SECOND AMENDMENT, dated as of November 14, 1997 (this "SECOND
AMENDMENT"), to the Revolving Credit and Letter of Credit Facility Agreement,
dated as of September 16, 1996, as amended by the First Amendment thereto
dated as of October 6, 1997 (as amended, supplemented or otherwise modified
from time to time, the "CREDIT AGREEMENT"), among METRIS COMPANIES, INC. (the
"BORROWER"), the Lenders parties thereto, NATIONSBANK, N.A., as co-agent (in
such capacity, the "CO-AGENT"), and THE CHASE MANHATTAN BANK, as
administrative agent (in such capacity, the "ADMINISTRATIVE AGENT"). Unless
otherwise defined herein, all capitalized terms defined in the Credit
Agreement and used herein are so used as so defined.
W I T N E S S E T H :
WHEREAS, the Borrower has requested that the Administrative Agent
and the Lenders enter into this Second Amendment;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
AMENDMENTS TO THE CREDIT AGREEMENT
1. Section 1.01 of the Credit Agreement is hereby amended by
amending and restating the definition of "Consolidated Tangible Net Worth" in
its entirety as follows:
"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
(other than unamortized fees), unamortized deferred charges (except to the
extent offset by deferred income), goodwill, patents, trademarks, service
marks, trade names, anticipated future benefit of tax loss carry-forwards,
copyrights, organization or developmental expenses and other intangible
assets.
2. Section 6.08 of the Credit Agreement is hereby amended and restated
in its entirety as follows:
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 (a) 4% during the period
from and including the Initial Test Date through and including September
29, 1997 and (b) 3.5% at any time after September 29, 1997.
2
ARTICLE II
CONSENT
The parties hereto hereby consent to the amendment and restatement
of the Borrower Pledge Agreement in its entirety as set forth in Annex A
hereto, which Annex A shall replace Exhibit D to the Credit Agreement,
effective on the "Effective Date" (as defined in said form of amended and
restated Borrower Pledge Agreement). The parties hereto authorize the
Administrative Agent to cooperate to effectuate the corporate reorganization
referred to in Section 25 of the amended and restated Borrower Pledge
Agreement, including the release of shares in its possession if necessary to
effectuate such reorganization. The Borrower agrees to cause the delivery of
shares pledged under the amended and restated Borrower Pledge Agreement and
to provide such opinions and certificates as the Administrative Agent may
reasonably request.
ARTICLE III
MISCELLANEOUS
1. REPRESENTATIONS AND WARRANTIES. The Borrower hereby
represents and warrants on and as of the Effective Date (as defined below)
that (a) this Second Amendment has been duly authorized, executed and
delivered by the Borrower and constitutes the legal, valid and binding
obligation of the Borrower enforceable against the Borrower in accordance
with its terms; (b) this Second Amendment and the consummation of the
transactions contemplated hereunder will not (i) violate (A) any provision of
any law, statute, rule or regulation where such violation would be materially
likely to result in a Material Adverse Effect, (B) the articles of
incorporation or other constitutive documents or by-laws of the Borrower, (C)
any order of any Governmental Authority where such violation would be
materially likely to result in a Material Adverse Effect or (D) any provision
of any material indenture, agreement or other instrument to which the
Borrower is a party or by which it or any of its property is or may be bound
or (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; and (c) 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 in connection with this Second Amendment and the
transactions contemplated hereby.
2. NO OTHER MODIFICATIONS. Except as expressly modified hereby,
all the provisions of the Credit Agreement are and shall continue to be in full
force and effect. Each reference in the Credit Agreement to "this Agreement",
"hereunder", "hereof" and words of like import referring to the Credit Agreement
and each reference in any other Loan Document to the Credit Agreement shall mean
the Credit Agreement as amended hereby. Except as expressly modified pursuant
hereto, all the provisions of the Borrower Pledge Agreement are and shall
continue to be in full force and effect. Effective on the "Effective Date" (as
defined in the form of amended and restated Borrower Pledge Agreement attached
hereto as Annex A), each reference in any Loan Document to the Borrower Pledge
Agreement shall mean the Borrower Pledge Agreement as amended and restated
pursuant hereto.
3. GOVERNING LAW. THIS SECOND AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS SECOND AMENDMENT SHALL
3
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.
