EXHIBIT 10.1
[CONFORMED COPY]
$1,300,000,000
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
July 21, 2000
among
Metro-▇▇▇▇▇▇▇-▇▇▇▇▇ Studios Inc.,
Orion Pictures Corporation,
Bank of America, N.A., as Agent,
The Lenders Listed Herein,
and
The L/C Issuers Named Herein
___________________________________
Bank of America, N.A., as
Administrative Agent
Banc of America Securities LLC,
as Lead Arranger and Sole Book Manager
The Chase Manhattan Bank
Societe Generale
as Co-Syndication Agents
Fleet National Bank,
as Documentation Agent
TABLE OF CONTENTS
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Page
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ARTICLE 1
Definitions
Section 1.01. Definitions.................................................. 1
Section 1.02. Accounting Terms and Determinations.......................... 29
Section 1.03. Classes and Types of Loans and Borrowings.................... 30
ARTICLE 2
The Credits
Section 2.01. Outstanding Term Loans; Commitments to Lend.................. 30
Section 2.02. Method of Borrowing.......................................... 34
Section 2.03. Notes........................................................ 36
Section 2.04. Maturity of Loans; Mandatory Prepayments; Certain Commitment
Reductions................................................... 36
Section 2.05. Interest Rates............................................... 41
Section 2.06. Fees......................................................... 43
Section 2.07. Optional Termination or Reduction of Commitments............. 44
Section 2.08. Method of Electing Interest Rates............................ 44
Section 2.09. Mandatory Termination of Commitments......................... 46
Section 2.10. Optional Prepayments......................................... 46
Section 2.11. General Provisions as to Payments............................ 46
Section 2.12. Funding Losses............................................... 47
Section 2.13. Computation of Interest and Fees............................. 48
Section 2.14. Letters of Credit............................................ 48
ARTICLE 3
Conditions
Section 3.01. Effective Date............................................... 51
Section 3.02. Consequences of Effectiveness................................ 52
Section 3.03. Borrowings and Issuances of Letters of Credit................ 53
ARTICLE 4
Representations and Warranties
Section 4.01. Corporate Existence and Power................................ 54
Section 4.02. Corporate and Governmental Authorization; No Contravention... 54
Section 4.03. Binding Effect............................................... 54
Section 4.04. Financial Information; Information Memorandum.................. 54
Section 4.05. Litigation..................................................... 55
Section 4.06. Compliance with ERISA.......................................... 55
Section 4.07. Environmental Compliance....................................... 56
Section 4.08. Taxes.......................................................... 56
Section 4.09. Subsidiaries................................................... 57
Section 4.10. Regulatory Restrictions on Borrowing........................... 57
Section 4.11. Full Disclosure................................................ 57
Section 4.12. Intellectual Property.......................................... 57
Section 4.13. Collateral Documents........................................... 58
Section 4.14. Solvency....................................................... 58
Section 4.15. Regulation U................................................... 58
ARTICLE 5
Covenants
Section 5.01. Information.................................................... 58
Section 5.02. Payment of Obligations......................................... 62
Section 5.03. Maintenance of Property; Insurance............................. 62
Section 5.04. Conduct of Business and Maintenance of Existence............... 62
Section 5.05. Compliance with Laws........................................... 63
Section 5.06. Inspection of Property, Books and Records...................... 63
Section 5.07. Mergers and Sales of Assets; Licensing Agreements.............. 63
Section 5.08. Use of Proceeds................................................ 65
Section 5.09. Negative Pledge................................................ 65
Section 5.10. Limitation on Debt............................................. 67
Section 5.11. [Intentionally Deleted]........................................ 68
Section 5.12. Sources and Uses of Cash....................................... 69
Section 5.13. Total Borrowed Funds/Library Cash Flow......................... 69
Section 5.14. Maximum Capital Expenditures................................... 69
Section 5.15. Minimum Combined Adjusted Net Worth............................ 69
Section 5.16. Operating Lease Payments....................................... 70
Section 5.17. Restricted Payments............................................ 70
Section 5.18. Investments.................................................... 71
Section 5.19. Transactions with Affiliates................................... 73
Section 5.20. Limitation on Restrictions Affecting Subsidiaries.............. 73
Section 5.21. MGM Debt....................................................... 74
Section 5.22. Hedging Facilities............................................. 74
Section 5.23. Further Assurances............................................. 74
Section 5.24. [Intentionally Deleted]........................................ 76
Section 5.25. Total Borrowed Funds to Film Value............................. 76
Section 5.26. Library Cash Flows to Combined Cash Interest Expense........... 76
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ARTICLE 6
Defaults
Section 6.01. Events of Default............................................. 77
Section 6.02. Notice of Default............................................. 80
Section 6.03. Cash Cover.................................................... 80
ARTICLE 7
The Agent
Section 7.01. Appointment and Authorization................................. 81
Section 7.02. Agent and Affiliates.......................................... 81
Section 7.03. Action by Agent............................................... 81
Section 7.04. Consultation with Experts..................................... 81
Section 7.05. Liability of Agent............................................ 81
Section 7.06. Indemnification............................................... 82
Section 7.07. Credit Decision............................................... 82
Section 7.08. Successor Agent............................................... 82
Section 7.09. Agent's Fees.................................................. 83
Section 7.10. Arranger...................................................... 83
Section 7.11. Resignation of Existing Agent; Appointment of Successor Agent. 83
ARTICLE 8
Change in Circumstances
Section 8.01. Basis for Determining Interest Rate Inadequate or Unfair...... 83
Section 8.02. Illegality.................................................... 84
Section 8.03. Increased Cost and Reduced Return............................. 84
Section 8.04. Taxes......................................................... 86
Section 8.05. Base Rate Loans Substituted for Affected Euro-Dollar Loans.... 88
Section 8.06. Substitution of Lender........................................ 88
ARTICLE 9
Guaranty
Section 9.01. The Guaranty.................................................. 89
Section 9.02. Guaranty Unconditional........................................ 89
Section 9.03. Discharge Only upon Payment in Full; Reinstatement In Certain
Circumstances................................................. 90
Section 9.04. Waiver by the Borrowers....................................... 90
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Section 9.05. Subrogation................................................... 91
Section 9.06. Stay of Acceleration.......................................... 91
Section 9.07. Limitation on the Obligations................................. 91
ARTICLE 10
Miscellaneous
Section 10.01. Notices...................................................... 91
Section 10.02. No Waivers................................................... 92
Section 10.03. Expenses; Indemnification.................................... 92
Section 10.04. Sharing of Set-offs.......................................... 93
Section 10.05. Amendments and Waivers; Release of Guarantors or Collateral.. 93
Section 10.06. Successors and Assigns....................................... 94
Section 10.07. Collateral................................................... 97
Section 10.08. Governing Law; Submission to Jurisdiction.................... 97
Section 10.09. Counterparts; Integration.................................... 97
Section 10.10. Waiver of Jury Trial......................................... 98
Section 10.11. Confidentiality.............................................. 98
Section 10.12. Non-reliance on Tracinda..................................... 98
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SCHEDULES AND EXHIBITS
Pricing Schedule
Schedule of Lenders
Schedule 1.01 - Library Films
Schedule 4.05 - Material Litigation
Schedule 4.09 - Material Subsidiaries
Schedule 5.09 - Existing Liens
Schedule 5.10 - Outstanding Debt
Schedule 5.18 - Existing Investments
Schedule 5.19 - Transactional Agreements with Affiliates
Exhibit A - Note
Exhibit B - Opinion of Christensen, Miller, Fink, Jacobs, ▇▇▇▇▇▇,
Weil & ▇▇▇▇▇▇▇, LLC, counsel for the Obligors
Exhibit C - Assignment and Assumption Agreement
Exhibit D - Extension Agreement
Exhibit E - Section 804 Certificate
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
AGREEMENT dated as of July 21, 2000 among METRO-▇▇▇▇▇▇▇- ▇▇▇▇▇ STUDIOS
INC. (formerly known as Metro-▇▇▇▇▇▇▇-▇▇▇▇▇ Inc.), ORION PICTURES CORPORATION,
the LENDERS listed on the signature pages hereof, the L/C ISSUERS named herein,
and BANK OF AMERICA, N.A., as Agent.
MGM Studios (as defined below), certain lenders, the L/C Issuers named
therein, ▇▇▇▇▇▇ Guaranty Trust Company of New York, as Agent and Bank of
America, N.A., (formerly known as Bank of America National Trust and Savings
Association), as Agent and Syndication Agent are parties to the Amended and
Restated Credit Agreement dated as of October 15, 1997 (as originally in effect
and as amended from time to time prior to the Effective Date (as defined below),
the "Original Credit Agreement"), and wish to amend the Original Credit
Agreement and restate it as so amended, effective upon the satisfaction of the
conditions specified in Section 3.01, as provided in this Second Amended and
Restated Credit Agreement (as so amended and restated, and as the same may be
amended from time to time after the Effective Date referred to below, this
"Agreement"; references to the Agreement include, for periods prior to the
Effective Date, the Original Credit Agreement as in effect from time to time).
The parties hereto therefore agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein, have
the following meanings:
"Accepting Tranche B Lenders" has the meaning set forth in Section
2.04(f)(iii).
"Adjusted London Interbank Offered Rate" has the meaning set forth in
Section 2.05(b).
"Administrative Questionnaire" means, with respect to each Lender, an
administrative questionnaire in the form prepared by the Agent and submitted to
the Agent (with a copy to the Borrowers) duly completed by such Lender.
"Affiliate" means (i) any Person that directly, or indirectly through
one or more intermediaries, controls either Borrower (a "Controlling Person") or
(ii)
any Bond Film Sale-Leaseback Company, any Single Purpose Subsidiary or any other
Person (other than any MGM/Orion Company) which is controlled by or is under
common control with a Controlling Person. As used herein, the term "control"
means possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agent" means Bank of America, N.A. in its capacity as agent for the
Lenders under the Loan Documents, and its successors in such capacity.
"Applicable Lending Office" means, with respect to any Lender, (i) in
the case of its Base Rate Loans, its Domestic Lending Office and (ii) in the
case of its Euro-Dollar Loans, its Euro-Dollar Lending Office.
"Arranger" means Banc of America Securities LLC, in its capacity as
arranger for the Lenders under the Loan Documents.
"Asset Sale" means any sale, lease, license or other disposition
(including any such transaction effected by way of merger or consolidation) (any
of the foregoing, for purposes of this definition, a "disposition") by any
MGM/Orion Company of any asset, including without limitation any sale-leaseback
transaction, whether or not involving a capital lease, but excluding (i)
dispositions of cash, cash equivalents and other cash management investments and
obsolete, unused or unnecessary equipment and undeveloped real estate, in each
case in the ordinary course of business, (ii) dispositions of any right, title
or interest in an individual Film (other than any Library Film) or group or
slate of Films (other than any Library Film) or Film Related Asset in the
ordinary course of business in connection with any Investment permitted under
Section 5.18, (iii) dispositions of any right, title or interest in an
individual Film (other than any Library Film) or group or slate of Films (other
than any Library Film) or Film Related Asset in the ordinary course of business
in connection with any financing permitted under Section 5.10(h), (iv)
dispositions pursuant to a Sale-Leaseback Transaction, (v) dispositions pursuant
to a Licensing Agreement permitted under Section 5.07(d) or (e), (vi)
dispositions of inventory, including Film Related Assets, but excluding any Film
(including without limitation any Library Film), in the ordinary course of
business, (vii) dispositions of any right, title or interest in an individual
Film (other than any Library Film) or slate of Films (other than any Library
Film) or Film Related Asset in the ordinary course of business pursuant to
transactions constituting split-rights deals, coproduction deals or cofinancing
deals (as such terms are generally understood in the movie industry on the
Effective Date), (viii) dispositions of accounts receivables pursuant to
Receivables Financings entered into prior to June 30, 1996, (ix) dispositions to
either Borrower or any Guarantor, (x) dispositions of Films or Film Related
Assets (other than any Library Film) for consideration at least equal to the
cost of production of such Film, (xi)
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dispositions of any Library Film consisting of an Investment permitted under
Sections 5.18(h) or 5.18(k), and (xii) dispositions of any Film Related Assets,
any Film (other than any Library Film) or group or slate of Films (other than
any Library Film) (any of the foregoing, for purposes of this clause (xii), a
"disposed asset") to any Single Purpose Subsidiary or Permitted Joint Venture
for the purpose of permitting such Single Purpose Subsidiary or Permitted Joint
Venture to develop, produce, finance, acquire, distribute or exploit such
disposed asset so long as the cash consideration received by the Borrower or the
Subsidiary disposing of such disposed asset in any such disposition is at least
equal to the amount invested or spent by the MGM/Orion Companies on or prior to
the date of such disposition with respect to the development, production,
acquisition or financing of such disposed asset (excluding from the calculation
of such amount invested or spent overhead and other selling, general and
administrative costs); provided that a disposition of assets not excluded by
clauses (i) through (xii) above during any Fiscal Year shall not constitute an
Asset Sale unless and until (and solely to the extent that) the aggregate Net
Cash Proceeds from such disposition, when combined with all other such
dispositions previously made during such Fiscal Year, exceeds $7,500,000. The
description of any transaction as not constituting an "Asset Sale" does not
affect any limitation on such transaction imposed by Article 5 of this Agreement
(other than Section 5.07(b)).
"Assignee" has the meaning set forth in Section 10.06(c).
"Available Revolving Commitment" means, for any Lender, such Lender's
Revolving Commitment.
"Base Rate" means, for any day, a rate per annum equal to the higher of
(i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day.
"Base Rate Loan" means a Loan which bears interest by reference to the
Base Rate pursuant to the applicable Notice of Borrowing or Notice of Interest
Rate Election or the provisions of Article 8.
"Base Rate Margin" means a rate per annum determined in accordance with
the Pricing Schedule.
"Bond Film Sale-Leaseback Company" means Seventeen Leasing Corporation,
Eighteen Leasing Corporation, Nineteen Leasing Corporation and any other
Subsidiary that has been established for the sole purpose of engaging in and
performing one or more Sale-Leaseback Transactions with respect to one or more
Bond Films (as defined in the definition of "Excluded Bond Property" in the
Security Agreement), in each case for so long as any such Person does not engage
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in any business or conduct any activities other than Sale-Leaseback Transactions
with respect to one or more Bond Films.
"Borrower" means either MGM Studios or Orion, as the context may
require, and "Borrowers" means both of the foregoing (including, in any case as
the context may require, such Person with respect to its obligations as
guarantor under Article 9).
"Borrower Pledge Agreement" means the Amended and Restated Borrower
Pledge Agreement dated as of October 15, 1997 between the Borrowers, on the one
hand, and the Agent, as amended from time to time.
"Borrowing" has the meaning set forth in Section 1.03.
"Class" has the meaning set forth in Section 1.03.
"Clawback Obligation" means, at any date, any obligation (a "clawback
obligation") of any MGM/Orion Company constituting a Guarantee of the
obligations of any Person incurred by such Person in connection with the
development, production, financing, acquisition, distribution and exploitation
of any Film or slate or group of Films or any Film Related Asset, or in
accordance with any Licensing Agreement, the amount of which clawback obligation
does not exceed the amount of distributions or other payments received by such
MGM/Orion Company from such Person with respect to such Film or slate or group
of Films or Film Related Asset or Licensing Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute.
"Collateral" means collateral subject to the Collateral Documents.
"Collateral Documents" means the Pledge Agreements, the Security
Agreement, any additional pledge agreements, security agreements or mortgages
required to be delivered pursuant to the Loan Documents and any instruments of
assignment, laboratory access letters or other instruments or agreements
executed pursuant to the foregoing.
"Combined Adjusted EBITDA" means for any period (i) Combined Adjusted
Net Income for such period plus (ii) to the extent deducted in determining
Combined Adjusted Net Income for such period, the sum of the following amounts,
in each case determined on a Combined Basis: (x) interest expense, (y) income
tax expense and (z) depreciation and amortization (other than amortization of
Film costs and participants' share), plus (iii) to the extent not otherwise
included in such Combined Adjusted Net Income, distribution fees paid
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in cash and cash distributions in respect of capital stock actually made during
such period by Single Purpose Subsidiaries to, and received by, any Combined
Company that is not a Single Purpose Subsidiary, plus (iv) to the extent
deducted in determining Combined Adjusted Net Income for such period, (x) the
aggregate amount of inherent loss reserves established in such period under
Financial Accounting Standard Board Statement No. 53 (as in effect on the
Effective Date, or as the same may be amended or replaced by a new Statement
issued by the American Institute of Certified Public Accountants) ("FASB 53"),
in respect of Films initially released or broadcast in such period, (y)
amortization of the film cost asset of Library Films, to the extent such
amortization is attributable to increases in the book value of such Library
Films pursuant to Accounting Principles Board Opinion 16 (as in effect on the
Effective Date) (including without limitation such increases prior to the
Effective Date) and (z) net losses (or minus net income) of Permitted Joint
Ventures allocated to the Borrowers and their respective Consolidated
Subsidiaries for such period, minus (v) an amount equal to the positive
difference, if any, between (A) pro forma amortization of Film costs for the
Combined Companies (other than any Single Purpose Subsidiary) in such period as
if no inherent loss reserves with respect to Films initially released or
broadcast after January 1, 1998 had been established under FASB 53 and (B)
actual amortization of Film costs for the Combined Companies (other than any
Single Purpose Subsidiary) in such period, all determined on a Combined Basis.
"Combined Adjusted Net Income" means for any period (i) the net income
of the Combined Companies (other than any Single Purpose Subsidiaries) for such
period, determined in any event before payment of any dividends on any preferred
stock plus (ii) to the extent deducted in determining such net income, any
Specified Non-Cash Charges minus (iii) any cash payments made by the Combined
Companies during such period with respect to items for which any Specified Non-
Cash Charges were taken in a prior period, all determined on a Combined Basis
minus (or plus) (iv) any extraordinary or other non-recurring gain (or loss) or
any gain (or loss) recognized in respect of any asset sale outside of the
ordinary course of business.
"Combined Adjusted Net Worth" means at any date (i) the aggregate
stockholders' equity of the Combined Companies as reflected on the balance sheet
of the Combined Companies at such date (or as the same would be reflected on
such balance sheet if such balance sheet were prepared at such date on a
Combined Basis) plus (ii) the aggregate amount of Specified Non-Cash Charges
taken after September 30, 1996 minus (iii) the aggregate amount of cash payments
made by the Combined Companies after September 30, 1996 with respect to items
for which any Specified Non-Cash Charges have been taken after September 30,
1996 minus (iv) all amounts that are included as assets on such balance sheet at
such date (or as the same would be included on such balance sheet if such
balance
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sheet were prepared at such date) in respect of any Film produced or acquired by
either Borrower or any of their respective Consolidated Subsidiaries which Film
has not been released within 18 months following the date of completion of
principal photography thereof or, if later, the date of acquisition thereof, all
determined on a Combined Basis plus (iv) upon any write-down of an Investment in
MGM permitted solely pursuant to clause (j)(B) of Section 5.18, 80% of the
amount of such write-down (but only to the extent that the prior equity
contribution or contributions with respect to which such Investment was
permitted resulted in an increase pursuant to clause (iii) of Section 5.15).
"Combined Basis" has the meaning set forth in Section 1.02
"Combined Capital Expenditures" means for any period the gross
additions to property, plant and equipment and other capital expenditures of the
Combined Companies determined on a Combined Basis for such period.
"Combined Cash Interest Expense" means for any period the cash interest
expense of the Combined Companies other than any Single Purpose Subsidiaries,
determined on a Combined Basis for such period.
"Combined Companies" means (i) MGM Studios and its Consolidated
Subsidiaries and (ii) Orion and its Consolidated Subsidiaries. Unless the
context otherwise requires, whenever an amount is to be determined hereunder
with respect to the Combined Companies, such amount shall be determined on a
Combined Basis.
"Combined Net Income" means for any period (i) the net income of the
Combined Companies for such period, determined in any event before payment of
any dividends on any preferred stock plus (ii) to the extent deducted in
determining such net income, any Specified Non-Cash Charges minus (iii) any cash
payments made by the Combined Companies during such period with respect to items
for which any Specified Non-Cash Charges were taken in a prior period, all
determined on a Combined Basis.
"Commitment" means a Revolving Commitment or a Swing Loan Commitment,
and "Commitments" means any combination of the foregoing.
"Commitment Fee Rate" means a rate per annum determined in accordance
with the Pricing Schedule.
"Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with either Borrower within the
meaning of Section 4001 of ERISA or is part of a group which includes either
6
Borrower and which is treated as a single employer under Section 414(b) or (c)
of the Code.
"Consolidated Subsidiary" means, with respect to any Person, at any
date, any Subsidiary or other entity the accounts of which would be consolidated
with those of such Person in its consolidated financial statements if such
statements were prepared as of such date; unless otherwise specified,
"Consolidated Subsidiary" means a Consolidated Subsidiary of either Borrower.
"Credit Exposure" for any Lender at any time means the sum of (i) such
Lender's Revolving Commitment at such time or, if the Revolving Commitments
shall have been terminated, the sum, determined at such time, of (x) the
aggregate outstanding principal amount of such Lender's Revolving Loans plus (y)
such Lender's Percentage of the outstanding principal amount of the Swing Loans
plus (z) such Lender's Letter of Credit Liabilities plus (ii) the aggregate
outstanding principal amount of such Lender's Term Loans at such time.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee which are capitalized in
accordance with generally accepted accounting principles (including without
limitation any such obligations under Sale-Leaseback Transactions to the extent
that such obligations are capitalized in accordance with generally accepted
accounting principles), (v) all non-contingent obligations (and, for purposes of
Sections 5.09, 6.01(e) and 6.01(f), all contingent obligations) of such Person
to reimburse any Lender or other Person in respect of amounts paid under a
letter of credit or similar instrument, (vi) all Debt secured by a Lien on any
asset of such Person, whether or not such Debt is otherwise an obligation of
such Person and (vii) all Debt of others Guaranteed by such Person; provided
however, that (x) the "Debt" of any Person does not include any (A) commitments
of such Person in connection with the development, production, acquisition,
distribution, exhibition or exploitation of Films (other than Clawback
Obligations), (B) guaranteed payment obligations of such Person of a nature
customary in the film industry of such Person under license agreements with
respect to the development, production, acquisition, distribution, exhibition or
exploitation of Films, (C) obligations of such Person in respect of Profit
Participations, Residuals and Deferred Payments payable to other Persons in
connection with the development, production, acquisition, distribution,
exhibition, exploitation or financing of Films, (D) obligations of such Person
in the nature of progress or installment payment obligations with respect to a
Film owed to the owner of such Film or cast, crew, writers, distributors,
directors, producers, owners of rights, bond
7
companies or similar Persons for such Film, in respect of the deferred purchase
price of such Film or rights to such Film, or services in, or in connection
with, such Film (in the case of each of (A), (B), (C) and (D) above, to the
extent entered into in the ordinary course of business of such Person and not
otherwise constituting "Debt" of a type referred to in clauses (i) or (ii)
above), (E) obligations of such Person under performance or completion bonds
which have been posted in the ordinary course of business in connection with the
development or production of Films or (F) any Guarantee of any obligation
referred to in clause (A), (B), (C), (D) or (E) and (y) for purposes of Section
5.10 and the determination of Total Borrowed Funds, the amount of "Debt" of any
MGM/Orion Company which constitutes "Debt" solely pursuant to clause (vii) of
this definition because such MGM/Orion Company is a partner in a partnership,
shall be equal to the principal or face amount of such Debt multiplied by such
MGM/Orion Company's percentage interest in such partnership, so long as such
partnership is solvent and paying and capable of paying its obligations as they
become due.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Deferred Payments" means deferred payments for services payable to
cast, crew, writers, distributors, directors, producers, owners of rights, bond
companies or similar Persons or payments to producers or investors, in
connection with the development, production, acquisition, distribution or
exploitation of Films or Film Related Assets, the amount or payment of which is
contingent upon the performance of such Films or Film Related Assets or deferred
to a fixed time, tied to the performance of such Film or Film Related Assets or
to the achievements of such Person with respect to such Film or Film Related
Asset.
"Deferred Tranche B Unscheduled Prepayment Date" has the meaning set
forth in Section 2.04(f)(ii).
"Derivatives Obligations" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
the foregoing transactions) or any combination of the foregoing transactions.
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"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City or Los Angeles are
authorized by law to close.
"Domestic Lending Office" means, as to each Lender, its office located
at its address set forth in its Administrative Questionnaire (or identified in
its Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Lender may hereafter designate as its Domestic Lending Office by
notice to the Borrowers and the Agent.
"Effective Date" means the date this Agreement becomes effective in
accordance with Section 3.01.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
the environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes into the environment including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or the
clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Lender, its office,
branch or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its Euro-
Dollar Lending Office) or such other office, branch or affiliate of such Lender
as it may hereafter designate as its Euro-Dollar Lending Office by notice to the
Borrowers and the Agent.
"Euro-Dollar Loan" means (i) a Loan which bears interest at a Euro-
Dollar Rate pursuant to the applicable Notice of Borrowing or Notice of Interest
Rate Election or (ii) an overdue amount which was a Euro-Dollar Loan immediately
before it became overdue.
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"Euro-Dollar Margin" means a rate per annum determined in accordance
with the Pricing Schedule.
"Euro-Dollar Rate" means a rate of interest determined pursuant to
Section 2.05(b) on the basis of an Adjusted London Interbank Offered Rate.
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section
2.05(b).
"Event of Default" has the meaning set forth in Section 6.01.
"Excess Cash Flow" means, for any Fiscal Year, (a) the sum of (x) the
amount set forth opposite the caption "Net cash provided by operating
activities" plus (or minus) (y) the amount set forth opposite the caption "Net
cash provided (used) by investing activities", in each case as set forth in the
statement of cash flows of the Combined Companies for such Fiscal Year minus (b)
the aggregate amount of scheduled principal repayments of the Term Loans made
pursuant to Sections 2.04(b) and (c) during such Fiscal Year minus (c) the
aggregate amount of optional repayments of the Term Loans made pursuant to
Section 2.10 minus (d) the aggregate amount of principal repayments of the Loans
made pursuant to Section 2.04(d) with respect to Asset Sales or the receipt of
Major Casualty Proceeds to the extent that the proceeds of any such Asset Sale
or Major Casualty Proceeds were added in determining the amounts referred to in
clauses (a)(x) or (a)(y) above for such Fiscal Year, minus (e) the aggregate
amount of scheduled principal payments of other Debt made during such Fiscal
Year (including the portion of any payments of Debt described in clause (iv) of
the definition thereof that is allocable to principal).
"Existing Lender" means a "Lender" (as such term is defined in the
Original Credit Agreement) that is a party to the Original Credit Agreement
immediately prior to the effectiveness of this Agreement on the Effective Date.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on the
next succeeding Domestic Business Day, and (ii) if no such rate is so published
on such next succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to Bank of America, N.A. on such day on
such transactions as determined by the Agent.
10
"Film Related Asset" means any right in and to any motion picture,
television product, literary work, dramatic work or musical work prior to the
time any such asset becomes a "Film".
"Film Value" means, at any date, the value of (i) the Library Films,
(ii) the MGM/Orion Companies' feature length theatrical motion pictures and
television programs described in clause (ii) of the definition of the term
"Films" and (iii) First-Run Feature Films that are owned [or all of the
MGM/Orion Companies distribution rights thereto are owned (including by way of
license)] by an Obligor and that were released for theatrical distribution in
the United States at least four weeks prior to such date, all to the extent that
the foregoing are subject to a perfected Lien created under the Collateral
Documents (to the extent the Collateral Documents by their terms purport to
create a Lien thereon), and all as set forth in the appraisal report delivered
on or most recently prior to such date pursuant to Section 5.01(j); provided
that if the value set forth in any such appraisal report is expressed as a
range, then "Film Value" means the average of the high and low values of such
range.
