UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
METRO-GOLDWYN-MAYER INC.
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(Name of Issuer)
Common Stock, $.01 par value
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(Title of Class of Securities)
591610-10-0
------------------------------------------
(CUSIP Number)
Stephen Fraidin, P.C.
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
(212) 859-8000
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communication)
November 13, 1997
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this Schedule because of Rule 13d-1(b)(3)
or (4), check the following box |_|.
Check the following box if a fee is being paid with the
statement [X]. (A fee is not required only if the reporting person:
(1) has a previous statement on file reporting beneficial ownership of
more than five percent of the class of securities described in Item 1;
and (2) has filed no amendment subsequent thereto reporting beneficial
ownership of five percent or less of such class.) (See Rule 13d-7.)
Note. Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
The information required in the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 ("Act") or otherwise subject to the
liabilities of that section of the Act but shall be subject to all
other provisions of the Act (however, see the Notes).
SCHEDULE 13D
CUSIP No. 591610-10-0 Page 1 of 12 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
TRACINDA CORPORATION
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
BK
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEVADA
NUMBER OF 7 SOLE VOTING POWER
SHARES 41,647,888
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH N/A
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 41,647,888
10 SHARED DISPOSITIVE POWER
N/A
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
41,647,888
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
63.24%
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
SCHEDULE 13D
CUSIP No. 591610-10-0 Page 2 of 12 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
KIRK KERKORIAN
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
N/A
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
NUMBER OF 7 SOLE VOTING POWER(FN1)
SHARES 41,647,888
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH N/A
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 41,647,888
10 SHARED DISPOSITIVE POWER
N/A
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
41,647,888
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
63.24%
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
[FN]
(1) The number of shares of Common Stock of the company specified in
this filing are all adjusted to give effect to a 41.667 for 1 stock
split effected by the company on November 12, 1997.
</FN>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
ITEM 1. SECURITY AND ISSUER.
This statement on Schedule 13D (this "Schedule 13D") relates to
the common stock, $.01 par value per share (the "Common Stock"), of
Metro-Goldwyn-Mayer Inc., a Delaware corporation (the "Company"). The
Company's principal executive offices are located at 2500 Broadway
Street, Santa Monica, California 90404.
ITEM 2. IDENTITY AND BACKGROUND.
This Schedule is being filed on behalf of Mr. Kirk Kerkorian and
Tracinda Corporation ("Tracinda"), a Nevada corporation wholly owned
by Mr. Kerkorian. Tracinda is an investment company. Mr. Kerkorian and
Tracinda are collectively referred to hereinafter as the "Filing
Persons."
Tracinda's principal business address is 4835 Koval Lane, Las
Vegas, Nevada 89109. During the last five years, Tracinda has not been
convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors) and has not been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or
finding any violation with respect to such laws.
Mr. Kerkorian is Tracinda's Chief Executive Officer and sole
director. Tracinda's other officers are Jerome B. York and Anthony L.
Mandekic. The following information is supplied with respect to Mr.
Kerkorian, Mr. York and Mr. Mandekic.
I. (a) Kirk Kerkorian.
(b) Mr. Kerkorian's business address is 4835 Koval Lane, Las
Vegas, Nevada 89109.
(c) Mr. Kerkorian's principal occupation or employment is
serving as Tracinda's Chief Executive Officer and President. In
addition, Mr. Kerkorian is a director of MGM Grand, Inc., a Delaware
corporation ("MGM Grand"). Tracinda is the principal stockholder of
MGM Grand. MGM Grand is engaged in the hotel and gaming business and
has its principal executive offices at 3799 South Las Vegas Boulevard,
Las Vegas, Nevada 89109. In addition, Mr. Kerkorian is a director of
the Company.
(d) - (e) During the last five years, Mr. Kerkorian has not
been convicted in a criminal proceeding (excluding traffic violations
and similar misdemeanors) and has not been a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
(f) Mr. Kerkorian is a citizen of the United States.
II. (a) Jerome B. York
(b) Mr. York's business address is 4835 Koval Lane, Las
Vegas, Nevada 89109.
(c) Mr. York's principal occupation or employment is serving
as Vice Chairman of Tracinda. Mr. York is also a director of MGM
Grand. Tracinda is the principal stockholder of MGM Grand. MGM Grand
is engaged in the hotel and gaming business and has it principal
executive offices at 3799 South Las Vegas Boulevard, Las Vegas, Nevada
89109. Mr. York is also a director of Apple Computer, Inc. ("Apple").
Apple is engaged in the business of designing, manufacturing and
marketing microprocessor-based personal computers and has its
principal executive offices at One Infinite Loop, Cupertino,
California 95014. Mr. York is also a director of USA Waste Services,
Inc. ("Waste Services"). Waste Services is engaged in the business of
providing waste management services and has its principal executive
offices at 1001 Fannin Street, Suite 400, Houston, Texas 77002. Mr.
York is also a director of the Company.
(d) - (e) During the last five years, Mr. York has not been
convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors) and has not been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or
finding any violation with respect to such laws.
(f) Mr. York is a citizen of the United States.
III. (a) Anthony L. Mandekic
(b) Mr. Mandekic's business address is 4835 Koval Lane, Las
Vegas, Nevada 89109.
(c) Mr. Mandekic's principal occupation or employment is
serving as Secretary/Treasurer of Tracinda.
