder,
and promptly to distribute to each Lender its proper share of each payment so
received; (b) to give notice on behalf of each of the Lenders to the Borrower
of any Event of Default specified in this Agreement of which the Administrative
Agent has actual knowledge acquired in connection with its agency hereunder;
(c) to act as Administrative Agent on behalf of the Lenders under the other
Loan Documents and to exercise all rights granted to the Administrative Agent
under the other Loan Documents; (d) to distribute to each Lender copies of all
notices, financial statements and other materials delivered by the Borrower
pursuant to this Agreement as received by the Administrative Agent; and
(e) take the actions it is authorized to take pursuant to the Collateral
Documents in order to release collateral thereunder.
Neither the Administrative Agent nor any of its directors,
officers, employees or agents shall be liable as such for any action taken or
omitted by any of them except for its or his own gross negligence or wilful
misconduct, or be responsible for any statement, warranty or representation
herein or the contents of any document delivered in connection herewith, or be
required to ascertain or to make any inquiry concerning the performance or
observance by any Loan Party of any of the terms, conditions, covenants or
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agreements contained in any Loan Document. The Administrative Agent shall not
be responsible to the Lenders or the holders of the Loans for the due
execution, genuineness, validity, enforceability or effectiveness of this
Agreement, or any other Loan Documents or other notes, instruments or
agreements. The Administrative Agent shall in all cases be fully protected in
acting, or refraining from acting, in accordance with written instructions
signed by the Required Lenders and, except as otherwise specifically provided
herein, such instructions and any action or inaction pursuant thereto shall be
binding on all the Lenders and each subsequent holder of any Loan. The
Administrative Agent shall, in the absence of knowledge to the contrary, be
entitled to rely on any instrument or document believed by it in good faith to
be genuine and correct and to have been signed or sent by the proper Person or
Persons. Neither the Administrative Agent nor any of its directors, officers,
employees or agents shall have any responsibility to the Borrower on account of
the failure of or delay in performance or breach by any Lender of any of its
obligations hereunder or to any Lender on account of the failure of or delay in
performance or breach by any other Lender or the Borrower of any of their
respective obligations hereunder or under any other Loan Document or in
connection herewith or therewith. The Administrative Agent may execute any and
all duties hereunder by or through agents or employees and shall be entitled to
rely upon the advice of legal counsel selected by it with respect to all
matters arising hereunder and shall not be liable for any action taken or
suffered in good faith by it in accordance with the advice of such counsel.
The Lenders hereby acknowledge that the Administrative Agent
shall be under no duty to take any discretionary action permitted to be taken
by it pursuant to the provisions of this Agreement unless it shall be requested
in writing to do so by the Required Lenders.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided below, (i) the Administrative Agent may resign
at any time by notifying the Lenders, the Issuing Banks and the Borrower and
(ii) the Administrative Agent, at the request of the Borrower and with the
consent of the Required Lenders (which consent shall not be unreasonably
withheld) shall resign. Upon any such resignation, the Borrower shall have the
right to appoint a successor, subject to the approval of the Required Lenders
(which approval shall not be unreasonably withheld). If no successor shall
have been so appointed by the Borrower and approved by the Required Lenders and
shall have accepted such appointment within 30 days after the retiring
Administrative Agent gives notice of its resignation or the Required Lenders
consent to the resignation of the Administrative Agent, then (i) the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, if the Administrative Agent shall have resigned by
notifying the Lenders or (ii) otherwise, the Required Lenders may appoint a
successor Administrative Agent to replace the terminated Administrative Agent,
in each case which successor shall be a bank with an office in New York, New
York, having a combined capital and surplus of at least $500,000,000 or an
Affiliate of any such bank. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor bank, such successor shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent and the retiring Administrative Agent
shall be discharged from its duties and obligations hereunder. After the
Administrative Agent's resignation hereunder, the provisions of this
Article and Section 9.05 shall continue in effect for its benefit in respect of
any actions taken or omitted to be taken by it while it was acting as
Administrative Agent.
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With respect to the Loans made by it and the Letter of Credit
participations acquired by it hereunder, the Administrative Agent in its
individual capacity and not as Administrative Agent shall have the same rights
and powers as any other Lender and may exercise the same as though it were not
the Administrative Agent, and the Administrative Agent and its Affiliates may
accept deposits from, lend money to and generally engage in any kind of
business with the Borrower or any Subsidiary or other Affiliate thereof as if
it were not the Administrative Agent.
