exv10w28



 



EXHIBIT 10.28


LODGENET ENTERTAINMENT CORPORATION

SECOND AMENDMENT TO CREDIT AGREEMENT



     This SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is dated as
of June 13, 2003 and entered into by and between LODGENET ENTERTAINMENT
CORPORATION, a Delaware corporation (“Borrower”) and CANADIAN IMPERIAL BANK OF
COMMERCE, as administrative agent for the Lenders (in such capacity,
“Administrative Agent”), and is made with reference to that certain Credit
Agreement dated as of August 29, 2001, as amended to date (as so amended, the
“Credit Agreement”), by and among Borrower, the Lenders named therein,
Administrative Agent, the Syndication Agent named therein, the Co-Documentation
Agents named therein, the Co-Lead Arrangers named therein and the Swing Line
Lender named therein. Capitalized terms used herein without definition shall
have the same meanings herein as set forth in the Credit Agreement.


RECITALS



     WHEREAS, Borrower and Lenders desire to (i) amend the Credit Agreement to
permit Borrower to issue up to $200 million of new senior subordinated notes
and use a portion of the proceeds of such issuance to refinance in full the
Senior 1996 Notes; and (ii) make certain other amendments as set forth below.


     NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:


     Section 1. AMENDMENTS TO THE CREDIT AGREEMENT


     1.1 Amendments to Section 1: Provisions Relating to Defined Terms


     A.     Subsection 1.1 of the Credit Agreement is hereby amended by adding
thereto the following definitions:


     “Subordinated 2003 Notes” means the unsecured senior subordinated notes
due 2013 issued by Borrower with an aggregate face value not to exceed
$200,000,000.”


     “Subordinated 2003 Notes Transaction Costs” means the reasonable
transaction costs associated with the issuance of the Subordinated 2003 Notes.”


     B.     Subsection 1.1 of the Credit Agreement is hereby further amended by
amending and restating the definition of “Applicable LIBOR Margin” to read in
its entirety as follows:


     “Applicable LIBOR Margin” means (a) with respect to Term Loans that are
LIBOR Loans, 4.00% per annum, and (b) with respect to Revolving Loans that are
LIBOR Loans, a percentage per annum as set forth below opposite the applicable
Consolidated Total
Leverage Ratio:


 






 



	 	 	 	 	 
	Consolidated Total Leverage Ratio	Applicable LIBOR Margin
	
	

	greater than or equal to 4.5:1.00	 	 	
3.25	%
	less than 4.50:1.00

but greater than or equal to 4.00:1.00	 	 	
3.00	%
	less 4.00:1.00

but greater than or equal to 3.50:1.00	 	 	
2.75	%
	less than 3.50:1.00

but greater than or equal to 3.00:1.00	 	 	
2.50	%
	less than 3.00:1.00	 	 	
2.25	%



; provided that until the date that is five Business Days after the date on
which Borrower delivers the first Margin Determination Certificate required to
be delivered to Administrative Agent pursuant to subjection 6.1(xiv), the
Applicable LIBOR Margin for Revolving Loans that are LIBOR Loans shall be
3.00%.


     C.     Subsection 1.1 of the Credit Agreement is hereby further amended by
amending the definition of “Consolidated Total Debt” to insert the phrase, “and
after the Subordinated 2003 Notes are issued and until the earlier of (a) 30
days after such issuance and (b) the date of redemption of the Senior 1996
Notes, less the principal amount of the Senior 1996 Notes (so long as Borrower
maintains restricted cash in the amount of the Senior 1996 Notes for the
purpose of redeeming the Senior 1996 Notes).


     D.     Subsection 1.1 of the Credit Agreement is hereby further amended by
amending the definition of “Senior Note Documents” to insert the phrase “and
the documents relating to the issuance of the Subordinated 2003 Notes” after
the phrase “the Senior 1996 Note Indenture.”


     E.     Subsection 1.1 of the Credit Agreement is hereby further amended by
amending the definition of “Senior Notes” to insert the phrase, “and the
Subordinated 2003 Notes” at the end thereof.


     F.     Subsection 1.1 of the Credit Agreement is hereby further amended by
amending the definition of “Subordinated Indebtedness” to insert the phrase
“and (ii) the Senior Notes” at the end thereof.


     1.3 Amendments to Subsection 7.1: Indebtedness


     A.     Subsection 7.1(iv) of the Credit Agreement is hereby amended and
restated to read in its entirety as follows:


     “(iv) Borrower may remain liable with respect to the Senior Notes (and
senior unsecured or subordinated Indebtedness to refinance the Senior Notes
acceptable to Administrative Agent) in an aggregate principal amount not to
exceed the lesser of (a) $168 million plus the


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Subordinated 2003 Notes Transaction Costs plus, until 30 days after the
issuance of the Subordinated 2003 Notes, the outstanding principal amount of
the Senior 1996 Notes, or (b) the then outstanding principal amount of the
Senior Notes plus any reasonable transaction costs associated with any
acceptable refinancing of such Senior Notes, provided, that within 30 days
after the issuance of the Subordinated 2003 Notes, Borrower redeems in full all
of the outstanding Senior 1996 Notes.”