4. COUNTERPARTS. This Second Amendment may be executed by one
or more of the parties to this Second Amendment on any number of separate
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
5. EFFECTIVENESS. This Second Amendment shall become effective
as of the date (the "EFFECTIVE DATE") upon which the Administrative Agent
shall have received executed counterparts of this Second Amendment from the
Borrower and the Required Lenders as specified by Section 9.08(b) of the
Credit Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
METRIS COMPANIES INC., as Borrower
By /s/ Xxxxxx X. Xxxxxxxxxx
----------------------------------------
Name:
Title:
By
----------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, individually and as
Administrative Agent
By /s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
NATIONSBANK, N.A., individually and as Co-Agent
By /s/ Xxxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Sr. Vice President
4
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
By /s/ R. Xxx Xxxxxxxxx
----------------------------------------
Name: R. Xxx Xxxxxxxxx
Title: Managing Director
THE BANK OF NEW YORK
By /s/ Xxxxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Vice President
THE BANK OF NOVA SCOTIA
By /s/ F.C.H. Xxxxx
----------------------------------------
Name: F.C.H. Xxxxx
Title: Senior Manager Loan Operations
BANK OF TOKYO-MITSUBISHI, LTD., Chicago Branch
By /s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
COMMERZBANK AKTIENGESELLSCHAFT Grand Cayman Branch
By /s/ J. Xxxxxxx Shortly
----------------------------------------
Name: J. Xxxxxxx Shortly
Title: Senior Vice President
By /s/ Xxxx Xxxxxx
----------------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
CREDIT AGRICOLE INDOSUEZ
By /s/ Xxxxx Xxxxx
----------------------------------------
Name: Xxxxx Xxxxx
Title: F.V.P., Head of Corporate Banking
Chicago
By /s/ Xxxxxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxxxxx Xxxxxx
Title: F.V.P.
5
CREDIT LYONNAIS CHICAGO BRANCH
By /s/ Xxxx Xxx Xxxxx
----------------------------------------
Name: Xxxx Xxx Xxxxx
Title: Vice President
THE DAI-ICHI KANGYO BANK, LTD.
By
----------------------------------------
Name:
Title:
DEUTSCHE BANK AG-NEW YORK BRANCH and/or CAYMAN
ISLANDS BRANCH
By /s/ Xxxxx X. X'Xxxxxx
----------------------------------------
Name: Xxxxx X. X'Xxxxxx
Title: Director
By /s/ Xxxxxxx Xxxxxxxxx
----------------------------------------
Name: V. Xxxxxxx Xxxxxxxxx
Title: Assistant Vice President
DEUTSCHE GENOSSENSCHAFTSBANK-CAYMAN ISLAND BRANCH
By /s/ Xxxx Xxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxx
Title: Vice President
By /s/ Xxxxxxxxx X. Xxxx
----------------------------------------
Name: Xxxxxxxxx X. Xxxx
Title: Vice President
FIRST BANK NATIONAL ASSOCIATION
By /s/ Xxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
6
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Xxxx Xxxxxx
----------------------------------------
Name: Xxxx Xxxxxx
Title: Managing Director
FIRST UNION NATIONAL BANK
By /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
THE FUJI BANK, LIMITED,
CHICAGO BRANCH
By
----------------------------------------
Name:
Title:
THE INDUSTRIAL BANK OF JAPAN, LIMITED, CHICAGO
BRANCH
By /s/ Xxxxxx Xxxxx
----------------------------------------
Name: Xxxxxx Xxxxx
Title: SVP & Deputy General Manager
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, CHICAGO BRANCH
By /s/ Xxxxxx X. Xxxxxx, Xx.
----------------------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: Senior Vice President
THE MITSUI TRUST AND BANKING COMPANY, LIMITED, NEW
YORK BRANCH
By /s/ Xxxxxx Xxxxx
----------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
7
NORDDEUTSCHE LANDESBANK GIROZENTRALE-NEW YORK
and/or CAYMAN ISLAND BRANCH
By
----------------------------------------
Name:
Title:
By
----------------------------------------
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
By /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Assistant Vice President
THE SAKURA BANK, LIMITED
By /s/ Xxxxxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxxxxx Xxxxxxxx
Title: Joint General Manager
UNION BANK OF SWITZERLAND, NEW YORK BRANCH
By /s/ Xxxxx Xxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President
By /s/ Xxxx X. Xxxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Assistant Treasurer
8
THE YASUDA TRUST AND BANKING CO., LIMITED
By /s/ Xxxx X. Xxxxxxxxxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxxxxxxxxx
Title: Senior Vice President
ANNEX A TO SECOND AMENDMENT
EXHIBIT D TO CREDIT AGREEMENT
FORM OF PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of September 16, 1996, as amended and
restated as of the Effective Date (as defined below), among Metris Companies
Inc. (the "Borrower"), a Delaware corporation, Metris Direct, Inc., a
Delaware corporation ("Direct"; together with the Borrower, the "Pledgors")
and The Chase Manhattan Bank, as administrative agent (in such capacity, the
"Administrative Agent") for the lenders (the "Lenders") party to the
Revolving Credit and Letter of Credit Facility Agreement, dated as of
September 16, 1996 (as amended, modified, extended or restated from time to
time, the "Credit Agreement"), among the Borrower, the Lenders and the
Administrative Agent.