Each Lender agrees (i) to reimburse the Administrative Agent,
on demand, in the amount of its pro rata share (based on its Commitment
hereunder) of any expenses incurred for the benefit of the Lenders by the
Administrative Agent, including counsel fees and compensation of agents and
employees paid for services rendered on behalf of the Lenders, which shall not
have been reimbursed by the Borrower and (ii) to indemnify and hold harmless
the Administrative Agent and any of its directors, officers, employees or
agents, on demand, in the amount of such pro rata share, from and against any
and all liabilities, taxes, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against it in its
capacity as the Administrative Agent or any of them in any way relating to or
arising out of this Agreement or any other Loan Document or any action taken or
omitted by it or any of them under this Agreement or any other Loan Document,
to the extent the same shall not have been reimbursed by the Borrower; provided
that no Lender shall be liable to the Administrative Agent for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the gross negligence or
wilful misconduct of the Administrative Agent or any of its directors,
officers, employees or agents.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also acknow-
ledges that it will, independently and without reliance upon the Administrative
Agent or any other Lender and based on such documents and information as it
shall from time to time deem appropriate, continue to make its own decisions in
taking or not taking action under or based upon this Agreement or any other
Loan Document, any related agreement or any document furnished hereunder or
thereunder.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Notices and other communications
provided for herein shall be in writing and shall be delivered by hand or over-
night courier service, mailed or sent by telecopier, as follows:
(a) if to the Borrower, to it at Metris Companies Inc., ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Atten-
tion of Vice President, Chief Financial Officer (Telephone No. (612)
525-5020) (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), with a copy to Fingerhut
Companies, Inc., at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention General Counsel (Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇) (Telecopy No.
(▇▇▇) ▇▇▇-▇▇▇▇);
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(b) if to the Administrative Agent, to it at Chase Agency
Services, Grand Central Tower, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇ (Telecopy No. 212-622-0122) and, in the
case of Competitive Bid matters, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (Telecopy No.
212-622-1308) and, in the case of Competitive Bid matters, with a copy
to Chase Securities Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention of ▇▇▇▇ ▇▇▇▇▇ (Telecopy
No. (▇▇▇) ▇▇▇-▇▇▇▇); and
(c) if to a Lender, to it at its address (or telecopy number)
set forth in Schedule 2.01 or in the Assignment and Acceptance pursuant
to which such Lender became a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or other telegraphic communications equipment of the sender, or on the
date five Business Days after dispatch by certified or registered mail if
mailed, in each case delivered, sent or mailed (properly addressed) to such
party as provided in this Section 9.01 or in accordance with the latest
unrevoked direction from such party given in accordance with this Section 9.01.
SECTION 9.02. Survival of Agreement. All covenants,
agreements, representations and warranties made by the Borrower herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and shall survive the making by the
Lenders of the Loans, regardless of any investigation made by the Lenders or on
their behalf, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any Fee or any other amount
payable under this Agreement or any other Loan Document is outstanding and
unpaid and so long as the Commitments have not been terminated.
SECTION 9.03. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrower, the Administrative
Agent and each Lender and thereafter shall be binding upon and inure to the
benefit of the Borrower, the Administrative Agent and each Lender and their
respective successors and assigns, except that the Borrower shall not have the
right to assign its rights hereunder or any interest herein without the prior
consent of all the Lenders.
SECTION 9.04. Successors and Assigns. (a) Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Borrower, the Administrative
Agent or the Lenders that are contained in this Agreement shall bind and inure
to the benefit of their respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a
portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing
to it); provided, however, that (i) except in the case of an assignment to a
Lender or an Affiliate of such Lender, the Borrower, the Issuing Banks and the
Administrative Agent must give their prior written consent to such assignment
(which consent, in each case, shall not be unreasonably withheld); (ii) unless
otherwise agreed by the Borrower and the Administrative Agent, the amount of
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the Commitment of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$5,000,000 (or, if less, the then-remaining Commitment of the assigning Lender)
and the amount of the Commitment of such Lender remaining after such assignment
shall not be less than $6,000,000 or shall be zero; (iii) the parties to each
such assignment shall execute and deliver to the Administrative Agent an
Assignment and Acceptance, together with a processing and recordation fee of
$3,500 (to be paid by the assignee or the assignor); and (iv) after giving
effect thereto, (x) the Commitment Percentage of the assigning Lender shall
equal such Lender's "Commitment Percentage" under and as defined in the Parent
Facility and (y) the Commitment Percentage of the assignee shall equal such
assignee's "Commitment Percentage" under and as defined in the Parent Facility.
Upon acceptance and recording pursuant to paragraph (e) of this Section 9.04,
from and after the effective date specified in each Assignment and Acceptance,
which effective date shall be at least five Business Days after the execution
thereof, (A) the assignee thereunder shall be a party hereto and, to the extent
of the interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement and (B) the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of
an assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto (but shall continue to be entitled to the
benefits of Sections 2.13, 2.16, 2.20 and 9.05, as well as to any Fees accrued
for its account hereunder and not yet paid)). Notwithstanding the foregoing,
any Lender assigning its rights and obligations under this Agreement may retain
any Competitive Loans made by it outstanding at such time, and in such case
shall retain its rights hereunder in respect of any Loans so retained until
such Loans have been repaid in full in accordance with this Agreement.