(d) - (e) During the last five years, Mr. Mandekic has not
been convicted in a criminal proceeding (excluding traffic violations
and similar misdemeanors) and has not been a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
(f) Mr. Mandekic is a citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On October 10, 1996, Tracinda acquired 8,333,400 shares of Common
Stock and 450,000 shares of the Company's Series A Preferred Stock
(which was convertible into 18,750,150 shares of Common Stock) for a
purchase price (after giving effect to the aforementioned conversion)
of $24.00 per share and an aggregate purchase price of $650,000,000.
The purchase price for such shares was funded from funds provided to
Tracinda pursuant to that certain Amended and Restated Credit
Agreement dated as of October 30, 1996, as amended, between Tracinda,
the financial institutions from time to time party thereto and Bank of
America National Trust and Savings Association, as administrative
agent (the "Credit Agreement'). Tracinda has pledged such shares
pursuant to the Credit Agreement and a related Stock Pledge Agreement.
On June 30, 1997, Tracinda sold to Seven Network Limited
("Seven"), pursuant to the exercise by Seven of an option, 100,000
shares of Series A Preferred Stock of the Company (which was
convertible into 4,166,700 shares of Common Stock) at a purchase price
of $100,000,000.
On July 10, 1997, Tracinda acquired 13,375,107 shares of Common
Stock, for a purchase price of $24.00 per share and an aggregate
purchase price of $321,000,000. The purchase price for such shares was
funded from funds provided to Tracinda pursuant to the Credit
Agreement and such additional shares were pledged pursuant to the
Credit Agreement and the related Stock Pledge Agreement.
On November 12, 1997, Tracinda converted 350,000 shares of the
Company's Series A Preferred Stock into 14,583,450 shares of Common
Stock.
On November 12, 1997, concurrently with the initial public
offering by the Company, Tracinda purchased 3,978,780 shares of Common
Stock at a purchase price of $18.85 per share, for an aggregate
purchase price of $75,000,000. In addition, following the completion
of the distribution by the underwriters of the shares offered by the
Company in the initial public offering, Tracinda acquired 1,220,900
additional shares of Common Stock, as set forth in Item 5 below which
is incorporated herein by reference. The aggregate purchase price for
the foregoing 1,220,900 shares of Common Stock was $24,626,262.50,
plus $48,836.00 of brokerage commissions, and was funded from funds
provided to Tracinda pursuant to the Credit Agreement and such
additional shares were pledged pursuant to the Credit Agreement and
the related Stock Pledge Agreement.
In addition, Tracinda has an option, exercisable at any time
through October 10, 2002, to purchase 156,251 shares of Common Stock
at a price of $6.41 per share.
ITEM 4. PURPOSE OF TRANSACTION.
The 8,333,400 shares of Common Stock and 450,000 shares of the
Company's Series A Preferred Stock (which was convertible into
18,750,150 shares of Common Stock) acquired by Tracinda on October 10,
1997, was acquired for investment purposes and for the purpose of
acquiring, together with Seven and senior management of MGM Studios
(as defined below) Metro-Goldwyn-Mayer Studios Inc. ("MGM Studios")
from Consortium de Realisation, a wholly owned subsidiary of Credit
Lyonnais S.A. The 13,375,107 Shares of Common Stock acquired by
Tracinda on July 10, 1997, was acquired for investment purposes and
for the purpose of providing the Company with funding to acquire Orion
Pictures Corporation and its subsidiaries from Metromedia
International Group, Inc. The rest of the shares beneficially owned by
Tracinda were acquired for investment purposes.
In the ordinary course of its business, Tracinda from time to
time reviews the performance of its investments and considers possible
strategies for enhancing value. As part of its ongoing review of its
investment in the shares, Tracinda will, from time to time, explore
the possibility of acquiring additional shares of Common Stock. Any
determination with respect to the acquisition of additional shares
will depend upon a variety of factors, including, without limitation,
current and anticipated future trading prices for the shares, the
financial condition, results of operations and prospects of the
Company and general economic, financial market and industry
conditions.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) - (b) The following table sets forth information with respect
to the shares of Common Stock beneficially owned by each person or
entity named in Item 2 hereof. Mr. Kerkorian has sole voting and
investment power with respect to 41,647,888 of the shares specified
below. Mr. York has sole voting and investment power with respect to
5,000 of the shares specified below.
Number of Percent of
Name Shares Outstanding(FN2)
Tracinda Corporation 41,647,888 63.24%
Kirk Kerkorian 41,647,888 63.24%
Jerome B. York 5,000 .01%
Anthony Mandekic -0- -0-%
[FN]
(2) Computed on the basis of 65,698,201 shares of Common Stock expected
to be outstanding as of November 13, 1997, as reported in the
Company's Prospectus dated November 12, 1997.
</FN>
(c) Except with respect to the shares specified in the
immediately succeeding sentence, the table below sets forth
information with respect to all purchases of shares of Common Stock by
the persons and entities specified in Item 2 during the last 60 days.
Except with respect to (i) 3,978,780 shares acquired by Tracinda
directly from the Company on November 12, 1997, at a purchase price
per share of $18.85 and (ii) 5,000 shares acquired by Mr. York on
November 12, 1997, in connection with the initial public offering by
the Company at a price per share of $20.00, all of such purchases
described below were effected by Tracinda on the New York Stock
Exchange.