The Lenders have agreed to make Loans to the Borrower and to issue
or participate in Letters of Credit for the account of the Borrower pursuant
to, and subject to the terms and conditions specified in the Credit
Agreement. Direct is a wholly owned Subsidiary of the Borrower and will
derive substantial direct and indirect benefit from the extensions of credit
made to the Borrower under the Credit Agreement. The Pledgors intend to
undertake a corporate reorganization as described in Section 25, in
connection with which the Pledge Agreement as in effect immediately prior to
the Effective Date (the "Existing Pledge Agreement") will be amended and
restated in its entirety as set forth herein. The obligations of the Lenders
to make Loans and to issue or participate in Letters of Credit, in each case,
under the Credit Agreement, are and will be conditioned on, among other
things, the execution and delivery by the Pledgors of a pledge agreement in
the form hereof to secure the due and punctual payment by (a) the Borrower of
(i) the principal of and interest on the Loans under the Credit Agreement
when and as due, whether at maturity, by acceleration, upon one or more dates
set for prepayment or otherwise, (ii) each payment required to be made by the
Borrower under Section 2.15 of the Credit Agreement in respect of any LC
Disbursement, when and as due, including interest thereon, if any, and (iii)
all Fees, expenses, indemnities, reimbursements and other obligations,
monetary or otherwise, of the Borrower to the Administrative Agent and the
Lenders, in each case, as applicable, under the Credit Agreement and the
other Loan Documents (all of the foregoing obligations being collectively
called the "Borrower Obligations") and (b) Direct of (i) all of its
obligations under the Subsidiary Guaranty, including, without limitation, the
Borrower Obligations guaranteed by it thereunder and (ii) all expenses,
indemnities, reimbursements and other obligations, monetary or otherwise, of
Direct to the Administrative Agent and the Lenders, in each case, as
applicable, under the Subsidiary Guaranty and the other Loan Documents (all
of the foregoing obligations being collectively called the "Direct
Obligations"; together with the Borrower Obligations, the "Obligations").
Capitalized terms used but not otherwise defined herein shall have the
meanings specified in the Credit Agreement.
Accordingly, the Pledgors and the Administrative Agent hereby agree
as follows:
2
SECTION 1. DEFINITIONS. (a) The definitions in this Section 1 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
(b) As used herein, the following terms shall have the following
meanings:
"COLLATERAL" shall have the meaning assigned to such term in
Section 2.
"CREDIT AGREEMENT TERMINATION DATE" shall mean the date upon which
all amounts outstanding (including all principal, interest, fees and
expenses) under the Credit Agreement shall be paid in full and all
Commitments thereunder shall be terminated.
"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 either Pledgor or one of its Subsidiaries.
"EFFECTIVE DATE" shall have the meaning assigned to such term in
Section 25.
"FEDERAL SECURITIES LAWS" shall have the meaning assigned to such term
in Section 12.
"ORIGINAL EFFECTIVE DATE" shall mean September 16, 1996.
"PLEDGED SECURITIES" shall have the meaning assigned to such term in
Section 2.
"PLEDGED STOCK" shall have the meaning assigned to such term in
Section 2.
"PROCEEDS" shall have the meaning assigned to such term under the New
York Uniform Commercial Code and, in any event, shall include (i) any and all
proceeds of any guarantee, insurance or indemnity payable to either Pledgor from
time to time with respect to any of the Collateral, (ii) any and all payments
(in any form whatsoever) made or due and payable to either Pledgor from time to
time in connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting under the color of Governmental Authority) and (iii) any
and all other amounts from time to time paid or payable with respect to or in
connection with any of the Collateral.
"SECURED PARTIES" shall mean the Lenders and the Administrative Agent.
"SECURITY INTEREST" shall have the meaning assigned to such term in
Section 2.
"SUBSIDIARY" shall mean any subsidiary of either Pledgor including any
subsidiary of either Pledgor created or acquired by such Pledgor after the
Original Effective Date other than Fingerhut Financial Services Master Trust.
3
SECTION 2. PLEDGE. As security for the payment and performance in
full of the Borrower Obligations (in the case of the Borrower) and the Direct
Obligations (in the case of Direct), each Pledgor hereby transfers, grants,
bargains, sells, conveys, hypothecates, pledges, sets over and delivers unto
the Administrative Agent, and grants to the Administrative Agent, for the
benefit of the Secured Parties, a security interest (the "Security Interest")
in all its right, title and interest in, to and under the following, whether
now owned or hereafter acquired: (a) the shares of capital stock listed in
Schedule I hereto as being owned by it and any shares of capital stock of any
Subsidiary (other than a Credit Card Bank) obtained by it in the future, and
the certificates representing or evidencing such shares (the "Pledged
Stock"), (b) all other property which may be delivered to and held by the
Administrative Agent pursuant to the terms hereof, (c) subject to Section 5
below, all payments of principal or interest, dividends, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of, in exchange for or upon the conversion of the
securities referred to in clauses (a) and (b) above, (d) subject to Sections
4 and 5 below, all rights and privileges of such Pledgor with respect to the
securities and other property referred to in clauses (a), (b) and (c) above,
and (e) all Proceeds of any of the foregoing (the items referred to in
clauses (a) through (e) being collectively called the "Collateral"). Upon
delivery to the Administrative Agent, (a) any stock certificates, notes or
other securities now or hereafter included in the Collateral (the "Pledged
Securities") shall be accompanied by stock powers duly executed in blank or
other instruments of transfer satisfactory to the Administrative Agent and by
such other instruments and documents as the Administrative Agent may
reasonably request and (b) all other property comprising part of the
Collateral shall be accompanied by proper instruments of assignment duly
executed by the relevant Pledgor and such other instruments or documents as
the Administrative Agent may request. Each subsequent delivery of Pledged
Securities shall be accompanied by a schedule describing the securities
theretofore and then being pledged hereunder, which schedule shall be
attached hereto as Schedule I and made a part hereof. Each schedule so
delivered shall supersede any prior schedules so delivered.