"Film Value Asset" means at any date a Library Film or any other Film
that is included in clauses (ii) or (iii) of the definition of "Film Value" (or
would be included if a determination of Film Value were to be made at such
date).
"Film Value Asset Disposition" means any Licensing Agreement with
respect to a Library Film, or any Asset Sale or Investment that results directly
or indirectly in a disposition of any Film Value Asset by or from any Obligor to
or in a Person that is not an Obligor (including without limitation any such
disposition consisting of an Asset Sale of the capital stock or other equity
interests of any Obligor that holds a Film Value Asset).
"Films" means motion pictures including, without limitation, feature
films, shorts, television programs, animated programs or other similar product,
and the components thereof (whether or not now known or recognized) to which any
MGM/Orion Company owns any right, title or interest including, without
limitation, (i) the Library Films, (ii) works in progress comprising feature
length theatrical motion picture or television projects in principal photography
and/or post-production, projects completed but not yet released, and unreleased
or completed but undelivered pick-ups, (iii) underlying rights in and to the
literary, musical and dramatic and other material associated with or related to
or necessary to the exploitation of the works or projects referred to in clauses
(i) or (ii) including, without limitation, copyrights pertaining thereto, (iv)
to the extent related to the works or projects referred to in clauses (i) or
(ii), sequel, prequel and remake rights, all rights to novelization,
merchandising, character, serialization, games and interactive video, (v) all
other ancillary and subsidiary rights throughout the universe related to such
works and projects, (vi) all negative and
11
positive film, soundtracks, optical, audio, video and advertising materials and
supplies associated with any of such works or projects, and (vii) all
contractual and other rights associated with or related to such works or
projects and the related ancillary and subsidiary rights whether in any media
now known or hereafter developed.
"First-Run Feature Films" means at any date any Films which have not
completed their initial theatrical release in the United States at such date,
determined in accordance with industry practice.
"Fiscal Quarter" means, for either Borrower, a fiscal quarter of such
Borrower, each of which shall end on the same date for each Borrower.
"Fiscal Year" means, for either Borrower, a fiscal year of such
Borrower, each of which shall end on December 31 of the relevant calendar year.
"Foreign Subsidiary" means any Subsidiary of either Borrower which is
not incorporated or organized in the United States or in any State thereof.
"GAAP" has the meaning set forth in Section 1.02.
"Group of Loans" means at any time a group of Loans of the same Class
of Loans consisting of (i) all such Loans to the same Borrower that are Base
Rate Loans at such time or (ii) all such Loans to the same Borrower that are
Euro- Dollar Loans having the same Interest Period at such time; provided that,
if a Loan of any particular Lender is converted to or made as a Base Rate Loan
pursuant to Article 8, such Loan shall be included in the same Group or Groups
of Loans from time to time as it would have been in if it had not been so
converted or made.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the holder of such Debt or other obligation of the payment thereof
or to protect such holder against loss in respect thereof (in whole or in part),
provided that the term Guarantee shall not include endorsements for collection
or deposit in the ordinary course of business. The term "Guarantee" used as a
verb has a corresponding meaning.
12
"Guarantor" means each Person who has executed the Subsidiary Guaranty,
or a supplement thereto as provided in Section 5.23.
"Guarantor Pledge Agreement" means the Amended and Restated Guarantor
Pledge Agreement dated as of October 15, 1997 between each Guarantor party
thereto and the Agent, as amended from time to time.
"Hazardous Substances" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives, by-products
and other hydrocarbons, or any substance having any constituent elements
displaying any of the foregoing characteristics.
"Hedging Obligations" means all obligations of either Borrower to any
Lender or any affiliate of a Lender under (i) any interest rate swap agreement,
interest rate cap agreement or interest rate collar agreement, (ii) any foreign
exchange contract or currency swap agreement or (iii) any similar agreement or
arrangement of a type designed to protect either Borrower against fluctuations
in interest rates or currency exchange rates.
"Indemnitee" has the meaning set forth in Section 10.03(b).
"Information Memorandum" means the confidential descriptive memorandum
dated September 1997 furnished to the Lenders in connection with the
transactions contemplated by the Loan Documents.
"Insolvency" means, with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Insolvent" means pertaining to a condition of Insolvency.
"Interest Period" means, with respect to each Euro-Dollar Loan, the
period commencing on the date of borrowing specified in the applicable Notice of
Borrowing or on the date specified in the applicable Notice of Interest Rate
Election and ending one, two, three or six months thereafter, as the Borrower
delivering such notice may elect in the applicable notice; provided that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Euro-Dollar Business Day;
13
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clauses (c) and (d) below, end on
the last Euro-Dollar Business Day of the calendar month at the end of
such Interest Period;
(c) if any Interest Period with respect to any Euro-Dollar Term
Loan includes a date on which a scheduled payment of principal of such
Term Loans is required to be made under Sections 2.04(b) or 2.04(c) but
does not end on such date, then (i) the principal amount of each Euro-
Dollar Term Loan required to be repaid on such date shall have an
Interest Period ending on such date and (ii) the remainder (if any) of
each such Euro-Dollar Term Loan shall have an Interest Period
determined as set forth above; and
(d) any Interest Period with respect to any Loan which would
otherwise end after the Maturity Date (as in effect on the first day of
such Interest Period) with respect to such Loan shall end on such
Maturity Date.
"Investment" means, with respect to any Person, any investment by such
Person in any other Person (including an Affiliate) in the form of direct or
indirect loans, Guarantees of Debt or other payment obligations, advances or
capital contributions, purchases or other acquisitions for consideration of
Debt, equity interests or other securities or warrants, options or other rights
to acquire equity interests or other securities and all other items that are
classified as investments on the balance sheet of such Person in accordance with
generally accepted accounting principles as in effect from time to time or that
would be so classified on such balance sheet if such balance sheet were prepared
at the relevant time.
"Investors" means Tracinda.
"IPO Registration Statement" means the Registration Statement of MGM
for the initial public offering of its common stock (including the exhibits
thereto), in the form filed with the Securities and Exchange Commission and as
the same may be amended from time to time prior to the Effective Date.
"L/C Issuer" means Bank of America, N.A. and any other Revolving Lender
that may agree with the Borrowers to issue letters of credit hereunder (and
shall have notified the Agent thereof), in each case as issuer of a letter of
credit hereunder.
"Lender" means a Term Lender, a Revolving Lender or the Swing Lender
and shall include, as the context may require, any L/C Issuer in such capacity.
14
"Letter of Credit" means a letter of credit to be issued hereunder by
an L/C Issuer.
"Letter of Credit Commitment" means, at any time, the lesser of (x)
$25,000,000 and (y) the aggregate Available Revolving Commitments at such time.
"Letter of Credit Fee Rate" has the meaning set forth in the Pricing
Schedule.
"Letter of Credit Liabilities" means, for any Revolving Lender and at
any time, such Revolving Lender's Revolving Percentage of the sum of (x) the
aggregate unreimbursed amount then owing by the Borrowers in respect of amounts
drawn under all Letters of Credit and (y) the aggregate amount then available
for drawing under all Letters of Credit.
"Leverage Ratio" means, on any date, the ratio of (i) Total Borrowed
Funds on such date to (ii) Combined Adjusted EBITDA for the period of four
consecutive Fiscal Quarters most recently ended on or prior to such date.
"Library Cash Flows" means for any period the aggregate amount of cash
received by the Obligors during such period (determined on a Combined Basis but
including only Obligors) (A) with respect to Films that were Library Films
during such period and (i) were also Library Films on the Effective Date or (ii)
have been released by an MGM/Orion Company on or prior to December 31, 1999
("Library Cash Flow Films"), but excluding (x) proceeds of any Asset Sale or
Investment that is a Film Value Asset Disposition, (y) any upfront payments with
respect to Licensing Agreements that constitute an initial payment in excess of
10% of the aggregate amount of payments under such Licensing Agreement and (z)
with respect to any Library Cash Flow Film that was disposed of pursuant to an
Investment that is a Film Value Asset Disposition during such period, any cash
the Borrowers in good faith reasonably believe is properly allocable to such
film for the portion of such period during which it was a Library Cash Flow
Film, unless the Obligors have actually received cash distributions from the
Single Purpose Subsidiary or Permitted Joint Venture in which such Investment
was made with respect to such film (but excluding any such distributions that
are subject to a Clawback Obligation) during the portion of such period after
such film was disposed of pursuant to such Film Value Asset Disposition in an
amount at least equal to the amount such Obligors reasonably expected in good
faith to receive at the time of such Film Value Asset Disposition for the
portion of such period following the Film Value Asset Disposition (which amount
was included in the adjustment made pursuant to clause (i) of the definition of
Pro Forma Compliance with respect to such Film Value Asset Disposition) and (B)
in the form of distributions from Single Purpose Subsidiaries or Permitted Joint
15
Ventures which distributions the Borrowers in good faith reasonably believe are
properly allocable to films that were Library Cash Flow Films prior to their
Investment in or other disposition to a Single Purpose Subsidiaries or Permitted
Joint Venture, but excluding any such distributions that are subject to a
Clawback Obligation.
"Library Films" means the films listed on Schedule 1.01 and all other
Films other than (and only for so long as such Films are) First-Run Feature
Films but only to the extent that any of the foregoing are owned or all of the
MGM/Orion Companies distribution rights thereto are owned (including by way of
license) by an Obligor.
"Licensing Agreements" means any licensing agreements now outstanding
or hereafter executed pursuant to which any MGM/Orion Company grants or licenses
to third parties any right, title or interest with respect to any Film Related
Asset, any Film or any group of Films, as the same may be amended, supplemented
or otherwise modified from time to time.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of this Agreement, any
MGM/Orion Company shall be deemed to own subject to a Lien any asset which it
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such asset.
"Loan" means a Base Rate Loan or a Euro-Dollar Loan and "Loans" means
Base Rate Loans or Euro-Dollar Loans or any combination of the foregoing.
"Loan Documents" means this Agreement, the Notes, the Subsidiary
Guaranty and the Collateral Documents.
"London Interbank Offered Rate" has the meaning set forth in Section
2.05(b).
"Major Casualty Proceeds" means (i) the aggregate insurance proceeds
received in connection with one or more related events by any MGM/Orion Company
under any insurance policy maintained by either Borrower or any of their
respective Subsidiaries covering casualty losses with respect to tangible real
or personal property or improvements or (ii) any award or other compensation
with respect to any condemnation of property (or any transfer or disposition of
property in lieu of condemnation) received by either Borrower or any of their
16
respective Subsidiaries, in either case only if the amount of such aggregate
proceeds or award or other compensation exceeds $10,000,000.
"Management Stock Incentive Plan" means the 1996 Management Stock
Option and Bonus Plan of MGM as in effect on the Original Effective Date, and as
the same may be amended or replaced on terms substantially as disclosed in the
IPO Registration Statement and otherwise substantially as made available to the
Lenders prior to the Effective Date.
"Material Adverse Effect" means (i) any material adverse effect upon
the assets or liabilities, or the business, financial position or results of
operations of the Borrowers and their respective Subsidiaries, taken as a whole;
(ii) prior to the Effective Date, a material adverse effect on the ability of
either Borrower or any other Person to consummate the transactions contemplated
hereby to occur on the Effective Date; (iii) a material adverse effect on the
ability of the Obligors to perform their obligations under this Agreement and
the Notes and the other Loan Documents, taken as a whole; or (iv) an adverse
effect on the rights and remedies of the Agent and the Lenders under this
Agreement and the Notes and the other Loan Documents.
"Material Subsidiary" means at any date any Subsidiary of either
Borrower, other than (a) any such Subsidiary which has (i) aggregate assets with
a fair market value of less than $1,000,000 and (ii) annual revenues of less
than $1,000,000, in each case calculated on the basis of the latest financial
statements delivered by the Borrowers to the Lenders pursuant to Section
4.04(b), 5.01(a) or 5.01(b), as the case may be and (b) any Bond Film Sale-
Leaseback Company.
"Maturity Date" means, (i) with respect to the Tranche A Loans, ▇▇▇▇▇
▇▇, ▇▇▇▇, (▇▇) with respect to the Tranche B Loans, March 31, 2006, (iii) with
respect to the Revolving Loans, the Revolver Maturity Date, (iv) with respect to
the Swing Loans, the Swing Termination Date and (v) with respect to the Letters
of Credit, the Revolver Maturity Date (or, if any such day is not a Euro-Dollar
Business Day, the next succeeding Euro-Dollar Business Day).
"MGM" means Metro-▇▇▇▇▇▇▇-▇▇▇▇▇ Inc. (formerly known as P&F Acquisition
Corp.), a Delaware corporation, and its successors.
"MGM Debt" means any Debt of MGM.
"MGM Expenses" has the meaning set forth in Section 5.17(b).
"MGM/Orion Company" means either Borrower or any of their respective
Subsidiaries, and "MGM/Orion Companies" means all or any combination of the
foregoing, as the context may require.
17
"MGM Studios" means Metro-▇▇▇▇▇▇▇-▇▇▇▇▇ Studios Inc. (formerly known as
Metro-▇▇▇▇▇▇▇-▇▇▇▇▇ Inc.), a Delaware corporation, together with its successors.
"Multiemployer Plan" means a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" means, with respect to any Reduction Event, an
amount equal to the cash proceeds received by any MGM/Orion Company from or in
respect of such Reduction Event (including any cash proceeds received as income
or other proceeds of any noncash proceeds of any Asset Sale), less (x) any
expenses reasonably incurred by such Person in respect of such Reduction Event
(including, without limitation, if such Reduction Event constitutes the issuance
and sale of securities, underwriters' discounts or commissions and expenses) and
(y) if such Reduction Event is an Asset Sale or the receipt of Major Casualty
Proceeds, (i) the amount of any Debt secured by a Lien on any asset disposed of
in such Asset Sale or in respect of which such Major Casualty Proceeds are
received and discharged or required to be repaid (and actually so repaid) from
the proceeds thereof and (ii) any taxes actually paid or to be payable by such
Person (as estimated by a senior financial or accounting officer of the relevant
Borrower or Borrowers, giving effect to the overall tax position of the
Borrowers) in respect of such Asset Sale.
"Notes" means promissory notes of either Borrower, substantially in the
form of Exhibit A hereto, evidencing the obligation of such Borrower to repay
the Loans made to it, and "Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" has the meaning set forth in Section 2.02(a).
"Notice of Interest Rate Election" has the meaning set forth in Section
2.08(a).
"Notice of Issuance" has the meaning set forth in Section 2.14(b).
"Ordinary Course Library Film Licensing Agreement" means any Licensing
Agreement or series of related Licensing Agreements with respect to one or more
Library Films other than any such Licensing Agreement or series of related
Licensing Agreements that satisfies any of the following criteria:
(i) the aggregate amount of payments under such Licensing
Agreement or series of related Licensing Agreements with respect to one
or more Library Films exceeds $175,000,000; or
18
(ii) the Borrower or the Subsidiary party thereto conveys,
sells, assigns, transfers or otherwise disposes of, with or without
recourse, its rights to receive payments under any such Licensing
Agreement or series of related Licensing Agreements with respect to one
or more Library Films; or
(iii) the aggregate amount of payments under such Licensing
Agreement or series of related Licensing Agreements with respect to one
or more Library Films exceeds $17,500,000 and the aggregate amount of
payments under all such Licensing Agreement or series of related
Licensing Agreements with respect to one or more Library Films that are
not to be made reasonably pro rata over the period of availability of
the Films which are the subject of such Licensing Agreement or series
of related Licensing Agreements with respect to one or more Library
Films would exceed the greater of (x) 10% of the aggregate amount of
all payments under such Licensing Agreement or series of related
Licensing Agreements with respect to one or more Library Films and (y)
$17,500,000.
"Obligor" means each Borrower and each Guarantor.
"Original Credit Agreement" has the meaning set forth in the
introductory paragraphs hereof.
"Original Effective Date" means October 10, 1996.
"Orion" means Orion Pictures Corporation, a Delaware corporation,
together with its successors.
"Parent" means, with respect to any Lender, any Person controlling such
Lender.
"Participant" has the meaning set forth in Section 10.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Permitted Joint Venture" means a Person (other than a Consolidated
Subsidiary of either Borrower) (i) the common stock or other equity interests of
which are owned at least 20% but not more than 50% by the MGM/Orion Companies
and (ii) the Investments in which by the MGM/Orion Companies are permitted under
this Agreement.
19
"Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Plan" means, at any time, any employee benefit plan which is covered
by ERISA and in respect of which MGM or a Commonly Controlled Entity is (or, if
such plan were terminated at such time, would under Section 4069 of ERISA be
deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Pledge Agreement" means the Borrower Pledge Agreement or any Guarantor
Pledge Agreement.
"Pricing Leverage Ratio" means, on any date, the ratio of (i)(x) Total
Borrowed Funds on such date plus (y) to the extent not included in Total
Borrowed Funds, Clawback Obligations at such date to (ii) Combined Adjusted
EBITDA for the period of four consecutive Fiscal Quarters most recently ended on
or prior to such date.
"Pricing Schedule" means the Schedule attached hereto identified as
such.
"Prime Rate" means the rate of interest publicly announced by Bank of
America, N.A. in New York City from time to time as its Prime Rate.
"Profit Participation" means the amount, as customarily determined by
the Borrowers or either of them, of all obligations (other than Residuals and
Deferred Payments) payable by any MGM/Orion Company as compensation for talent,
financiers or to producers and for similar services in connection with the
development, acquisition, production, financing, distribution, exhibition or
exploitation of Films or rights with respect thereto, the payment of which is
contingent upon or triggered by and payable only to the extent of the receipt by
any MGM/Orion Company, as the case may be, of revenues from the exploitation of
such Film or such rights.
"Pro Forma Compliance" means, for any Film Value Asset Disposition and
on the date thereof (the "Disposition Date"), that after giving effect to such
Film Value Asset Disposition the Borrowers shall be in compliance with the
covenants in Article 5 (including without limitation Sections 5.13, 5.15 and
5.25) as of the Disposition Date (or, in the case of Section 5.13, as of the
last day of Fiscal Quarter then most recently ended) determined after giving
effect to the following pro forma assumptions or adjustments:
(i) Library Cash Flows for the period of four consecutive Fiscal
Quarters ended on or most recently prior to such Disposition Date (the
20
"reference period") shall be determined by deeming all Film Value Asset
Dispositions occurring after the beginning of the reference period and
not later than the Disposition Date (including the proposed Film Value
Asset Disposition for which such determination is being performed) to
have occurred immediately prior to the beginning of such reference
period; provided that with respect to any Film Value Asset Disposition
consisting of an Investment in a Single Purpose Subsidiary or a
Permitted Joint Venture, if on the Disposition Date pursuant to the
terms of the agreements governing such Film Value Asset Disposition the
Borrowers are entitled to receive cash distributions from the Single
Purpose Subsidiary or Permitted Joint Venture in which such Investment
was made with respect to such Film Value Asset and the Borrowers
reasonably believe in good faith that they will receive such cash
distributions, Library Cash Flows shall be determined by including the
aggregate amount of such cash distributions that the Borrowers
reasonably believe in good faith they would have received during the
reference period had the Disposition Date occurred immediately prior to
the beginning of such reference period;
(ii) Film Value shall be as set forth in the appraisal report
delivered on or most recently prior to such Asset Sale Date pursuant to
Section 5.01(j) (averaged, if necessary, in accordance with the
definition thereof), adjusted to give effect to the disposition of all
Library Films and motion pictures and television programs described in
clause (ii) of the definition of "Films" pursuant to all Film Value
Asset Dispositions occurring after the date of such appraisal report
and not later than the Disposition Date (including the proposed Film
Value Asset Disposition for which such determination is being
performed); and
(iii) Total Borrowed Funds shall be determined at such
Disposition Date after giving effect to the repayment of any Debt made
on such Disposition Date with the cash proceeds of such Film Value
Asset Disposition (or committed to be made on such Disposition Date and
actually made within two Domestic Business Days (or, if such repayment
is a repayment of the Tranche B Loans, on or prior to the Deferred
Tranche B Unscheduled Prepayment Date with respect thereto) (and, if
such repayment is not so made within such time, Total Borrowed Funds
and Pro Forma Compliance with respect to such Film Value Asset
Disposition shall be redetermined as of such Disposition Date giving
effect to the fact that such repayment has not been made)).
"Projected Known Sources" means at any date (the "Test Date"), the sum
(without duplication) of the following amounts, in each case determined for the
Combined Companies on a Combined Basis:
21
(a) cash and cash equivalents held by the Combined Companies on such
date plus
(b) the aggregate amount, without duplication, of cash projected by
the Borrowers in good faith to be received by the Combined Companies during the
period of four consecutive Fiscal Quarters (the "Test Period") commencing on the
day immediately after such date from the following sources:
(i) any unutilized commitment under a binding agreement by
Tracinda to purchase equity securities of MGM; and
(ii) any unutilized commitment to make advances to any Combined
Company (including without limitation any Commitment to make Loans to
the Borrowers);
but only to the extent, in the case of any agreement or instrument referred to
in clause (i) or (ii) above, that (x) the conditions to requiring such advance
or purchase (as the case may be) would be satisfied on such Test Date if such
advance or purchase were requested by the relevant Combined Company (including,
in the case of any Loan under this Agreement, without limitation, the condition
that no Default exists on such date or after giving effect to such Loan) (or,
with respect to any such condition that can be satisfied only after such Test
Date, the Borrowers reasonably and in good faith believe that such condition
will be satisfied at all relevant times during such Test Period), and (y) such
commitment is subject to no conditions other than performance by the relevant
Combined Company of the agreements under which such commitment or commitments
exist; plus
(c) the aggregate amount, without duplication, of all cash payments
that the Borrowers reasonably and in good faith project to be received by the
Combined Companies during the Test Period from:
(i) royalties and other accounts receivable, but only to the
extent that (x) the relevant obligation to make such royalty payments
are subject to no conditions other than performance by the relevant
Combined Companies of the related agreements and (y) the Borrowers
reasonably and in good faith believe that such condition will be
satisfied at all relevant times during such Test Period;
(ii) revenues with respect to Films and Film Related Assets
(determined by reference to the Combined Companies' ultimates in the
case of any Film, such ultimate to be valued, in the case of any
completed Film that has not yet been released, at a "break-even"
cost);
22
(iii) distributions from Permitted Joint Ventures (as defined in
the definition of Combined Adjusted EBITDA), but only to the extent
that (x) the right to receive such payment is subject to no condition
other than performance by the relevant Combined Companies of the
relevant agreements under which such distributions would be made and
(y) the Borrowers reasonably and in good faith believe that such
condition will be satisfied at all relevant times during such Test
Period. and
(iv) revenues from sales of branded merchandise.
"Projected Known Uses" means at any date (the "Test Date"), the sum
(without duplication) of the following amounts, in each case determined for the
Combined Companies on a Combined Basis, in each case projected by the Borrowers
reasonably and in good faith to be paid during the period of four consecutive
Fiscal Quarters (the "Test Period") commencing immediately after such date: (a)
cash overhead, (b) Combined Cash Interest Expense and the aggregate principal
amount of Debt required to be paid during such Test Period in accordance with
the terms of the relevant Debt agreements in effect on the Test Date, (c) income
taxes to be paid in cash, (d) cash expenses attributable to remaining negative
costs and prints and advertising expenses for Films which have commenced
production or for which orders have been received, (e) Combined Capital
Expenditures, (f) Investments (including, without limitation, Investments in
Permitted Joint Ventures and in MGM ) and (g) any other cash expenditures
(including, without limitation, Restricted Payments) anticipated to be made by
the Combined Companies during the Test Period.
"Quarterly Dates" means each March 31, June 30, September 30 and
December 31.
"Receivables Financing" means any receivables securitization program or
other type of accounts receivable financing transaction by a Person.
"Reduction Amount" means:
(i) in respect of any incurrence by any MGM/Orion Company of any
Debt that constitutes a Reduction Event or the receipt of Major
Casualty Proceeds that constitutes a Reduction Event, 100% of the Net
Cash Proceeds thereof;
(ii) in respect of Excess Cash Flow for any Fiscal Year
commencing with the 2000 Fiscal Year, the Applicable Percentage of
Excess Cash Flow for such Fiscal Year (as used in this clause (ii),
"Applicable Percentage" in respect of any Fiscal Year means 75% or, if
23
the Leverage Ratio on the last day of such Fiscal Year was not greater
than 4.5 to 1, 50%); and
(iii) in respect of any certification as to anticipated
reinvestment of Major Casualty Proceeds set forth in any Proceeds
Certificate being no longer true, 100% of the Net Cash Proceeds from
the relevant receipt of Major Casualty Proceeds not invested prior to
such date to repair or replace affected assets.
"Reduction Event" means (i) the incurrence of any Debt by any MGM/Orion
Company (other than Debt permitted under Section 5.10), (ii) receipt of Major
Casualty Proceeds, unless, within 5 Domestic Business Days after receipt
thereof, the Borrower receiving such Major Casualty Proceeds shall have
delivered to the Agent a certificate (a "Proceeds Certificate") of the chief
financial officer or the chief accounting officer of such Borrower, certifying
as to (x) the aggregate amount of such Major Casualty Proceeds and (y) the fact
that the MGM/Orion Companies shall invest such Major Casualty Proceeds to repair
or replace affected assets with 180 days after receipt thereof and (iii) the
first day on which any certification made pursuant to any Proceeds Certificate
shall cease to be true. The description of any transaction as falling within the
above definition does not affect any limitation on such transaction imposed by
Article 5 of this Agreement or any rights of any Lender upon the occurrence of
an Event of Default under Article 6 of this Agreement.
"Reference Lenders" means the principal London offices of Bank of
America, N.A., The Bank of Nova Scotia and The Chase Manhattan Bank, and
"Reference Lender" means any one of such Reference Lenders.
"Refunded Swing Loans" has the meaning set forth in Section 2.01(e).
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Reportable Event" means any of the events set forth in Section 4043(b)
of ERISA, other than those events as to which the thirty day notice period is
waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. Section
2615.
"Required Lenders" means at any time Lenders having in the aggregate
greater than 50% of the aggregate Credit Exposures at such time.
"Residuals" means the amount, as reasonably determined by the
Borrowers, or either of them, of all obligations (other than Profit
Participations and Deferred Payments) payable by any MGM/Orion Company pursuant
to guild
24
agreements or other collective bargaining agreements in connection with the
development, acquisition, production, financing, distribution, exhibition or
exploitation of Films or rights with respect thereto.
"Responsible Officer" means, with respect to either Borrower, any
senior vice president of such Borrower, and any more senior corporate officer of
such Borrower, in any case appointed to such office by the Board of Directors of
such Borrower or any committee thereof.
"Restricted Payment" means (i) any dividend or other distribution on
any shares of either Borrower's capital stock (except dividends payable solely
in shares of such Borrower's capital stock) or (ii) any payment by any MGM/Orion
Company on account of the purchase, redemption, retirement or acquisition of (a)
any shares of either Borrower's capital stock or (b) any option, warrant or
other right to acquire shares of either Borrower's capital stock (but not
including payments of principal, premium (if any) or interest made pursuant to
the terms of convertible debt securities prior to conversion).
"Revolver Maturity Date" means September 30, 2003 or such later date to
which the Revolver Maturity Date shall have been extended pursuant to Section
2.04(a)(ii) (or, if any such day is not a Euro-Dollar Business Day, the next
preceding Euro-Dollar Business Day).