Transaction Date Number of Shares Price Per Share Aggregate Price
11/13 37,000 $19.875 $ 735,375.00
11/13 400,000 20.00 8,000,000.00
11/13 101,400 20.25 2,053,350.00
11/13 25,000 20.375 509,375.00
11/13 65,000 20.5 1,332,500.00
11/13 15,000 20.675 309,375.00
11/13 10,000 20.75 207,500.00
11/13 70,000 21.00 1,470,000.00
11/14 86,600 20.00 1,732,000.00
11/14 2,000 20.0625 40,125.00
11/14 12,900 20.25 261,225.00
11/14 25,000 20.375 509,375.00
11/14 25,000 20.50 512,500.00
11/14 10,000 20.5625 205,625.00
11/14 7,500 20.625 154,687.50
11/14 42,500 20.75 881,875.00
11/17 65,000 19 15/16 1,295,937.50
11/17 2,000 19 15/16 39,875.00
11/17 5,000 19 15/16 99,687.50
11/17 134,000 19 15/16 2,671,625.00
11/17 2,000 19 15/16 39,875.00
11/17 2,000 20.00 40,000.00
11/17 50,500 20.00 1,010,000.00
11/17 2,000 20 1/16 40,125.00
11/17 2,500 20 1/8 50,312.50
11/17 21,000 20 3/16 423,937.50
(d) No person other than (i) Tracinda (and Mr. Kerkorian as sole
shareholder, President and Chief Executive Officer of Tracinda) with
respect to the shares beneficially owned by Tracinda and (ii) Mr.
York, with respect to the shares beneficially owned by Mr. York, has
the right to receive or power to direct the receipt of dividends from,
or the proceeds from the sale of, the shares.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Tracinda entered into an Investment Agreement with the Company
and Seven, dated as of July 11, 1996, as amended by Amendment No. 1, a
copy of which is attached hereto as Exhibit 7.2, pursuant to which
Tracinda acquired 8,333,400 shares of Common Stock and 450,000 shares
of the Company's Series A Preferred Stock. Tracinda entered into an
Investment Agreement with the Company and Seven, dated as of May 2,
1997, a copy of which is attached hereto as Exhibit 7.3, pursuant to
which Tracinda acquired 13,375,107 shares of Common Stock. Tracinda
entered into an Investment Agreement with the Company, dated as of
November 12, 1997, a copy of which is attached hereto as Exhibit 7.4,
pursuant to which Tracinda acquired 3,978,780 shares of Common Stock.
Tracinda, the Company, Seven and one or more other parties are parties
to an Amended and Restated Investors Shareholder Agreement, dated as
of November 12, 1997, a copy of which is attached hereto as Exhibit
7.5, and an Amended and Restated Shareholders Agreement, dated as of
November 12, 1997, a copy of which is attached hereto as Exhibit 7.6,
each of which contains certain provisions relating to the corporate
governance of the Company and provide for, among other matters,
certain transfer related provisions and registration rights. Tracinda
and the Company are parties to an Amended and Restated Stock Option
Agreement dated as of November 12, 1997, a copy of which is attached
hereto as Exhibit 7.7, pursuant to which the Company granted Tracinda
an option to purchase up to 156,251 shares of Common Stock at a
purchase price of $6.41 per share.
In addition as described above in Item 3, Tracinda is a party to
the Credit Agreement pursuant to which Tracinda secured funding to
purchase the shares purchased by Tracinda and pursuant to which
Tracinda pledged the shares so acquired by Tracinda.
Pursuant to agreements entered into with Merrill Lynch & Co. in
connection with the initial public offering by the Company, the form
of which is attached hereto as Exhibit 7.8, each of Tracinda, Mr.
Kerkorian and Mr. York generally agreed not to sell, offer to sell,
grant any options for the sale of, or otherwise dispose of, any shares
of the Common Stock for a period of 180 days after November 12, 1997,
without the prior written consent of Merrill Lynch.
Except as described above, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) among the persons
named in Item 2 hereof and between such persons and any other person
with respect to any securities of the Company, including but not
limited to transfer or voting of any of such securities, finder's
fees, joint ventures, loan or option arrangements, put or calls,
guarantees of profits, division of profits or loss, or the giving or
withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The following exhibits are filed as part of this Schedule 13D.
Exhibit 7.1. Amended and Restated Credit Agreement dated as of
October 30, 1996, as amended, between Tracinda,
the Financial institutions from time to time party
thereto and Bank of America National Trust and
Savings Association, as administrative agent, and
the related form of Stock Pledge Agreement.
Exhibit 7.2. Investment Agreement dated as of July 11, 1996, as
amended by Amendment No. 1.
Exhibit 7.3. Investment Agreement dated as of May 2, 1997.
Exhibit 7.4. Investment Agreement dated as of November 12, 1997.
Exhibit 7.5. Amended and Restated Investors Shareholder Agreement
dated as of November 12, 1997.
Exhibit 7.6. Amended and Restated Shareholders Agreement dated as
of November 12, 1997.
Exhibit 7.7. Amended and Restated Stock Option Agreement dated as
of November 12, 1997.
Exhibit 7.9. Form of Hold-Back Agreement.
Exhibit 7.9. Joint Filing Agreement.
Exhibit 7.10. Power of Attorney
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is
true, complete and correct.
Date: November 18, 1997
TRACINDA CORPORATION,
a Nevada corporation
By: /s/ Anthony L. Mandekic
-----------------------
Anthony L. Mandekic
Secretary/Treasurer
Kirk Kerkorian
By: /s/ Anthony L. Mandekic
-----------------------
Anthony L. Mandekic
Attorney-in-Fact
FIRST AMENDED AND RESTATED
--------------------------
CREDIT AGREEMENT
----------------
This FIRST AMENDED AND RESTATED CREDIT AGREEMENT is entered
into as of October 30, 1996, among TRACINDA CORPORATION, a Nevada
corporation (the "Company"), the several financial institutions from
time to time party to this Agreement (collectively, the "Banks";
individually, a "Bank"), and Bank of America National Trust and
Savings Association, as Letter of Credit Issuing Bank and
Administrative Agent for the Banks.