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and
that its Commitment, and the outstanding balances of its Standby Loans and
Competitive Loans, in each case without giving effect to assignments thereof
which have not become effective, are as set forth in such Assignment and
Acceptance, (ii) except as set forth in (i) above, such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement, or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto or the financial condition of
any Loan Party or the performance or observance by any Loan Party of any of its
obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee
represents and warrants that it is legally authorized to enter into such
Assignment and Acceptance; (iv) such assignee confirms that it has received a
copy of this Agreement, together with copies of the most recent financial
statements delivered pursuant to Section 5.04 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (v) such assignee will
independently and without reliance upon the Administrative Agent, such
assigning Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
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credit decisions in taking or not taking action under this Agreement; (vi) such
assignee appoints and authorizes the Administrative Agent to take such action
as agent on its behalf and to exercise such powers under this Agreement as are
delegated to the Administrative Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all the obligations which
by the terms of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent shall maintain at one of its
offices in the City of New York a copy of each Assignment and Acceptance
delivered to it and a register for the recordation of the names and addresses
of the Lenders, and the Commitment of, and principal amount of the Loans owing
to, each Lender pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register shall be conclusive in the absence of
manifest error and the Borrower, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by the Borrower and any Lender, at any
reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, an administrative
questionnaire in form satisfactory to the Administrative Agent completed in
respect of the assignee (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b)
above and, if required, the written consent of the Borrower and the
Administrative Agent to such assignment, the Administrative Agent shall
(i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Lender and the Issuing Banks.
(f) Each Lender may without the consent of the Borrower or
the Administrative Agent sell participations to one or more banks or other
entities in all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided, however, that (i) such Lender's obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) the
participating banks or other entities shall be entitled to the benefit of the
cost protection provisions contained in Sections 2.13 and 2.16 limited, as to
each participant, to the amount the selling Lender could claim and (iv) the
Borrower, the Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights
and obligations under this Agreement, and such Lender shall retain the sole
right to enforce the obligations of the Borrower relating to the Loans and to
approve any amendment, modification or waiver of any provision of this
Agreement (other than amendments, modifications or waivers decreasing any fees
payable hereunder or the amount of principal of or the rate at which interest
is payable on the Loans, or extending any scheduled principal payment date or
date fixed for the payment of principal of or interest on the Loans).
(g) Any Lender or participant may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section 9.04, disclose to the assignee or participant or proposed assignee
or participant any information relating to the Borrower furnished to such
Lender by or on behalf of the Borrower; provided that, prior to any such
disclosure of information designated by the Borrower as confidential, each such
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assignee or participant or proposed assignee or participant shall execute an
agreement whereby such assignee or participant shall agree (subject to
customary exceptions) to preserve the confidentiality of such confidential
information. It is understood that confidential information relating to the
Borrower would not ordinarily be provided in connection with assignments or
participations of Competitive Loans.
(h) Notwithstanding the limitations set forth in paragraph
(b) above, (i) any Lender may at any time assign or pledge all or any portion
of its rights under this Agreement to a Federal Reserve Bank and (ii) any
Lender which is a "fund" may at any time assign or pledge all or any portion of
its rights under this Agreement to secure such Lender's indebtedness, in each
case without the prior written consent of the Borrower or the Administrative
Agent; provided that each such assignment shall be made in accordance with
applicable law and no such assignment shall release a Lender from any of its
obligations hereunder. In order to facilitate any such assignment, the
Borrower shall, at the request of the assigning Lender, duly execute and
deliver to the assigning Lender a registered promissory note or notes
evidencing the Loans made to the Borrower by the assigning Lender hereunder.
(i) The Borrower shall not assign or delegate any of its
respective rights and duties hereunder.
SECTION 9.05. Expenses; Indemnity. (a) The Borrower agrees
to pay all reasonable out-of-pocket expenses incurred by the Administrative
Agent in connection with the preparation of this Agreement and the other Loan
Documents or in connection with any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions hereby
contemplated shall be consummated) or incurred by the Administrative Agent,
Issuing Banks or any Lender in connection with the enforcement or protection of
their rights in connection with this Agreement and the other Loan Documents or
in connection with the Loans made hereunder, including (i) the reasonable fees
and disbursements of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Administrative
Agent, (ii) in connection with any such amendment, modification or waiver, the
fees and disbursements of any common counsel, and (iii) in connection with any
such enforcement or protection, the fees and disbursements of any counsel for
the Administrative Agent or any Lender. The Borrower further agrees that it
shall indemnify the Administrative Agent, the Issuing Bank and the Lenders from
and hold them harmless against any documentary taxes, assessments or charges
made by any Governmental Authority by reason of the execution and delivery of
this Agreement or any of the other Loan Documents.