"Revolving Commitment" means, (i) with respect to each Revolving Lender
listed on the Schedule of Lenders, the amount that the Borrower and such
Revolving Lender have agreed upon on the Effective Date constitutes such
Revolving Lender's Revolving Commitment (ii) with respect to each Assignee that
becomes a Revolving Lender pursuant to Section 10.06(c), the amount of the
Revolving Commitment thereby assumed by it, in each case as such amount may be
increased or reduced from time to time pursuant to Section 10.06(c) or reduced
from time to time pursuant to Sections 2.04(d) and 2.07.
"Revolving Credit Period" means the period from and including the
Original Effective Date to but not including the Revolver Maturity Date.
"Revolving Exposure" means, with respect to each Revolving Lender, at
any time, an amount equal to the sum of (i) the aggregate principal amount of
the Revolving Loans of such Revolving Lender outstanding at such time, (ii) such
Revolving Lender's Revolving Percentage of the aggregate principal amount of the
Swing Loans outstanding at such time and (iii) such Revolving Lender's Letter of
Credit Liabilities at such time.
25
"Revolving Lender" means each Lender identified as a Revolving Lender
on the Schedule of Lenders, each Assignee which becomes a Revolving Lender
pursuant to Section 10.06(c), and their respective successors.
"Revolving Loan" means a loan made by a Revolving Lender pursuant to
Section 2.01(c).
"Revolving Percentage" means, with respect to each Revolving Lender, at
any time, the percentage that such Revolving Lender's Revolving Commitment
constitutes of the aggregate amount of the Revolving Commitments at such time.
"Sale-Leaseback Transaction" means the sale by any MGM/Orion Company of
all of its right, title and interest in and to a Film and the retention by, or
concurrent reconveyance to such Borrower or such Subsidiary of distribution
rights to such Film and an option to repurchase such Film, in consideration of
one or more payments by such Borrower or such Subsidiary of amounts having an
aggregate discounted present value that is less than the purchase price paid by
the purchaser thereof; provided that, concurrently with such reconveyance, such
Borrower or such Subsidiary has defeased its obligation to make the aggregate
amount of such payments.
"Schedule of Lenders" means the Schedule attached hereto identified as
such.
"Security Agreement" means the Amended and Restated Borrower and
Guarantor Security Agreement dated as of October 15, 1997 among the Obligors
party thereto and the Agent, as amended from time to time.
"Single Employer Plan" means any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Single Purpose Subsidiary" means at any date any Subsidiary of a
Borrower (other than a Foreign Subsidiary) (i) that has been established for the
sole purpose of, and does not engage in any business or conduct any activities
other than, the development, production, financing, acquisition, distribution or
exploitation of any one Film or slate or group of Films or any Film Related
Asset and (ii) that has no Debt or other obligation that (x) is Guaranteed or
otherwise supported by either Borrower or any other Subsidiary (other than any
other Single Purpose Subsidiary), other than as a result of Clawback Obligations
incurred by either Borrower or such other Subsidiary with respect to such Single
Purpose Subsidiary or (y) subjects any asset of either Borrower or any other
Subsidiary (other than any other Single Purpose Subsidiary) directly or
indirectly, contingently or otherwise, to the satisfaction of such Debt or
obligation thereof,
26
except as a result of the satisfaction of Clawback Obligations incurred by
either Borrower or such other Subsidiary with respect to such Single Purpose
Subsidiary.
"Specified Non-Cash Charges" means any non-cash charges with respect to
capital stock, stock options and "bonus interests", in each case granted
pursuant to the Management Stock Incentive Plan or to any former or current
employees or directors of the Combined Companies under plans or arrangements as
set forth in MGM's filings with the Securities and Exchange Commission from time
to time.
"Subsidiary" means, as to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person; unless
otherwise specified, "Subsidiary" means a Subsidiary of either Borrower.
"Subsidiary Guaranty" means the Amended and Restated Subsidiary
Guaranty Agreement dated as of October 15, 1997 between each Guarantor party
thereto and the Agent, as amended from time to time.
"Swing Credit Period" means the period from and including the first
Domestic Business Day after the Original Effective Date to but not including the
Swing Termination Date.
"Swing Lender" means Bank of America, N.A., in its capacity as the
Swing Lender under the swing loan facility described in Section 2.01(d), and its
successors in such capacity.
"Swing Loan" means a Loan made by the Swing Lender pursuant to Section
2.01(d).
"Swing Loan Commitment" means $10,000,000 or, if less, the aggregate
amount of the Available Revolving Commitments.
"Swing Loan Refund Amount" has the meaning set forth in Section
2.01(e).
"Swing Termination Date" means the earlier of (i) August 31, 2003 or
such later date to which the Swing Termination Date shall have been extended
pursuant to Section 2.04(a)(ii) (or, if such day is not a Domestic Business Day,
the next preceding Domestic Business Day) and (ii) the date of termination of
the Revolving Commitments in their entirety.
27
"Target Date" means the first date on which the Leverage Ratio at the
last day of each of the two Fiscal Quarters most recently ended on or prior to
such date does not exceed 2.5 to 1.
"Temporary Cash Investment" means any Investment in (i) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, (ii) commercial paper
rated at least A-2 by Standard & Poor's Ratings Services or P-2 by ▇▇▇▇▇'▇
Investors Service, Inc., (iii) time deposits with, including certificates of
deposit issued by, any office located in the United States of any bank or trust
company which is organized under the laws of the United States or any state
thereof and has capital, surplus and undivided profits aggregating at least
$500,000,000 or (iv) repurchase agreements with respect to securities described
in clause (i) above entered into with an office of any bank or trust company
meeting the criteria specified in clause (iii) above, provided in each case that
such Investment matures within one year from the date of acquisition thereof by
any MGM/Orion Company.
"Term Lender" means a Tranche A Lender or a Tranche B Lender.
"Term Loan" means a Tranche A Loan or a Tranche B Loan.
"Terminating Lender" means each Lender that is an Existing Lender but
is not a Lender upon the effectiveness of this Agreement on the Effective Date.
"Total Borrowed Funds" means at any date the aggregate amount of Debt
of the Combined Companies described in clauses (i) and (ii) and (iv) of the
definition of Debt (but excluding (a) any obligations under Sale-Leaseback
Transactions which constitute Debt under clause (iv) of the definition thereof
and (b) Debt of any Single Purpose Subsidiary, so long as such Debt complies
with the provisions of clause (ii) of the definition of Single Purpose
Subsidiary), plus the aggregate amount of all Clawback Obligations of the
Combined Companies (other than a Single Purpose Subsidiary) that, at such date,
are reflected on the balance sheet of the obligor thereof at such date (or would
be required to be so reflected if such balance sheet were prepared on such
date).
"Tracinda" means Tracinda Corporation, a Nevada corporation, and its
successors.
"Tranche A Lender" means each Lender identified as a Tranche A Lender
on the Schedule of Lenders, each Assignee which becomes a Tranche A Lender
pursuant to Section 10.06(c), and their respective successors.
"Tranche A Loan" means a loan made by a Tranche A Lender pursuant to
Section 2.01(a).
28
"Tranche B Lender" means each Lender identified as a Tranche B Lender
on the Schedule of Lenders, each Assignee which becomes a Tranche B Lender
pursuant to Section 10.06(c), and their respective successors.
"Tranche B Loan" means a loan made by a Tranche B Lender pursuant to
Section 2.01(b).
"Tranche B Prepayment Notice" has the meaning set forth in Section
2.04(f)(i).
"Tranche B Unscheduled Prepayment" has the meaning set forth in Section
2.04(f)(i).
Each of "Tranche C", "Tranche C Commitment", "Tranche C Loans" and
"Tranche C Request" has the meaning set forth in Section 2.01(i).
"TV Distribution Venture" means a Person (other than a Subsidiary of
either Borrower) (i) the common stock or other equity interests of which are
owned at least 5% but not more than 50% by the MGM/Orion Companies and (ii) that
is principally engaged in the distribution, exhibition or exploitation of
television programming, including Films and other motion pictures, feature
films, shorts, televisions programs or animated programs.
"Type" has the meaning set forth in Section 1.03.
"UIP" means United International Pictures B.V., a Netherlands entity,
and its successors.
"Unscheduled Prepayment Date" has the meaning set forth in Section
2.04(f)(i).
"United States" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified in the immediately succeeding sentence or otherwise herein, all
accounting terms used herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to be delivered
hereunder shall be prepared in accordance with generally accepted accounting
principles as in effect from time to time, applied on a basis consistent (except
for changes concurred in by the Borrowers' independent public accountants) with
the most recent financial statements of the Combined Companies delivered to the
Lenders ("GAAP"); provided that, if the Borrowers notify the Agent that the
Borrowers wish to amend any covenant in Article 5 or any related definition to
29
eliminate the effect of any change in generally accepted accounting principles
on the operation of such covenant (or if the Agent notifies the Borrowers that
the Required Lenders wish to amend Article 5 or any related definition for such
purpose), then the Borrowers' compliance with such covenant shall be determined
on the basis of generally accepted accounting principles in effect immediately
before the relevant change in generally accepted accounting principles became
effective, until either such notice is withdrawn or such covenant or definition
is amended in a manner satisfactory to the Borrowers and the Required Lenders.
The term "Combined Basis", when used with respect to the determination of any
amount, means that such amount is to be determined by combining (i) the relevant
amount determined with respect to MGM Studios and its Consolidated Subsidiaries
on a consolidated basis and (ii) the relevant amount determined with respect to
Orion and its Consolidated Subsidiaries on a consolidated basis, all in
accordance with GAAP. Unless the context otherwise requires, whenever an amount
herein is expressly to be determined with respect to the Combined Companies,
such amount shall be determined on a Combined Basis.
SECTION 1.03. Classes and Types of Loans and Borrowings. The term
"Borrowing" denotes the aggregation of Loans of one or more Lenders to be made
to a single Borrower pursuant to Article 2 on the same date, all of which Loans
are of the same Class and Type (subject to Article 8) and, except in the case of
Base Rate Loans, have the same initial Interest Period. Loans hereunder are
distinguished by "Class" and by "Type". The "Class" of a Loan (or of a
Commitment to make such a Loan or of a Borrowing comprised of such Loans or of a
Group of such Loans) refers to the determination whether such Loan is a Tranche
A Loan, Tranche B Loan, a Revolving Loan or a Swing Loan, each of which
constitutes a Class. The "Type" of a Loan refers to the determination whether
such Loan is a Euro-Dollar Loan or a Base Rate Loan. Identification of a Loan
(or a Borrowing) by both Class and Type (e.g., a "Tranche B Euro-Dollar Loan")
indicates that such Loan is both a Tranche B Loan and a Euro-Dollar Loan (or
that such Borrowing or Group of Loans is comprised of such Loans).
ARTICLE 2
THE CREDITS
SECTION 2.01. Outstanding Term Loans; Commitments to Lend. (a) Tranche
A Loans. Each Tranche A Lender has made a single loan to each Borrower in a
principal amount outstanding on the Effective Date equal to the principal amount
agreed upon on the Effective Date between such Tranche A Lender and the
Borrower. The Tranche A Loans are not revolving in nature and amounts of such
loans repaid or prepaid may not be reborrowed.
30
(b) Tranche B Loans. Each Tranche B Lender has made a single loan to
each Borrower in a principal amount outstanding on the Effective Date equal to
the principal amount agreed upon on the Effective Date between such Tranche B
Lender and the Borrower. The Tranche B Loans are not revolving in nature and
amounts of such loans repaid or prepaid may not be reborrowed.
(c) Revolving Loans. During the Revolving Credit Period, each
Revolving Lender severally agrees, on the terms and conditions set forth in this
Agreement, to make revolving loans to the Borrowers from time to time in amounts
such that the Revolving Exposure of such Revolving Lender at such time shall not
exceed the amount of its Available Revolving Commitment at such time. Each
Borrowing under this subsection shall be in an aggregate principal amount of
$5,000,000 or any larger multiple of $1,000,000 (except that any such Borrowing
may be in the aggregate amount available in accordance with Section 3.03(c)) and
shall be made from the several Revolving Lenders ratably in proportion to their
respective Revolving Commitments; provided, that the failure of any Revolving
Lender at any time to fulfill its obligation to make a Revolving Loan on the
terms and conditions set forth in this Agreement shall not in itself excuse any
other Revolving Lender from its obligation to make a Revolving Loan. Within the
foregoing limits, the Borrowers may borrow under this subsection, prepay
Revolving Loans to the extent permitted by Section 2.10 and reborrow at any time
during the Revolving Credit Period under this subsection.
(d) Swing Loans. During the Swing Credit Period, the Swing Lender
agrees, on the terms and conditions set forth in this Agreement, to make loans
to the Borrowers pursuant to this subsection from time to time in amounts such
that at any time (i) the aggregate principal amount of Swing Loans outstanding
at such time does not exceed the Swing Loan Commitment and (ii) the aggregate
Revolving Exposure at such time does not exceed the aggregate amount of the
Available Revolving Commitments at such time. Each Borrowing under this
subsection shall be in an aggregate principal amount of $1,000,000 or any larger
multiple thereof (except that any such Borrowing may be in the aggregate amount
of the Swing Loan Commitment available in accordance with the immediately
preceding sentence). Within the foregoing limits, the Borrowers may borrow under
this subsection, prepay Swing Loans to the extent permitted by Section 2.10 and
reborrow at any time during the Swing Credit Period under this subsection.
(e) Conversion of Swing Loans to Revolving Loans. The Swing Lender,
at any time and from time to time in its sole and absolute discretion may, on
behalf of either Borrower (each of which hereby irrevocably directs the Swing
Lender to act on its behalf), on notice given by the Swing Lender no later than
10:30 A.M. (New York City time) on the proposed date of Borrowing for the
Revolving Loans referred to below, request each Revolving Lender to make, and
each Revolving Lender hereby agrees to make, a Revolving Loan, in an amount
31
(such amount with respect to each Lender, its "Swing Loan Refund Amount") equal
to such Revolving Lender's Revolving Percentage of the aggregate principal
amount of the Swing Loans (the "Refunded Swing Loans") outstanding on the date
of such notice and with respect to which such notice relates, to repay the Swing
Lender. Unless any of the events described in clause (g) or (h) of Section 6.01
with respect to the relevant Borrower shall have occurred and be continuing (in
which case the procedures of Section 2.01(f) shall apply), each Revolving Lender
shall make such Revolving Loan available to the Agent at its address specified
in or pursuant to Section 10.01 in immediately available funds, not later than
12:00 Noon (New York City time), on the date specified in such notice. Each such
Revolving Loan shall initially be made as a Base Rate Loan. The Agent shall pay
the proceeds of such Revolving Loans to the Swing Lender, which shall
immediately apply such proceeds to repay Refunded Swing Loans. Effective on the
day such Revolving Loans are made, the portion of the Swing Loans so paid shall
no longer be outstanding as Swing Loans, shall no longer be due as Swing Loans
under the Notes held by the Swing Lender, and shall be due as Revolving Loans
under the respective Notes issued to the Revolving Lenders (including the Swing
Lender) in accordance with their respective Revolving Percentages.
(f) Purchase of Participations in Swing Loans. If prior to the time
Revolving Loans would have otherwise been made pursuant to Section 2.01(e), one
of the events described in clause (g) or (h) of Section 6.01 with respect to the
relevant Borrower shall have occurred and be continuing, each Revolving Lender
shall, on the date such Revolving Loans were to have been made pursuant to the
notice referred to in Section 2.01(e) (the "Refunding Date"), purchase an
undivided participating interest in the Swing Loans in an amount equal to such
Revolving Lender's Swing Loan Refund Amount. On the Refunding Date, each
Revolving Lender shall transfer to the Swing Lender, in immediately available
funds, such Lender's Swing Loan Refund Amount, and upon receipt thereof the
Swing Lender shall deliver to such Revolving Lender a Swing Loan participation
certificate dated the date of the Swing Lender's receipt of such funds and in
the Swing Loan Refund Amount of such Revolving Lender.
(g) Payments on Participated Swing Loans. Whenever, at any time after
the Swing Lender has received from any Revolving Lender such Revolving Lender's
Swing Loan Refund Amount pursuant to Section 2.01(f), the Swing Lender receives
any payment on account of the Swing Loans in which the Revolving Lenders have
purchased participations pursuant to Section 2.01(f), the Swing Lender will
promptly distribute to each such Revolving Lender its ratable share (determined
on the basis of the Swing Loan Refund Amounts of all of the Revolving Lenders)
of such payment (appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Revolving Lender's participating
interest was outstanding and funded); provided, however,
32
that in the event that such payment received by the Swing Lender is required to
be returned, such Revolving Lender will return to the Swing Lender any portion
thereof previously distributed to it by the Swing Lender.
(h) Obligations to Refund or Purchase Participations in Swing Loans
Absolute. Each Revolving Lender's obligation to transfer the amount of a
Revolving Loan to the Swing Lender as provided in Section 2.01(e) or to purchase
a participating interest pursuant to Section 2.01(f) shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (i) any set-off, counterclaim, recoupment, defense or other right
which such Revolving Lender, either Borrower or any other Person may have
against the Swing Lender or any other Person, (ii) the occurrence or continuance
of a Default or an Event of Default or the termination or reduction of any
Commitments, (iii) any adverse change in the condition (financial or otherwise)
of either Borrower or any other Person, (iv) any breach of this Agreement by
either Borrower, any other Lender or any other Person or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.
(i) Amendment to Provide for Tranche C Loans. (i) At any time after
the Effective Date, if no Default shall then have occurred and be continuing,
the Borrowers may in their sole discretion request an amendment of this
Agreement to add a new tranche of term loans to be made to one or both Borrowers
under this Agreement as "Loans" (such tranche, loans and request, respectively,
"Tranche C", the "Tranche C Loans" and the "Tranche C Request"). Any proposed
Tranche C would provide for not more than $200,000,000 aggregate principal
amount of Tranche C Loans, with a final maturity date not earlier than the
Maturity Date of the Tranche B Loans and de minimis amortization prior to the
final maturity date of such Tranche C Loans, and would provide for payments or
offers of payment with respect to Reduction Events that are ratable with or
subsequent to payments or offers of payment with respect to Tranche B Loans. The
Tranche C Loans would otherwise be pari passu with and treated similarly
(including with respect to Collateral) to the other Loans.
(ii) To make a Tranche C Request, the Borrowers shall send a
written notice thereof to the Agent not less than 30 days prior to the
proposed effective date of the amendments with respect thereto,
setting forth in reasonable detail the proposed aggregate amount of
Tranche C Loans, relevant margins with respect thereto, maturity date
and amortization schedule and other material information with respect
thereto. Upon receipt of such Tranche C Request, the Agent shall
cooperate with the Borrowers to prepare a proposed amendment or
amendments to this Agreement and any other relevant Loan Document
reflecting such Tranche C Request and shall distribute such proposed
amendment or amendments to the Lenders, together with an offer to each
Lender at such time to
33
assume a commitment with respect to Tranche C Loans (a "Tranche C
Commitment") ratably in accordance with their respective Credit
Exposures at such time (its "Pro Rata Share"). If, within the time
period specified in such distribution, which shall not in any event be
less than five Domestic Business Days, Lenders holding at least 66 2/3%
of the aggregate Credit Exposures (or, if at the time of any such
request the Leverage Ratio was less than 4.5 to 1 on the last day of
the two consecutive Fiscal Quarters then most recently ended, the
Required Lenders) approve such proposed amendments (which approval by
any Lender may, but shall not be required to, include an agreement by
such Lender to assume a Tranche C Commitment in an amount specified in
such approval), this Agreement and the relevant Loan Documents will be
amended as provided in such proposed amendment or amendments to add
Tranche C, and each Lender agreeing to accept a Tranche C Commitment
shall be assigned such a commitment in an amount no less than the
lesser of (i) its offer and (ii) its Pro Rata Share. If one or more of
the existing Lenders declines so to participate, the Borrowers may
offer the remaining amounts of the Tranche C Commitments to existing
Lenders or new financial institutions (each of which new financial
institutions is subject to the prior written approval of the Agent,
which shall not be unreasonably withheld), which shall, upon execution
by such financial institution and effectiveness of the amendments with
respect to Tranche C, become Lenders with a Tranche C Commitment in the
amount provided in such acceptance. No Lender that does not agree to
accept a Tranche C Commitment and execute and deliver any such
amendments with respect to Tranche C shall have any obligation to make
any Tranche C Loan.
SECTION 2.02. Method of Borrowing. (a) The relevant Borrower shall give
the Agent notice (a "Notice of Borrowing") (x) not later than 12:00 Noon (New
York City time) on (1) the date of each Base Rate Borrowing (other than a Swing
Borrowing or a Revolving Borrowing the proceeds of which are to be applied to
repay Refunded Swing Loans) and (2) the third Euro-Dollar Business Day before
each Euro-Dollar Borrowing and (y) not later than 12:00 Noon (New York City
time) on the date of each Swing Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic Business
Day in the case of a Base Rate Borrowing or a Euro-Dollar Business Day
in the case of a Euro-Dollar Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) whether the Loans comprising such Borrowing are to bear
interest initially at a rate based on the Base Rate or at a Euro-Dollar
Rate;
34
provided that all Swing Loans shall bear interest at a rate based on
the Base Rate; and
(iv) in the case of a Euro-Dollar Borrowing, the duration of the
initial Interest Period applicable thereto, subject to the provisions
of the definition of Interest Period.
In no event shall (i) the total number of Groups of Loans at any one time
outstanding exceed 20 or (ii) the total number of Swing Borrowings made in any
one calendar week exceed 3.
(b) Upon receipt of a Notice of Borrowing, the Agent shall promptly
notify each Lender of the contents thereof and of such Lender's ratable share of
such Borrowing (if any) and such Notice of Borrowing shall not thereafter be
revocable by such Borrower.
(c) Not later than 12:00 Noon (New York City time) on the date of
each Borrowing (or, solely in the case of either a Base Rate Borrowing or a
Swing Borrowing, 1:00 P.M. (New York City time)), each Lender (or, in the case
of a Swing Borrowing, the Swing Lender) shall make available its ratable share
of such Borrowing, in Federal or other funds immediately available in New York
City, to the Agent at its address referred to in Section 10.01. Unless the Agent
determines that any applicable condition specified in Article 3 has not been
satisfied, the Agent will make the funds so received from the Lenders available
to such Borrower by crediting an account of such Borrower maintained with the
Agent and specified by such Borrower prior to the date of such Borrowing or, if
no such account has been specified, at the Agent's aforesaid address.
(d) Unless the Agent shall have received notice from a Lender prior
to the date of any Borrowing that such Lender will not make available to the
Agent such Lender's share of such Borrowing, the Agent may assume that such
Lender has made such share available to the Agent on the date of such Borrowing
in accordance with subsection (c) of this Section and the Agent may, in reliance
upon such assumption, make available to such Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have so
made such share available to the Agent, such Lender and such Borrower severally
agree to repay to the Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to such Borrower until the date such amount is repaid to the Agent, at
(i) in the case of such Borrower, a rate per annum equal to the higher of the
Federal Funds Rate and the interest rate applicable thereto pursuant to Section
2.05 and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender
shall repay to the Agent such corresponding amount, such amount so repaid shall
constitute such Lender's Loan included in such Borrowing for purposes of this
Agreement.
35
SECTION 2.03. Notes. (a) The Loans of each Lender to each Borrower
shall be evidenced by a single Note of such Borrower payable to the order of
such Lender for the account of its Applicable Lending Office in an amount equal
to the aggregate unpaid principal amount of such Lender's Loans.
(b) Each Lender may, by notice to either Borrower and the Agent,
request that its Loans of a particular Type or Class to such Borrower be
evidenced by a separate Note in an amount equal to the aggregate unpaid
principal amount of such Loans. Each such Note shall be in substantially the
form of Exhibit A hereto with appropriate modifications to reflect the fact that
it evidences solely Loans of the relevant Type or Class. Each reference in this
Agreement to the "Note" of such Lender shall be deemed to refer to and include
any or all of such Notes, as the context may require.
(c) Upon receipt of each Lender's Notes pursuant to Section 3.01, the
Agent shall forward such Notes to such Lender. Each Lender shall record the
date, amount, Type and Class of each Loan made by it to each Borrower and the
date and amount of each payment of principal made with respect thereto, and may,
if such Lender so elects in connection with any transfer or enforcement of its
Note of either Borrower, endorse on the schedule forming a part thereof
appropriate notations to evidence the foregoing information with respect to each
such Loan to such Borrower then outstanding; provided that the failure of any
Lender to make any such recordation or endorsement shall not affect the
obligations of either Borrower hereunder or under the Notes or any other Loan
Document. Each Lender is hereby irrevocably authorized by each Borrower so to
endorse its Notes and to attach to and make a part of any Note a continuation of
any such schedule as and when required.
SECTION 2.04. Maturity of Loans; Mandatory Prepayments; Certain
Commitment Reductions. (a) Maturity of Loans.
(i) Final Maturity. Each Loan of each Class shall mature, and
the outstanding principal amount thereof shall be due and payable
(together with accrued interest thereon), on the Maturity Date for such
Class of Loans.
(ii) Extension of Revolving Credit Period and Swing Credit
Period. The Revolver Maturity Date and the Swing Termination Date may
each be extended, in the manner set forth in this subsection, on
September 30, 2003 and on the first anniversary of such date (an
"Extension Date") for a period of one year after the then current
Revolver Maturity Date and Swing Termination Date; provided that the
Swing Termination Date shall not be extended on any Extension Date
unless the Revolver Maturity Date
36
shall also be extended, in the manner set forth herein, on such
Extension Date. If the Borrowers wish to request an extension of the
Revolver Maturity Date and Swing Termination Date on any Extension
Date, they shall give written notice to that effect to the Agent not
less than 90 nor more than 120 days prior to such Extension Date,
whereupon the Agent shall notify each of the Revolving Lenders and the
Swing Lender of such notice. Each Revolving Lender will respond to such
request, whether affirmatively or negatively, within 30 days; provided
that any Lender which does not respond to such request within such
period shall be deemed to have responded to such request negatively. If
all Revolving Lenders and the Swing Lender respond affirmatively, then,
subject to receipt by the Agent prior to such Extension Date of
counterparts of an Extension Agreement in substantially the form of
Exhibit D duly completed and signed by all of the parties hereto, the
Revolver Maturity Date and the Swing Termination Date shall each be
extended, effective on such Extension Date, for a period of one year to
the date stated in such Extension Agreement.
(b) Tranche A Scheduled Amortization. In addition, the Borrowers shall
repay, and there shall become due and payable, on each date set forth below, an
aggregate principal amount of the Tranche A Loans equal to the amount set forth
below opposite such date (as such amount may be reduced pursuant to Section
2.04(e) and Section 2.10(d)):
Date Amount
---- ------
09/30/01 $15,000,000
12/31/01 $15,000,000
03/31/02 $17,500,000
06/30/02 $17,500,000
09/30/02 $17,500,000
12/31/02 $17,500,000
03/31/03 $25,000,000
06/30/03 $25,000,000
09/30/03 $25,000,000
12/31/03 $25,000,000
03/31/04 $25,000,000
06/30/04 $25,000,000
09/30/04 $25,000,000
12/31/04 $25,000,000
03/31/05 $100,000,000
(c) Tranche B Scheduled Amortization. In addition, the Borrowers
shall repay, and there shall become due and payable, on each date set forth
below an
37
aggregate principal amount of the Tranche B Loans equal to the amount set forth
below opposite such date (as such amount may be reduced pursuant to Section
2.04(e) and Section 2.10(d)):
Date Amount
------------------ ------------
Each Quarterly Date
from and including
09/30/01 through and
including 12/31/05 $ 750,000
3/31/06 $286,500,000
(d) Mandatory Prepayments and Revolving Commitments Reduction.