RECITALS
A. The Company and Bank of America National Trust and
Savings Association entered into that certain Credit Agreement entered
into as of June 27, 1991, as amended by a First Amendment dated as of
May 12, 1992, a Second Amendment dated as of October 1, 1992, a Third
Amendment dated as of December 17, 1992, a Fourth Amendment dated as
of February 3, 1993, a Fifth Amendment dated as of August 2, 1993, a
Sixth Amendment dated as of June 22, 1994, a Seventh Amendment dated
as of August 26, 1994, an Eighth Amendment dated as of April 5, 1995,
a Ninth Amendment dated as of June 21, 1995, a Tenth Amendment dated
as of September 22, 1995, an Eleventh Amendment dated as of February
15, 1996, a Twelfth Amendment dated as of July 10, 1996, and a
Thirteenth Amendment dated as of August 5, 1996 (as so amended, the
"Existing Agreement"). The obligations of the Company under the
Existing Agreement are secured by the collateral, as defined therein.
B. By this Agreement, the Company, the Administrative Agent
and the Banks desire to amend and restate the Existing Agreement on
the terms and conditions set forth herein. The Company's obligations
under the Existing Agreement will continue to be secured by the
Collateral under this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained herein, the parties agree as
follows:
SECTION 1
DEFINITIONS
1.01. Certain Defined Terms. The following terms have the
following meanings:
"Administrative Agent" means BofA in its capacity as agent
for the Banks hereunder, and any successor agent arising under Section
10.10.
"Administrative Agent-Related Persons" means BofA and any
successor agent arising under Section 10.10 and any successor letter
of credit issuing bank hereunder, together with their respective
Affiliates (including, in the case of BofA, the Arranger), and the
officers, directors, employees, agents and attorneys-in-fact of such
Persons and Affiliates.
"Administrative Agent's Payment Office" means the address
for payments set forth on Schedule 11.02 or such other address as the
Administrative Agent may from time to time specify.
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person. A Person shall be deemed to
control another Person if the controlling Person possesses, directly
or indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the
ownership of voting securities, membership interests, by contract, or
otherwise.
"Aggregate Cost" means, with respect to Margin Stock, as of
the date of determination, the total cost of Margin Stock on the books
of the Company, determined (in the case of purchases and sales of the
same Margin Stock) on a specific cost identification basis.
"Aggregate Market Value" means:
(a) with respect to MGM stock, so long as MGM is not a
publicly traded company, the lower of (i) the principal amount
originally expended by the Company in acquiring such investment and
(ii) the Company's book value of such investment;
(b) with respect to all shares of other stock (including MGM
if and when it becomes a publicly traded company), the sum of the
market values (as computed below) of such stock, with the market value
of any such security being computed as the number of shares of such
stock times the closing price per share of such stock on the trading
day immediately preceding the date of determination, the closing price
being the last sale price regular way or, in case no such sale takes
place on such day, the average of the closing bid and asked prices
regular way, in either case on the New York Stock Exchange, or, if
shares of such issue or class are not listed or admitted to trading on
the New York Stock Exchange, on the principal national securities
exchange on which the shares are listed or admitted to trading, or if
the shares are not so listed or admitted to trading, the average of
the highest reported bid and lowest reported asked prices as furnished
by the National Association of Securities Dealers, Inc. through
NASDAQ; and
(c) with respect to other Eligible Investments, the
principal amount originally expended by the Company in acquiring such
investment.
"Agreement" means this Credit Agreement.
"Arranger" means BA Securities, Inc., a Delaware
corporation.
"Assignee" has the meaning specified in Section 11.08(a).
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the allocated
cost of internal legal services and all disbursements of internal
counsel.
"Bank" has the meaning specified in the introductory clause
hereto. References to the "Banks" shall include BofA, including in its
capacity as Issuing Bank; for purposes of clarification only, to the
extent that BofA may have any rights or obligations in addition to
those of the Banks due to its status as Issuing Bank, its status as
such will be specifically referenced.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of
1978 (11 U.S.C. ss.101, et seq.).
"Base Rate" means, for any day, the higher of: (a) 0.50% per
annum above the latest Federal Funds Rate; and (b) the rate of
interest in effect for such day as publicly announced from time to
time by BofA in San Francisco, California, as its "reference rate."
(The "reference rate" is a rate set by BofA based upon various factors
including BofA's costs and desired return, general economic conditions
and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate.)
Any change in the reference rate announced by BofA shall
take effect at the opening of business on the day specified in the
public announcement of such change.
"Base Rate Loan" means a Loan, or an L/C Advance, that bears
interest based on the Base Rate.
"BofA" means Bank of America National Trust and Savings
Association, a national banking association.
"Borrowing Base" means, as of the date of any determination,
an amount equal to the sum of, without duplication:
(a) 50% of the Aggregate Market Value of all Designated
Stock owned by the Company at such time; and
(b) 50% of the Aggregate Market Value of all other
Eligible Investments owned by the Company at such time.
"Borrowing Base and Compliance Certificate" means a
certificate substantially in the form attached hereto as Exhibit C.
"Borrowing" means a borrowing hereunder consisting of Loans
of the same Type made to the Company on the same day by the Banks
under Section 2, and, other than in the case of Base Rate Loans,
having the same Interest Period.
"Borrowing Date" means any date on which a Borrowing occurs
under Section 2.03.