(b) The Borrower agrees to indemnify the Administrative Agent,
the Issuing Banks, each Lender and their directors, officers, employees and
agents (each such Person being called an "Indemnitee") against, and to hold
each Indemnitee harmless from, any and all losses, claims, damages, liabilities
and related expenses, including reasonable counsel fees and expenses, incurred
by or asserted against any Indemnitee arising out of, in any way connected
with, or as a result of (i) the execution or delivery of this Agreement or any
other Loan Document or any agreement or instrument contemplated thereby, the
performance by the parties thereto of their respective obligations thereunder
or the consummation of the Transactions and the other transactions contemplated
thereby, (ii) the use of the proceeds of the Loans or (iii) any claim, litiga-
tion, investigation or proceeding relating to any of the foregoing, whether or
not any Indemnitee is a party thereto; provided, however, that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses are determined by a court of
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competent jurisdiction by final and nonappealable judgment to have resulted
from the gross negligence or wilful misconduct of such Indemnitee; provided
further, however, that the Borrower will only be liable for the fees of a
single firm which shall act as common counsel for the Lenders, except in the
case where (i) a Lender reasonably determines based upon the written advice of
legal counsel, a copy of which shall be provided to the Borrower, in its
judgment that having common counsel would present such counsel with a conflict
of interest, (ii) a Lender reasonably concludes that there may be legal
defenses available to it that are different from or in addition to those
available to other Lenders or (iii) defense of any action or proceeding is not
assumed by the Lenders.
(c) The provisions of this Section 9.05 shall remain
operative and in full force and effect regardless of the expiration of the term
of this Agreement, the consummation of the transactions contemplated hereby,
the repayment of any of the Loans, the invalidity or unenforceability of any
term or provision of this Agreement or any other Loan Document, or any
investigation made by or on behalf of the Administrative Agent or any Lender.
All amounts due under this Section 9.05 shall be payable on written demand
therefor accompanied by evidence in reasonable detail sufficient to identify
the nature and amount of the expense so incurred.
SECTION 9.06. Right of Setoff. If an Event of Default shall
have occurred and be continuing, each Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Lender
to or for the credit or the account of the Borrower against any of and all the
obligations of the Borrower now or hereafter existing under this Agreement or
any other Loan Document held by such Lender, irrespective of whether or not
such Lender shall have made any demand under this Agreement or such other Loan
Document and although such obligations may be unmatured. The rights of each
Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have. Each Lender
agrees promptly to notify the Borrower of any such setoff and the application
thereof made by such Lender.
SECTION 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK.
SECTION 9.08. Waivers; Amendment. (a) No failure or delay
of the Administrative Agent, the Issuing Bank or any Lender in exercising any
power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The
rights and remedies of the Administrative Agent, the Issuing Bank and the
Lenders hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies which they would otherwise have. No waiver
of any provision of this Agreement or any other Loan Document or consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances.
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(b) Neither this Agreement, any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except pursuant
to an agreement or agreements in writing entered into by the Borrower, each
other affected Loan Party and the Required Lenders (except, in the case of the
Parent Guaranty, as otherwise provided in Section 11 thereof); provided,
however, that no such agreement shall (i) decrease the principal amount of, or
extend the maturity of or any scheduled principal payment date or date for the
payment of any interest on any Loan, or waive or excuse any such payment or any
part thereof, or decrease the rate of interest on any Loan, without the prior
written consent of each Lender affected thereby, (ii) change the Commitment or
decrease the Facility Fee of any Lender without the prior written consent of
such Lender, (iii) amend or modify the provisions of Section 2.17, the provi-
sions of this Section or the definition of the "Required Lenders", without the
prior written consent of each Lender or (iv) release or otherwise limit or
modify the obligations of any Guarantor (except as provided in the Subsidiary
Guaranty or the Affiliate Guaranty) or release any of the collateral securing
the Obligations (except as provided in the Security Agreement) in each case
without the prior written consent of each Lender; provided further that no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent hereunder without the prior written consent of the
Administrative Agent. Each Lender and each holder of a Loan shall be bound by
any waiver, amendment or modification authorized by this Section, and any
consent by any Lender or holder of a Loan pursuant to this Section shall bind
any Person subsequently acquiring a Loan from it.
SECTION 9.09. Interest Rate Limitation. Notwithstanding
anything herein to the contrary, if at any time the applicable interest rate,
together with all fees and charges which are treated as interest under appli-
cable law (collectively, the "Charges"), as provided for herein or in any other
document executed in connection herewith, or otherwise contracted for, charged,
received, taken or reserved by any Lender, shall exceed the maximum lawful rate
(the "Maximum Rate") which may be contracted for, charged, taken, received or
reserved by such Lender in accordance with applicable law, the rate of interest
payable in respect of the Loans held by such Lender, together with all Charges
payable to such Lender, shall be limited to the Maximum Rate.
SECTION 9.10. Entire Agreement. This Agreement and the other
Loan Documents and the letter agreement referred to in Section 2.06 constitute
the entire contract between the parties relative to the subject matter hereof.
Any previous agreement among the parties with respect to the subject matter
hereof is superseded by this Agreement and the other Loan Documents. Nothing
in this Agreement or in the other Loan Documents, expressed or implied, is
intended to confer upon any party other than the parties hereto and thereto any
rights, remedies, obligations or liabilities under or by reason of this
Agreement or the other Loan Documents.