     B.     Subsection 7.1(vi) of the Credit Agreement is hereby amended and
restated to read in its entirety as follows:


     “Borrower may become and remain liable with respect to Subordinated
Indebtedness in an aggregate principal amount not to exceed $100,000,000 less
the face amount of Subordinated 2003 Notes issued in excess of the sum of
$150,000,000 plus the Subordinated 2003 Notes Transaction Costs.”


     1.4 Amendments to Subsection 7.2D: No Restrictions on Subsidiary
Distributions to Borrower or Other Subsidiaries


     Subsection 7.2D is hereby amended by adding at the beginning thereof the
following phrase: “Except to the extent necessary to comply with the terms of
the Subordinated 2003 Notes,”.


     1.5 Amendments to Subsection 7.5: Restricted Junior Payments


     A.     Section 7.5 of the Credit Agreement is hereby amended by deleting the
first proviso clause commencing on the second line thereof and inserting in
lieu thereof the following phrase: “provided that Borrower may make regularly
scheduled payments of principal and interest in respect of any Subordinated
Indebtedness in accordance with the terms of, and only to the extent required
by, and subject to the subordination provisions contained in, the indenture or
other agreement pursuant to which such Subordinated Indebtedness was issued, as
such indenture or other agreement may be amended from time to time to the
extent permitted under subsection 7.14;”.


     B.     Subsection 7.5 of the Credit Agreement is hereby further amended by
adding at the end thereof the following phrase: “and, provided, further, that
Borrower may make Restricted Junior Payments to repay in full the Senior 1996
Notes with a portion of the proceeds of the issuance, of the Subordinated 2003
Notes and may further repay the principal of any Senior Notes in connection
with a refinancing thereof permitted pursuant to subsection 7.l(iv).”


     1.6 Amendments to Subsection 7.6: Financial Covenants


     Subsections 7.6A and 7.6B of the Credit Agreement are each hereby amended
and restated to read in their entirety as follows:


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     A.     Minimum Consolidated Interest Coverage Ratio. Borrower shall not permit
the Consolidated Interest Coverage Ratio for any four consecutive Fiscal
Quarter period ending during any of the periods set forth below to be less than
the correlative ratio indicated:



	 	 	 	 	 
	 	 	Minimum Consolidated Interest
	Period	 	Coverage Ratio
	
	 	

	1st Fiscal Quarter, Fiscal Year 2003
	 	 	2.25:1.00	 
	2nd Fiscal Quarter, Fiscal Year 2003
	 	 	2.25:1.00	 
	3rd Fiscal Quarter, Fiscal Year 2003
	 	 	2.25:1.00	 
	4th Fiscal Quarter, Fiscal Year 2003
	 	 	2.25:1.00	 
	1st Fiscal Quarter, Fiscal Year 2004
	 	 	2.25:1.00	 
	2nd Fiscal Quarter, Fiscal Year 2004
	 	 	2.25:1.00	 
	3rd Fiscal Quarter, Fiscal Year 2004
	 	 	2.25:1.00	 
	4th Fiscal Quarter, Fiscal Year 2004
	 	 	2.25:1.00	 
	1st Fiscal Quarter, Fiscal Year 2005
	 	 	2.50:1.00	 
	2nd Fiscal Quarter, Fiscal Year 2005
	 	 	2.50:1.00	 
	3rd Fiscal Quarter, Fiscal Year 2005
	 	 	2.50:1.00	 
	4th Fiscal Quarter, Fiscal Year 2005
	 	 	2.50:1.00	 
	1st Fiscal Quarter, Fiscal Year 2006 and each

Fiscal Quarter thereafter	 	 	2.75:1.00	 



     B.     Maximum Consolidated Total Leverage Ratio. Borrower shall not permit
the Consolidated Total Leverage Ratio as of the last day of the most recently
ended Fiscal Quarter ending during any of the periods set forth below to exceed
the correlative ratio indicated:



	 	 	 	 	 
	 	 	Maximum Consolidated and Total Leverage
	Period	 	Ratio
	
	 	