(i) In addition, the Loans shall be prepaid and the Revolving
Commitments shall be reduced in the following amounts:
(A) in the event that any Reduction Event shall occur, an
amount equal to the Reduction Amount with respect thereto; and
(B) an amount, for each Fiscal Year ending on or after
December 31, 1999, equal to the Reduction Amount of Excess
Cash Flow for such Fiscal Year.
(ii) Subject to Section 2.04(f) in the case of a prepayment of
the Term Loans in part, the prepayments and reductions required by
Section 2.04(d)(i)(A) shall be made forthwith upon receipt by any
MGM/Orion Company of such Net Cash Proceeds; provided that if the
Reduction Amount in respect of any Reduction Event is less than
$1,000,000, such prepayment or reduction shall be made upon receipt of
proceeds such that, together with all other such amounts not previously
applied, the Reduction Amount is equal to at least $1,000,000 and
provided further, that, at the election of the Borrowers, if the amount
of any such prepayment to be made exceeds the amount of Base Rate Loans
then outstanding, such excess amount shall be deposited in escrow
pursuant to arrangements in form and substance satisfactory to the
Agent, and such excess shall not be required to be prepaid until the
last day of the Interest Periods relating to outstanding Euro-Dollar
Loans in an aggregate principal amount equal to or greater than such
excess amount unless an Event of Default has occurred and is continuing
or the Required Lenders otherwise determine in their sole discretion
and so notify the Borrowers. Subject to Section 2.04(f), the
prepayments and reductions required by clause (i)(B) of this subsection
shall be made on or before the 105th day after the end of the related
fiscal year. The Borrowers shall give the Agent at least five Euro-
38
Dollar Business Days' notice of each prepayment required pursuant to
this subsection.
(e) Application of Prepayments, Repayments and Revolving Commitment
Reductions.
(i) The prepayments and reductions required pursuant to
subsection (d) shall be effected in the following order: first, the
Borrowers shall prepay the Term Loans until the Term Loans have been
paid in full (subject to Section 2.04(f) in the case of a prepayment
of the Term Loans in part), second, the Revolving Commitments shall be
reduced and third, solely if such prepayment is to be made after the
Revolving Credit Period, the Borrowers shall prepay Revolving Loans
until the Revolving Loans have been paid in full.
(ii) Subject to Section 2.04(f), each prepayment of the Term
Loans made by the Borrowers pursuant to subsection (d) shall be
allocated pro rata on the basis of principal amount between the then
outstanding Tranche A Loans and Tranche B Loans.
(iii) If on the date of any reduction of the Revolving Commitments
pursuant to subsection (d) the aggregate Revolving Exposure on such
date exceeds the aggregate Available Revolving Commitments on such
date, the Borrowers shall apply an amount equal to such excess to
prepay the Revolving Credit Loans or Swing Loans (or both) and/or cash
collateralize Letters of Credit so that after giving effect thereto
the Revolving Exposure of each Revolving Lender does not exceed its
Revolving Credit Commitment as then reduced. Amounts to be applied
pursuant to the preceding sentence shall be applied first to repay the
principal amount of the Swing Loans then outstanding until all such
Swing Loans shall have been repaid in full, second to repay the
principal amount of the Revolving Credit Loans then outstanding until
all such Revolving Credit Loans shall have been repaid in full and
third if any excess then remains such excess shall be deposited in the
Cash Collateral Account established pursuant to Section 6(C) of the
Security Agreement to be held, applied or released for application as
provided in the Security Agreement. In determining Revolving Exposure
for purposes of this clause (iii), Letter of Credit Liabilities shall
be reduced to the extent that they are cash collateralized as
contemplated by the previous sentence.
(iv) Subject to clause (ii) of this subsection, each repayment or
prepayment of Loans of any Class made by either Borrower pursuant to
this Section shall be applied to such Group or Groups of Loans of such
Class as such Borrower may designate in the applicable Notice of
39
Borrowing or Notice of Interest Rate Election (or, failing such
designation, as determined by the Agent), and, except as provided in
subsection (f) with respect to Tranche B Loans, shall be applied to
repay ratably the Loans of such Class of the several Lenders included
in such Group or Groups.
(v) The amount of any prepayment of the Term Loans made by the
Borrowers pursuant to subsection (d) (other than as a result of any
event set forth in clause (ii) or (iii) in the definition of "Reduction
Event") shall be applied to reduce the amount of subsequent scheduled
repayments of the Term Loans pursuant to subsections (b) or (c) above,
as the case may be, in inverse order of maturtity. The amount of any
prepayment of the Term Loans made by the Borrowers pursuant to
subsection (d) set forth in clause (ii) or (iii) in the definition of
"Reduction Event" shall be applied to reduce the amount of subsequent
scheduled repayments of the Term Loans pursuant to subsections (b) or
(c) above, as the case may be, ratably to all remaining amortization
payments.
(f) Option of Tranche B Lenders Not to Accept Prepayments.
(i) The Borrowers shall (x) at least one Domestic Business Day
prior to any date (an "Unscheduled Prepayment Date") on which any
prepayment of the Tranche B Loans (a "Tranche B Unscheduled
Prepayment"), other than a prepayment of the Tranche B Loans in whole,
would, but for the provisions of this subsection (f), otherwise have
been made pursuant to Section 2.04(d) or 2.10(a), deliver a notice
conforming to the requirements of subsection (f)(ii) (a "Tranche B
Prepayment Notice") to the Agent and (y) on or prior to such
Unscheduled Prepayment Date, deposit in the Tranche B Prepayment
Account established pursuant to Section 6(A) of the Security Agreement
an amount equal to the principal amount that would have been payable
by the Borrowers pursuant to Section 2.04(d) or 2.10(a) on such
Unscheduled Prepayment Date in respect of such Tranche B Unscheduled
Prepayment. Such Tranche B Unscheduled Prepayment shall not occur on
such Unscheduled Payment Date but shall instead be deferred as
hereinafter provided in this subsection (f). Upon receipt of any
Tranche B Prepayment Notice, the Agent shall promptly notify each
Tranche B Lender of the contents hereof.
(ii) Each Tranche B Prepayment Notice shall be in writing, shall
refer to this Section 2.04(f) and shall (w) set forth the amount of
the Tranche B Unscheduled Prepayment and the prepayment that the
applicable Tranche B Lender will be entitled to receive if it accepts
prepayment of its Tranche B Loans in accordance with this subsection,
(x) contain an offer to prepay on a specified date (each such date, a
"Deferred Tranche B Unscheduled Prepayment Date"), which shall not be
less
40
than 20 days or more than 25 days after the date of such Tranche B
Prepayment Notice, the Tranche B Loans of such Tranche B Lender by an
aggregate principal amount equal to such Tranche B Lender's ratable
share of such Tranche B Unscheduled Prepayment (determined by reference
to the outstanding principal amount of such Lender's Tranche B Loan as
a proportion of the aggregate outstanding principal amount of the
Tranche B Loans of all of the Tranche B Lenders), (y) request such
Tranche B Lender to notify the Borrowers and the Agent in writing, no
later than the fifth Domestic Business Day prior to the Deferred
Tranche B Unscheduled Prepayment Date, of such Tranche B Lender's
acceptance or rejection (in each case, in whole and not in part) of
such offer of prepayment and (z) inform such Tranche B Lender that the
failure by such Tranche B Lender to reject such offer in writing on or
before the fifth day prior to such Deferred Tranche B Unscheduled
Prepayment Date shall be deemed an acceptance of such prepayment offer.
Each Tranche B Prepayment Notice shall be given by telecopy, confirmed
hand delivery or overnight courier service, in each case addressed to
the Agent and each Tranche B Lender as provided in Section 10.01.
(iii) On each Deferred Tranche B Unscheduled Prepayment Date,
the Agent shall withdraw from the Tranche B Prepayment Account the
aggregate amount required to prepay the Tranche B Loans of each of the
Tranche B Lenders that shall have accepted (or been deemed to have
accepted) prepayment in accordance with the related Tranche B
Prepayment Notice (each, an "Accepting Tranche B Lender") and shall
cause such amount to be applied on behalf of the Borrowers to prepay
the outstanding Tranche B Loans of the Accepting Tranche B Lenders.
(iv) Any amount remaining in the Tranche B Prepayment Account
on any Deferred Tranche B Unscheduled Prepayment Date after giving
effect to the prepayments required by clause (iii) above (exclusive of
any interest or profits with respect to amounts held in the Tranche B
Prepayment Account) shall be withdrawn and applied by the Agent (x) to
prepay the principal of the then outstanding Tranche B Loans of the
Accepting Tranche B Lenders and, if the Borrowers so elect, the then
outstanding Tranche A Loans, in each case ratably in proportion to
their then outstanding principal amounts (including the Tranche A Loans
only if the Borrowers so elect), and/or (y) after all Term Loans have
been repaid, to reduce the Revolving Credit Commitments, all in
accordance with subsection (d) above or Section 2.10(a), as applicable.
SECTION 2.05. Interest Rates. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from and
including the date such Loan is made to but excluding the date it becomes due or
is converted
41
into a Euro-Dollar Loan, at a rate per annum equal to the sum of (x) the Base
Rate Margin plus (y) the Base Rate for such day. Such interest shall be payable
quarterly in arrears on each Quarterly Date. Any overdue principal of or
interest on any Base Rate Loan shall bear interest, payable on demand, for each
day until paid at a rate per annum equal to the sum of 2% plus the rate
otherwise applicable to Base Rate Loans for such day.
(b) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period applicable
thereto, from and including the first day thereof to but excluding the last day
thereof, at a rate per annum equal to the sum of the Euro-Dollar Margin for such
day plus the Adjusted London Interbank Offered Rate applicable to such Interest
Period. Such interest shall be payable for each Interest Period on the last day
thereof and, if such Interest Period is longer than three months, at intervals
of three months after the first day thereof and, with respect to the principal
amount of any Euro-Dollar Loan converted to a Base Rate Loan, on each date a
Euro-Dollar Loan is so converted.
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upward, if necessary, to the next higher 1/100 of 1%) by dividing (i) the
applicable London Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar
Reserve Percentage. The Adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in the Euro-Dollar
Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Interest Period
means the average (rounded upward, if necessary, to the next higher 1/16 of 1%)
of the respective rates per annum at which deposits in dollars are offered to
each of the Reference Lenders in the London interbank market at approximately
11:00 A.M. (London time) two Euro-Dollar Business Days before the first day of
such Interest Period in an amount approximately equal to the principal amount of
the Euro-Dollar Loan of such Reference Lender to which such Interest Period is
to apply and for a period of time comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member Lender of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or
42
other assets which includes loans by a non-United States office of any Lender to
United States residents).
(c) Any overdue principal of or interest on any Euro-Dollar Loan
shall bear interest, payable on demand, for each day until paid at a rate per
annum equal to the higher of (i) the sum of 2% plus the Euro-Dollar Margin for
such day plus the quotient obtained (rounded upward, if necessary, to the next
higher 1/100 of 1%) by dividing (x) the average (rounded upward, if necessary,
to the next higher 1/16 of 1%) of the respective rates per annum at which one
day (or, if such amount due remains unpaid more than three Euro-Dollar Business
Days, then for such other period of time not longer than three months as the
Agent may select) deposits in dollars in an amount approximately equal to such
overdue payment due to each of the Reference Lenders are offered to such
Reference Lender in the London interbank market for the applicable period
determined as provided above by (y) 1.00 minus the Euro-Dollar Reserve
Percentage (or, if the circumstances described in Section 8.01(a) or 8.01(b)
shall exist, at a rate per annum equal to the sum of 2% plus the rate applicable
to Base Rate Loans for such day) and (ii) the sum of 2% plus the Euro-Dollar
Margin for such day plus the Adjusted London Interbank Offered Rate applicable
to such Loan at the date such payment was due.
(d) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to the Borrowers and the
participating Lenders of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
(e) Each Reference Lender agrees to use its best efforts to furnish
quotations to the Agent as contemplated by this Section. If any Reference Lender
does not furnish a timely quotation, the Agent shall determine the relevant
interest rate on the basis of the quotation or quotations furnished by the
remaining Reference Lender or Lenders or, if none of such quotations is
available on a timely basis, the provisions of Section 8.01 shall apply.
SECTION 2.06. Fees. (a) During the Revolving Credit Period, the
Borrowers shall pay to the Agent for the account of each Revolving Lender a
commitment fee at the Commitment Fee Rate (determined daily in accordance with
the Pricing Schedule) on the daily amount by which such Revolving Lender's
Revolving Commitment exceeds the sum of (x) the aggregate outstanding principal
amount of its Revolving Loans and (y) its Letter of Credit Liabilities. Such
commitment fee shall accrue from and including the Effective Date to but
excluding the date of termination of the Revolving Commitments in their
entirety.
(b) The Borrowers shall pay to the Agent (i) for the account of the
Revolving Lenders ratably in proportion to their Revolving Commitments a letter
of credit fee accruing daily on the aggregate amount then available for drawing
43
under all Letters of Credit at the Letter of Credit Fee Rate (determined in
accordance with the Pricing Schedule) and (ii) for the account of each L/C
Issuer a letter of credit fronting fee accruing daily on the aggregate amount
then available for drawing under all Letters of Credit issued by such L/C Issuer
at a rate per annum equal to 1/4 of 1%.
(c) Accrued fees under Sections 2.06(a) and (b) shall be payable
quarterly in arrears on each March 31, June 30, September 30 and December 31 and
on the date of termination of the Revolving Commitments in their entirety (and,
if later, the date on which the aggregate Letter of Credit Liabilities shall
have been reduced to $0).
SECTION 2.07. Optional Termination or Reduction of Commitments. During
the Revolving Credit Period the Borrowers may, upon at least three Domestic
Business Days' notice to the Agent, (i) terminate the Revolving Commitments at
any time, if no Revolving Loans, no Swing Loans or Letter of Credit Liabilities
are outstanding at such time or (ii) ratably reduce from time to time by an
aggregate amount of $5,000,000 or a larger multiple of $1,000,000, the aggregate
amount of the Revolving Commitments in excess of the aggregate Revolving
Exposure at such time.
SECTION 2.08. Method of Electing Interest Rates. (a) The Loans included
in each Borrowing shall initially be of the Type specified by the relevant
Borrower in the applicable Notice of Borrowing, subject to the limitations set
forth in Section 2.02; provided that the Type of any Loans outstanding under the
Original Credit Agreement immediately prior to the Effective Date shall be the
Type which such Loans are immediately prior to the Effective Date). On and after
the Effective Date, the relevant Borrower may from time to time elect to change
or continue the Type of Loans in each Group of Loans (other than any Group of
Loans which are Swing Loans), subject in each case to the provisions of Article
8, as follows:
(i) if such Loans are Base Rate Loans, such Borrower may elect
to convert such Loans to Euro-Dollar Loans as of any Euro-Dollar
Business Day; provided that no Base Rate Loans shall be converted to
Euro-Dollar Loans if at the time such conversion is to be effective, an
Event of Default has occurred and is continuing; and
(ii) if such Loans are Euro-Dollar Loans, such Borrower may
elect to convert such Loans to Base Rate Loans as of any Domestic
Business Day or to continue such Loans as Euro-Dollar Loans for an
additional Interest Period as of any Euro-Dollar Business Day, subject
to Section 2.12 in the case of any such conversion or continuation
effective on any day other than the last day of the then current
Interest Period
44
applicable to such Loans; provided that no Euro-Dollar Loans shall be
continued as Euro-Dollar Loans if at the time such continuation is to
be effective, an Event of Default has occurred and is continuing.
Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Agent not later than 12:00 Noon (New York City time) on
the third Euro-Dollar Business Day before the conversion or continuation
selected in such notice is to be effective. A Notice of Interest Rate Election
may, if it so specifies, apply to only a portion of the aggregate principal
amount of the relevant Group of Loans; provided that (i) such portion is
allocated ratably among the Loans comprising such Group and (ii) the portion to
which such Notice applies, and the remaining portion to which it does not apply,
are each $5,000,000 or any larger multiple of $1,000,000. If no Notice of
Interest Election is timely received prior to the end of an Interest Period for
any Group of Loans, such Borrower shall be deemed to have elected that such
Group of Loans be converted to Base Rate Loans as of the last day of such
Interest Period. In no event shall the total number of Groups of Loans at any
time outstanding exceed 20.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such
notice applies;
(ii) the date on which the conversion or continuation selected
in such notice is to be effective, subject to the provisos set forth in
Sections 2.08(a)(i) and 2.08(a)(ii);
(iii) if the Loans comprising such Group are to be converted,
the new Type of Loans and, if the Loans being converted are to be Euro-
Dollar Loans, the duration of the next succeeding Interest Period
applicable thereto; and
(iv) if such Loans are to be continued as Euro-Dollar Loans for
an additional Interest Period, the duration of such additional Interest
Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election from either
Borrower pursuant to Section 2.08(a), the Agent shall promptly notify each
Lender of the contents thereof and such notice shall not thereafter be revocable
by such Borrower.
45
(d) An election by either Borrower to change or continue the rate of
interest applicable to any Group of Loans pursuant to this Section shall not
constitute a "Borrowing" subject to the provisions of Section 3.03.
SECTION 2.09. Mandatory Termination of Commitments. (a) Revolving
Commitments. The Revolving Commitments shall terminate on the Revolver Maturity
Date.
(b) Swing Loan Commitment. The Swing Loan Commitment shall terminate
on the Swing Termination Date.
SECTION 2.10. Optional Prepayments. (a) Subject, in the case of any
Borrowing of Euro-Dollar Loans to Section 2.12 and, in the case of any Borrowing
of Tranche B Loans, to Section 2.04(f), either Borrower may, upon at least one
Domestic Business Day's notice to the Agent, prepay any Group of Base Rate Loans
or upon at least three Euro-Dollar Business Days' notice to the Agent, prepay
any Group of Euro-Dollar Loans, in each case in whole at any time, or from time
to time in part in amounts aggregating $5,000,000 (or, solely in the case of any
Group of Loans which are Swing Loans, $1,000,000) or any larger multiple of
$1,000,000, by paying the principal amount to be prepaid together with, in the
case of a prepayment of Euro-Dollar Loans, accrued interest thereon to the date
of prepayment. Each such optional prepayment shall be applied to prepay ratably
the Loans of the several Lenders included in such Group.
(b) Upon receipt of a notice of prepayment pursuant to this Section,
the Agent shall promptly notify each Lender of the contents thereof and of such
Lender's ratable share of such prepayment and such notice shall not thereafter
be revocable by such Borrower.
(c) Subject to Section 2.04(f), each prepayment of the Term Loans
made by either Borrower pursuant to this Section 2.10 shall be allocated pro
rata on the basis of principal amount between the then outstanding Tranche A
Loans and Tranche B Loans.
(d) Each prepayment of the Term Loans of either Class made by either
Borrower pursuant to this Section shall be applied as follows: first, to reduce
the amount of the subsequent scheduled repayments of the Term Loans (if any) of
such Class to be made within 180 days of the date such prepayment is made in
forward order until such amount shall have been paid in full and thereafter to
reduce the amount of subsequent scheduled repayments to the Term Loans of such
Class in inverse order of maturity.
SECTION 2.11. General Provisions as to Payments. (a) The Borrowers
shall make each payment of principal of, and interest on, the Loans and of
Letter
46
of Credit Liabilities and of fees hereunder (other than fees payable directly to
any L/C Issuer), not later than 1:00 P.M. (New York City time) on the date when
due, in Federal or other funds immediately available in New York City, to the
Agent at its address referred to in Section 10.01. The Agent will promptly
distribute to each Lender its ratable share of each such payment received by the
Agent for the account of the Lenders. Whenever any payment of principal of, or
interest on, the Base Rate Loans or of Letter of Credit Liabilities or of fees
shall be due on a day which is not a Domestic Business Day, the date for payment
thereof shall be extended to the next succeeding Domestic Business Day. Whenever
any payment of principal of, or interest on, the Euro-Dollar Loans shall be due
on a day which is not a Euro-Dollar Business Day, the date for payment thereof
shall be extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case the date
for payment thereof shall be the next preceding Euro-Dollar Business Day. If the
date for any payment of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from the relevant
Borrower prior to the date on which any payment is due from such Borrower to the
Lenders hereunder that such Borrower will not make such payment in full, the
Agent may assume that such Borrower has made such payment in full to the Agent
on such date and the Agent may, in reliance upon such assumption, cause to be
distributed to each Lender on such due date an amount equal to the amount then
due such Lender. If and to the extent that such Borrower shall not have so made
such payment, each Lender shall repay to the Agent forthwith on demand such
amount distributed to such Lender together with interest thereon, for each day
from the date such amount is distributed to such Lender until the date such
Lender repays such amount to the Agent, at the Federal Funds Rate.
SECTION 2.12. Funding Losses. If either Borrower makes any payment of
principal with respect to any Euro-Dollar Loan or any Euro-Dollar Loan is
converted (pursuant to Article 2, 6 or 8 or otherwise) on any day other than the
last day of an Interest Period applicable thereto, or the last day of an
applicable period fixed pursuant to Section 2.05(c), or if either Borrower fails
to borrow, prepay, convert or continue any Euro-Dollar Loans after notice has
been given to any Lender in accordance with Section 2.02(a), 2.04(d), 2.08 or
2.10, such Borrower shall reimburse each Lender within 15 days after demand for
any resulting loss or expense incurred by it (or, without duplication, by an
existing or prospective Participant in the related Loan), including (without
limitation) any loss incurred in obtaining, liquidating or employing deposits
from third parties, but excluding loss of margin for the period after any such
payment or conversion or failure to borrow, prepay, convert or continue,
provided that such Lender shall have delivered to such Borrower a certificate as
to the amount of such loss or expense, which certificate shall be conclusive in
the absence of manifest error.
47
SECTION 2.13. Computation of Interest and Fees. Interest based on the
Prime Rate hereunder shall be computed on the basis of a year of 365 days (or
366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
SECTION 2.14. Letters of Credit. (a) Subject to the terms and
conditions hereof, each L/C Issuer agrees to issue letters of credit hereunder
from time to time before the tenth day before the Revolver Maturity Date upon
the request of either Borrower (the "Letters of Credit"); provided that,
immediately after each Letter of Credit is issued, (i) the aggregate amount of
the Letter of Credit Liabilities shall not exceed the Letter of Credit
Commitment and (ii) the aggregate amount of the Revolving Exposures shall not
exceed the aggregate amount of the Available Revolving Commitments. Upon the
date of issuance by an L/C Issuer of a Letter of Credit, the L/C Issuer shall be
deemed, without further action by any party hereto, to have sold to each
Revolving Lender, and each Revolving Lender shall be deemed, without further
action by any party hereto, to have purchased from the L/C Issuer, a
participation in such Letter of Credit and all of the related Letter of Credit
Liabilities pro rata to their respective Revolving Percentages.
(b) The relevant Borrower shall give the L/C Issuer notice at least
three Domestic Business Days prior to the requested issuance of a Letter of
Credit specifying the date such Letter of Credit is to be issued, and describing
the terms of such Letter of Credit and the nature of the transactions to be
supported thereby (such notice, including any such notice given in connection
with the extension or renewal of a Letter of Credit, a "Notice of Issuance").
Upon receipt of a Notice of Issuance, the L/C Issuer shall promptly notify the
Agent, and the Agent shall promptly notify each Revolving Lender of the contents
thereof and of the amount of such Revolving Lender's participation in such
Letter of Credit. The issuance by the L/C Issuer of each Letter of Credit shall,
in addition to the conditions precedent set forth in Section 3.03, be subject to
the conditions precedent that such Letter of Credit shall be in such form and
contain such terms as shall be satisfactory to the L/C Issuer and that such
Borrower shall have executed and delivered such other instruments and agreements
relating to such Letter of Credit as the L/C Issuer shall have reasonably
requested. Such Borrower shall also pay to the L/C Issuer for its own account
issuance, drawing, amendment and extension charges in the amounts and at the
times as agreed between such Borrower and the L/C Issuer. The extension or
renewal of any Letter of Credit shall be deemed to be an issuance of such Letter
of Credit, and if any Letter of Credit contains a provision pursuant to which it
is deemed to be extended unless notice of termination is given by the L/C
Issuer, the L/C Issuer shall timely give such notice of termination unless it
has theretofore timely received a Notice of Issuance and the other conditions to
issuance of a Letter of Credit have also theretofore been
48
met with respect to such extension. No Letter of Credit shall have a term
extending or be extendible beyond the date which is ten days prior to the
Revolver Maturity Date.
(c) Upon receipt from the beneficiary of any Letter of Credit of any
notice of a drawing under such Letter of Credit, the L/C Issuer shall notify the
Agent and the Agent shall promptly give notice (a "Draw Notice") to such
Borrower and each Revolving Lender as to the amount to be paid as a result of
such demand or drawing and the payment date. Upon receipt of a Draw Notice by
such Borrower, such Borrower shall be irrevocably and unconditionally obligated
to reimburse the L/C Issuer for any amounts paid by the L/C Issuer upon any
drawing under any Letter of Credit, without presentment, demand, protest or
other formalities of any kind on the second Domestic Business Day following the
date of receipt. Regardless of if and when a Draw Notice is given to or received
by such Borrower, all such amounts paid by the L/C Issuer and remaining unpaid
by such Borrower shall bear interest, payable on demand, for each day from and
including the date of payment by the L/C Issuer until paid at a rate per annum
equal to (x) to but not including the due date determined in accordance with the
preceding sentence, the rate applicable to Base Rate Loans for such day and (y)
on and after such due date, the sum of 2% plus the rate applicable to Base Rate
Revolving Loans for such day. In addition, each Revolving Lender will pay to the
Agent, for the account of the L/C Issuer, immediately upon the L/C Issuer's
demand at any time during the period commencing after such drawing until
reimbursement therefor in full by such Borrower, an amount equal to such
Lender's ratable share of such drawing (in proportion to its participation
therein), together with interest on such amount for each day from the date of
the L/C Issuer demand for such payment (or, if such demand is made after 12:00
Noon (New York City time) on such date, from the next succeeding Domestic
Business Day) to the date of payment by such Lender of such amount at the
Federal Funds Rate. The L/C Issuer will pay to each Revolving Lender ratably all
amounts received from such Borrower for application in payment of its
reimbursement obligations in respect of any Letter of Credit, but only to the
extent such Revolving Lender has made payment to the L/C Issuer in respect of
such Letter of Credit pursuant hereto.
(d) The obligations of the Borrowers and each Revolving Lender under
subsection (c) above shall be absolute, unconditional and irrevocable, and shall
be performed strictly in accordance with the terms of this Agreement, under all
circumstances whatsoever, including without limitation the following
circumstances:
(i) any lack of validity or enforceability of this Agreement or
any Letter of Credit or any document related hereto or thereto;
49
(ii) any amendment or waiver of or any consent to departure from
all or any of the provisions of this Agreement or any Letter of Credit
or any document related hereto or thereto;
(iii) the use which may be made of the Letter of Credit by, or
any acts or omission of, a beneficiary of a Letter of Credit (or any
Person for whom the beneficiary may be acting);
(iv) the existence of any claim, set-off, defense or other
rights that either Borrower may have at any time against a beneficiary
of a Letter of Credit (or any Person for whom the beneficiary may be
acting), the Lenders (including the L/C Issuer) or any other Person,
whether in connection with this Agreement or the Letter of Credit or
any document related hereto or thereto or any unrelated transaction;
(v) any statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent or invalid in any
respect or any statement therein being untrue or inaccurate in any
respect whatsoever;
(vi) payment under a Letter of Credit against presentation to
the L/C Issuer of a draft or certificate that does not comply with the
terms of the Letter of Credit; or
(vii) any other act or omission to act or delay of any kind by
any Lender (including the L/C Issuer ), the Agent or any other Person,
but for the provisions of this subsection (vii), constitute a legal or
equitable discharge of either Borrower's or the Lender's obligations
hereunder.