SECTION 9.11. Waiver of Jury Trial. Each party hereto hereby
waives, to the fullest extent permitted by applicable law, any right it may
have to a trial by jury in respect of any litigation directly or indirectly
arising out of, under or in connection with this Agreement or any of the other
Loan Documents. Each party hereto (a) certifies that no representative, agent
or attorney of any other party has represented, expressly or otherwise, that
such other party would not, in the event of litigation, seek to enforce the
foregoing waiver and (b) acknowledges that it and the other parties hereto have
been induced to enter into this Agreement and the other Loan Documents, as
applicable, by, among other things, the mutual waivers and certifications in
this Section 9.11.
69
SECTION 9.12. Severability. In the event any one or more of
the provisions contained in this Agreement or in any other Loan Document should
be held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein and
therein shall not in any way be affected or impaired thereby. The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 9.13. Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall constitute an original but all
of which when taken together shall constitute but one contract, and shall
become effective as provided in Section 9.03.
SECTION 9.14. Headings. The cover page, the Article and
Section headings and the Table of Contents used herein are for convenience of
reference only, are not part of this Agreement and are not to affect the
construction of, or to be taken into consideration in interpreting, this
Agreement.
SECTION 9.15. Jurisdiction; Consent to Service of Process.
(a) Each of the parties hereto agrees that a final judgment in any New York
State court or any Federal court of the United States of America sitting in New
York City shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that any party hereto may have to bring any
action or proceeding relating to this Agreement or the other Loan Documents in
the courts of any jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement or the
other Loan Documents in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 9.01. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 9.16. Confidentiality. Unless otherwise agreed to in
writing by the Borrower, the Administrative Agent and each Lender hereby agree
to keep all Proprietary Information (as defined below) confidential and not to
disclose or reveal any Proprietary Information to any Person other than the
Administrative Agent's or such Lender's directors, officers, employees,
Affiliates and agents and to actual or potential assignees and participants,
and then only on a confidential basis; provided, however, that the
Administrative Agent or any Lender may disclose Proprietary Information (a) as
required by law, rule, regulation or judicial process, (b) to its attorneys and
accountants or (c) as requested or required by any state or Federal or foreign
authority or examiner regulating banks or banking. For purposes of this
Agreement, the term "Proprietary Information" shall include all information
about the Borrower or any of its Affiliates which has been furnished by the
70
Borrower or any of its Affiliates, whether furnished before or after the date
hereof, and regardless of the manner in which it is furnished; provided,
however, that Proprietary Information does not include information which (x) is
or becomes generally available to the public other than as a result of a
disclosure by the Administrative Agent or any Lender not permitted by this
Agreement, (y) was available to the Administrative Agent or any Lender on a
nonconfidential basis prior to its disclosure to the Administrative Agent or
such Lender by the Borrower or any of its Affiliates from a Person who is not
otherwise bound by a confidentiality agreement with the Company or any of its
Affiliates or is not otherwise prohibited from transmitting the information to
the Administrative Agent or such Lender or (z) becomes available to the
Administrative Agent or any Lender on a nonconfidential basis from a Person
other than the Borrower or its Affiliates who is not otherwise bound by a
confidentiality agreement with the Company or any of its Affiliates, or is not
otherwise prohibited from transmitting the information to the Administrative
Agent or such Lender. In addition, the terms of any confidentiality agreement
between any Lender and the Parent or the Borrower will remain in full force and
effect pursuant to the terms thereof.
71
IN WITNESS WHEREOF, the Borrower the Administrative Agent and
the Lenders have caused this Agreement to be duly executed by their respective
authorized officers as of the day and year first above written.
METRIS COMPANIES INC., as
Borrower
By
Name:
Title:
By
Name:
Title:
THE CHASE MANHATTAN BANK,
individually and as
Administrative Agent and an
Issuing Bank
By
Name:
Title:
NATIONSBANK, N.A.,
individually and as Co-Agent
By
Name:
Title:
72
BANK OF AMERICA ILLINOIS,
individually and as an
Issuing Bank
By
Name:
Title:
THE BANK OF NEW YORK
By
Name:
Title:
THE BANK OF NOVA SCOTIA
By
Name:
Title:
BANK OF TOKYO-MITSUBISHI,
LTD., Chicago Branch
By
Name:
Title:
COMMERZBANK
AKTIENGESELLSCHAFT Grand
Cayman Branch
By
Name:
Title:
By
Name:
Title:
CAISSE NATIONALE DE CREDIT
AGRICOLE
By
Name:
Title:
73
CREDIT LYONNAIS CHICAGO
BRANCH
By
Name:
Title:
THE DAI-ICHI KANGYO BANK,
LTD.