TO HAVE AND TO HOLD the Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental
thereto, unto the Administrative Agent, its successors and assigns, forever;
SUBJECT, HOWEVER, to the terms, covenants and conditions hereinafter set
forth.
SECTION 3. REPRESENTATIONS AND WARRANTIES. Each Pledgor hereby
represents, warrants and covenants to and with the Administrative Agent that,
from and after the Effective Date:
(a) the Pledged Stock set forth in Schedule I attached hereto pledged
by such Pledgor represents all the outstanding capital stock of each of its
Subsidiaries (other than a Credit Card Bank);
(b) except for the security interest granted to the Administrative
Agent, on behalf of the Secured Parties, such Pledgor (i) is and will at
all times continue to be the direct owner, beneficially and of record, of
the Pledged Securities pledged by it, (ii) holds the same free and clear of
all liens, charges, encumbrances and security
4
interests of every kind and nature, (iii) will make no assignment,
pledge, hypothecation or transfer of, or create any security interest
in, the Collateral and (iv) subject to Section 5 below, will cause any
and all Collateral, whether for value paid by such Pledgor or otherwise,
to be forthwith deposited with the Administrative Agent and pledged or
assigned hereunder;
(c) such Pledgor (i) has good right and legal authority to pledge the
Collateral pledged by it in the manner hereby done or contemplated and (ii)
will defend its title or interest thereto or therein against any and all
attachments, liens claims, encumbrances, security interests or other
impediments of any nature, however arising, of all Persons;
(d) no consent or approval of any governmental body or regulatory
authority or any securities exchange was or is necessary to the validity of
the pledge effected hereby;
(e) by virtue of the execution and delivery by such Pledgor of this
Pledge Agreement, when the certificates, instruments or other documents
representing or evidencing the Collateral pledged by it are delivered to
the Administrative Agent in accordance with this Pledge Agreement, the
Administrative Agent will obtain a valid and perfected first lien, upon and
security interest in such Collateral (except for Liens permitted by the
Credit Agreement) as security for the payment and performance of the
relevant Obligations, prior to all other liens and encumbrances thereon and
security interests therein; and
(f) the pledge effected hereby is effective to vest in the
Administrative Agent, on behalf of the Secured Parties, the rights of the
Administrative Agent in the Collateral as set forth herein.
SECTION 4. REGISTRATION IN NOMINEE NAME; DENOMINATIONS. The
Administrative Agent, on behalf of the Secured Parties, shall have the
right, in its sole and absolute discretion, to hold the Pledged
Securities in the name of the relevant Pledgor, endorsed or assigned in
blank or in favor of the Administrative Agent, or in its own name or the
name of its nominee. The relevant Pledgor will promptly give to the
Administrative Agent copies of any notices or other communications
received by it with respect to Pledged Securities registered in its
name. The Administrative Agent shall at all times have the right to
exchange the certificates representing Pledged Securities for
certificates (a) of smaller or larger denominations for any purpose
consistent with this Pledge Agreement or (b) registered in its name or
the name of its nominee.
SECTION 5. VOTING RIGHTS; DIVIDENDS AND INTEREST; ETC.
(a) Unless and until an Event of Default shall have occurred and be
continuing:
5
(i) The relevant Pledgor shall be entitled to exercise any and
all voting and/or other consensual rights and powers accruing to an owner
of Pledged Securities or any part thereof for any purpose not inconsistent
with the terms of this Pledge Agreement, the Credit Agreement and the other
Loan Documents.
(ii) The Administrative Agent shall execute and deliver to the
relevant Pledgor, or cause to be executed and delivered to such Pledgor,
all such proxies, powers of attorney, and other instruments as such Pledgor
may reasonably request for the purpose of enabling such Pledgor to exercise
the voting and/or consensual rights and powers which it is entitled to
exercise pursuant to subparagraph (i) above.
(iii) The relevant Pledgor shall be entitled to receive and retain
any and all cash dividends and cash interest paid on the Pledged
Securities.
(b) Upon the occurrence and during the continuance of an Event of
Default, all rights of either Pledgor to exercise the voting and consensual
rights and powers which they are entitled to exercise pursuant to paragraph
(a)(i) of this Section 5 and the right to receive and retain cash dividends and
cash interest shall cease, and all such rights shall thereupon become vested in
the Administrative Agent, which shall have the sole and exclusive right and
authority to exercise such voting and consensual rights and powers and to
receive and retain such dividends and interest during the continuance of such
Event of Default, which shall be applied against the Obligations in accordance
with Section 7.