Nothing in this subsection (d) is intended to limit the right of either Borrower
to make a claim against the L/C Issuer for damages as contemplated by the
proviso to the first sentence of subsection (e).
(e) Each Borrower hereby indemnifies and holds harmless each L/C
Issuer and the Agent (and, to the extent any other Lender shall have contributed
toward or indemnified against any such claim, damage, loss, liability, cost or
expense, incurred by an L/C Issuer or the Agent, each such other Lender) from
and against any and all claims, damages, losses, liabilities, costs or expenses
which it may incur (including, without limitation, any claims, damages, losses,
liabilities, costs or expenses which the L/C Issuer may incur by reason of or in
connection with the failure of any other Lender to fulfill or comply with its
obligations to such L/C Issuer hereunder), and none of the Lenders (including an
L/C Issuer) nor the Agent nor any of their officers or directors or employees or
agents shall be liable or responsible, by reason of or in connection with the
execution and delivery or transfer of or payment or failure to pay under any
Letter
50
of Credit, including without limitation any of the circumstances enumerated in
subsection (d) above, as well as (i) any error, omission, interruption or delay
in transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, (ii) any error in interpretation of technical terms, (iii) any loss
or delay in the transmission of any document required in order to make a drawing
under a Letter of Credit, (iv) any consequences arising from causes beyond the
control of the L/C Issuer, including without limitation any government acts, or
(v) any other circumstances whatsoever in making or failing to make payment
under such Letter of Credit; provided that no Borrower shall be required to
indemnify any Lender for any claims, damages, losses, liabilities, costs or
expenses, and each Borrower shall have a claim against the L/C Issuer for direct
(but not consequential) damage suffered by it, to the extent found by a court of
competent jurisdiction to have been caused by (x) the willful misconduct or
gross negligence of the L/C Issuer in determining whether a request presented
under any Letter of Credit complied with the terms of such Letter of Credit or
(y) the L/C Issuer's failure to pay under any Letter of Credit after the
presentation to it of a request strictly complying with the terms and conditions
of the Letter of Credit. Nothing in this subsection (e) is intended to limit the
obligations of either Borrower under any other provision of this Agreement. To
the extent the Borrowers do not indemnify an L/C Issuer as required by this
subsection, the Revolving Lenders agree to do so ratably in accordance with
their Revolving Commitments.
ARTICLE 3
CONDITIONS
SECTION 3.01. Effective Date. This Agreement shall become effective
on the date when each of the following conditions shall have been satisfied:
(a) the Agent shall have received from each Borrower and the Required
Lenders either a counterpart hereof signed by such party or facsimile or other
written confirmation satisfactory to the Agent confirming that such party has
signed a counterpart hereof;
(b) the Agent shall have received an opinion of Christensen, Miller,
Fink, Jacobs, ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇, LLP, special counsel for the Obligors,
substantially in the form of Exhibit B and dated the Effective Date;
(c) the Agent shall have received a Perfection Certificate (as defined
in the Security Agreement) as of the Effective Date duly completed by the
Borrowers, together with duly executed financing statements on Form UCC-1 or
UCC-3 in form sufficient for filing in all jurisdictions in which such filing is
necessary to continue or perfect Liens created by the Collateral Documents and
all
51
necessary documents for filing with the U.S. Patent and Trademark Office and the
U.S. Copyright Office, and the delivery of any promissory notes and stock
certificates comprising the Collateral;
(d) the Agent and the Arranger shall have received payment in full of
all fees, expenses and other amounts due and payable hereunder (including fees
and expenses payable pursuant to Section 10.03) or pursuant to any letter
agreement between either Borrower and the Agent or the Arranger relating to the
transactions contemplated by the Loan Documents;
(e) after giving effect to the amendment and restatement of the
Original Credit Agreement effected hereby, (i) no Default shall have occurred
and be continuing and (ii) the representations and warranties of the Obligors
contained in the Loan Documents shall be true in all material respects on and as
of the Effective Date; and
(f) the Agent shall have received all documents the Agent may
reasonably request relating to the existence of the Obligors, the corporate
authority for and the validity of the Loan Documents, and any other matters
relevant hereto, all in form and substance reasonably satisfactory to the Agent.
SECTION 3.02. Consequences of Effectiveness. (a) On the Effective Date,
without further action by any of the parties thereto, (i) the Original Credit
Agreement will be automatically amended and restated to read as this Agreement
reads and (ii) the rights and obligations of the Terminating Lenders under the
Original Credit Agreement will terminate, provided that their rights under
Sections 2.12, 8.04 and 10.03(b) of the Original Credit Agreement will survive.
(b) The interest rates determined in accordance with Section 2.05 of
this Amended and Restated Agreement shall be effective on the Effective Date;
provided that, the interest rate applicable to each Euro-Dollar Loan outstanding
on the Effective Date for each day during the then current Interest Period
applicable thereto shall be the rate per annum equal to the sum of the Euro-
Dollar Margin (as defined in this Amended and Restated Credit Agreement) for
such day plus the Adjusted London Interbank Offered Rate applicable to such Loan
for such Interest Period (as determined pursuant to Section 2.05 of the Original
Credit Agreement).
(c) On and after the Effective Date, the rights and obligations of
the parties hereto shall be governed by the provisions hereof. The rights and
obligations of the parties to the Original Credit Agreement with respect to the
period prior to the Effective Date shall continue to be governed by the
provisions thereof as in effect prior to the Effective Date, except that all
interest and fees accrued under the Original Credit Agreement to but excluding
the Effective Date shall be paid on the Effective Date. In addition, the Lenders
waive any "Default"
52
or "Event of Default" under the Original Credit Agreement, as a result of either
Borrower's noncompliance with Section 5.23(d) of the Original Credit Agreement,
Section 5 of the Borrower Pledge Agreement, Section 5 of the Guarantor Pledge
Agreement, or Section 4(A) or (B) of the Security Agreement, solely for any
period ending prior to the Effective Date.
SECTION 3.03. Borrowings and Issuances of Letters of Credit. The
obligation of any Lender to make a Loan on the occasion of any Borrowing (other
than the obligation of any Lender to make a Refunding Swing Loan), and the
obligation of an L/C Issuer to issue (which shall include, for purposes of this
Section, any renewal or extension of the term of) any Letter of Credit are each
subject to the satisfaction of the following conditions:
(a) receipt by the Agent of a Notice of Borrowing as required by
Section 2.01 or receipt by the L/C Issuer of a Notice of Issuance as required by
Section 2.14(b);
(b) solely in the case of a Revolving Borrowing, a Swing Borrowing or
issuance of a Letter of Credit the fact that, immediately after such Borrowing
or the issuance of such Letter of Credit, as the case may be, the aggregate
Revolving Exposure will not exceed the aggregate amount of the Available
Revolving Commitments;
(c) the fact that, immediately before and after such Borrowing or
issuance of a Letter of Credit, as the case may be, no Default shall have
occurred and be continuing; and
(d) the fact that the representations and warranties of the Obligors
contained in the Loan Documents shall be true in all material respects on and as
of the date of such Borrowing.
Each Borrowing and issuance of a Letter of Credit hereunder shall be
deemed to be a representation and warranty by the Borrowers on the date of such
Borrowing or issuance of a Letter of Credit, as the case may be, as to the facts
specified in clauses (b), (c) and (d) of this Section.
53
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. Each Obligor is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, and has all corporate powers and
all material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted, except to the extent that
the failure to have such licenses, authorizations, consents and approvals could
not in the aggregate reasonably be expected to have a Material Adverse Effect.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by each Obligor of the
Loan Documents to which it is a party (i) are within the corporate powers of
such Obligor and have been duly authorized by all necessary corporate action,
(ii) require no action by or in respect of, or filing with, any governmental
body, agency or official, other than actions or filings which have been taken or
made on or prior to the Effective Date or, solely with respect to filings
necessary to perfect any security interest created under any of the Collateral
Documents, will be made on or prior to 5 Domestic Business Days after the
Effective Date, (iii) do not contravene, or constitute a default under, any
provision (A) of applicable law or regulation, (B) of the articles or
certificate of incorporation or by-laws of such Obligor, (C) of any agreement or
instrument under which Debt has or may be incurred binding upon MGM or any of
its Subsidiaries, (D) of any other agreement or instrument binding upon MGM or
any of its Subsidiaries which contravention or default could reasonably be
expected to have a Material Adverse Effect or (E) of any judgment, injunction,
order or decree binding upon MGM or any of its Subsidiaries or (iv) result in
the creation or imposition of any Lien on any material asset of MGM or any of
its Subsidiaries.
SECTION 4.03. Binding Effect. The Loan Documents (other than the Notes)
to which each Obligor is a party constitute valid and binding agreements of such
Obligor and each Note of each Borrower, when executed and delivered in
accordance with this Agreement, will constitute a valid and binding obligation
of such Borrower, in each case enforceable in accordance with its terms except
(i) as may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (ii) as may be limited by equitable principles
of general applicability.
SECTION 4.04. Financial Information; Information Memorandum. (a) The
consolidated balance sheets of each of MGM Studios and its Consolidated
Subsidiaries and Orion and its Consolidated Subsidiaries as of December 31, 1999
54
and the related consolidated statements of income and cash flows for the fiscal
year then ended, reported on by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, a copy of which has been
delivered to each of the Lenders, fairly present, in conformity with generally
accepted accounting principles, the consolidated financial position of each of
MGM Studios and its Consolidated Subsidiaries and Orion and its Consolidated
Subsidiaries, respectively, as of such date and their respective consolidated
results of operations and cash flows for such fiscal year.
(b) [Intentionally Deleted].
(c) [Intentionally Deleted].
(d) The projections set forth in the Information Memorandum were
prepared in good faith on assumptions believed to be reasonable at the time of
preparation thereof.
(e) Since December 31, 1999 there has been no material adverse change
in the assets or liabilities or the business, financial position or results of
operations of the Combined Companies, considered as a whole, except for any such
change as a result of (x) any change resulting from general economic, financial
or market conditions not specific to the Borrowers and their respective
Subsidiaries or the business in which they operate or (y) any change resulting
from conditions or circumstances generally affecting the business in which the
Borrowers and their respective Subsidiaries operate (including losses from the
release of Films in the ordinary course of business).
SECTION 4.05. Litigation. Except as set forth in Schedule 4.05, there
is no action, suit or proceeding pending against, or to the knowledge of either
Borrower threatened against or affecting, MGM or any of its Subsidiaries or
questioning the validity or enforceability of the Loan Documents, in each case
before any court or arbitrator or any governmental body, agency or official
which could reasonably be expected to have a Material Adverse Effect.
SECTION 4.06. Compliance with ERISA. Neither a Reportable Event nor an
"accumulated funding deficiency" (within the meaning of Section 412 of the Code
or Section 302 of ERISA) has occurred during the five-year period prior to the
date on which this representation is made or deemed made with respect to any
Plan, and each Plan has complied in all material respects with the applicable
provisions of ERISA and the Code, except in each case to the extent that the
same could not reasonably be expected to have a Material Adverse Effect. No
termination of a Single Employer Plan has occurred, and no Lien in favor of the
PBGC or a Plan has arisen, during such five-year period, except to the extent
that the same could not reasonably be expected to have a Material Adverse
Effect. The present value of all accrued benefits under each Single Employer
Plan (based
55
on those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits, except to the extent that the same could not reasonably be expected to
have a Material Adverse Effect. Neither MGM nor any Commonly Controlled Entity
has had a complete or partial withdrawal from any Multiemployer Plan, and
neither MGM nor any Commonly Controlled Entity would become subject to any
liability under ERISA if MGM or any such Commonly Controlled Entity were to
withdraw completely from all Multiemployer Plans as of the valuation date most
closely preceding the date on which this representation is made or deemed made,
except in each case to the extent that the same could not reasonably be expected
to have a Material Adverse Effect. No such Multiemployer Plan is in
Reorganization or Insolvent. Neither MGM nor any of its Subsidiaries has any
liability for any post-retirement welfare benefits.
SECTION 4.07. Environmental Compliance. In the ordinary course of its
business, each Borrower conducts an ongoing review of the effect of
Environmental Laws on the business, operations and properties of such Borrower
and its Subsidiaries, in the course of which it identifies and evaluates
associated liabilities and costs (including, without limitation, any capital or
operating expenditures required for clean-up or closure of properties presently
or previously owned, any capital or operating expenditures required to achieve
or maintain compliance with environmental protection standards imposed by law or
as a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site disposal
of wastes or Hazardous Substances, and any actual or potential liabilities to
third parties, including employees, and any related costs and expenses). On the
basis of this review, each Borrower has reasonably concluded that such
associated liabilities and costs, including the costs of compliance with
Environmental Laws, are unlikely to have a Material Adverse Effect.
SECTION 4.08. Taxes. MGM and its Subsidiaries have filed all United
States Federal income tax returns and all other material tax returns which are
required to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by MGM or any Subsidiary (other
than any such taxes being contested in good faith by appropriate proceeding and
with respect to which appropriate reserves in accordance with generally accepted
accounting principles have been taken). The charges, accruals and reserves on
the books of MGM and its Subsidiaries in respect of taxes or other governmental
charges are, in the opinion of the Borrowers, adequate.
56
SECTION 4.09. Subsidiaries. (a) Each of the Material Subsidiaries of
either Borrower is a corporation or other business entity duly incorporated or
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, and has all corporate or other
powers and all material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted, except to the
extent that the failure of such Material Subsidiaries to maintain their
respective good standing or to have such licenses, authorizations, consents and
approvals could not in the aggregate reasonably be expected to have a Material
Adverse Effect (or its existence has been terminated as permitted under Section
5.04 or it has merged or consolidated with another Person as permitted under
Section 5.07(a)).
(b) Schedule 4.09 lists all of the Material Subsidiaries of each
Borrower (including any Material Subsidiary the existence of which has been
terminated as permitted under Section 5.04 or which has merged or consolidated
with another Person as permitted under Section 5.07(a)). Each Material
Subsidiary of a Borrower (other than Foreign Subsidiaries and Single Purpose
Subsidiaries) is a Guarantor. Each Guarantor is a direct or indirect wholly-
owned Subsidiary of a Borrower.
SECTION 4.10. Regulatory Restrictions on Borrowing. None of the
Borrowers is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, a "holding company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended, or otherwise subject to
any regulatory scheme which restricts its ability to incur debt.
SECTION 4.11. Full Disclosure. No information heretofore or hereafter
furnished by any Obligor to the Agent or any Lender for purposes of or in
connection with the Loan Documents or any transaction contemplated thereby
contains or, taken together with all information so furnished will contain, any
untrue statement of a material fact or omits or will omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
SECTION 4.12. Intellectual Property. Except as set forth in Schedule
4.05, each of the Borrowers and their respective Subsidiaries owns, or is a
licensed to use, all trademarks, tradenames, copyrights (including without
limitation any copyrights relating to Library Films), technology, know-how and
processes necessary for the conduct of their respective businesses as currently
conducted (the "Intellectual Property"), except to the extent that the failure
to own or be licensed to use any such Intellectual Property could not in the
aggregate reasonably be expected to have a Material Adverse Effect. No claim has
been asserted and is pending by any Person challenging or questioning the use of
any Intellectual Property or the validity or effectiveness of any such
Intellectual
57
Property, nor does either Borrower know of any valid basis for any such claim,
except, in each case, for claims which could not in the aggregate reasonably be
expected to have a Material Adverse Effect. The use of Intellectual Property by
any MGM/Orion Company does not infringe on the rights of any Person, except to
the extent that such infringements could not in the aggregate reasonably be
expected to have a Material Adverse Effect.
SECTION 4.13. Collateral Documents. The representations and warranties
made by the Obligors in the Collateral Documents are true and correct in all
material respects.
SECTION 4.14. Solvency. As of the Effective Date after giving effect to
the transactions contemplated hereby to occur on the Effective Date, and at all
times thereafter: (i) the aggregate fair market value of the business and/or
assets of each Borrower, and of the Obligors, taken as a whole, will in each
case exceed its or their respective liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities), (ii) each Borrower will,
and the Obligors, taken as a whole, will, have sufficient cash flow to enable it
or them (as the case may be) to pay its or their debts as they mature and (iii)
the MGM/Orion Companies will not have unreasonably small capital for the
business in which the MGM/Orion Companies are engaged.
SECTION 4.15. Regulation U. After giving effect to the issuance of any
Letters of Credit and the application of the proceeds of any Loans, not more
than 25% of the value of the assets of the Borrowers and their respective
Subsidiaries is represented by "margin stock" as defined in Regulation U.
ARTICLE 5
COVENANTS
Each Borrower agrees that, so long as any Lender has any Commitment
hereunder or any amount payable under any Note or any Letter of Credit Liability
remains unpaid:
SECTION 5.01. Information. The Borrowers will deliver to the Agent,
with sufficient copies for all Lenders (and the Agent shall deliver promptly
upon receipt to the Lenders):
(a) as soon as available and in any event within 105 days after the
end of each Fiscal Year, (i) an audited combined balance sheet of the Combined
Companies as of the end of such Fiscal Year and the related audited combined
statements of operations and cash flows for such Fiscal Year, setting forth in
each
58
case in comparative form the figures for the previous Fiscal Year, all reported
on without material qualification by independent public accountants of
nationally recognized standing and (ii) an unaudited combined statement of cash
flows of the Combined Companies for such Fiscal Year, setting forth in
reasonable detail a calculation of combined cash flows from operations of the
Combined Companies for such Fiscal Year (determined in a manner consistent with
the statements of cash flows included in the Information Memorandum);
(b) as soon as available and in any event within 45 days after the
end of each of the first three Fiscal Quarters of each Fiscal Year, (i) a
combined balance sheet of the Borrowers and their respective Consolidated
Subsidiaries as of the end of such Fiscal Quarter and the related combined
statements of operations and cash flows for such Fiscal Quarter and for the
portion of the Fiscal Year ended at the end of such Fiscal Quarter, setting
forth in the case of such statements of operations and cash flows, in
comparative form the figures for the corresponding Fiscal Quarter and the
corresponding portion of the previous Fiscal Year, all certified (subject to
normal year-end adjustments) as to fairness of presentation, generally accepted
accounting principles and consistency by the chief financial officer or the
chief accounting officer of each Borrower and (ii) an unaudited combined
statement of cash flows of the Combined Companies for such Fiscal Quarter and
the portion of the Fiscal Year ended at the end of such Fiscal Quarter, setting
forth in reasonable detail a calculation of combined cash flows from operations
of Combined Companies for such Fiscal Quarter and the portion of the Fiscal Year
ended at the end of such Fiscal Quarter (determined in a manner consistent with
the statements of cash flows included in the Information Memorandum);
(c) simultaneously with the delivery of each set of financial
statements referred to in Sections 5.01(a) and 5.01(b), (A) a certificate of the
chief financial officer or the chief accounting officer of each Borrower, (i)
setting forth in reasonable detail the calculations required to establish (x)
whether the Borrowers were in compliance with the requirements of Sections 5.10
to 5.18, inclusive, on the date of such financial statements and (y) the
Clawback Obligations at the last day of the Fiscal Quarter or Fiscal Year as to
which such financial statements relate, (ii) setting forth (x) the aggregate
fair market value of all Film Value Assets that have been disposed of pursuant
to Film Value Asset Dispositions since the date of the immediately prior
certificate delivered pursuant to this Section 5.01(c) (or in the case of the
first certificate delivered hereunder, since the Effective Date) (other than
pursuant to Ordinary Course Library Film Licensing Agreements), (y) whether the
Borrowers are in compliance with the provisions of Section 5.25 on the date of
such financial statements and, for purposes of such calculation, Film Value
shall be as set forth in the appraisal report delivered on or most recently
prior to such date pursuant to Section 5.01(j) (averaged, if necessary, in
accordance with the definition thereof) and adjusted to give effect to
59
all Film Value Asset Dispositions (other than pursuant to Ordinary Course
Library Film Licensing Agreements) consummated after the date as of which such
appraisal report has been prepared (but including any payments to be made (but
not yet made) to any Obligor pursuant to the agreements governing any such Film
Value Asset Disposition and constituting a portion of the purchase price with
respect to the Film Value Asset disposed pursuant to such Film Value Asset
Disposition); and (z) in reasonable detail, the calculations required to make
such determination, (iii) listing all new Material Subsidiaries of either
Borrower since the date of the previous certificate delivered pursuant to this
Section 5.01(c), (iv) solely in the case of each set of financial statements
referred to in Section 5.01(a), setting forth in reasonable detail the
calculations required to determine Excess Cash Flow for the related Fiscal Year
and (v) stating whether, to his or her knowledge, any Default exists on the date
of such certificate and, if any Default then exists, setting forth the details
thereof and the action which the Borrowers are taking or propose to take with
respect thereto and (B) from the chief financial officer or the chief accounting
officer of each Borrower, a report setting forth in reasonable detail a
discussion and analysis of the Borrowers' financial condition and results of
operations for the Fiscal Quarter then ended;
(d) simultaneously with the delivery of each set of financial
statements referred to in Section 5.01(a)(i), a statement of the firm of
independent public accountants which reported on such statements (i) whether
anything has come to their attention to cause them to believe that any Default
under Sections 5.11 to 5.16, inclusive, existed on the date of such statements
and (ii) confirming the accuracy of the calculations set forth in the officer's
certificate delivered simultaneously therewith pursuant to Section 5.01(c)
(other than the calculations relating to the determination of Excess Cash Flow);
(e) reasonably promptly after any Responsible Officer obtains
knowledge of any Default, if such Default is then continuing, a certificate of
the chief financial officer or the chief accounting officer of the relevant
Borrower setting forth the details thereof and the action which the Borrowers
are taking or propose to take with respect thereto;
(f) as soon as reasonably practicable after any Responsible Officer
obtains knowledge thereof, notice of any event or condition which has had or
could reasonably be expected to have a Material Adverse Effect and the nature of
such Material Adverse Effect;
(g) as soon as reasonably practicable after any Responsible Officer
obtains knowledge of the commencement of, or of a threat of the commencement of,
an action, suit or proceeding against MGM or any of its Subsidiaries before any
court or arbitrator or any governmental body, agency or official which could
reasonably be expected to have a Material Adverse Effect or which questions the
60
validity or enforceability of the Loan Documents, a certificate of a senior
financial officer of each Borrower setting forth the nature of such pending or
threatened action, suit or proceeding and such additional information with
respect thereto as may be reasonably requested by any Lender;
(h) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their
equivalents) (if any) which either Borrower or MGM shall have filed with the
Securities and Exchange Commission;
(i) written notice of the following events, as soon as possible and
in any event within 30 days after any of the appropriate officers or employees
of MGM with responsibility for MGM's Plans and the compliance by such Plans with
ERISA and the Code knows or has reason to know thereof: (i) the occurrence or
expected occurrence of any Reportable Event with respect to any Plan, the filing
of an application for a waiver of the minimum funding standard with respect to a
Plan under Section 412 of the Code, the creation of any Lien in favor of PBGC or
a Plan or any withdrawal from, or the termination, reorganization or Insolvency
of, any Multiemployer Plan or (ii) the institution of proceedings or the taking
of any other action by the PBGC or MGM or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the terminating,
reorganization or Insolvency of, any Plan;
(j) (i) not later than April 30, 2000 and April 30 of every second
calendar year thereafter and October 31 of each calendar year, beginning with
October 31, 2000, a bring-down appraisal report prepared and certified by the
chief financial officer or the chief accounting officer of the Borrowers, as to
the Film Value as of the last day of the immediately preceding Fiscal Year (in
the case of any such appraisal report required to be delivered on or prior to
April 30 of any calendar year) or as of June 30 of the then current Fiscal Year
(in the case of any such appraisal report required to be delivered after April
30 and on or prior to October 31 of any calendar year), performed using the
methods and procedures used in, and prepared in a form substantially consistent
with, the appraisal then most recently delivered pursuant to clause (ii) and
(ii) not later than April 30, 2001 and April 30 of every second calendar year
thereafter, an appraisal report prepared by a qualified independent appraiser
selected by the Borrowers and reasonably satisfactory to the Agent, as to the
Film Value as of the last day of the immediately preceding Fiscal Year,
performed, in the case of Library Films, using the methods and procedures used
in, and prepared in a form substantially consistent with, the appraisal of the
Library Films of MGM Studios prepared by ▇▇▇▇▇▇ ▇▇▇▇ LLC and dated August 1996;
61
(k) within 30 days after the end of each Fiscal Year, the operating
and capital expenditure budgets and cash flow forecasts of each of the Borrowers
and their respective Consolidated Subsidiaries and the Combined Companies for
the immediately succeeding Fiscal Year, which budgets and forecasts shall be in
format and scope reasonably consistent with the projections, budgets and
forecasts set forth in the Information Memorandum; and
(l) from time to time such additional information regarding the
financial position or business of the Borrowers and their respective
Subsidiaries or any other Obligor as the Agent, at the request of any Lender,
may reasonably request.
SECTION 5.02. Payment of Obligations. Each Borrower will pay and
discharge, and will cause each of its Material Subsidiaries to pay and
discharge, at or before maturity, all their respective material obligations and
liabilities (including, without limitation, tax liabilities and claims of
materialmen, warehousemen and the like which if unpaid might by law give rise to
a Lien), except (i) where the same may be contested in good faith by appropriate
proceedings, and will maintain, and will cause each Material Subsidiary to
maintain, in accordance with generally accepted accounting principles,
appropriate reserves for the accrual of any of the same and (ii) where the
failure to pay or discharge such obligations and liabilities could not
reasonably be expected to have a Material Adverse Effect.
SECTION 5.03. Maintenance of Property; Insurance. (a) Each Borrower
will keep, and will cause each of its Material Subsidiaries to keep, all
property useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted, except where the failure to do so
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(b) Each Borrower will, and will cause each of its Material
Subsidiaries to, maintain (in the name of such Borrower or such Subsidiary) with
financially sound and responsible insurance companies, insurance on their
respective properties in at least such amounts, against at least such risks and
with such risk retention as are usually maintained, insured against or retained,
as the case may be, in the same general area by companies of established repute
engaged in the same or a similar business (but including in any event public
liability insurance and "errors and omissions" insurance); and will furnish to
the Lenders, upon request from the Agent, information presented in reasonable
detail as to the insurance so carried.
SECTION 5.04. Conduct of Business and Maintenance of Existence. Each
Borrower will continue, and will cause each of its Material Subsidiaries to
continue, to engage in business of the same general type as now conducted by
such Borrower and its Material Subsidiaries and other businesses reasonably
62
incidental thereto and will preserve, renew and keep in full force and effect,
and will cause each of its Material Subsidiaries to preserve, renew and keep in
full force and effect their respective corporate existence and their respective
rights, privileges and franchises necessary or desirable in the normal conduct
of business, except to the extent that the failure to keep in full force and
effect such rights, privileges and franchises could not in the aggregate
reasonably be expected to have a Material Adverse Effect; provided that (i)
either Borrower may liquidate or terminate the corporate existence of any of its
Material Subsidiaries if, prior to or contemporaneously with such liquidation or
termination, substantially all of the assets of such Material Subsidiary are
distributed, contributed or otherwise transferred to a Borrower or a Guarantor
and (ii) nothing in this Section 5.04 shall prohibit any transaction explicitly
permitted by the proviso set forth in Section 5.07(a).
SECTION 5.05. Compliance with Laws. Each Borrower will comply, and will
cause each of its Material Subsidiaries to comply, in all material respects with
all applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including, without limitation, Environmental Laws and
ERISA and the rules and regulations thereunder) except (i) where the necessity
of compliance therewith is contested in good faith by appropriate proceedings or
(ii) to the extent that failure to so comply could not in the aggregate
reasonably be expected to have a Material Adverse Effect.