By
Name:
Title:
DEUTSCHE BANK AG-CHICAGO
BRANCH and/or CAYMAN ISLAND
BRANCH
By
Name:
Title:
By
Name:
Title:
DEUTSCHE GENOSSENSCHAFTSBANK-
CAYMAN ISLAND BRANCH
By
Name:
Title:
By
Name:
Title:
FIRST BANK N.A.,
individually and as an
Issuing Bank
By
Name:
Title:
74
THE FIRST NATIONAL BANK OF
CHICAGO
By
Name:
Title:
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By
Name:
Title:
THE FUJI BANK, LIMITED,
CHICAGO BRANCH
By
Name:
Title:
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, CHICAGO BRANCH
By
Name:
Title:
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED, CHICAGO
BRANCH
By
Name:
Title:
THE MITSUI TRUST AND BANKING
COMPANY, LIMITED, NEW YORK
BRANCH
By
Name:
Title:
75
NORDDEUTSCHE LANDESBANK
GIROZENTRALE-NEW YORK and/or
CAYMAN ISLAND BRANCH
By
Name:
Title:
By
Name:
Title:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
individually and as an
Issuing Bank
By
Name:
Title:
THE SAKURA BANK, LIMITED
By
Name:
Title:
UNION BANK OF SWITZERLAND,
NEW YORK BRANCH
By
Name:
Title:
By
Name:
Title:
THE YASUDA TRUST AND BANKING
CO., LIMITED
By
Name:
Title:
76
EXHIBIT A-1
FORM OF COMPETITIVE BID REQUEST
The Chase Manhattan Bank, as Administrative Agent for
the Lenders referred to below,
Chase Agency Services
Grand Central Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
[Date]
Dear Gentlemen and Ladies:
The undersigned, Metris Companies Inc. (the "Borrower"),
refers to the Revolving Credit and Letter of Credit Facility Agreement dated as
of September 16, 1996 (as it may hereafter be amended, modified, extended or
restated from time to time, the "Credit Agreement"), among the Borrower, the
Lenders named therein, The Chase Manhattan Bank, as Administrative Agent for
the Lenders, NationsBank, N.A., as Co-Agent, and certain Issuing Banks.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement. The Borrower hereby
gives you notice pursuant to Section 2.03(a) of the Credit Agreement that it
requests a Competitive Borrowing under the Credit Agreement, and in that
connection sets forth below the terms on which such Competitive Borrowing is
requested to be made:
(A) Date of Competitive Borrowing
(which is a Business Day) ____________________
(B) Principal Amount of
Competitive Borrowing ____________________
(C) Interest rate basis ____________________
(D) Interest Period and the last
day thereof ____________________
77
Upon acceptance of any or all of the Loans offered by the
Lenders in response to this request, the Borrower shall be deemed to have
represented and warranted that the conditions to lending specified in
Article IV of the Credit Agreement have been satisfied.
Very truly yours,
METRIS COMPANIES INC.
By __________________________
Title: [Responsible
Officer]
78
EXHIBIT A-2
FORM OF NOTICE OF COMPETITIVE BID REQUEST
The Chase Manhattan Bank, as Administrative Agent for
the Lenders referred to below,
Chase Agency Services
Grand Central Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
[Date]
Dear Gentlemen and Ladies:
Reference is made to the Revolving Credit and Letter of
Facility Agreement dated as of September 16, 1996 (as it may hereafter be
amended, modified, extended or restated from time to time, the "Credit Agree-
ment"), among Metris Companies Inc. (the "Borrower"), the Lenders named
therein, The Chase Manhattan Bank, as Administrative Agent for the Lenders,
NationsBank, N.A., as Co-Agent, and certain Issuing Banks. Capitalized terms
used herein and not otherwise defined herein shall have the meanings assigned
to such terms in the Credit Agreement. The Borrower made a Competitive Bid
Request on , 19 , pursuant to Section 2.03(a) of the Credit Agree-
ment, and in that connection you are invited to submit a Competitive Bid
by [Date]/[Time] . Your Competitive Bid must comply with Sec-
tion 2.03(b) of the Credit Agreement and the terms set forth below on which the
Competitive Bid Request was made:
(A) Date of Competitive Borrowing ____________________
(B) Principal amount of
Competitive Borrowing ____________________
(C) Interest rate basis ____________________
79
(D) Interest Period and the last
day thereof ____________________
Very truly yours,
THE CHASE MANHATTAN BANK, as
Administrative Agent
By ____________________
Title:
80
EXHIBIT A-3
FORM OF COMPETITIVE BID
The Chase Manhattan Bank, as Administrative Agent for
the Lenders referred to below,
Chase Agency Services
Grand Central Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
[Date]
Dear Gentlemen and Ladies:
The undersigned, [Name of Lender], refers to the Revolving
Credit and Letter of Credit Facility Agreement dated as of September 16, 1996
(as it may hereafter be amended, modified, extended or restated from time to
time, the "Credit Agreement"), among Metris Companies Inc. (the "Borrower"),
the Lenders named therein, The Chase Manhattan Bank, as Administrative Agent
for the Lenders, NationsBank, N.A., as Co-Agent, and certain Issuing Banks.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement. The undersigned
hereby makes a Competitive Bid pursuant to Section 2.03(b) of the Credit Agree-
ment, in response to the Competitive Bid Request made by the Borrower on
, 19 , and in that connection sets forth below the terms on which such
Competitive Bid is made:
(A) Principal Amount ____________________
(B) Competitive Bid Rate ____________________
(C) Interest Period and last
day thereof ____________________
The undersigned hereby confirms that it is prepared, subject
to the conditions set forth in the Credit Agreement, to extend credit to the
Borrower upon acceptance by the Borrower of this bid in accordance with
Section 2.03(d) of the Credit Agreement.