SECTION 6. REMEDIES UPON DEFAULT. If an Event of Default shall
have occurred and be continuing, the Administrative Agent may sell the
Collateral, or any part thereof, at public or private sale or at any broker's
board or on any securities exchange, for cash, upon credit or for future
delivery as the Administrative Agent shall deem appropriate. The
Administrative Agent shall be authorized at any such sale (if it deems it
advisable to do so) to restrict the prospective bidders or purchasers to
Persons who will represent and agree that they are purchasing the Collateral
for their own account for investment and not with a view to the distribution
or sale thereof, and upon consummation of any such sale the Administrative
Agent shall have the right to assign, transfer and deliver to the purchaser
or purchasers thereof the Collateral so sold. Each such purchaser at any
such sale shall hold the property sold absolutely, free from any claim or
right on the part of either Pledgor, and each Pledgor hereby waives (to the
extent permitted by law) all rights of redemption, stay and appraisal which
such Pledgor now has or may at any time in the future have under any rule of
law or statute now existing or hereafter enacted.
The Administrative Agent shall give the relevant Pledgor 10 days'
written notice (which each Pledgor agrees is reasonable notice within the
meaning of Section 9-504(3) of the Uniform Commercial Code as in effect in the
State of New York) of the Administrative Agent's intention to make any sale of
Collateral owned by such Pledgor. Such notice, in the case of a public sale,
shall state the time and place for such sale and, in the case of a sale at a
broker's board or on a securities exchange, shall state the board or exchange at
which such sale is to be made and the day on which the Collateral, or portion
thereof, will first be offered for sale at such board or exchange. Any such
public sale shall
6
be held at such time or times within ordinary business hours and at such
place or places as the Administrative Agent may fix and state in the notice
(if any) of such sale. At any such sale, the Collateral, or portion thereof,
to be sold may be sold in one lot as an entirety or in separate parcels, as
the Administrative Agent may, in its sole and absolute discretion, determine.
The Administrative Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Collateral shall have been given. The Administrative
Agent may, without notice or publication, adjourn any public or private sale
or cause the same to be adjourned from time to time by announcement at the
time and place fixed for sale, and such sale may, without further notice, be
made at the time and place to which the same was so adjourned. In case any
sale of all or any part of the Collateral is made on credit or for future
delivery, the Collateral so sold may be retained by the Administrative Agent
until the sale price is paid by the purchaser or purchasers thereof, but the
Administrative Agent shall not incur any liability in case any such purchaser
or purchasers shall fail to take up and pay for the Collateral so sold and,
in case of any such failure, such Collateral may be sold again upon like
notice. At any public sale made pursuant to this Section 6, the
Administrative Agent or any other Secured Party may bid for or purchase, free
(to the extent permitted by law) from any right of redemption, stay or
appraisal on the part of either Pledgor (all said rights being also hereby
waived and released to the extent permitted by law), the Collateral or any
part thereof offered for sale and may make payment on account thereof by
using any claim then due and payable to the Administrative Agent or any other
Secured Party from such Pledgor as a credit against the purchase price, and
the Secured Parties may, upon compliance with the terms of sale, hold, retain
and dispose of such property without further accountability to such Pledgor
therefor. For purposes hereof, a written agreement to purchase the
Collateral or any portion thereof shall be treated as a sale thereof; the
Administrative Agent shall be free to carry out such sale pursuant to such
agreement, and neither Pledgor shall be entitled to the return of the
Collateral or any portion thereof subject thereto, notwithstanding the fact
that after the Administrative Agent shall have entered into such an agreement
all Events of Default shall have been remedied and the Obligations paid in
full; PROVIDED, HOWEVER, that in the event the Obligations shall have been
paid in full, the relevant Pledgor shall be entitled to the return of the
proceeds of the sale of any such Collateral to the extent not applied to
payment of the Obligations. As an alternative to exercising the power of
sale herein conferred upon it, the Administrative Agent may proceed by a suit
or suits at law or in equity to foreclose upon the Collateral pursuant to
this Pledge Agreement and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver.
SECTION 7. APPLICATION OF PROCEEDS OF SALE. The proceeds of any
sale of Collateral pursuant to Section 6 hereof, as well as any Collateral
consisting of cash, shall be applied by the Administrative Agent as follows:
FIRST, to the payment of all reasonable costs and expenses incurred by
the Administrative Agent in connection with such sale or otherwise in
connection with this Pledge Agreement or any of the Obligations, including
all court costs and the reasonable fees and expenses of its agents and
legal counsel, the repayment of all advances made by the Administrative
Agent hereunder on behalf of the Pledgors and
7
any other costs or expenses incurred in connection with the exercise of
any right or remedy hereunder;
SECOND, to the payment in full of the Obligations, pro rata as among
the Secured Parties in accordance with the monetary Obligations owed to
them until all the Obligations have been paid in full; and
THIRD, to the relevant Pledgor, its successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Administrative Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Pledge Agreement. Upon any sale of the Collateral by the Administrative
Agent (including, pursuant to a power of sale granted by statute or under a
judicial proceeding), the receipt of the Administrative Agent or of the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold and such purchaser or purchasers shall
not be obligated to see to the application of any part of the purchase money
paid over to the Administrative Agent or such officer or be answerable in any
way for the misapplication thereof.
SECTION 8. LIMITATIONS ON RESPONSIBILITY OF ADMINISTRATIVE AGENT.