SECTION 5.06. Inspection of Property, Books and Records. Each Borrower
will keep, and will cause each of its Subsidiaries to keep, proper books of
record and account in which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and activities; and will
permit, and will cause each of its Subsidiaries to permit, representatives of
the Agent, at the Agent's or the Lenders' expense, to visit and inspect any of
their respective properties, to examine and make abstracts from any of their
respective books and records and to discuss their respective affairs, finances
and accounts with their respective officers, employees and independent public
accountants, all at such reasonable times during normal business hours and upon
reasonable prior notice, and as often as may reasonably be desired.
SECTION 5.07. Mergers and Sales of Assets; Licensing Agreements. (a)
Each Borrower will not, and will not permit any of its Material Subsidiaries to,
consolidate or merge with or into any other Person; provided that (i) either
Borrower may merge with another Person if such Borrower is the corporation
surviving such merger and immediately after giving effect to such merger, no
Default shall have occurred and be continuing and (ii) any Material Subsidiary
may merge with any other Person if the corporation surviving the merger is a
Borrower or a Guarantor and immediately after giving effect to such merger, no
Default shall have occurred and be continuing.
63
(b) Each Borrower will not, and will not permit any of its
Subsidiaries to, make any Asset Sale unless (i) such Asset Sale is for fair
market value, as determined in good faith by the Borrowers taking into account
current practices in the entertainment industry, (ii) immediately after giving
effect to such Asset Sale, (x) the aggregate proceeds (including the fair market
value of any non-cash proceeds) received by the Borrowers and their respective
Subsidiaries from all Asset Sales consummated on and after the Effective Date
does not exceed 15% of Combined Adjusted Net Worth determined on the basis of
the most recent financial statements delivered by the Borrowers pursuant to
Section 4.04, 5.01(a) or 5.01(b), as the case may be, (y) the Borrowers shall be
in Pro Forma Compliance and (z) no Default shall have occurred and be continuing
and (iii) if after giving effect to such Asset Sale the aggregate fair market
value of all Film Value Assets that have been disposed of pursuant to Film Value
Asset Dispositions during the then current Fiscal Year (other than pursuant to
Ordinary Course Library Film Licensing Agreements) exceeds $100,000,000, the
Borrowers shall have provided to the Agent a certificate signed on its behalf by
its chief financial officer or chief accounting officer (1) certifying as to the
matter referred to in clause (ii)(y) above and (2) setting forth the calculation
of Pro Forma Compliance in reasonable detail after giving effect to such Film
Value Asset Disposition, provided that for the purposes of the calculation to be
made pursuant to this clause (2) only, Ordinary Course Library Film Licensing
Agreements shall not be included.
(c) Without limitation of the foregoing, each Borrower will not, and
will not permit its Subsidiaries to, sell, lease or otherwise transfer, directly
or indirectly, all or substantially all of the assets of such Borrower and its
Subsidiaries, taken as a whole, to any other Person; provided that nothing in
this subsection (c) shall prohibit any Subsidiary from distributing,
contributing or otherwise transferring its assets to a Borrower or a Guarantor.
(d) Without limitation of the foregoing, each Borrower will not, and
will not permit its Subsidiaries to, enter into any Licensing Agreement or
series of related Licensing Agreements with respect to any Library Films unless
(i) immediately after entering into any such Licensing Agreement, (x) the
Borrowers shall be in Pro Forma Compliance and (y) no Default shall have
occurred and be continuing and (ii) if after giving effect to such Licensing
Agreement the aggregate fair market value of all Film Value Assets that have
been disposed of pursuant to Film Value Asset Dispositions during the then
current Fiscal Year (other than pursuant to Ordinary Course Library Film
Licensing Agreements) exceeds $100,000,000, the Borrowers shall have provided to
the Agent a certificate signed on its behalf by its chief financial officer or
chief accounting officer (1) certifying as to the matter referred to in clause
(i)(x) above and (2) setting forth the calculation of Pro Forma Compliance in
reasonable detail after giving effect to such Film Value Asset Disposition,
provided that for the purposes
64
of the calculation to be made pursuant to this clause (2) only, Ordinary Course
Library Film Licensing Agreements shall not be included.
(e) Without limitation of the foregoing, each Borrower will not, and
will not permit its Subsidiaries to, enter into any Licensing Agreement or
series of related Licensing Agreements with respect to any Films (other than
Library Films) or Film Related Assets if such Borrower or such Subsidiary
conveys, sells, assigns, transfers or otherwise disposes of, with or without
recourse, its rights to receive payments under any such Licensing Agreement or
series of related Licensing Agreements.
SECTION 5.08. Use of Proceeds. The Letters of Credit and the proceeds
of the Term Loans, the Revolving Loans and the Swing Loans made on and after the
Effective Date will be used by each Borrower for general corporate purposes.
None of such proceeds and none of the Letters of Credit will be used, directly
or indirectly, in violation of Regulation U or to finance, directly or
indirectly, the acquisition of part or all of a voting interest of 5% or more in
any Person if such acquisition is opposed by the board of directors or
management of such Person.
SECTION 5.09. Negative Pledge. Neither Borrower nor any Subsidiary will
create, assume or suffer to exist any Lien on any asset now owned or hereafter
acquired by it, except:
(a) any Lien existing on any asset of any Person at the time such
Person becomes a Subsidiary and not created in contemplation of such event;
(b) any Lien on any fixed or capital asset securing Debt incurred or
assumed for the purpose of financing all or any part of the cost of acquiring
such asset; provided that such Lien attaches to such asset concurrently with or
within 90 days after the acquisition thereof;
(c) any Lien on any asset of any Person existing at the time such
Person is merged or consolidated with or into a Borrower or a Subsidiary and not
created in contemplation of such event;
(d) any Lien existing on any asset prior to the acquisition thereof by
a Borrower or a Subsidiary and not created in contemplation of such acquisition;
(e) any Lien on assets of a Foreign Subsidiary securing Debt permitted
under Section 5.10(e);
(f) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
65
clauses of this Section, provided that such Debt is not increased and is not
secured by any additional assets;
(g) any Lien securing Profit Participations, Residuals and Deferred
Payments and other obligations that do not constitute Debt by operation of
clause (x) of the proviso in the definition of "Debt"; provided that such Lien
attaches solely to cash deposits and the Film or Films or Film Related Assets
that are the subject of such arrangements;
(h) Liens (other than Liens securing Debt) consisting of rights of
licensees under access agreements pursuant to which such licensees have access
to duplicating material for the purpose of making prints of Films licensed to
them, and rights of distributors, exhibitors, licensees and other Persons in
Films created in connection with the distribution and exploitation of such Films
in the ordinary course of business;
(i) Liens securing Debt permitted by Sections 5.10(h) or (i) or
securing obligations of any MGM/Orion Company incurred in connection with
acquiring rights to Films in the ordinary course of business, provided that the
agreement to grant such Liens shall be created substantially simultaneously
with, or within 90 days of, the acquisition, development, production or
postproduction of such Films;
(j) Liens (other than Liens securing Debt) incurred in the ordinary
course of business on any Film or any Film Related Asset constituting
negotiation rights with respect to such Film or Film Related Asset, options to
develop such Film or Film Related Asset or similar rights with respect to such
Film or Film Related Asset;
(k) Liens on cash and cash equivalents arising under the escrow
arrangements referred to in the proviso to the definition of Sale-Leaseback
Transactions and Liens consisting of the rights and interests of the lessor with
respect to Films subject to Sale-Leaseback Transactions permitted under Section
5.10(i) hereof;
(l) Liens arising out of Licensing Agreements or security agreements
entered into pursuant to such Licensing Agreements in respect of Films or Film
Related Assets permitted under Section 5.07(d) or Section 5.07(e) hereof,
consisting of such licensing rights and attaching solely to the Film or Films or
Film Related Assets so licensed;
(m) Liens in existence on the Effective Date and reflected in Schedule
5.09 hereto;
66
(n) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with respect
thereto are maintained on the books of any MGM/Orion Company, as the case may
be, in conformity with generally accepted accounting principles (or, in the case
of Foreign Subsidiaries, generally accepted accounting principles in effect from
time to time in their respective jurisdictions of incorporation);
(o) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are not
overdue for a period of more than 60 days or which are being contested in good
faith by appropriate proceedings;
(p) pledges or deposits in connection with workers' compensation,
unemployment insurance or other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
(q) Liens on deposits to secure obligations to acquire Films or Film
Related Assets or the performance of bids, trade contracts (other than contracts
under which Debt may be incurred), leases, performance or completion bonds and
other obligations of a like nature incurred in the ordinary course of business;
provided that any such Liens securing the obligation of any MGM/Orion Company to
acquire Films or Film Related Assets shall encumber only cash;
(r) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case materially
detract from the value of the property subject thereto or materially interfere
with the ordinary conduct of the business of any MGM/Orion Company;
(s) Liens (other than Liens permitted by any of the foregoing clauses)
arising in the ordinary course of its business which (i) do not secure Debt or
Derivatives Obligations, (ii) do not secure any obligation in an amount
exceeding $5,000,000 and (iii) do not in the aggregate materially detract from
the value of its assets or materially impair the use thereof in the operation of
its business; and
(t) Liens created by the Collateral Documents.
SECTION 5.10. Limitation on Debt. Each Borrower will not, and will not
permit any of its Subsidiaries to, incur or at any time be liable with respect
to any Debt except:
(a) Debt under this Agreement;
(b) [Intentionally Deleted];
67
(c) Debt owed to UIP (or any successor thereto) under agreements
between UIP (or such successor) and any MGM/Orion Company in an aggregate
principal amount not in excess of $20,000,000 at any one time;
(d) Debt secured by Liens permitted by Section 5.09(a), 5.09(b),
5.09(c), 5.09(d) or 5.09(f);
(e) [Intentionally Deleted];
(f) (i) Debt of a Borrower owed to the other Borrower or to a
Guarantor, or Debt of a Guarantor owed to a Borrower or to another Guarantor, or
Debt of a Foreign Subsidiary owed to another Foreign Subsidiary or (ii) Debt of
a Foreign Subsidiary owed to a Borrower or to a Guarantor and incurred in the
ordinary course of business to finance operating expenditures of such Foreign
Subsidiary and evidenced by a note (which may be a grid note) constituting
Collateral under any Collateral Document;
(g) Debt of any MGM/Orion Company incurred to finance any acquisition
of fixed or capital assets permitted pursuant to Section 5.14 and any Debt of
the relevant obligor refinancing such Debt; provided that the principal amount
thereof is not increased;
(h) (i) Debt (other than (x) Debt of a Single Purpose Subsidiary and
(y) Clawback Obligations) incurred in connection with the financing or
refinancing of the development, production, acquisition, distribution,
exhibition or exploitation of a Film or Film Related Assets or a group or slate
of Films, but solely to the extent that under the terms of such Debt the
obligations of the Borrowers and their respective Subsidiaries with respect to
such Debt may be satisfied by recourse only to such Film or a group or slate of
Films and rights pertaining thereto and, in each case, to the proceeds thereof,
(ii) Debt of a Single Purpose Subsidiary, so long as such Debt complies with the
provisions of clause (ii) of the definition of Single Purpose Subsidiary and
(iii) Clawback Obligations;
(i) Debt in respect of Sale-Leaseback Transactions;
(j) Debt outstanding on the Effective Date and listed on Schedule
5.10; and
(k) Debt not otherwise permitted by the foregoing clauses of this
Section in an aggregate principal or face amount not in excess of $50,000,000 at
any time.
Section 5.11. [Intentionally Deleted].
68
Section 5.12. Sources and Uses of Cash. As of the last day of each
Fiscal Quarter, the ratio of Projected Known Sources to Projected Known Uses for
the four consecutive Fiscal Quarters commencing immediately after such day shall
not be less than 1.0 to 1.0.
Section 5.13. Total Borrowed Funds/Library Cash Flow. At all times
during any Fiscal Quarter set forth below the ratio of (i) Total Borrowed Funds
at such date to (ii) Library Cash Flows for the period of four consecutive
Fiscal Quarters then most recently ended, will not be greater than the ratio set
forth below opposite such Fiscal Quarter:
Fiscal Quarter Ending Ratio
--------------------- -----
12/31/99 4.50:1
03/31/00 5.00:1
06/30/00 5.50:1
09/30/00 5.50:1
12/31/00 5.00:1
03/31/01 4.75:1
06/30/01 4.75:1
09/30/01 4.75:1
12/31/01 4.75:1
03/31/02 4.50:1
06/30/02 4.25:1
09/30/02 4.25:1
12/31/02 4.00:1
03/31/03 4.50:1
06/30/03 4.50:1
09/30/03 4.50:1
12/31/03 4.50:1
Thereafter 3.50:1
Section 5.14. Maximum Capital Expenditures. Combined Capital
Expenditures for any Fiscal Year will not exceed $35,000,000; provided that, if
and to the extent that the amount of Combined Capital Expenditures for any
Fiscal Year is less than $35,000,000, the maximum amount of Combined Capital
Expenditures in any subsequent Fiscal Year shall be increased by such excess
amount.
Section 5.15. Minimum Combined Adjusted Net Worth. Combined Adjusted
Net Worth will at no time be less than an amount equal to the sum of (i)
$1,250,000,000 plus (ii) an amount equal to 50% of Combined Net Income for each
Fiscal Year ending after December 31, 1999 but prior to the date of
determination, in each case, for which such Combined Net Income is positive (but
with no deduction on account of negative Combined Net Income for any Fiscal
69
Year), plus (iii) 80% of the aggregate net proceeds, including the fair market
value of property other than cash (as determined in good faith by the Board of
Directors of MGM) received by either Borrower from the issuance and sale after
March 31, 2000 of any of its capital stock or in connection with the conversion
or exchange of any Debt of either Borrower into its capital stock after March
31, 2000 (including without limitation any contribution to capital by MGM).
Section 5.16. Operating Lease Payments. Each Borrower will not, and
will not permit any of its Subsidiaries to, incur or assume (whether pursuant to
a Guarantee or otherwise) any liability for rental payments under a lease with a
lease term (as defined in Financial Accounting Standards Board Statement No. 13,
as in effect on the date hereof) of one year or more (other than in connection
with any Sale-Leaseback Transaction) if, after giving effect thereto, the
aggregate amount of minimum lease payments that the Combined Companies have so
incurred or assumed will exceed, on a Combined Basis, (x) $35,000,000 for any
Fiscal Year under all such leases (excluding any lease which is to be accounted
for as a capital lease on the balance sheet of either Borrower and its
respective Consolidated Subsidiaries) plus (y) a one-time basket in an aggregate
amount not in excess of $15,000,000 consisting solely of lease payments incurred
as a result of the Combined Companies changing the location of their chief
executive office (which one-time basket may be applied in one Fiscal Year or in
two consecutive Fiscal Years).
Section 5.17. Restricted Payments. Neither Borrower nor any
Subsidiary will declare or make any Restricted Payment; provided that the
foregoing shall not restrict or prohibit dividends or distributions to MGM at
such times and in such amounts as are necessary to permit:
(a) (i) purchases of shares of (or options to purchase shares of)
capital stock of MGM from former or current employees of either Borrower or MGM,
or any spouse or lineal descendant of any such employee or any trust for the
benefit of any of the foregoing (A) upon their death, disability, termination or
retirement or (B) in accordance with the terms of the Management Stock Incentive
Plan and other plans or arrangements as set forth in MGM's filings with the
Securities and Exchange Commission from time to time (including without
limitation stock option agreements issued in substantially the forms attached to
the Management Stock Incentive Plan or the Stockholders Agreement dated as of
the Original Effective Date among MGM, MGM Studios, the Investors and certain
other stockholders party thereto from time to time, as the same may be amended
or replaced), so long as in each of cases (i)(A) and (i)(B), immediately before
and after giving effect to any such dividend or distribution for such purpose,
no Default shall have occurred and be continuing; and
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(b) payments in the ordinary course of business of MGM of legal fees,
tax preparation fees, franchise taxes and other overhead and general expenses
items, to the extent attributable and properly allocable to the MGM/Orion
Companies and their businesses (collectively, "MGM Expenses"); provided that the
aggregate amount of distributions made by the Borrowers pursuant to this clause
(b) will not exceed in the aggregate $1,000,000 in any Fiscal Year.
Section 5.18. Investments. Neither Borrower nor any Subsidiary will
hold, make or acquire any Investment in any Person other than:
(a) Investments by either Borrower in the form of equity interests of
Persons which are Guarantors or which, within 30 days after consummation of such
Investment, become Guarantors;
(b) Investments constituting intercompany loans permitted under
Section 5.10(f);
(c) Investments made by either Borrower or any Subsidiary in the
ordinary course of business pursuant to arm's length transactions in Persons
(other than either Borrower or any Subsidiary) for the development, production,
acquisition, distribution, exhibition or exploitation of Films and Film Related
Assets (other than Library Films), copyrights or trademarks in connection with
co- production deals, split-▇▇▇▇▇▇ ▇▇▇▇, overhead deals or similar arrangements
(as such terms are generally understood in the movie industry on the date
hereof);
(d) Investments constituting loans and advances in cash by either
Borrower or any Subsidiary to directors, officers and employees of MGM, either
Borrower, or any Subsidiary, in the ordinary course of business aggregating not
in excess of $4,000,000 at any time outstanding;
(e) Investments (other than Investments otherwise permitted by this
Section 5.18) in existence on either the Original Effective Date (with respect
to MGM Studios or any of its Subsidiaries) or July 10, 1997 (with respect to
Orion or any of its Subsidiaries) and listed on Schedule 5.18;
(f) Investments made after the Original Effective Date pursuant to a
commitment to make such Investments in existence on the Original Effective Date
and listed on Schedule 5.18;
(g) Investments (other than Investments otherwise permitted by this
Section 5.18) by either Borrower or any Subsidiary in the form of equity
interests of Persons which are not Guarantors;
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(h) Investments by either Borrower or any Subsidiary in Single
Purpose Subsidiaries or any other Person (including a TV Distribution Venture,
but excluding a Subsidiary of either Borrower), that is principally engaged in
the production, distribution, exhibition or exploitation of Films, consisting of
the contribution by such Borrower or Subsidiary of Film Value Assets to such
Person;
(i) Temporary Cash Investments;
(j) Investments by either Borrower constituting loans and advances to
MGM or purchases of capital stock of MGM, so long as the aggregate principal
amount of such loans and advances at any time outstanding plus the aggregate
amount of consideration for purchases of such capital stock does not exceed the
sum of (A) $100,000,000 plus (B) the lesser of (x) the aggregate amount of
equity contributions (if any) made in cash by MGM to the Borrowers solely out of
the net proceeds of an issuance and sale of common stock of MGM after March 31,
2000 and (y) $400,000,000;
(k) Investments in TV Distribution Ventures not otherwise permitted
by the foregoing clauses of this Section; and
(l) any Investment (other than Investments in Single Purpose
Subsidiaries and Investments consisting of the contribution of Library Films)
not otherwise permitted by the foregoing clauses of this Section if, immediately
after such Investment is made or acquired, the aggregate net book value of all
Investments permitted by this clause (l) (determined, with respect to each such
Investment, at the time such Investment is made) does not exceed $25,000,000.
Notwithstanding the foregoing, any Investment otherwise permitted by the
foregoing provisions of this Section 5.18 that includes or constitutes a Film
Value Asset Disposition shall be permitted only if (A) immediately after giving
effect thereto (x) the Borrowers shall be in Pro Forma Compliance and (y) no
Default shall have occurred and be continuing and (B) if after giving effect to
such Investment the aggregate fair market value of all Film Value Assets that
have been disposed of pursuant to Film Value Asset Dispositions during the then
current Fiscal Year (other than pursuant to Ordinary Course Library Film
Licensing Agreements) exceeds $100,000,000, the Borrowers shall have provided to
the Agent a certificate signed on its behalf by its chief financial officer or
chief accounting officer (1) certifying as to the matter referred to in clause
(A)(x) above and (2) setting forth the calculation of Pro Forma Compliance in
reasonable detail after giving effect to such Film Value Asset Disposition,
provided that for the purposes of the calculation to be made pursuant to this
clause (2) only, Ordinary Course Library Film Licensing Agreements shall not be
included.
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Section 5.19. Transactions with Affiliates. Each Borrower will not,
and will not permit any of its Subsidiaries to, directly or indirectly, pay any
funds to or for the account of, make any investment (whether by acquisition of
stock or indebtedness, by loan, advance, transfer of property, guarantee or
other agreement to pay, purchase or service, directly or indirectly, any Debt,
or otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or participate in, or effect, any transaction with,
any Affiliate except on an arms- length basis on terms at least as favorable to
such Borrower or such Subsidiary than could have been obtained from a third
party who was not an Affiliate; provided that the foregoing provisions of this
Section shall not prohibit (i) any such Person from declaring or paying any
lawful dividend or other payment ratably in respect of all of its capital stock
of the relevant class so long as, after giving effect thereto, no Default shall
have occurred and be continuing, (ii) the consummation of the transactions
contemplated by the agreements set forth on Schedule 5.19, as amended to the
Effective Date and substantially in the forms heretofore distributed to each of
the Lenders, (iii) customary indemnification arrangements between either
Borrower and the directors and officers of MGM, such Borrower, and any
Subsidiary of such Borrower, (iv) customary tax sharing arrangements between or
among MGM, the Borrowers, and the Subsidiaries, (v) dividends and distributions
to MGM permitted under Section 5.17, (vi) maintenance of "D&O", "keyman" and
similar insurance by any of the Borrowers or MGM, including with respect to
directors and officers of MGM, the Borrowers, and the Subsidiaries, (vii) any
disposition of a "disposed asset" to a Single Purpose Subsidiary as described in
clause (xi) of the definition of "Asset Sale", to the extent that such
disposition complies with the requirements of such clause and (viii) the
execution, delivery and performance of distribution agreements with any Single
Purpose Subsidiary with respect to the distribution of Films held by such Single
Purpose Subsidiary.
Section 5.20. Limitation on Restrictions Affecting Subsidiaries.
Neither any Borrower nor any of its Subsidiaries (other than any Single Purpose
Subsidiary) will enter into, or suffer to exist, any agreement with any Person,
other than this Agreement, which prohibits or limits the ability of any
Subsidiary to (a) pay dividends or make other distributions or pay any Debt owed
to either Borrower or any Subsidiary, (b) make loans or advances to either
Borrower or any Subsidiary, (c) transfer any of its properties or assets to
either Borrower or any Subsidiary or (d) create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired (other than with respect to assets subject to consensual
liens permitted under Section 5.09); provided that the foregoing shall not apply
to (i) provisions restricting assignment of any lease or other contract, (ii)
restrictions imposed by applicable law, (iii) restrictions under any agreement
relating to any property, asset or business acquired by any MGM/Orion Company,
which restrictions existed at the time of acquisition, (iv) restrictions with
respect solely to a Subsidiary or a
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Borrower imposed pursuant to a binding agreement (subject only to customary
closing conditions and termination provisions) that has been entered into for
the sale or disposition of all or substantially all of the capital stock or
assets to be sold of such Subsidiary, provided that such sale is permitted under
Section 5.07(b) hereof, (v) customary restrictions on transfer of Collateral
imposed on such Collateral in connection with Liens on such Collateral securing
Debt, to the extent such Liens are permitted under Section 5.09 hereof, (vi)
restrictions in effect on the Original Effective Date contained in agreements
governing Debt of Foreign Subsidiaries outstanding on the Original Effective
Date, and (vii) restrictions ("New Restrictions") set forth in replacements of
agreements or instruments ("Replaced Agreements") containing restrictions
described in clauses (iii) or (vi); provided that such New Restrictions are no
more restrictive in any material respect than the restrictions set forth in the
relevant Replaced Agreement and do not apply to any additional property or
assets.
Section 5.21. MGM Debt. Each Borrower will not, and will not permit
any of its Subsidiaries to, directly or indirectly, redeem, retire, purchase,
acquire, defease or otherwise make any payment in respect of the principal of
any MGM Debt, except by making Investments pursuant to Section 5.18(j), the
proceeds of which will be applied by MGM to do so.
Section 5.22. Hedging Facilities. Not later than 60 days after the
Effective Date the Borrowers will have entered into and thereafter maintain in
full force and effect interest rate agreements, swaps, caps or other appropriate
hedging arrangements in such amounts and on such terms as to convert to fixed
rate or otherwise limit, in a manner satisfactory to the Agent, the floating
interest rate risk on at least 662/3% in aggregate principal amount of all Term
Loans outstanding from time to time for a period of no less than three years
beginning on such date, all on terms and conditions reasonably satisfactory to
the Required Lenders.
Section 5.23. Further Assurances. (a) Each Borrower will, and will
cause each Guarantor to, at such Borrower's sole cost and expense, do, execute,
acknowledge and deliver all such further acts, deeds, conveyances, mortgages,
assignments, notices of assignment and transfers as the Agent shall from time to
time request, which may be necessary in the reasonable judgment of the Agent
from time to time to assure, perfect, convey, assign and transfer to the Agent
the property and rights conveyed or assigned pursuant to the Collateral
Documents.
(b) All costs and expenses in connection with the grant of any
security interests under the Collateral Documents, including without limitation
reasonable legal fees and other reasonable costs and expenses in connection with
the granting, perfecting and maintenance of any security interests under the
Collateral Documents or the preparation, execution, delivery, recordation or
filing of documents and any other acts as the Agent may reasonably request in
connection
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with the grant of such security interests shall be paid by the Borrowers
promptly upon demand.
(c) Each Borrower will not, and will not permit any of its
Subsidiaries to, enter into or become subject to any agreement which would
impair their ability to comply, or which would purport to prohibit them from
complying, with the provisions of this Section.
(d) Each Borrower will cause each of its Material Subsidiaries
acquired after the Effective Date and each of its Subsidiaries which becomes a
Material Subsidiary after the Effective Date (in each case, other than a Foreign
Subsidiary or a Single Purpose Subsidiary) (i) to become a party to the
Subsidiary Guaranty as guarantor by executing a supplement thereof in form and
substance satisfactory to the Agent and (ii) to enter into a Security Agreement
and any other agreements as may be necessary or desirable in order to grant
perfected first priority security interests upon all of its assets to secure its
obligations under the Subsidiary Guaranty. In addition, such Borrower will
pledge, or cause to be pledged, pursuant to a Pledge Agreement, all of the
capital stock or other equity interests of such Material Subsidiary owned
directly or indirectly by such Borrower (or, if such Material Subsidiary is a
Foreign Subsidiary, 66% of the capital stock or equity interests of such
Material Subsidiary, and excluding any such capital stock or other equity
interests owned directly by a Foreign Subsidiary). Such Borrower shall cause
each such Material Subsidiary to take such actions as may be necessary or
desirable to effect the foregoing within 30 days after such Material Subsidiary
is acquired or becomes a Material Subsidiary, as the case may be, including
without limitation causing such Material Subsidiary to (x) execute and deliver
to the Agent such number of copies as the Agent may specify of such supplements
and Security Agreement and other documents creating security interests and (y)
deliver such certificates, evidences of corporate action or other documents as
the Agent may reasonably request, all in form and substance satisfactory to the
Agent, relating to the satisfaction of such Borrower's obligations under this
Section. Upon compliance by either Borrower with the provisions of this
subsection (d), Schedule 4.09 shall be deemed to have been amended to reflect
that such Material Subsidiary is a Guarantor.