"Business Day" means any day other than a Saturday, Sunday
or other day on which commercial banks in New York City or San
Francisco are authorized or required by law to close and, if the
applicable Business Day relates to any Offshore Rate Loan, means such
a day on which dealings are carried on in the applicable offshore
dollar interbank market.
"Capital Adequacy Regulation" means any guideline, request
or directive of any central bank or other Governmental Authority, or
any other law, rule or regulation, whether or not having the force of
law, in each case, regarding capital adequacy of any bank or of any
corporation controlling a bank.
"Cash Collateralize" means to pledge and deposit with
or deliver to the Administrative Agent, for the benefit of the
Administrative Agent, the Issuing Bank and the Banks, as
additional collateral for the L/C Obligations, cash or deposit
account balances in an amount equal to the Effective Amount of
the applicable L/C Obligations pursuant to documentation in form
and substance satisfactory to the Agent and the Issuing Bank
(which documents are hereby consented to by the Banks).
Derivatives of such term shall have corresponding meaning. The
Company hereby grants the Agent, for the benefit of the Agent,
the Issuing Bank and the Banks, a security interest in all such
cash and deposit account balances. Cash collateral shall be
maintained in blocked, interest bearing deposit accounts at BofA.
"Closing Date" means the date on which all conditions
precedent set forth in Section 5.01 are satisfied or waived by all
Banks.
"Code" means the Internal Revenue Code of 1986, and
regulations promulgated thereunder.
"Collateral" has the meaning given such term in the
Collateral Documents collectively.
"Collateral Documents" means, collectively, (i) the Pledge
Agreement, and all other security agreements, assignments and other
similar agreements between the Company or any Subsidiary and or in
favor of the Administrative Agent on behalf of itself and the Banks,
now or hereafter delivered to the Banks or the Administrative Agent
pursuant to or in connection with the transactions contemplated
hereby, and all financing statements (or comparable documents now or
hereafter filed in accordance with the Uniform Commercial Code or
comparable law) against the Company or any Subsidiary as debtor in
favor of the Banks or the Administrative Agent for the benefit of the
Administrative Agent and the Banks, and (ii) any amendments,
supplements, modifications, renewals, replacements, consolidations,
substitutions and extensions of any of the foregoing.
"Commitment", as to each Bank, has the meaning specified in
Section 2.01.
"Control Stock" means common stock issued by a U.S.
corporation which stock is publicly traded in the U.S. and listed on a
national securities exchange in the U.S. and of which the Company
directly or indirectly owns or controls the power to vote 10% or more
of the aggregate outstanding voting common shares of such issuer.
"Control Stock Acquisition" means the acquisition of the
Control Stock of a Person.
"Controlled Group" means the Company and all Persons
(whether or not incorporated) under common control or treated as a
single employer with the Company pursuant to Section 414(b), (c), (m)
or (o) of the Code.
"Conversion/Continuation Date" means any date on which,
under Section 2.04, the Company (a) converts Loans of one Type to
another Type, or (b) continues as Loans of the same Type, but with a
new Interest Period, Loans having Interest Periods expiring on such
date.
"Credit Extension" means and includes (a) the making of any
Loans hereunder, and (b) the Issuance of any Letters of Credit
hereunder.
"Default" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured or
otherwise remedied during such time) constitute an Event of Default.
"Designated Stock" means all Chrysler Corporation common
stock, MGM Grand common stock, all MGM stock and any other stock
designated by the Banks pursuant to Section 7.13, in each case now
owned or hereafter acquired by the Company.
"Disposition" means the sale or other disposition of
any stock or any Subsidiary.
"Dollars", "dollars" and "$" each mean lawful money of the
United States.
"Effective Amount" means (i) with respect to any Loans on
any date, the aggregate outstanding principal amount thereof after
giving effect to any Borrowings and prepayments or repayments of Loans
occurring on such date; and (ii) with respect to any outstanding L/C
Obligations on any date, the amount of such L/C Obligations on such
date after giving effect to any Issuances of Letters of Credit
occurring on such date and any other changes in the aggregate amount
of the L/C Obligations as of such date, including as a result of any
reimbursements of outstanding unpaid drawings under any Letters of
Credit or any reductions in the maximum amount available for drawing
under Letters of Credit taking effect on such date.
"Eligible Assignee" means (a) another Bank; (b), with
respect to any Bank, a Subsidiary of such Bank, a Subsidiary of a
Person of which such Bank is a Subsidiary, or a Person of which such
Bank is a Subsidiary, in each case having a combined capital and
surplus of at least $100,000,000; (c) a commercial bank organized
under the laws of the United States, or any state thereof, and having
a combined capital and surplus of at least $100,000,000; (d) any
insurance company engaged in the business of writing insurance which
(i) has a net worth of $200,000,000 or more, (ii) is engaged in the
business of lending money and extending credit under credit facilities
substantially similar to those extended under this Agreement and (iii)
is operationally and procedurally able to meet the obligations of a
Bank to the same degree as a commercial bank, and (e) any other
financial institution (including a mutual fund or other fund) having
total assets of $250,000,000 or more which meets the requirements set
forth in subclauses (ii) and (iii) of clause (d) above; provided that
each Eligible Assignee must (a) either (i) be organized under the Laws
of the United States of America, any State thereof or the District of
Columbia or (ii) be organized under the Laws of the Cayman Islands or
any country which is a member of the Organization for Economic
Cooperation and Development, or a political subdivision of such a
country, (b) act through a branch, agency or funding office located in
the United States of America, and (c) be exempt from withholding of
tax on interest.