	1st Fiscal Quarter, Fiscal Year 2003
	 	 	4.50:1.00	 
	2nd Fiscal Quarter, Fiscal Year 2003
	 	 	5.00:1.00	 
	3rd Fiscal Quarter, Fiscal Year 2003
	 	 	5.00:1.00	 
	4th Fiscal Quarter, Fiscal Year 2003
	 	 	5.00:1.00	 
	1st Fiscal Quarter, Fiscal Year 2004
	 	 	4.75:1.00	 
	2nd Fiscal Quarter, Fiscal Year 2004
	 	 	4.75:1.00	 
	3rd Fiscal Quarter, Fiscal Year 2004
	 	 	4.50:1.00	 
	4th Fiscal Quarter, Fiscal Year 2004
	 	 	4.50:1.00	 
	1st Fiscal Quarter, Fiscal Year 2005
	 	 	4.25:1.00	 
	2nd Fiscal Quarter, Fiscal Year 2005
	 	 	4.25:1.00	 
	3rd Fiscal Quarter, Fiscal Year 2005
	 	 	4.25:1.00	 
	4th Fiscal Quarter, Fiscal Year 2005
	 	 	4.00:1.00	 
	1st Fiscal Quarter, Fiscal Year 2006
	 	 	3.75:1.00	 
	2nd Fiscal Quarter, Fiscal Year 2006
	 	 	3.75:1.00	 
	3rd Fiscal Quarter, Fiscal Year 2006
	 	 	3.75:1.00	 
	4th Fiscal Quarter, Fiscal Year 2006 and each

Fiscal Quarter thereafter	 	 	3.50:1.00	 



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     1.7 Amendments to Subsection 7.8: Consolidated Capital Expenditures


     Subsection 7.8 of the Credit Agreement is hereby amended by deleting the
figures “$95,000,000” and “$90,000,000,” as applicable, corresponding to Fiscal
Years 2003 through 2007 and replacing such figures in each case with the figure
“$80,000,000.”


     1.8 Amendments to Subsection 7.14: Amendments of Senior Notes


     Subsection 7.14 of the Credit Agreement is hereby amended by adding at the
end thereof the following phrase: “, provided that Borrower may amend the
provisions of the Senior Notes to shorten the required notice period for a
redemption of the Senior Notes permitted pursuant to Section 7.5.”


     1.9 Amendments to Schedule 5.16: Material Contracts with Restrictions on
Assignment


     Schedule 5.16 of the Credit Agreement is hereby amended by inserting as
item number 3 thereon the following description: “Indenture between the
Borrower and a trustee entered into in connection with the Subordinated 2003
Notes.”


     Section 2. ACKNOWLEDGMENTS


     A.     Acknowledgement Pursuant to Section 7.1(iv)


     Pursuant
to, and in accordance with, subsection 7.1(iv) of the Credit
Agreement, the Administrative Agent and Requisite Lenders hereby acknowledge
that the Subordinated 2003 Notes constitute subordinated Indebtedness to
refinance the Senior Notes acceptable to Administrative Agent.


     B.     Acknowledgment
Pursuant to Section 7.1(vi)


     Pursuant
to, and in accordance with, subsection 7.1(vi) of the Credit
Agreement, the Administrative Agent and Requisite Lenders hereby acknowledge
that the excess of (a) the aggregate principal amount of the Subordinated 2003
Notes outstanding at any time over (b) the sum of (x) the original principal
amount of the Senior 1996 Notes ($150,000,000) plus (y) the Subordinated 2003
Notes Transaction Costs, constitutes Subordinated Indebtedness that is
subordinated to the Obligations on terms and conditions that are acceptable to
the Administrative Agent and Requisite Lenders.


     Section 3. CONDITIONS TO EFFECTIVENESS


     Section 1 of this Amendment shall become effective only upon the
satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the “Amendment
Effective Date”):


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     A.     On or before the Amendment Effective Date, Borrower shall deliver to
Lenders (or to Administrative Agent for Lenders with sufficient originally
executed copies, where appropriate, for each Lender and its counsel) copies of
this Amendment, executed by Borrower.


     B.     On or before the Amendment Effective Date, all corporate and other
proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto not previously found
acceptable by Administrative Agent, acting on behalf of Lenders, and its
counsel shall be satisfactory in form and substance to Administrative Agent and
such counsel, and Administrative Agent and such counsel shall have received all
such counterpart originals or certified copies of such documents as
Administrative Agent may reasonably request.


     C.     On or before the Amendment Effective Date, Borrower shall have paid to
Administrative Agent for distribution to each Lender that has executed a
consent to this Amendment in the form attached hereto as Exhibit A (a “Lender
Consent”), an amendment fee for each such Lender equal to 0.125% of the sum of
the Term Loan Exposure plus the Revolving Loan Exposure of such Lender.


     D.     On or before the Amendment Effective Date, Borrower shall have
delivered to Administrative Agent copies of the documents relating to the
issuance of the Subordinated 2003 Notes.