(e) Each Borrower will, and will cause each of its Subsidiaries to,
take all action necessary in accordance with good business practices to (i)
maintain in full force and effect (x) all trademarks, service marks, trade names
and licenses and all material rights with respect to the foregoing, necessary
for the conduct of its business as now conducted (collectively, the
"Trademarks") and (y) all copyrights (including without limitation any
copyrights relating to Library Films) and all material rights with respect
thereto, necessary for the conduct of its business as now conducted
(collectively, the "Copyrights"), other than such Trademarks and Copyrights
which such Borrower reasonably determines are, in
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the aggregate, of insignificant or non-material economic value, or where the
failure to maintain such Trademarks or Copyrights could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect, and (ii) protect all
Trademarks and all Copyrights against infringement by third parties, other than
such Trademarks and Copyrights which such Borrower reasonably determines are, in
the aggregate, of insignificant or non-material economic value or where the
failure to maintain such Trademarks or Copyrights could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(f) Each Borrower will, and will cause each of its Subsidiaries to,
submit to the United States Copyright Office or other applicable United States
governmental authority (with a copy to the Agent) as soon as reasonably
practicable but in any event, with respect to any Film, no later than 90
Domestic Business Days after the date of release of such Film and, with respect
to any screenplay, within 30 Domestic Business Days after commencement of
principal photography of the relevant Film (i) with respect to each screenplay
or Film which is unregistered and to which either Borrower or any Subsidiary
owns the copyright, a completed application for copyright registration and (ii)
with respect to each screenplay and Film which is registered in the name of a
Person other than any MGM/Orion Company, and in which any MGM/Orion Company
acquires the copyright or any rights in the copyright, an assignment to such
Borrower or such Subsidiary of the interest owned by it.
(g) Each Borrower will, and will cause each other Obligor party to a
Security Agreement to, provide a Laboratory Pledgeholder Agreement (as defined
in a Security Agreement) with each laboratory which holds any material film
and/or sound materials, cause such Laboratory Pledgeholder Agreements to remain
in full force and effect during all times when such laboratory is in possession
of such elements, and, pursuant to the Laboratory Pledgeholder Agreements, with
respect to each Film, deliver to the Agent a laboratory access letter,
substantially in the form of Exhibit B thereto, to each laboratory holding any
material film and/or sound materials.
Section 5.24. [Intentionally Deleted].
Section 5.25. Total Borrowed Funds to Film Value. As of the last day
of each Fiscal Quarter beginning with the first Fiscal Quarter of 2000, the
ratio of (i) Total Borrowed Funds on such date to (ii) the Film Value determined
on or most recently prior to such date shall not exceed 0.5:1.
Section 5.26. Library Cash Flows to Combined Cash Interest Expense.
As of the last day of each Fiscal Quarter beginning with the second Fiscal
Quarter of 2000, the ratio of (i) Library Cash Flows to (ii) Combined Cash
Interest
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Expense, in each case for the period of four consecutive Fiscal Quarters ended
on such day, shall not be less than 1.75:1.
ARTICLE 6
Defaults
Section 6.01. Events of Default. If one or more of the following
events ("Events of Default") shall have occurred and be continuing:
(a) either Borrower (i) shall fail to pay when due any principal of
any Loan, (ii) shall fail to reimburse when due any drawing under any Letter of
Credit or (iii) shall fail to pay within 5 days after the due date thereof any
interest, any fees or any other amount payable hereunder;
(b) (i) either Borrower shall fail to observe or perform any covenant
contained in Article 5 (other than those contained in Sections 5.01 through
5.06, inclusive and Sections 5.23(a), (b), (c), (e), (f) and (g)) or (ii) any
Obligor shall fail to observe or perform any covenant contained in Sections
4(A), (E) or (H) of the Security Agreement or (iii) either Borrower shall fail
to observe or perform any covenant contained in Section 3(B) of the Borrower
Pledge Agreement or any other Obligor shall fail to observe or perform any
covenant contained in the Pledge Agreement to which such Obligor is a party
containing provisions substantially similar to those set forth in Section 3(B)
of the Borrower Pledge Agreement;
(c) any Obligor shall fail to observe or perform any covenant or
agreement contained in the Loan Documents (other than those covered by clause
(a) or (b) above) for 30 days after notice thereof has been given to the
Borrowers by the Agent;
(d) any representation, warranty or certification made by any Obligor
in any Loan Document or in any certificate or other document delivered pursuant
to any Loan Document shall prove to have been incorrect in any material respect
when made (or deemed made);
(e) either Borrower or any Subsidiary shall fail to make any payment
in respect of any Debt and/or payment or collateralization obligations in
respect of Derivatives Obligations of either Borrower or any Subsidiary when due
or within any applicable grace period (other than any Single Purpose Subsidiary
with respect to Debt or Derivatives Obligations solely of such Single Purpose
Subsidiary), if the aggregate principal or face amount of Debt and/or payment or
collateralization obligations (regardless of whether such Debt and/or payment or
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collateralization obligations arise in one or more related or unrelated
transactions) with respect to which such failure or failures shall have occurred
exceeds $5,000,000;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Debt (other than the Notes) of either
Borrower or any Subsidiary or enables the holder of such Debt or any Person
acting on such holder's behalf to accelerate the maturity thereof (other than
any Single Purpose Subsidiary with respect to Debt or Derivatives Obligations
solely of such Single Purpose Subsidiary), if the aggregate principal amount of
Debt (regardless of whether such Debt arises in one or more related or unrelated
transactions) with respect to which such events or conditions shall have
occurred exceeds $5,000,000;
(g) either Borrower or any Material Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any domestic or foreign
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or shall consent
to any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced
against either Borrower or any Material Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under any
domestic or foreign bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of its
property, and such involuntary case or other proceeding shall remain undismissed
and unstayed for a period of 90 days; or an order for relief shall be entered
against either Borrower or any Material Subsidiary under any domestic or foreign
bankruptcy laws as now or hereafter in effect;
(i) (i) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan or any Lien in favor
of the PBGC or a Plan shall arise on the assets of MGM or any Commonly
Controlled Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single Employer Plan, which
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Reportable Event or commencement of proceedings or appointment of a trustee is,
in the reasonable opinion of the Required Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) notice of
intent to terminate a Single Employer Plan shall be filed under Title IV of
ERISA by MGM or a Commonly Controlled Entity, (v) MGM or any Commonly Controlled
Entity shall, or in the reasonable opinion of the Required Lenders is likely to,
incur any liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or condition
shall occur or exist with respect to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other such events
or conditions, if any, could reasonably be expected to have a Material Adverse
Effect;
(j) judgments or orders for the payment of money in excess of
$10,000,000 (net of any amount (x) covered by insurance or (y) covered by a
third-party indemnity from a solvent third party financially capable of making
such payments (as determined by the Required Lenders on the basis of information
provided by the Borrowers) shall be rendered and properly entered against MGM,
either Borrower or any Subsidiary and such judgments or orders shall continue
unsatisfied and unstayed for a period of 60 days;
(k) any Lien created by any of the Collateral Documents in respect of
a substantial portion of the Collateral shall at any time fail to constitute a
valid and (to the extent required by the Collateral Documents) perfected Lien
securing the obligations purported to be secured thereby, with the priority
required by the Loan Documents, or any Obligor shall so assert in writing;
(l) the Subsidiary Guaranty or the guaranty set forth in Article 9
shall at any time fail to constitute a valid and binding agreement of each
Obligor party thereto, or any Obligor shall so assert in writing; or
(m) (i) MGM shall cease to legally and beneficially own 100% of the
issued and outstanding capital stock of either Borrower; or (ii) the Investors
(directly or through one or more Investment Vehicles) shall fail to legally and
beneficially own in the aggregate capital stock representing at least 35% of the
Voting Power of the stock of MGM; or (iii) any person or group of persons
(within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934,
as amended) (other than the Investors and their Investment Vehicles) shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by
the Securities and Exchange Commission under said Act) having greater Voting
Power of the capital stock of MGM than the Voting Power of the capital stock of
MGM legally and beneficially owned in the aggregate by the Investors and their
Investment Vehicles at such date; or (iv) during any period of 12 consecutive
calendar months, individuals who were (x) directors of MGM on the first day of
such period, (y) elected to fill vacancies caused by the ordinary course
resignation
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(including without limitation any such resignation effected by such director
declining to stand for reelection), retirement, death or disability of any other
director and whose nomination or election was approved by a vote of at least a
majority of the directors then still in office who were directors of MGM on the
first day of such period or (z) appointed or nominated for election by an
Investor or one of its Investment Vehicles or by a majority of the directors
described in clauses (x) and (y), shall cease to constitute a majority of the
board of directors of MGM; (as used herein, "Voting Power" means, with respect
to any outstanding capital stock of MGM, the power (expressed as a percentage)
represented by such capital stock of the aggregate voting power of all
outstanding shares of any class of capital stock of MGM having ordinary voting
power, including the power to vote for election of the members of the board of
directors of MGM (or, if any class thereof has power to designate members of the
board of directors of MGM or any special committee thereof, the power to so
designate); and "Investment Vehicles" shall mean, with respect to an Investor,
any Subsidiary of such Investor not less than 95% of each class of capital stock
(or, if such Subsidiary is not a corporation, the appropriate equity interests
thereof) of which is owned by such Investor, directly or through one or more
other Investment Vehicles);
then, and in every such event, the Agent shall (i) if requested by Lenders
having more than 50% in aggregate amount of the Commitments, by notice to the
Borrowers terminate the Commitments and they shall thereupon terminate, and (ii)
if requested by Lenders holding more than 50% of the sum of (x) the aggregate
principal amount of the Loans then outstanding and (y) the Letter of Credit
Liabilities then outstanding, by notice to the Borrowers declare the Loans and
the Letter of Credit Liabilities (in each case together with accrued interest
thereon) to be, and the Loans and the Letter of Credit Liabilities shall
thereupon become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by each
Borrower; provided that in the case of any of the Events of Default specified in
clause (g) or (h) above with respect to either Borrower, without any notice to
either Borrower or any other act by the Agent or the Lenders, the Commitments
shall thereupon terminate and the Loans and the Letter of Credit Liabilities (
in each case together with accrued interest thereon) shall become immediately
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by each Borrower.
Section 6.02. Notice of Default. The Agent shall give notice to the
Borrowers under Section 6.01(c) promptly upon being requested to do so by the
Required Lenders and shall thereupon notify all the Lenders thereof.
Section 6.03. Cash Cover. Each Borrower agrees, in addition to the
provisions of Section 6.01 hereof, that upon the occurrence and during the
continuance of any Event of Default, it shall, if requested by the Agent upon
the
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instruction of the Lenders having more than 50% in aggregate amount of the
Revolving Exposure, pay to the Agent an amount in immediately available funds
(which funds shall be held as collateral and applied pursuant to the Security
Agreement) equal to the aggregate amount available for drawing under all Letters
of Credit then outstanding at such time, provided that, upon the occurrence of
any Event of Default specified in Section 6.01(g) or 6.01(h) with respect to
either Borrower, such Borrower shall pay such amount forthwith without any
notice or demand or any other act by the Agent or the Lenders.
ARTICLE 7
The Agent
Section 7.01. Appointment and Authorization. Each Lender irrevocably
appoints and authorizes the Agent to enter into and act as its agent in
connection with the Collateral Documents and to take such action as agent on its
behalf and to exercise such powers under the Loan Documents as are delegated to
the Agent by the terms hereof or thereof, together with all such powers as are
reasonably incidental thereto.
Section 7.02. Agent and Affiliates. Bank of America, N.A. shall have
the same rights and powers under the Loan Documents as any other Lender and may
exercise or refrain from exercising the same as though it were not the Agent,
and Bank of America, N.A. and its affiliates may accept deposits from, lend
money to, and generally engage in any kind of business with either Borrower or
any Subsidiary or affiliate of either Borrower as if it were not the Agent.
Section 7.03. Action by Agent. The obligations of the Agent hereunder
are only those expressly set forth herein. Without limiting the generality of
the foregoing, the Agent shall not be required to take any action with respect
to any Default, except as expressly provided in Article 6.
Section 7.04. Consultation with Experts. The Agent may consult with
legal counsel (who may be counsel for any Obligor), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
Section 7.05. Liability of Agent. Neither the Agent nor any of its
affiliates nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or not taken by it in connection herewith
(a) with the consent or at the request of the Required Lenders (or, when
expressly required hereby, such different number of Lenders required to consent
to or to request such
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action or inaction) or (b) in the absence of its own gross negligence or willful
misconduct. Neither the Agent nor any of its affiliates nor any of their
respective directors, officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into or verify (i) any statement, warranty
or representation made in connection with the Loan Documents or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of any Obligor; (iii) the satisfaction of any condition specified in
Article 3, except receipt of items required to be delivered to the Agent; (iv)
the validity, effectiveness or genuineness of the Loan Documents or any other
instrument or writing furnished in connection herewith or (v) the existence or
the value of any of the Collateral. The Agent shall not incur any liability by
acting in reliance upon any notice, consent, certificate, statement, or other
writing (which may be a bank wire, telex, facsimile transmission or similar
writing) believed by it to be genuine or to be signed by the proper party or
parties. Without limiting the generality of the foregoing, the use of the term
"agent" in the Loan Documents with reference to the Agent is not intended to
connote any fiduciary or other implied (or express) obligations arising under
agency doctrine or any applicable law. Instead, such term is used merely as a
matter of market custom and is intended to create or reflect only an
administrative relationship between independent contracting parties.
Section 7.06. Indemnification. Each Lender shall, ratably in
accordance with its Credit Exposure, indemnify the Agent, its affiliates and
their respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrowers) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from such indemnitees' gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with the Loan Documents or any
action taken or omitted by such indemnitees thereunder.
Section 7.07. Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under the Loan Documents.
Section 7.08. Successor Agent. The Agent may resign at any time by
giving notice thereof to the Lenders and the Borrowers. Upon any such
resignation, the Required Lenders shall have the right to appoint a successor
Agent with, so long as no Default has occurred and is continuing, the consent of
the Borrowers (which consent shall not be unreasonably withheld). If no
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successor Agent shall have been so appointed by the Required Lenders, and shall
have accepted such appointment, within 30 days after the retiring Agent gives
notice of resignation, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent, which shall be a commercial Lender organized or
licensed under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $100,000,000. Upon the
acceptance of its appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the rights
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent.
Section 7.09. Agent's Fees. The Borrowers shall pay to the Agent for
its own account fees in the amounts and at the times previously agreed upon
between the Borrowers and the Agent.
Section 7.10. Arranger. The Arranger, in its capacity as such, shall
have no duties or obligations under the Loan Documents and shall not have a
fiduciary relationship with any Lender.
Section 7.11. Resignation of Existing Agent; Appointment of Successor
Agent. Each Lender, each Borrower and ▇▇▇▇▇▇ Guaranty Trust Company of New York
("MGT") in its capacity as Agent under the Original Credit Agreement agree that
effective on and as of the Closing Date, MGT shall resign as Agent under the
Original Credit Agreement and the other Loan Documents and Bank of America, N.A.
shall have been appointed as the successor Agent under this Agreement and the
other Loan Documents, and shall have accepted such appointment. Each Lender,
each Borrower and MGT further agree that the provisions of this Article shall
inure to the benefit of MGT as to actions taken or omitted to be taken by it
while it was Agent.
ARTICLE 8
Change In Circumstances
Section 8.01. Basis for Determining Interest Rate Inadequate or
Unfair. If on or prior to the first day of any Interest Period for any Euro-
Dollar Loan:
(a) the Agent is advised by the Reference Lenders that deposits in
dollars (in the applicable amounts) are not being offered to the Reference
Lenders in the London interbank market for such Interest Period, or
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(b) Lenders having 50% or more of the aggregate principal amount of
the affected Loans advise the Agent that the Adjusted London Interbank Offered
Rate as determined by the Agent will not adequately and fairly reflect the cost
to such Lenders of funding their Euro-Dollar Loans for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrowers and the Lenders,
whereupon until the Agent notifies the Borrowers that the circumstances giving
rise to such suspension no longer exist, (i) the obligations of the Lenders to
make Euro-Dollar Loans or to continue or convert outstanding Loans as or into
Euro-Dollar Loans shall be suspended and (ii) each outstanding Euro-Dollar Loan
shall be converted into a Base Rate Loan on the last day of the then current
Interest Period applicable thereto. Unless the Borrowers notify the Agent at
least two Domestic Business Days before the date of any Euro-Dollar Borrowing
for which a Notice of Borrowing has previously been given that it elects not to
borrow on such date, such Borrowing shall instead be made as a Base Rate
Borrowing.
Section 8.02. Illegality. If, on or after the Effective Date, the
adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender (or its Euro-Dollar Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for any Lender (or its
Euro-Dollar Lending Office) to make, maintain or fund its Euro-Dollar Loans and
such Lender shall so notify the Agent, the Agent shall forthwith give notice
thereof to the other Lenders and the Borrowers, whereupon until such Lender
notifies the Borrowers and the Agent that the circumstances giving rise to such
suspension no longer exist, the obligation of such Lender to make Euro-Dollar
Loans, or to convert outstanding Loans into Euro-Dollar Loans, shall be
suspended. Before giving any notice to the Agent pursuant to this Section, such
Lender shall designate a different Euro-Dollar Lending Office if such
designation will avoid the need for giving such notice and will not, in the
judgment of such Lender, be otherwise disadvantageous to such Lender. If such
notice is given, each Euro-Dollar Loan of such Lender then outstanding shall be
converted to a Base Rate Loan either (a) on the last day of the then current
Interest Period applicable to such Euro-Dollar Loan if such Lender may lawfully
continue to maintain and fund such Loan to such day or (b) immediately if such
Lender shall determine that it may not lawfully continue to maintain and fund
such Loan to such day.
Section 8.03. Increased Cost and Reduced Return. (a) If on or after
the Effective Date, the adoption of any applicable law, rule or regulation, or
any change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
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bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its Applicable Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall impose, modify or deem
applicable any reserve (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System, but excluding
any such requirement included in an applicable Euro-Dollar Reserve Percentage),
special deposit, insurance assessment or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Lender (or its
Applicable Lending Office) or shall impose on any Lender (or its Applicable
Lending Office) or the London interbank market any other condition affecting its
Euro-Dollar Loans, its Notes or its obligation to make Euro-Dollar Loans or its
obligations hereunder with respect to Letters of Credit and the result of any of
the foregoing is to increase the cost to such Lender (or its Applicable Lending
Office) of making or maintaining any Euro-Dollar Loan or of issuing or
participating in any Letter of Credit, or to reduce the amount of any sum
received or receivable by such Lender (or its Applicable Lending Office) under
this Agreement or under its Notes with respect thereto, by an amount deemed by
such Lender to be material, then, within 15 days after demand by such Lender
(with a copy to the Agent), the Borrowers shall pay to such Lender such
additional amount or amounts as will compensate such Lender for such increased
cost or reduction.
(b) If any Lender shall have determined that, after the Effective
Date, the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any such law, rule or regulation, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or 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 capital of such Lender (or its Parent) as a consequence of such Lender's
obligations hereunder to a level below that which such Lender (or its Parent)
could have achieved but for such adoption, change, request or directive (taking
into consideration its policies with respect to capital adequacy) by an amount
deemed by such Lender to be material, then from time to time, within 15 days
after demand by such Lender (with a copy to the Agent), the Borrowers shall pay
to such Lender such additional amount or amounts as will compensate such Lender
(or its Parent) for such reduction.
(c) Each Lender will promptly notify the Borrowers and the Agent of
any event of which it has knowledge, occurring after the Effective Date, which
will entitle such Lender to compensation pursuant to this Section and will
designate a different Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the judgment of
such Lender, be otherwise disadvantageous to such Lender. A certificate of any
Lender
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claiming compensation under this Section and setting forth in reasonable detail
the additional amount or amounts to be paid to it hereunder and the method of
calculation thereof shall be conclusive in the absence of manifest error. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods.
Section 8.04. Taxes. (a) For the purposes of this Section 8.04, the
following terms have the following meanings:
"Taxes" means any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings with respect to
any payment by any Obligor pursuant to this Agreement or under any
Note, and all liabilities with respect thereto, excluding (i) in the
case of each Lender and the Agent, taxes imposed on its income, and
franchise or similar taxes imposed on it, by a jurisdiction under the
laws of which such Lender or such Agent (as the case may be) is
organized or in which its principal executive office is located or, in
the case of each Lender, in which its Applicable Lending Office is
located and (ii) in the case of each Lender, any United States
withholding tax imposed on such payments but only to the extent that
such Lender is subject to United States withholding tax at the time
such Lender first becomes a party to this Agreement.
"Other Taxes" means any present or future stamp or documentary
taxes and any other excise or property taxes, or similar charges or
levies, which arise from any payment made pursuant to this Agreement or
under any Note or from the execution or delivery of, or otherwise with
respect to, any Loan Document.
(b) Any and all payments by any Obligor to or for the account of any
Lender or the Agent hereunder or under any Note shall be made without deduction
for any Taxes or Other Taxes; provided that, if any Obligor shall be required by
law to deduct any Taxes or Other Taxes from any such payments, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) such Lender or such Agent (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
such Obligor shall make such deductions, (iii) such Obligor shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law and (iv) such Obligor shall furnish to the Agent,
at its address referred to in Section 10.01, the original or a certified copy of
a receipt evidencing payment thereof.
(c) Each Borrower agrees to indemnify each Lender and the Agent for
the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes
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or Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section) paid by such Lender or such Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be paid within 15 days after such
Lender or such Agent (as the case may be) makes demand therefor.
(d) Each Lender organized under the laws of a jurisdiction outside
the United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Lender listed on the signature pages hereof and on
or prior to the date on which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by the
Borrowers (but only so long as such Lender remains lawfully able to do so),
shall provide the Borrowers and the Agent with either (i) Internal Revenue
Service Form 1001 or 4224, as appropriate, or any successor form prescribed by
the Internal Revenue Service, certifying that such Lender is entitled to
benefits under an income tax treaty to which the United States is a party which
exempts the Lender from United States withholding tax or reduces the rate of
withholding tax on payments of interest for the account of such Lender or
certifying that the income receivable pursuant to this Agreement is effectively
connected with the conduct of a trade or business in the United States or (ii)
if such Lender is not a "bank" within the meaning of Section 881(c)(3)(A) of the
Code and cannot deliver either Internal Revenue Service Form 1001 or 4224
pursuant to clause (i) above, (x) a certificate substantially in the form of
Exhibit E and (y) two accurate and complete original signed copies of Internal
Revenue Service Form W-8 or any successor form prescribed by the Internal
Revenue Service) certifying to such Lender's entitlement to a complete exemption
from United States withholding tax with respect to payments of interest and fees
(if applicable) made under this Agreement and under any Note.
(e) For any period with respect to which a Lender has failed to
provide the Borrowers or the Agent with the appropriate form pursuant to Section
8.04(d) (unless such failure is due to a change in treaty, law or regulation
occurring subsequent to the date on which such form originally was required to
be provided), such Lender shall not be entitled to indemnification under Section
8.04(b) or (c) with respect to Taxes imposed by the United States. In addition,
for any period with respect to which a Lender described in clause (ii) of
Section 8.04(d) has delivered Internal Revenue Service Form W-8 (or any
successor form prescribed by the Internal Revenue Service) pursuant to such
Section but such form does not establish a complete exemption from deduction of
withholding or similar taxes imposed by the United States, such Lender shall not
be entitled to indemnification under Section 8.04(b) or (c) with respect to
Taxes imposed by the United States with respect to payments made under this
Agreement or any Note (other than with respect to any such payments constituting
payments of interest). If a Lender which is otherwise exempt from or subject to
a reduced rate of
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withholding tax, becomes subject to Taxes because of its failure to deliver a
form required hereunder, the Borrowers shall take, at the cost of such Lender,
such steps as such Lender shall reasonably request to assist such Lender to
recover such Taxes.
(f) If any Obligor is required to pay additional amounts to or for
the account of any Lender pursuant to this Section, then such Lender will change
the jurisdiction of its Applicable Lending Office if, in the judgment of such
Lender, such change (i) will eliminate or reduce any such additional payment
which may thereafter accrue and (ii) is not otherwise disadvantageous to such
Lender.
Section 8.05. Base Rate Loans Substituted for Affected Euro-Dollar
Loans. If (a) the obligation of any Lender to make, or convert outstanding Loans
to, Euro-Dollar Loans has been suspended pursuant to Section 8.02 or (b) any
Lender has demanded compensation under Section 8.03 or 8.04 with respect to its
Euro-Dollar Loans and the Borrowers shall, by at least five Euro-Dollar Business
Days' prior notice to such Lender through the Agent, have elected that the
provisions of this Section shall apply to such Lender, then, unless and until
such Lender notifies the Borrowers that the circumstances giving rise to such
suspension or demand for compensation no longer exist:
(i) all Loans which would otherwise be made by such Lender as (or
continued as or converted into) Euro-Dollar Loans shall instead be Base Rate
Loans (on which interest and principal shall be payable contemporaneously with
the related Euro-Dollar Loans of the other Lenders); and
(ii) after each of its Euro-Dollar Loans has been repaid (or converted
to a Base Rate Loan), all payments of principal which would otherwise be applied
to repay such Euro-Dollar Loans shall be applied to repay its Base Rate Loans
instead.
If such Lender notifies the Borrowers that the circumstances giving rise to such
notice no longer apply, the principal amount of each such Base Rate Loan shall
be converted into a Euro-Dollar Loan on the first day of the next succeeding
Interest Period applicable to the related Euro-Dollar Loans of the other
Lenders.
Section 8.06. Substitution of Lender. If (a) the obligation of any
Lender to make or convert Euro-Dollar Loans has been suspended pursuant to
Section 8.02 or (b) any Lender has demanded compensation under Section 8.03 or
8.04, the Borrowers shall have the right, with the assistance of the Agent, to
seek a mutually satisfactory substitute lender or lenders (which may be one or
more of the Lenders) to purchase the Notes and assume the outstanding Loans, the
Commitment (if any) and the Letter of Credit Liabilities (if any) of such
Lender. Each such Lender agrees to assign all of its outstanding Loans, its
Commitment (if
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any), its Notes and its Letter of Credit Liabilities (if any) to any such
substitute lender, without recourse or warranty other than title and outstanding
amount; provided that such substitute lender shall have paid to such Lender in
immediately available funds the principal of and accrued interest to the date of
such payment on its outstanding Loans and Letter of Credit Liabilities (if any)
and all fees owed to it hereunder.
ARTICLE 9
Guaranty
Section 9.01. The Guaranty. Each Borrower hereby unconditionally
guarantees the full and punctual payment (whether at stated maturity, upon
acceleration or otherwise) of all amounts payable by the other Borrower under
this Agreement and any other Loan Document and all Hedging Obligations. Upon
failure by such other Borrower to pay punctually any such amount, each Borrower
agrees that it shall forthwith on demand pay the amount not so paid at the place
and in the manner specified in this Agreement, the other relevant Loan Document
or the document with respect to any Hedging Obligations (which shall be included
in the definition of "Loan Documents" for purposes of Section 9.02 hereof), as
the case may be.
Section 9.02. Guaranty Unconditional. The obligations of each
Borrower under this Article shall be unconditional and absolute and, without
limiting the generality of the foregoing, shall not be released, discharged or
otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver or release
in respect of any obligation of the other Borrower, any other Obligor or any
other Person under any Loan Document, by operation of law or otherwise;
(b) any modification or amendment of or supplement to this Agreement,
any Note or any other Loan Document;
(c) any release, impairment, non-perfection or invalidity of any
direct or indirect security for any obligation of the other Borrower, any other
Obligor or any other Person under any Loan Document;
(d) any change in the corporate existence, structure or ownership of
the other Borrower, any other Obligor or any other Person or any of their
respective Subsidiaries, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting the other Borrower, any other Obligor or any other
Person or any of their assets or any resulting release or discharge of any
obligation of the
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other Borrower, any other Obligor or any other Person contained in any Loan
Document;
(e) the existence of any claim, set-off or other rights which such
Borrower may have at any time against the other Borrower, any other Obligor, the
Agent, any Lender or any other Person, whether in connection herewith or any
unrelated transactions, provided that nothing herein shall prevent the assertion
of any such claim by separate suit or compulsory counterclaim;
(f) any invalidity or unenforceability relating to or against the
other Borrower, any other Obligor or any other Person for any reason of this
Agreement, any Note or any other Loan Document, or any provision of applicable
law or regulation purporting to prohibit the payment by the other Borrower, any
other Obligor or any other Person of the principal of or interest on any Note or
any other amount payable by the other Borrower under any Loan Document; or
(g) any other act or omission to act or delay of any kind by the
other Borrower, any other Obligor, the Agent, any other Party to any Loan
Document, any Lender or any other Person or any other circumstance whatsoever
which might, but for the provisions of this paragraph, constitute a legal or
equitable discharge of or defense to either Borrower's obligations under this
Article.