The Administrative Agent shall not be responsible in any manner whatsoever
for the correctness of any recitals, statements, representations or
warranties contained herein or in any other Collateral Documents, except for
those made by it herein. The Administrative Agent makes no representation as
to the value or condition of the Collateral or any part thereof, as to the
title of either Pledgor to the Collateral, as to the security afforded by
this Pledge Agreement or the related Collateral Documents or as to the
validity, execution, enforceability, legality or sufficiency of this Pledge
Agreement or the related Collateral Documents, and the Administrative Agent
shall incur no liability or responsibility in respect of any such matters.
The Administrative Agent shall not be responsible for insuring the
Collateral, for the payment of taxes, charges or assessments or for liens
upon the Collateral or otherwise as to the maintenance of the Collateral,
except as provided in the immediately following sentence when the
Administrative Agent has possession of the Collateral. The Administrative
Agent shall have no duty to either Pledgor or to the holders of the
Obligations as to any Collateral in its possession or control or in the
possession or control of any agent or nominee of the Administrative Agent or
any income thereon or as to the preservation of rights against prior parties
or any other rights pertaining thereto, except the duty to accord such of the
Collateral as may be in its possession substantially the same care as it
accords its own assets and the duty to account for monies received by it.
The Administrative Agent shall not be required to ascertain or inquire as to
the performance by either Pledgor of any of the covenants or agreements
contained herein or in the other Loan Documents. Neither the Administrative
Agent nor any officer, agent or representative thereof shall be personally
liable for any action taken or omitted to be taken by any such Person in
connection with this Pledge Agreement or any related Collateral Document
except for (i) such Person's own gross negligence or willful misconduct or
(ii) such Person's failure to perform its duties or obligations under this
Pledge Agreement; PROVIDED, HOWEVER, neither the Administrative Agent nor any
officer, agent or representative thereof shall be personally liable for any
action taken by any such Person in
8
accordance with any notice given by the Required Lenders hereunder solely by
reason of the circumstances that, at the time such action is taken by any
such Person, the Required Lenders which gave the notice to take such action
are no longer the Required Lenders. The Administrative Agent may execute any
of the powers granted under this Pledge Agreement or any of the related
Collateral Documents and perform any duty hereunder or thereunder either
directly or by or through agents or attorneys-in-fact, and shall not be
responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it without gross negligence or willful
misconduct.
SECTION 9. RELIANCE BY ADMINISTRATIVE AGENT; INDEMNITY AGAINST
LIABILITIES; ETC. (a) Whenever in the performance of its duties under this
Pledge Agreement the Administrative Agent shall deem it necessary or
desirable that a matter be proved or established with respect to either
Pledgor or any other Person in connection with the taking, suffering or
omitting of any action hereunder by the Administrative Agent, such matter may
be conclusively deemed to be proved or established by a certificate executed
by an officer of such Person, and the Administrative Agent shall have no
liability with respect to any action taken, suffered or omitted in reliance
thereon.
(b) The Administrative Agent may consult with counsel and shall be
fully protected in taking any action hereunder in accordance with any advice
of such counsel. The Administrative Agent shall have the right but not the
obligation at any time to seek instructions concerning the administration of
this Pledge Agreement, the duties created hereunder or the Collateral from
any court of competent jurisdiction.
(c) The Administrative Agent shall be fully protected in relying
upon any resolution, statement, certificate, instrument, opinion, report,
notice, request consent, order or other paper or document which it reasonably
believes to be genuine and to have been signed or presented by the proper
party or parties. In the absence of its gross negligence or willful
misconduct, the Administrative Agent may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed therein, upon
any certificate or opinions furnished to the Administrative Agent in
connection with this Pledge Agreement.
(d) The Administrative Agent shall not be deemed to have actual,
constructive, direct or indirect notice or knowledge of the occurrence of any
Default or Event of Default unless and until the Administrative Agent shall
have received a notice of such Default or Event of Default. The
Administrative Agent shall have no obligation whatsoever either prior to or
after receiving such a notice to inquire whether a Default or Event of
Default has, in fact, occurred and shall be entitled to rely conclusively,
and shall be fully protected in so relying, on any notice so furnished to it
so long as such notice is received directly or indirectly from either Pledgor
or the Required Lenders. The Administrative Agent may (but shall not be
obligated to) take action hereunder on the basis of an Event of Default of
the type specified in clause (i) or (j) of Article VII of the Credit
Agreement whether or not the Administrative Agent has received any notice of
such Event of Default.
(e) If the Administrative Agent has been requested to take any
specific action pursuant to any provision of this Pledge Agreement, the
Administrative Agent shall not
9
be under any obligation to exercise any of the rights or powers vested in it
by this Pledge Agreement in the manner so requested unless it shall have been
provided indemnity satisfactory to it against the costs, expenses and
liabilities which may be incurred by it in compliance with such request or
direction.
SECTION 10. INDEMNIFICATION BY PLEDGORS. Each Pledgor agrees to
indemnify and hold harmless the Administrative Agent and its directors,
officers, employees and agents, on demand, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by or asserted against the Administrative
Agent in its capacity as the Administrative Agent or any of them in any way
relating to or arising out of this Pledge Agreement or any related Collateral
Document or any action taken or omitted by them under this Pledge Agreement
or any related Collateral Document; PROVIDED that neither Pledgor shall be
liable to the Administrative Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from (i) the gross negligence or willful
misconduct of the Administrative Agent or any of its directors, officers,
employees or agents or (ii) failure of the Administrative Agent to perform
its duties or obligations under this Pledge Agreement.