"Eligible Investments" means:
(a) direct obligations of the United States government
or any agency thereof, or obligations guaranteed by the United States
government or any agency thereof, and which mature within one year
from the date of acquisition thereof or within such longer period as
the Majority Banks may expressly agree from time to time;
(b) certificates of deposit, bankers acceptances or
time deposits of Bank, in each case having a final maturity of one
year or less, or with such longer maturity as the Majority Banks may
expressly agree from time to time;
(c) certificates of deposit, bankers' acceptances or
time deposits, in each case having a final maturity of one year or
less (or such longer maturity as the Majority Banks may expressly
agree from time to time) of any other commercial bank having total
combined capital and surplus in excess of $500,000,000 and whose
long-term debt obligations (or the long-term debt obligations of its
parent holding company) have a rating of at least A by Standard &
Poors Ratings Group or A2 by Moody's Investors Service, Inc., or their
respective successors; and
(d) prime commercial paper maturing or redeemable at
the option of the holder thereof within six months of the acquisition
thereof and having a rating of at least Al or Pi by Standard & Poors
Ratings Group or Moody's Investors Service, Inc.;
(e) all Designated Stock;
(f) all Control Stock; and
(g) all Non-Control Stock.
"Environmental Claims" means all claims, however asserted,
by any Governmental Authority or other Person alleging potential
liability or responsibility for violation of any Environmental Law, or
for release or injury to the environment.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any
Governmental Authorities, in each case relating to environmental,
health, safety and land use matters.
"ERISA" means the Employee Retirement Income Security Act of
1974, and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or
not incorporated) under common control with the Company within the
meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and
(o) of the Code for purposes of provisions relating to Section 412 of
the Code).
"ERISA Event" means (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by the Company or any ERISA Affiliate
from a Pension Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer (as defined in Section
4001(a)(2) of ERISA) or a cessation of operations which is treated as
such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by the Company or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or
4041A of ERISA, or the commencement of proceedings by the PBGC to
terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan or Multiemployer Plan; or
(f) the imposition of any liability under Title IV of ERISA, other
than PBGC premiums due but not delinquent under Section 4007 of ERISA,
upon the Company or any ERISA Affiliate.
"Event of Default" means any event specified in Section
9.01, provided that any requirement for the giving of notice or the
lapse of time or both or the happening of any other condition has been
satisfied.
"Exchange Act" means the Securities Exchange Act of 1934,
and regulations promulgated thereunder.
"FDIC" means the Federal Deposit Insurance Corporation, and
any Governmental Authority succeeding to any of its principal
functions.
"Federal Funds Rate" means, for any day, the rate set forth
in the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Bank of New
York (including any such successor, "H.15(519)") on the preceding
Business Day opposite the caption "Federal Funds (Effective)"; or, if
for any relevant day such rate is not so published on any such
preceding Business Day, the rate for such day will be the arithmetic
mean as determined by the Administrative Agent of the rates for the
last transaction in overnight Federal funds arranged prior to 9:00
a.m. (New York City time) on that day by each of three leading brokers
of Federal funds transactions in New York City selected by the
Administrative Agent.
"FRB" means the Board of Governors of the Federal Reserve
System, and any Governmental Authority succeeding to any of its
principal functions.
"Further Taxes" means any and all present or future taxes,
levies, assessments, imposts, duties, deductions, fees, withholdings
or similar charges (excluding net income taxes and franchise taxes),
and all liabilities with respect thereto, imposed by any jurisdiction
on account of amounts payable or paid pursuant to Section 4.01.
"GAAP" means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified
Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date
of determination.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Honor Date" has the meaning specified in Section 3.03(b).
"Hostile Acquisition" means a Control Stock Acquisition that
has not been approved by the Board of Directors (or other equivalent
governing body) of such Person.
"Indemnified Liabilities" has the meaning specified in
Section 11.05.
"Indemnified Person" has the meaning specified in Section
11.05.
"Insolvency Proceeding" means, with respect to any Person,
(a) any case, action or proceeding with respect to such Person before
any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the
benefit of creditors, composition, marshalling of assets for
creditors, or other, similar arrangement in respect of its creditors
generally or any substantial portion of its creditors; undertaken
under U.S. Federal, state or foreign law, including the Bankruptcy
Code.
"Interest Payment Date" means, as to any Loan other than a
Base Rate Loan, the last day of each Interest Period applicable to
such Loan and, as to any Base Rate Loan, the 10th day of each January,
April, July, and October next following the last day of each calendar
quarter, on the Maturity Date and on any earlier date as such Base
Rate Loan will be due and payable (whether by mandatory prepayment,
acceleration or otherwise).
"Interest Period" means, as to any Offshore Rate Loan, the
period commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as an Offshore Rate Loan, and ending on the date one, two,
three or six months thereafter, as selected by the Company in its
Notice of Borrowing or Notice of Conversion/Continuation; provided
that:
(i) if any interest Period would otherwise end on a day that
is not a Business Day, that Interest Period shall be extended to
the following Business Day unless the result of such extension
would be to carry such Interest Period into another calendar
month, in which event such Interest Period shall end on the
preceding Business Day;
(ii) any Interest Period that begins on the last 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 end on the last Business Day of the
calendar month at the end of such Interest Period; and
(iii) no Interest Period shall extend beyond the Maturity
Date.
"IRS" means the Internal Revenue Service, and any
Governmental Authority succeeding to any of its principal functions
under the Code.
"Issuance Date" has the meaning specified in Section
3.01(a).