Section 9.03. Discharge Only upon Payment in Full; Reinstatement In
Certain Circumstances. Each Borrower's obligations under this Article shall
remain in full force and effect so long as any Lender shall have any Commitment
or any outstanding Letter of Credit under this Agreement or any principal of or
interest on any Loan or any Note or any reimbursement obligation with respect to
any Letter of Credit issued pursuant to this Agreement or any other amount
payable under this Agreement or any other Loan Document or any Hedging
Obligations shall remain unpaid. If at any time any payment of any amount
payable by the other Borrower under this Agreement, any other Loan Document or
any document in respect of Hedging Obligations is rescinded or must be otherwise
restored or returned upon the insolvency or receivership of the other Borrower
or otherwise, each Borrower's obligations under this Article with respect to
such payment shall be reinstated as though such payment had been due but not
made at such time.
Section 9.04. Waiver by the Borrowers. Each Borrower irrevocably
waives acceptance hereof, presentment, demand, protest and any notice not
provided for herein, as well as any requirement that at any time any action be
taken by any corporation or person against the other Borrower or any other
Person.
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Section 9.05. Subrogation. Upon making any payment with respect to
the other Borrower under this Article, each Borrower shall be subrogated to the
rights of the payee against such other Borrower with respect to such payment;
provided that the Borrower making such payment pursuant to this Article shall
not enforce any payment by way of subrogation, or by reason of contribution
against any other guarantor of such other Borrower's obligations guaranteed
under this Article, until (x) all amounts of principal of and interest on the
Loans, (y) all reimbursement obligations with respect to any Letter of Credit
and all interest thereon and (y) all other amounts payable by such other
Borrower under this Agreement and any other Loan Documents and (z) all Hedging
Obligations have been paid in full, all outstanding Letters of Credit have been
canceled or expired and the Commitments of each Lender have been terminated.
Section 9.06. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by either Borrower under this Agreement or any
other Loan Document or of any Hedging Obligation is stayed by reason of the
insolvency or receivership of such Borrower or otherwise, all such amounts
otherwise subject to acceleration under the terms of this Agreement, any other
Loan Document or document in respect of Hedging Obligations shall nonetheless be
payable by the other Borrower under this Article forthwith on demand by the
Agent made at the request of the Required Lenders.
Section 9.07. Limitation on the Obligations. The obligations of each
Borrower solely as a "guarantor" of the obligations of the other Borrower under
this Article shall be limited to an aggregate amount that is equal to the
largest amount that would not render such obligations of such Borrower under
this Article subject to avoidance under ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Bankruptcy Code or any comparable provisions of applicable law.
ARTICLE 10
Miscellaneous
Section 10.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, telex,
facsimile transmission (with a copy by Unites States mail) or similar writing)
and shall be given to such party: (a) in the case of either Borrower or the
Agent, at its address, facsimile number or telex number set forth on the
signature pages hereof, (b) in the case of any Guarantor, in care of MGM
Studios, (c) in the case of any Lender, at its address, facsimile number or
telex number set forth in its Administrative Questionnaire or (d) in the case of
any party, such other address, facsimile number or telex number as such party
may hereafter specify for the purpose by notice to the Agent and the Borrowers.
Each such notice, request or other communication
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shall be effective (i) if given by telex, when such telex is transmitted to the
telex number specified in this Section and the appropriate answerback is
received, (ii) if given by facsimile transmission, when transmitted to the
facsimile number specified in this Section and confirmation of receipt is
received, (iii) if given by mail, 72 hours after such communication is deposited
in the mails with first class postage prepaid, addressed as aforesaid or (iv) if
given by any other means, when delivered at the address specified in this
Section; provided that notices to the Agent under Article 2 or Article 8 shall
not be effective until received.
Section 10.02. No Waivers. No failure or delay by the Agent or any
Lender in exercising any right, power or privilege hereunder or under any other
Loan Document shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
Section 10.03. Expenses; Indemnification. (a) The Borrowers shall pay
(i) all out-of-pocket expenses of the Agent and the Arranger, including
reasonable fees and disbursements of each special counsel for the Agent, in
connection with the preparation and administration of the Loan Documents, any
waiver or consent thereunder, any Tranche C Request with respect thereto or any
amendment thereof or any Default or alleged Default thereunder, (ii) the
reasonable fees and expenses of consultants and other experts retained by the
Agent or the Required Lenders with the consent of the Borrowers (which consent
shall not be unreasonably withheld); provided that, if such consultants or other
experts shall have been retained in connection with any Default under the Loan
Documents, no such consent shall be required and (iii) if an Event of Default
occurs, all out-of-pocket expenses incurred by the Agent and each Lender,
including (without duplication) the reasonable fees and disbursements of outside
counsel and the allocated cost of inside counsel, in connection with such Event
of Default and collection, bankruptcy, insolvency and other enforcement
proceedings resulting therefrom.
(b) Each Borrower agrees to indemnify the Agent and each Lender,
their respective affiliates and the respective directors, officers, trustees,
agents and employees of the foregoing (each an "Indemnitee") and hold each
Indemnitee harmless from and against any and all liabilities, losses, damages,
costs and expenses of any kind, including, without limitation, the reasonable
fees and disbursements of counsel and settlement costs, which may be incurred by
such Indemnitee in connection with any investigative, administrative or judicial
proceeding (whether or not such Indemnitee shall be designated a party thereto)
brought or threatened relating to or arising out of the Loan Documents or any
actual or proposed use of proceeds of Loans hereunder; provided that no
Indemnitee shall have the right to be indemnified hereunder for such
Indemnitee's
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own gross negligence or willful misconduct as determined by a court of competent
jurisdiction.
Section 10.04. Sharing of Set-offs. Each Lender agrees that if it
shall, by exercising any right of set-off or counterclaim or otherwise, receive
payment of a proportion of the aggregate amount of principal and interest then
due with respect to any Note and any Letter of Credit Liabilities held by it
which is greater than the proportion received by any other Lender in respect of
the aggregate amount of principal and interest then due with respect to any Note
and Letter of Credit Liabilities held by such other Lender, the Lender receiving
such proportionately greater payment shall purchase such participations in the
Notes held by the other Lenders, and such other adjustments shall be made, as
may be required so that all such payments of principal and interest then due
with respect to the Notes and Letter of Credit Liabilities held by the Lenders
shall be shared by the Lenders pro rata; provided that nothing in this Section
shall impair the right of any Lender to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to such exercise to the
payment of indebtedness of any Obligor other than its indebtedness hereunder.
Each Obligor agrees, to the fullest extent it may effectively do so under
applicable law, that any holder of a participation in a Note or Letter of Credit
Liabilities, whether or not acquired pursuant to the foregoing arrangements, may
exercise rights of set-off or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation were a direct
creditor of such Obligor in the amount of such participation.
Section 10.05. Amendments and Waivers; Release of Guarantors or
Collateral. Any provision of this Agreement or the Notes may be amended or
waived if, but only if, such amendment or waiver is in writing and is signed by
each Borrower and the Required Lenders (and, if the rights or duties of the
Agent or any L/C Issuer are affected thereby, by such Agent or such L/C Issuer,
as relevant); provided that no such amendment or waiver shall:
(a) unless signed by all the Lenders with a Commitment of any Class,
increase or decrease the Commitments of such Class (except for a ratable
decrease in all the Commitments of such Class), subject any such Lender to any
additional obligation, or postpone the date fixed for the scheduled termination
of any Commitment of such Class;
(b) unless signed by all Lenders holding Loans of any Class, reduce
the principal of or rate of interest on any Loans of, or fees with respect to,
such Class, postpone the date fixed for any scheduled payment of such fees or
the principal of or interest on any such Loans, or decrease the aggregate amount
by which such Loans are required to be repaid on any date scheduled pursuant to
Section 2.04 or postpone any date for such repayment;
93
(c) unless signed by all Revolving Lenders, reduce the amount to be
reimbursed in respect of any Letter of Credit or of any interest with respect to
any Letter of Credit Liabilities or any fees payable by reference to the Letters
of Credit hereunder, postpone the date fixed for any payment of the amount to be
reimbursed in respect of any Letter of Credit or any interest thereon or any
fees payable by reference to the Letters of Credit hereunder or (except as
expressly provided in Section 2.14) expiry date of any Letter of Credit;
(d) unless signed by the Swing Lender and each other Lender affected
thereby, increase the Swing Loan Commitment, postpone the date fixed for the
termination of the Swing Loan Commitment or otherwise affect any of its rights
or obligations hereunder;
(e) unless signed by all the Lenders, (i) except as provided in
Section 2.01(i) hereof, add any new tranche or class of commitments or loans
under this Agreement or (ii) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Notes or the Letter of Credit
Liabilities or the number of Lenders, which shall be required for the Lenders or
any of them to take any action under this Section or any other provision of this
Agreement.
Any provision of the Loan Documents (other than this Agreement and the Notes)
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed by the relevant Obligor and the Agent with the consent of the
Required Lenders; provided that no such amendment or waiver shall, unless signed
by all the Lenders, effect or permit (i) a release of all or substantially all
of the Collateral or, except as provided in Section 2.01(i) hereof, provide for
the sharing of such Collateral with additional obligations or (ii) a release of
all or substantially all of the Guarantors from their obligations under the
Subsidiary Guaranty. Notwithstanding the foregoing, Collateral shall be released
from the Lien of the Collateral Documents from time to time as necessary to
effect any sale or pledge of assets permitted by the Loan Documents, and the
Agent shall execute and deliver all release documents reasonably requested to
evidence such release.
SECTION 10.06. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that no Obligor may assign
or otherwise transfer any of its rights under this Agreement and the other Loan
Documents without the prior written consent of all Lenders.
(b) Any Lender may at any time grant to one or more Lenders or other
institutions (other than a Competitor) (each a "Participant") participating
interests in its Commitment or any or all of its Loans or Letter of Credit
Liabilities. In the event of any such grant by a Lender of a participating
interest to a Participant, whether or not upon notice to the Borrowers and the
Agent, such
94
Lender shall remain responsible for the performance of its obligations
hereunder, and the Borrowers and the Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement pursuant to which any Lender may
grant such a participating interest shall provide that such Lender shall retain
the sole right and responsibility to enforce the obligations of the Borrowers
hereunder including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
participation agreement may provide that such Lender will not agree to any
modification, amendment or waiver of this Agreement described in clause (a),
(b), (c), or (d) of, or in the proviso in the penultimate sentence of, Section
10.05 without the consent of the Participant. Each Borrower agrees that, without
duplication of amounts payable to the relevant Lender, each Participant shall,
to the extent provided in its participation agreement, be entitled to the
benefits of Article 8 with respect to its participating interest. An assignment
or other transfer which is not permitted by subsection (c) or (d) below shall be
given effect for purposes of this Agreement only to the extent of a
participating interest granted in accordance with this subsection (b).
(c) Any Lender may at any time assign to one or more Lenders or other
institutions (including any fund that regularly engages in making, purchasing or
investing in loans) (each an "Assignee") all, or a proportionate part of all, of
its rights and obligations under this Agreement and the Notes with respect to
its Commitment of any Class or its outstanding Loans of any Class or its letter
of Credit Liabilities, and such Assignee shall assume such rights and
obligations, pursuant to an Assignment and Assumption Agreement in substantially
the form of Exhibit C hereto executed by such Assignee and such transferor
Lender, with (and subject to) the subscribed consent of each Borrower, which
shall not be unreasonably withheld, the Agent and, solely with respect to any
assignment of the Revolving Commitments, Revolving Loans or Letter of Credit
Liabilities, the L/C Issuers and the Swing Lender; provided that (i) if an
Assignee is an affiliate of such transferor Lender or was a Lender immediately
prior to such assignment, no such consent shall be required, (ii) if such
transferor Lender pursuant to such assignment assigns to an Assignee a part (but
not all) of its Commitment or Loans of any Class or its Letter of Credit
Liabilities, then the sum of (x) the aggregate amount of the Commitments of all
Classes (if any), (y) the aggregate outstanding principal amount of the Loans of
all Classes (if any) and (z) the aggregate Letter of Credit Liabilities (if any)
held by such Assignee immediately after giving effect to such assignment and
retained by the transferor Lender immediately after giving effect to such
assignment shall each be at least $1,000,000 and (iii) no Lender shall enter
into any assignment with a Competitor. Upon execution and delivery of such
instrument and payment by such Assignee to such transferor Lender of an amount
equal to the purchase price agreed between such transferor Lender and such
Assignee, such Assignee shall be a Lender party to this Agreement and shall have
all the rights and obligations of a Lender with a Commitment as set forth in
95
such instrument of assumption, and the transferor Lender shall be released from
its obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Lender, the Agent and the
Borrowers shall make appropriate arrangements so that, if required, new Notes
are issued to the Assignee. In connection with any such assignment, the
transferor Lender shall pay to the Agent an administrative fee for processing
such assignment in the amount of $3,500. If the Assignee is not incorporated
under the laws of the United States of America or a state thereof, it shall
deliver to the Borrowers and the Agent certification as to exemption from
deduction or withholding of any United States federal income taxes in accordance
with Section 8.04.
(d) For the avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section 10.06 concerning assignments of
Loans and Notes relate only to absolute assignments and that such provisions do
not purport to regulate assignments creating security interests, including,
without limitation, any pledge or assignment by a Lender of any Loan or Note to
any Federal Reserve Bank in accordance with applicable law. No such assignment
shall release the transferor Lender from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Lender's
rights shall be entitled to receive any greater payment under Section 8.03 or
8.04 than such Lender would have been entitled to receive with respect to the
rights transferred, unless such transfer is made (x) with each Borrower's prior
written consent or (y) by reason of the provisions of Section 8.02, 8.03 or 8.04
requiring such Lender to designate a different Applicable Lending Office under
certain circumstances or (z) at a time when the circumstances giving rise to
such greater payment did not exist.
(f) For purposes of this Section 10.06, "Competitor" means any Person
whose primary line of business is the entertainment industry (any such Person,
an "Entertainment Person"), or any Person controlled by, or under common control
with, any Entertainment Person.
(g) Each Borrower hereby designates the Agent to serve as such
Borrower's agent, solely for purposes of this subsection 10.06(g), to maintain a
register (the "Register") on which the Agent will record the Commitments from
time to time of each Lender, the Loans made by each Lender and each repayment in
respect of the principal amount of the Loans of each Lender and to retain a copy
of each Assignment and Assumption Agreement delivered to the Agent pursuant to
this Section. Failure to make any such recordation, or any error in such
recordation, shall not affect either Borrower's obligation in respect of such
Loans. The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrowers, the Agent and the Lenders shall treat each
Person in whose
96
name a Loan and the Notes evidencing the same is registered as the owner thereof
for all purposes of this Agreement, notwithstanding notice or any provision
herein to the contrary. With respect to any Lender, the assignment or other
transfer of the Commitments of such Lender and the rights to the principal of,
and interest on, any Loan made and any Note issued pursuant to this Agreement
shall not be effective until such assignment or other transfer is recorded on
the Register and, except to the extent provided in this subsection 10.06(g),
otherwise complies with Section 10.06, and prior to such recordation all amounts
owing to the transferor Lender with respect to such Commitments, Loans and Notes
shall remain owing to the transferor Lender. The registration of assignment or
other transfer of all or part of any Commitments, Loans and Notes for a Lender
shall be recorded by the Agent on the Register only upon the acceptance by the
Agent of a properly executed and delivered Assignment and Assumption Agreement.
The Register shall be available at the offices where kept by the Agent for
inspection by the Borrowers and any Lender at any reasonable time upon
reasonable prior notice to the Agent. The Borrowers may not replace any Lender
pursuant to Section 8.06, unless, with respect to any Notes held by such Lender,
the requirements of subsection 10.06(c) have been satisfied.
SECTION 10.07. Collateral. Each of the Lenders represents to the Agent
and each of the other Lenders that it in good faith is not relying upon any
"margin stock" (as defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
SECTION 10.08. Governing Law; Submission to Jurisdiction. This
Agreement and each Note shall be governed by and construed in accordance with
the laws of the State of New York. Each Obligor hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. Each Obligor irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
SECTION 10.09. Counterparts; Integration. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement constitutes the entire agreement and understanding among the
parties hereto and supersedes any and all prior agreements and understandings,
oral or written, relating to the subject matter hereof.
97
SECTION 10.10. Waiver of Jury Trial. EACH OF THE BORROWERS, THE AGENT
AND THE LENDERS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 10.11. Confidentiality. The Agent and each Lender agrees to
keep any information delivered or made available by any Obligor pursuant to the
Loan Documents confidential from anyone other than persons employed or retained
by such Lender who are engaged in evaluating, approving, structuring or
administering the credit facility contemplated hereby; provided that nothing
herein shall prevent the Agent or any Lender from disclosing such information
(a) to any other Lender or to any other Agent, (b) to any other Person if
reasonably incidental to the administration of the credit facility contemplated
hereby, (c) upon the order of any court or administrative agency, (d) upon the
request or demand of any regulatory agency or authority, (e) which had been
publicly disclosed other than as a result of a disclosure by the Agent or any
Lender prohibited by this Agreement, (f) in connection with any litigation to
which the Agent, any Lender or its subsidiaries or Parent may be a party, (g) to
the extent necessary in connection with the exercise of any remedy hereunder,
(h) to such Lender's or such Agent's legal counsel and independent auditors and
(i) subject to provisions substantially similar to those contained in this
Section, to either (A) any actual or proposed Participant or Assignee or (B) any
direct or indirect contractual counterparties in swap agreements or to the
professional advisors of such swap counterparties.
SECTION 10.12. Non-reliance on Tracinda. It is understood by the
parties that neither ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ nor Tracinda nor any other Investor
individually or collectively, is a party to this Agreement or any other
agreement contemplated hereby. Accordingly, in the event (a) there is any
alleged breach or default by any party under this Agreement or any other
agreement contemplated herein, or (b) any party has any claim arising from or
relating to any such agreement, no party, nor any third party claiming through
such party, shall claim, commence any proceeding or otherwise seek to impose any
liability whatsoever against ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or Tracinda or any other Investor by
reason of such alleged breach, default or claim.
98
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
METRO-▇▇▇▇▇▇▇-▇▇▇▇▇ STUDIOS
INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Title: Senior Executive Vice President
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telex: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: 310-449-3090
ORION PICTURES CORPORATION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Title: Senior Executive Vice President
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telex: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: 310-449-3090
BANK OF AMERICA, N.A.
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Title: Managing Director
SOCIETE GENERALE
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Title: Vice President
THE CHASE MANHATTAN BANK
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇ III
---------------------------
Title: Managing Director
GENERAL ELECTRIC CAPITAL
CORPORATION
By /s/ W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------
Title: Duly Authorized Signatory
THE BANK OF NOVA SCOTIA
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------
Title: Managing Director
FLEET NATIONAL BANK
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Title: Managing Director
ING (US) CAPITAL LLC
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
Title: Managing Director
BANK OF SCOTLAND
By /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Title: Senior Vice President
THE BANK OF NEW YORK
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Title: Assistant Vice President
ARAB BANKING CORPORATION
(B.S.C.)
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
Title: Vice Preseident
FLEET BUSINESS CREDIT CORPORATION
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------
Title: Vice President
TORONTO DOMINION (NEW YORK), INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Title: Vice President
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Title: Vice President & Manager
UNION BANK OF CALIFORNIA, N.A.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------
Title: Vice President
ABN AMRO N.V.
By /s/ ▇▇▇▇▇▇▇ O'▇. ▇▇▇▇▇
--------------------------------
Title: Senior Vice President
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Title: Group Vice President
NATEXIS BANQUE
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
Title: Assistant Vice President
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Title: Vice President and Group Manager
Entertainment Finance
GULF INTERNATIONAL BANK B.S.C.
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Title: Assistant Vice-President
By /s/ Abdel-Fattah Tahoun
------------------------------------
Title: Senior Vice-President
PACIFIC CENTURY BANK, N.A.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Title: Vice President
BANQUE WORMS
By: _______________________
Title:
CITY NATIONAL BANK, A NATIONAL BANKING
ASSOCIATION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Title: Vice President
FIRST HAWAIIAN BANK
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Title: Senior Vice President
THE FUJI BANK, LIMITED
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Title: Senior Vice President
FC CBO LIMITED
By /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------
Title: Director
▇▇▇ ▇▇▇▇▇▇ PRIME RATE INCOME TRUST
By: ▇▇▇ ▇▇▇▇▇▇ Investment Advisory Corp.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Title: Vice President
▇▇▇ ▇▇▇▇▇▇ SENIOR INCOME TRUST
By: ▇▇▇ ▇▇▇▇▇▇ Investment Advisory Corp.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Title: Vice President
CONTINENTAL ASSURANCE COMPANY, SEPARATE ACCOUNT (E)
By: Highland Capital Management, L.P. as
Collateral Manager
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇ CFA
--------------------------------
Title: Executive Vice President
PAMCO CAYMAN LTD.
By: Highland Capital Management, L.P.
as Collateral Manager
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Title: Executive Vice President
ML CBO IV (Cayman) Ltd.
By: Highland Capital Management, L.P.
as Collateral Manager
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Title: Executive Vice President
▇▇▇ CAPITAL FUNDING, L.P.
By: Highland Capital Management, L.P.
as Collateral Manager
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Title: Executive Vice President
HIGHLAND LEGACY LIMITED
By: Highland Capital Management, L.P.
as Collateral Manager
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Title: Executive Vice President
KZH PAMCO LLC
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Title: Authorized Agent
▇▇▇▇▇▇▇ ▇▇▇▇▇ SENIOR FLOATING RATE
FUND, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Title: Authorized Signatory
▇▇▇▇▇▇▇ ▇▇▇▇▇ SENIOR FLOATING RATE
FUND II, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Title: Authorized Signatory
▇▇▇▇▇▇▇ ▇▇▇▇▇ PRIME RATE PORTFOLIO
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Investment
Managers, I.P., as Investment Advisor
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Title: Authorized Signatory
SENIOR HIGH INCOME PORTFOLIO, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Title: Authorized Signatory
▇▇▇▇▇▇▇ ▇▇▇▇▇ DEBT STRATEGIES PORTFOLIO
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Investment Managers,
L.P., as Investment Advisor
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: Authorized Signatory
DEBT STRATEGIES FUND, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: Authorized Signatory
DEBT STRATEGIES FUND II, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: Authorized Signatory
▇▇▇▇▇▇▇ ▇▇▇▇▇ GLOBAL INVESTMENT SERIES: INCOME
STRATEGIES PORTFOLIO
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Investment Managers,
L.P., as Investment Advisor
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: Authorized Signatory
THE ING CAPITAL SENIOR SECURED HIGH INCOME
FUND HOLDINGS, LTD.
By: ING Capital Advisors LLC, as an
Investment Manager
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------------
Title: Vice President & Portfolio Manager
KZH ING-1 LLC
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
Title: Authorized Agent
KZH ING-2 LLC
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
Title: Authorized Agent
ARCHIMEDES FUNDING, LLC
By: ING Capital Advisors LLC, as
Collateral Manager
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------------
Title: Vice President & Portfolio Manager
ARCHIMEDES FUNDING III, LTD.
By: ING Capital Advisors LLC, as
Collateral Manager
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------------
Title: Vice President & Portfolio Manager
ARCHIMEDES FUNDING III, LTD.
By: ING Capital Advisors LLC, as
Collateral Manager
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------------
Title: Vice President & Portfolio Manager
ING HIGH INCOME PRINCIPAL PRESERVATION FUND
HOLDINGS,LDC.
By: ING Capital Advisors LLC, as
Investment Advisor
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------------
Title: Vice President & Portfolio Manager
SEQUILS-ING I (HBDGM), LTD.
By: ING Capital Advisors LLC, as
Collateral Manager
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------------
Title: Vice President & Portfolio Manager
FIRST DOMINION FUNDING I
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Title: Authorized Signator
FIRST DOMINION FUNDING III
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Title: Authorized Signator
SENIOR DEBT PORTFOLIO (▇▇▇▇▇ ▇▇▇▇▇ MANAGEMENT)
By: Boston Management and Research as
Investment Advisor
By /s/ Payson ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Title: Second Vice President and
Associate General Counsel
SIMSBURY CLO, LIMITED
By: Mass Mutual Life Insurance Co., as
Collateral Manager
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
Title: Second Vice President and
Associate General Counsel
MAPLEWOOD (CAYMAN) LIMITED
By: Mass Mutual Life Insurance Co., as
Investment Manager
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
Title: Second Vice President and
Associate General Counsel
PILGRIM PRIME RATE TRUST
By: Pilgrim Investments Inc., as its
Investment Manager
By /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Title: Vice President
PACIFIC LIFE INSURANCE
By /s/ ▇▇▇▇▇▇▇ ▇▇▇
-----------------------------------
Title: Senior Vice President
PACIFIC LIFE CBO 1998-1 LTD.
By /s/ ▇▇▇▇▇▇▇ ▇▇▇
-----------------------------------
Title: Senior Vice President
KZH STERLING LLC
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Title: Authorized Agent
FINOVA CAPITAL CORPORATION
By ______________________________
Title:
AVALON CAPITAL LTD.
By: Invesco Senior Secured Management
Inc., as Portfolio Advisor
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Title: Authorized Signatory
AVALON CAPITAL LTD. 2
By: Invesco Senior Secured Management
Inc., as Portfolio Advisor
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
Title: Authorized Signatory
CERES II FINANCE LTD.
By: Invesco Senior Secured Management
Inc., as Submanaging Agent (Financial)
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title: Authorized Signatory
KEYPORT LIFE INSURANCE COMPANY
By: ▇▇▇▇▇ ▇▇▇ & Farnham, as Agent
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Senior Vice President & Portfolio
Manager
CYPRESSTREE INVESTMENT PARTNERS I, LTD.
By: CypressTree Investment Management
Company, Inc., as Portfolio Manager
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
Title: Principal
CYPRESSTREE INVESTMENT PARTNERS II, LTD.
By: CypressTree Investment Management
Company, Inc., as Portfolio Manager
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
Title: Principal
BLACK DIAMOND CLO 1998-1 LTD.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
Title: Director
PFL LIFE INSURANCE COMPANY
By /s/ ▇▇▇▇ ▇▇▇▇▇▇
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Title: Vice President
TYLER TRADING INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: President
ELT LTD.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Title: Authorized Agent
STRATEGIC MANAGED LOAN PORTFOLIO
By /s/ ▇▇▇▇ ▇▇▇▇▇
------------------------------------
Title: Vice President of Alternative
Investment Strategies
CAPTIVA FINANCE LTD.
By /s/ ▇▇▇▇▇ ▇▇▇▇
----------------------------
Title: Director
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ PRIME INCOME TRUST
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
Title: Senior Vice President
KZH CYPRESSTREE-1 LLC
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Title: Authorized Agent
BANK OF AMERICA, N.A., as Agent
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Title: Managing Director
▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF NEW YORK.,
in its capacity as Agent under the Original
Credit Agreement for the purposes of Section
7.11 herein
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Title: Vice President