     Section 4. BORROWER’S REPRESENTATIONS AND WARRANTIES


     In order to induce Lenders to enter into this Amendment and to amend the
Credit Agreement in the manner provided herein, Borrower represents and
warrants to each Lender that the following statements are true, correct and
complete:


     A.     Corporate Power and Authority. Borrower has all requisite corporate
power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Amendment (the “Amended Agreement”).


     B.     Authorization of Agreements. The execution and delivery of this
Amendment and the performance of the Amended Agreement have been duly
authorized by all necessary corporate action on the part of Borrower.


     C.     No Conflict. The execution and delivery by Borrower of this Amendment
and the performance by Borrower of the Amended Agreement do not and will not
(i) violate any provision of any law or any governmental rule or regulation

applicable to Borrower or any of its Subsidiaries, the Certificate or Articles
of Incorporation or Bylaws of Borrower or any of its Subsidiaries or any order,
judgment or decree of any court or other agency of government binding on
Borrower or any of its Subsidiaries; (ii) conflict with, result in a breach of
or constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of Borrower or any of its Subsidiaries; (iii) result in
or require the creation or imposition of any


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Lien upon any of the properties or assets of Borrower or any of its
Subsidiaries; or (iv) require any approval of stockholders or any approval or
consent of any Person under any Contractual Obligation of Borrower or any of
its Subsidiaries.


     D.     Governmental Consents. The execution and delivery by Borrower of this
Amendment and the performance by Borrower of the Amended Agreement do not and
will not require any registration with, consent or approval of, or notice to,
or other action to, with or by, any federal, state or other governmental
authority or regulatory body.


     E.     Binding Obligation. This Amendment and the Amended Agreement have been
duly executed and delivered by Borrower and are the legally valid and binding
obligations of Borrower, enforceable against Borrower in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors’
rights generally or by equitable principles relating to enforceability.


     F.     Incorporation of Representations and Warranties From Credit Agreement.
The representations and warranties contained in Section 5 of the Credit
Agreement are and will be true, correct and complete in all material respects
on and as of the Amendment Effective Date to the same extent as though made on
and as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.


     G.     Absence of Default. No event has occurred and is continuing or will
result from the consummation of the transactions contemplated by this Amendment
that would constitute an Event of Default or a Potential Event of Default.


     Section 5. MISCELLANEOUS


     A.     Reference to and Effect on the Credit Agreement and the Other Loan
Documents.


     (i)  On and after the Amendment Effective Date, each reference in the
Credit Agreement to “this Agreement”, “hereunder”, “hereof’, “herein” or words
of like import referring to the Credit Agreement, and each reference in the
other Loan Documents to the “Credit Agreement”, “thereunder”, “thereof’ or
words of like import referring to the Credit Agreement shall mean and be a
reference to the Amended Agreement


     (ii)  Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and effect
and are hereby ratified and confirmed.


     (iii)  The execution, delivery and performance of this Amendment shall not,
except as expressly provided herein, constitute a waiver of any provision of,
or operate as a waiver of any right, power or remedy of Administrative Agent or
any Lender under, the Credit Agreement or any of the other Loan Documents.


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     B.     Fees and Expenses. Borrower acknowledges that all costs, fees and
expenses as described in subsection 10.2 of the Credit Agreement incurred by
Administrative Agent and its counsel with respect to this Amendment and the
documents and transactions contemplated hereby shall be for the account of
Borrower.


     C.     Headings. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive
effect.


     D.     Applicable Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.


     E.     Counterparts; Effectiveness. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. This Amendment (other than the
provisions of Section 1 hereof, the effectiveness of which is governed by
Section 3 hereof) shall become effective upon the execution of a counterpart
hereof by Borrower and Administrative Agent and the execution of a Lender
Consent by Requisite Lenders and receipt by Borrower and Administrative Agent
of written or telephonic notification of such execution and authorization of
delivery thereof.


(remainder of page intentionally left blank)



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     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.



	 	 	 	 	 
	 	 	LODGENET ENTERTAINMENT
CORPORATION
	 	 	 	 	 
	 	 	
By:
	 	/s/ Gary H. Ritondaro
	 	 	 	

	 	 	
Name:
	 	Gary H. Ritondaro
	 	 	
Title:
	 	Chief Financial Officer
	 	 	 	 	 
	 	 	CANADIAN IMPERIAL BANK OF
COMMERCE,
	 	 	as Administrative Agent
	 	 	 	 	 
	 	 	
By:
	 	/s/ Paul J. Chakmak
	 	 	 	

	 	 	
Name:
	 	Paul J. Chakmak
	 	 	
Title:
	 	Managing Director
	 	 	 	 	CIBC World Markets Corp., as AGENT




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