"Issue" means, with respect to any Letter of Credit, to
issue or to extend the expiry of, or to renew or increase the amount
of, such Letter of Credit; and the terms "Issued," "Issuing" and
"Issuance" have corresponding meanings.
"Issuing Bank" means BofA in its capacity as issuer of one
or more Letters of Credit hereunder, together with any replacement
letter of credit issuer arising under Section 10.01(b) or Section
10.10.
"L/C Advance" means each Bank's participation in any L/C
Borrowing in accordance with its Pro Rata Share.
"L/C Amendment Application" means an application form for
amendment of outstanding standby or commercial documentary letters of
credit as shall at any time be in use at the Issuing Bank, as the
Issuing Bank shall request.
"L/C Application" means an application form for issuances of
standby or commercial documentary letters of credit as shall at any
time be in use at the Issuing Bank, as the Issuing Bank shall request.
"L/C Borrowing" means an extension of credit resulting from
a drawing under any Letter of Credit which shall not have been
reimbursed on the date when made nor converted into a Borrowing of
Loans under Section 3.03(b).
"L/C Commitment" means the commitment of the Issuing Bank to
Issue, and the commitment of the Banks severally to participate in,
Letters of Credit from time to time Issued or outstanding under
Section 3, in an aggregate amount not to exceed on any date the amount
of $50,000,000, as the same shall be reduced as a result of a
reduction in the L/C Commitment pursuant to Section 2.04; provided
that the L/C Commitment is a part of the combined Commitments, rather
than a separate, independent commitment.
"L/C Obligations" means at any time the sum of (a) the
aggregate undrawn amount of all Letters of Credit then outstanding,
plus (b) the amount of all unreimbursed drawings under all Letters of
Credit, including all outstanding L/C Borrowings.
"L/C-Related Documents" means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document
relating to any Letter of Credit, including any of the Issuing Bank's
standard form documents for letter of credit issuances.
"Lending Office" means, as to any Bank, the office or
offices of such Bank specified as its "Lending Office" or "Domestic
Lending Office" or "Offshore Lending Office", as the case may be, on
Schedule 11.02, or such other office or offices as such Bank may from
time to time notify the Company and the Administrative Agent.
"Letters of Credit" means any letters of credit (whether
standby letters of credit or commercial documentary letters of credit)
Issued by the Issuing Bank pursuant to Section 3.
"Lien" means any security interest, mortgage, deed of trust,
pledge, hypothecation, assignment, charge or deposit arrangement,
encumbrance, lien (statutory or other) or preferential arrangement of
any kind or nature whatsoever in respect of any property (including
those created by, arising under or evidenced by any conditional sale
or other title retention agreement, the interest of a lessor under a
capital lease, any financing lease having substantially the same
economic effect as any of the foregoing, or the filing of any
financing statement naming the owner of the asset to which such lien
relates as debtor, under the Uniform Commercial Code or any comparable
law) and any contingent or other agreement to provide any of the
foregoing, but not including the interest of a lessor under an
operating lease.
"Loan" has the meaning specified in Section 2.01, and may be
a Base Rate Loan or an Offshore Rate Loan (each, a "Type" of Loan).
"Loan Documents" means this Agreement, any Notes, the
Collateral Documents, the L/C-Related Documents, and all other
documents delivered to the Administrative Agent or any Bank in
connection herewith.
"Majority Banks" means at any time (a) Banks then holding at
least 66-2/3% of the then aggregate unpaid principal amount of the
Loans, or, if no such principal amount is then outstanding, Banks then
having at least 66-2/3% of the Commitments, and (b) for so long as
there is more than one Bank party to this First Amended and Restated
Credit Agreement, at least two of such Banks.
"Margin Regulations" means Regulations G, T, U and X issued
by the Board of Governors of the FRB, or any successor regulations
regulating purchase or carrying of securities pursuant to Section 7 of
the Securities Exchange Act of 1934, or any successor law.
"Margin Stock" means a security included within the
definition of "margin stock" in the Margin Regulations.
"Material Adverse Effect" means (a) a material adverse
change in, or a material adverse effect upon, the operations,
business, properties, condition (financial or otherwise) of the
Company; (b) a material impairment of the ability of the Company to
perform under any Loan Document and to avoid any Event of Default; or
(c) a material adverse effect upon (i) the legality, validity, binding
effect or enforceability against the Company of any Loan Document, or
(ii) the perfection or priority of any Lien granted under any of the
Collateral Documents.
"Maturity Date" means the earlier of (a) June 30, 1999; and
(b) the date on which the Commitments terminate in accordance with the
provisions of this Agreement.
"MGM" means P & F Acquisition Corp. a Delaware corporation.
"MGM Grand" means MGM Grand, Inc., a Delaware corporation.
"Multiemployer Plan" means a "multiemployer plan", within
the meaning of Section 4001(a)(3) of ERISA, to which the Company or
any ERISA Affiliate makes, is making, or is obligated to make
contributions or, during the preceding three calendar years, has made,
or been obligated to make, contributions.
"Net Cash Proceeds" means the gross cash proceeds received
by the Company upon any Disposition, net of actual and reasonable
commissions, costs of sale and taxes related thereto.
"Non-Control Stock" means common stock issued by a U.S.
corporation which stock is publicly traded in the U.S. and listed on a
national securities exchange in the U.S. and of which the Company
directly or indirectly owns or controls the power to vote less than
10% of the aggregate outstanding voting common shares of such issuer.
"Non-Purpose Credit" means any Credit Extension which is not
a Purpose Credit.