SECTION 11. THE ADMINISTRATIVE AGENT APPOINTED ATTORNEY-IN-FACT.
Each Pledgor hereby appoints the Administrative Agent the attorney-in-fact of
such Pledgor for the purpose of carrying out the provisions of this Pledge
Agreement and taking any action and executing any instrument which the
Administrative Agent may deem necessary or advisable to accomplish the
purposes hereof, which appointment is irrevocable and coupled with an
interest. In accordance with this Pledge Agreement and without limiting the
generality of the foregoing sentence, the Administrative Agent shall have the
right and power to receive, endorse and collect all checks and other orders
for the payment of money made payable to such Pledgor representing any
dividend or other distribution payable in respect of the Collateral or any
part thereof and to give full discharge for the same.
SECTION 12. SECURITIES ACT, ETC. In view of the position of each
Pledgor in relation to the Pledged Securities, or because of other present or
future circumstances, a question may arise under the Securities Act of 1933,
as now or hereafter in effect (the "Securities Act"), or any similar statute
hereafter enacted analogous in purpose or effect (the Securities Act and any
such similar statute as from time to time in effect being called the "Federal
Securities Laws") with respect to any disposition of the Pledged Securities
permitted hereunder. Each Pledgor understands that compliance with the
Federal Securities Laws might very strictly limit the course of conduct of
the Administrative Agent if the Administrative Agent were to attempt to
dispose of all or any part of the Pledged Securities, and might also limit
the extent to which or the manner in which any subsequent transferee of any
Pledged Securities could dispose of the same. Similarly, there may be other
legal restrictions or limitations affecting the Administrative Agent in any
attempt to dispose of all or part of the Pledged Securities under applicable
Blue Sky or other state securities laws or similar laws analogous in purpose
or effect. Each Pledgor agrees that the Administrative Agent shall not incur
any liability as a result of the sale of the Pledged Securities or any
portion thereof at any such private sale in a manner that the Administrative
Agent reasonably believes is
10
commercially reasonable (within the meaning of Section 9-504(3) of the
Uniform Commercial Code). Each Pledgor hereby waives any claims against the
Administrative Agent, the Agent or the Lenders arising by reason of the fact
that the price at which the Pledged Securities may have been sold at such
sale was less than the price that might have been obtained at a public sale
or was less than the aggregate amount of the Obligations, even if the
Administrative Agent shall accept the first offer received and does not offer
any portion of the Pledged Securities to more than one possible purchaser.
Each Pledgor further agrees that the Administrative Agent has no obligation
to delay the sale of any Pledged Securities for the period of time necessary
to permit such Pledgor to qualify or register such Pledged Securities for
public sale under the Securities Act, applicable Blue Sky laws and other
applicable state and federal securities laws, even if such Pledgor would
agree to do so. Without limiting the generality of the foregoing, the
provisions of this Section 12 would apply if, for example, the Administrative
Agent were to place all or any portion of the Pledged Securities for private
placement by any investment banking firm, or if such investment banking firm
purchased all or any portion of the Pledged securities for its own account,
or if the Administrative Agent placed all or any portion of the Pledged
Securities privately with a purchaser or purchasers.
SECTION 13. ADMINISTRATIVE AGENT'S EXPENSES. Each Pledgor agrees
to pay upon demand to the Administrative Agent the amount of any and all
reasonable expenses, including the reasonable expenses of its counsel and of
any experts or agents, which the Administrative Agent may incur in connection
with (i) the administration of this Pledge Agreement, (ii) the custody or
preservation of, or the sale of, collection from or other realization upon,
any of the Collateral, (iii) the exercise or enforcement of any of the rights
of the Administrative Agent hereunder or (iv) the failure of such Pledgor to
perform or observe any of the provisions hereof. Any such amounts payable as
provided hereunder shall be additional Obligations secured hereby.
SECTION 14. NOTICES. Notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed or sent by telex, graphic scanning or other
telegraphic communications equipment of the sending party, to the relevant
address specified in Section 9.01 of the Credit Agreement.
All notices and other communications given to any party hereto in
accordance with the provisions of this Pledge Agreement shall be deemed to
have been given on the date of receipt if delivered by hand or overnight
courier service or sent by telex, graphic scanning or other telegraphic
communications equipment of the sender, or on the date five Business Days
after dispatch by certified or registered mail if mailed, in each case
delivered, sent or mailed (properly addressed) to such party as provided in
this Section 14 or in accordance with the latest unrevoked direction from
such party given in accordance with this Section 14.
SECTION 15. SUCCESSORS AND ASSIGNS. (a) Whenever in this Pledge
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of the Pledgors, the
Administrative Agent or the Lenders that are contained in this Pledge
Agreement shall bind and inure to the benefit of their respective successors
and assigns.