Very truly yours,
[NAME OF LENDER]
By _________________________
Title:
81
EXHIBIT A-4
FORM OF COMPETITIVE BID ACCEPT/REJECT LETTER
[Date]
The Chase Manhattan Bank, as Administrative Agent for
the Lenders referred to below,
Chase Agency Services
Grand Central Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Dear Gentlemen and Ladies:
The undersigned, Metris Companies Inc., (the "Borrower"),
refers to the Revolving Credit and Letter of Credit Facility Agreement dated as
of September 16, 1996 (as it may hereafter be amended, modified, extended or
restated from time to time, the "Credit Agreement"), among the Borrower, the
Lenders named therein, The Chase Manhattan Bank, as Administrative Agent for
the Lenders, NationsBank, N.A., as Co-Agent, and certain Issuing Banks.
In accordance with Section 2.03(c) of the Credit Agreement, we
have received a summary of bids in connection with our Competitive Bid Request
dated ___________ and in accordance with Section 2.03(d) of the Credit
Agreement, we hereby accept the following bids for maturity on [date]:
Principal Amount Fixed Rate/Margin Lender
$ [%]/[+/-. %]
$
We hereby reject the following bids:
Principal Amount Fixed Rate/Margin Lender
$ [%]/[+/-. %]
$
82
The $ should be deposited in The Chase Manhattan Bank
account number [ ] on [date].
Very truly yours,
METRIS COMPANIES INC.
By____________________
Name:
Title:
83
EXHIBIT A-5
FORM OF STANDBY BORROWING REQUEST
The Chase Manhattan Bank, as Administrative Agent for
the Lenders referred to below,
Chase Agency Services
Grand Central Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
[Date]
Dear Gentlemen and Ladies:
The undersigned, Metris Companies Inc., (the "Borrower"),
refers to the Revolving Credit and Letter of Credit Facility Agreement dated as
of September 16, 1996 (as it may hereafter be amended, modified, extended or
restated from time to time, the "Credit Agreement"), among the Borrower, the
Lenders named therein, The Chase Manhattan Bank, as Administrative Agent for
the Lenders, NationsBank, N.A., as Co-Agent, and certain Issuing Banks.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement. The Borrower hereby
gives you notice pursuant to Section 2.04 of the Credit Agreement that it
requests a Standby Borrowing under the Credit Agreement, and in that connection
sets forth below the terms on which such Standby Borrowing is requested to be
made:
(A) Date of Standby Borrowing
(which is a Business Day) ____________________
(B) Principal Amount of
Standby Borrowing ____________________
(C) Interest rate basis ____________________
(D) Interest Period and the last
day thereof ____________________
84
Upon acceptance of any or all of the Loans made by the Lenders
in response to this request, the Borrower shall be deemed to have represented
and warranted that the conditions to lending specified in Article IV of the
Credit Agreement have been satisfied (unless all such Loans are continued or
converted as contemplated by Section 2.05(b)).
Very truly yours,
METRIS COMPANIES INC.
By
Title: [Responsible Officer]
85
EXHIBIT C
[FORM OF]
ASSIGNMENT AND ACCEPTANCE
Reference is made to Revolving Credit and Letter of Credit
Facility Agreement dated as of September 16, 1996 (as it may hereafter be
amended, modified, extended or restated from time to time, the "Credit
Agreement"), among Metris Companies Inc., a Delaware corporation (the
"Borrower"), the Lenders named therein (the "Lenders") and The Chase Manhattan
Bank, as administrative agent for the Lenders (in such capacity, the
"Administrative Agent"), NationsBank, N.A., as Co-Agent, and certain Issuing
Banks. Terms defined in the Credit Agreement are used herein with the same
meanings.
1. The Assignor hereby sells and assigns, without recourse,
to the Assignee, and the Assignee hereby purchases and assumes, without
recourse, from the Assignor, effective as of the Effective Date set forth on
the second page hereof, the interests set forth on the third page hereof (the
"Assigned Interest") in the Assignor's rights and obligations under the Credit
Agreement, including, without limitation, the interests set forth on the second
page hereof in the Commitment of the Assignor on the Effective Date and the
Competitive Loans and Standby Loans owing to the Assignor which are outstanding
on the Effective Date, together with unpaid interest accrued on the assigned
Loans to the Effective Date and the amount, if any, set forth on the reverse
hereof of the Fees accrued to the Effective Date for the account of the
Assignor. Each of the Assignor and the Assignee hereby makes and agrees to be
bound by all the representations, warranties and agreements set forth in
Section 9.04(c) of the Credit Agreement, a copy of which has been received by
each such party. From and after the Effective Date (i) the Assignee shall be a
party to and be bound by the provisions of the Credit Agreement and, to the
extent of the interests assigned by this Assignment and Acceptance, have the
rights and obligations of a Lender thereunder and under the Loan Documents and
(ii) the Assignor shall, to the extent of the interests assigned by this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.
2. This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) if the Assignee is organized under the
laws of a jurisdiction outside the United States, the forms specified in
Section 2.20(f) of the Credit Agreement, duly completed and executed by such
Assignee and (ii) a processing and recordation fee of $3,500.
3. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.
86
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
(may not be fewer than 5 Business
Days after the Date of Assignment):
87
Percentage Assigned of
Commitments (set
forth, to at Least 8
decimals, as a
Commitment Amount percentage of the
Assigned (and aggregate Commitments
identifying information of all Lenders
as to individual Loans) thereunder)
Commitment: $ %
Competitive Advance:
Fees Assigned (if
any):
The terms set forth above and on
the reverse side hereof are hereby
agreed to:
Accepted
__________________, as Assignor THE CHASE MANHATTAN BANK, as
Administrative Agent
By:_____________________ By:______________________
Name: Name:
Title: Title:
__________________, as Assignee METRIS COMPANIES, INC.
By:_____________________ By:______________________
Name: Name:
Title: Title:
88
SCHEDULE 6.01
LIENS ON PROPERTY OR ASSETS OF
THE BORROWER AND THE SUBSIDIARIES
1. Lessors under various operating leases of the Borrower and its
Subsidiaries have made and may make in the future notice filings with
respect to the lessor's property that is the subject of such leases.
89
SCHEDULE 3.14
TAX RETURNS AND PAYMENTS
The Borrower and its Subsidiaries have filed all applicable Federal, State and
material local tax returns and have paid or caused to be paid all associated
taxes due and payable on such returns or on any assessments received by them;
except that because one of the Borrower's Subsidiaries, Direct Merchants Credit
Card Bank, National Association, is a national banking entity (established in
1995) which derives the majority of its income from co-branded Mastercard
credit cards, it may be subject to special financial institution rules in
certain states. Such rules attempt to impute state income tax nexus to a
credit card company if it obtains finance revenue and/or has credit card
receivables generated from customers in that state. Of the states that have
adopted such financial institution rules, Minnesota is the only state where the
Borrower and its Subsidiaries are currently filing income or franchise tax
returns. States which currently have rules pursuant to which they may attempt
to impose income tax nexus based upon such credit card activity include:
Arkansas Minnesota
California New Mexico
Hawaii Tennessee
Indiana West Virginia
Massachusetts
Direct Merchants Credit Card Bank, National Association, has not filed in
states other than Minnesota because it believes the above referenced financial
institution rules to be unconstitutional.
90
SCHEDULE 3.08
METRIS COMPANIES INC.
SUBSIDIARIES
NAME INCORPORATION 100% Owned By
Direct Merchants Credit Card Bank, National Association Metris Companies Inc.
National Association
DMCCB, Inc. Minnesota Metris Companies Inc.
Metris Direct, Inc. Minnesota Metris Companies Inc.
Metris Receivables, Inc. Delaware Metris Companies Inc.
91
SCHEDULE 3.09
LITIGATION
There are not any actions, suits or proceedings at law or in equity or by or
before any Governmental Authority pending or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or any Subsidiary or any business,
property or rights of any such Person (i) which involve any Loan Document or
the Transactions or (ii) which would be materially likely to result in a
Material Adverse Effect.
2.____________________
3.[FN]
Not less than $5,000,000 (and in integral multiples of $1,000,000) or
greater than the Total Commitment.
Eurodollar Competitive Loan or Fixed Rate Competitive Loan.
Which shall be subject to the definition of "Interest Period" and end not
later than the Maturity Date.
The Competitive Bid must be received by the Administrative Agent (i) in the
case of a Eurodollar Competitive Loan, not later than 10:00 a.m., New York City
time, four Business Days before a proposed Competitive Borrowing, and (ii) in
the case of Fixed Rate Competitive Borrowing, not later than 10:00 a.m., New
York City time, one Business Day before a Competitive Borrowing.
Not less than $5,000,000 or greater than the requested Competitive
Borrowing and in integral multiples of $1,000,000. Multiple bids will be
accepted by the Administrative Agent.
I.e., LIBO Rate + or - %, in the case of Eurodollar Loans or %, in
the case of Fixed Rate Loans.
Not less than $5,000,000 (and in integral multiples of $1,000,000) or
greater than the Total Commitment then available.
Eurodollar Loan or ABR Loan.
Which shall be subject to the definition of "Interest Period" and end not
later than the Maturity Date.
To be completed only if consents are required under Section 9.04(b).