11
(b) Neither Pledgor shall assign or delegate any of its rights and
duties hereunder.
(c) The covenants, promises and agreements by each Pledgor shall
inure to the benefit of each assignee of any Lender permitted under Section
9.04 of the Credit Agreement.
SECTION 16. APPLICABLE LAW. THIS PLEDGE AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 17. WAIVERS; AMENDMENT. (a) No failure or delay of the
Administrative Agent in exercising any power or right hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such
right or power, or any abandonment or discontinuance of steps to enforce such
a right or power, preclude the exercise of any other right or power. The
rights and remedies of the Administrative Agent hereunder are cumulative and
not exclusive of any rights or remedies which it would otherwise have. No
waiver of any provision of this Pledge Agreement or consent to any departure
by either Pledgor therefrom shall in any event be effective unless the same
shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for
which given. No notice or demand on either Pledgor in any case shall entitle
either Pledgor to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Pledge Agreement nor any provision hereof may be
waived, amended or modified, except as provided in Section 9.08 of the Credit
Agreement.
SECTION 18. ENTIRE AGREEMENT. This Pledge Agreement and the other
Loan Documents constitute the entire contract between the parties relative to
the subject matter hereof. Any previous agreement among the parties with
respect to the subject matter hereof is superseded by this Pledge Agreement
and the other Loan Documents. Nothing in this Pledge Agreement or in the
other Loan Documents, expressed or implied, is intended to confer upon any
party other than the parties hereto or thereto any rights, remedies,
obligations or liabilities under or by reason of this Pledge Agreement or the
other Loan Documents.
SECTION 19. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Pledgors herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Pledge Agreement shall be considered to have been relied
upon by the Lenders and shall survive the making by the Lenders of the Loans
under the Credit Agreement and the issuance by the Issuing Banks of Letters
of Credit, regardless of any investigation made by the Lenders or on their
behalf, and shall continue in full force and effect as long as any Obligation
is outstanding and unpaid and so long as the Commitments have not been
terminated.
SECTION 20. TERMINATION. This Pledge Agreement, and the Security
Interest shall terminate when all the Obligations have been paid in full, the
Lenders have no further
12
commitment to lend under the Credit Agreement and no Letters of Credit are
outstanding, at which time the Administrative Agent shall reassign and
deliver to the relevant Pledgor, or to such Person or Persons as the relevant
Pledgor shall designate, against receipt, such of the Collateral (if any) as
shall not have been sold or otherwise applied by the Administrative Agent
pursuant to the terms hereof and shall still be held by it hereunder,
together with appropriate instruments of reassignment and release. Any such
reassignment shall be without recourse to or warranty by the Administrative
Agent and at the expense of the relevant Pledgor.
SECTION 21. SEVERABILITY. In the event any one or more of the
provisions contained in this Pledge Agreement should be held invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid
provisions the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.
SECTION 22. COUNTERPARTS. This Pledge Agreement may be executed
in two or more counterparts, each of which shall constitute an original but
all of which when taken together shall constitute but one contract.
SECTION 23. HEADINGS. Article and Section headings used herein
are for convenience of reference only, are not part of this Pledge Agreement
and are not to affect the construction of, or to be taken into consideration
in interpreting, this Pledge Agreement.
SECTION 24. FURTHER ASSURANCES. Each Pledgor agrees to do such
further acts and things, and to execute and deliver such additional
conveyances, assignments, agreements and instruments, as the Administrative
Agent may at any time request in connection with the administration and
enforcement of this Pledge Agreement or with respect to the Collateral or any
part thereof or in order better to assure and confirm unto the Administrative
Agent its rights and remedies hereunder.
SECTION 25. EFFECTIVE DATE. The amendment and restatement of the
Existing Pledge Agreement pursuant hereto shall become effective on the date
(the "Effective Date") on which the Pledgors shall have consummated a
corporate reorganization, after giving effect to which Direct shall become
the only direct Subsidiary of the Borrower and all other Subsidiaries of the
Borrower shall become direct Subsidiaries of Direct. Concurrently with the
Effective Date, the Pledgors shall cause to be delivered to the
Administrative Agent (a) new stock powers, UCC-1 financing statements and
other instruments in connection with the perfection of the security interests
created hereby and (b) an opinion of counsel containing opinions comparable
to those originally given in respect of the Existing Pledge Agreement.
13
IN WITNESS WHEREOF, the parties hereto have duly executed this
Pledge Agreement, or caused this Pledge Agreement to be duly executed on
their behalf, as of the day and year first above written.
METRIS COMPANIES INC., as a Pledgor
By
-----------------------------------------
Name:
Title:
METRIS DIRECT, INC., as a Pledgor
By
-----------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
Administrative Agent
By /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
14
SCHEDULE 1
PLEDGED SECURITIES
CERTIFICATE NUMBER OF
NAME OF COMPANY NAME OF PLEDGOR NUMBER SHARES
--------------- --------------- ----------- ---------
Metris Direct, Inc. Metris Companies Inc. 3 1,000
Metris Receivables, Inc. Metris Direct, Inc. 4 100
DMCCB, Inc. Metris Direct, Inc. 3 1,000
LIST OTHERS