"Note" means a promissory note executed by the Company in
favor of a Bank pursuant to Section 2.02(b), in substantially the form
of Exhibit E.
"Notice of Borrowing" means a notice in substantially the
form of Exhibit A.
"Notice of Conversion/Continuation" means a notice in
substantially the form of Exhibit B.
"Obligations" means all advances, debts, liabilities,
obligations, covenants and duties arising under any Loan Document
owing by the Company to any Bank, the Administrative Agent, or any
Indemnified Person, whether direct or indirect (including those
acquired by assignment), absolute or contingent, due or to become due,
now existing or hereafter arising.
"Offshore Rate" means, for each Interest Period, with
respect to Offshore Rate Loans comprising part of the same Borrowing,
the rate of interest per annum at which dollar deposits in the
approximate amount of BofA's Offshore Rate Loan for such Interest
Period would be offered by BofA's Grand Cayman Branch, Grand Cayman,
B.W.I. (or such other office as may be designated for such purpose by
BofA), to major banks in the offshore dollar interbank market upon
request of such banks at approximately 11:00 a.m. (New York City time)
on the second Business Day prior to the commencement of such Interest
Period.
"Offshore Rate Loan" means a Loan that bears interest based
on the Offshore Rate.
"Organization Documents" means, for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate
of determination or instrument relating to the rights of preferred
shareholders of such corporation, any shareholder rights agreement,
and all applicable resolutions of the board of directors (or any
committee thereof) of such corporation.
"Other Taxes" means any present or future stamp, court or
documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery, performance, enforcement or registration of, or
otherwise with respect to, this Agreement or any other Loan Documents.
"Participant" has the meaning specified in Section 11.08(d).
"PBGC" means the Pension Benefit Guaranty Corporation, or
any Governmental Authority succeeding to any of its principal
functions under ERISA.
"Pension Plan" means a pension plan (as defined in Section
3(2) of ERISA) subject to Title IV of ERISA which the Company
sponsors, maintains, or to which it makes, is making, or is obligated
to make contributions, or in the case of a multiple employer plan (as
described in Section 4064(a) of ERISA) has made contributions at any
time during the immediately preceding five plan years.
"Person" means an individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA) which the Company sponsors or maintains or to which the
Company makes, is making, or is obligated to make contributions and
includes any Pension Plan.
"Pledge Agreement" means a Pledge Agreement substantially in
the form of Exhibit D hereto, as it may from time to time be amended,
restated, supplemented or otherwise modified, which shall be used to
grant to the Administrative Agent on behalf of itself and the Banks a
security interest in any Designated Stock.
"Pledged Borrowing Base" means (a) the Aggregate Market
Value of Eligible Investments in the custody of the Administrative
Agent and in which the Administrative Agent on behalf of itself and
the Banks has a first-priority perfected security interest MULTIPLIED
BY (b) the percentages set forth in the definition of "Borrowing
Base".
"Pro Rata Share" means, as to any Bank at any time, the
percentage equivalent (expressed as a decimal, rounded to the ninth
decimal place) at such time of such Bank's Commitment divided by the
combined Commitments of all Banks.
"Purpose Credit" has the meaning set forth for such term in
Regulation U.
"Reportable Event" means, any of the events set forth in
Section 4043(c) of ERISA or the regulations thereunder, other than any
such event for which the 30-day notice requirement under ERISA has
been waived in regulations issued by the PBGC.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of
an arbitrator or of a Governmental Authority, in each case applicable
to or binding upon the Person or any of its property or to which the
Person or any of its property is subject.
"Regulation U" means Regulation U referred to in the
definition of "Margin Regulations."
"Responsible Officer" means the chief executive officer, the
president or the secretary-treasurer of the Company, or any other
officer having substantially the same authority and responsibility;
or, with respect to compliance with financial covenants, the chief
financial officer or the treasurer of the Company, or any other
officer having substantially the same authority and responsibility.
"Representative Amount" means an amount that is
representative for a single transaction in the relevant market at the
relevant time.
"Rule 144" means Rule 144 under the Securities Act of 1933,
as amended.
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"Subsidiaries" means those business associations (other than
MGM and MGM Grand) of which the Company or its Subsidiaries own more
than 50% of the outstanding common stock.
"Tangible Net Worth" means the total assets of the Company
(exclusive of goodwill, patents, trademarks, trade names, organization
expense, treasury stock, unamortized debt discount and premium,
deferred charges and other like intangibles) less all liabilities
(including accrued and deferred income taxes and subordinated
liabilities); provided, however, that in computing Tangible Net Worth
for purposes of Sections 7.07 and 8.07 as of any date, the value of
all Eligible Investments shall be the Aggregate Market Value as of
such date.
"Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or
similar charges, and all liabilities with respect thereto, excluding,
in the case of each Bank and the Administrative Agent, respectively,
taxes imposed on or measured by its net income by the jurisdiction (or
any political subdivision thereof) under the laws of which such Bank
or the Administrative Agent, as the case may be, is organized or
maintains a lending office.
"Type" has the meaning specified in the definition of
"Loan."
"Unfunded Pension Liability" means the excess of a Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the
current value of that Plan's assets, determined in accordance with the
assumptions used for funding the Pension Plan pursuant to Section 412
of the Code for the applicable plan year.
"United States" and "U.S." each means the United States of
America.
1.02. Other Interpretive Provisions. (a) The meanings of
defined terms are equally applicable to the singular and plural forms
of the defined terms.
(b) The words "hereof", "herein", "hereunder" and
similar words refer to this Agreement as a whole and not to any
particular provision of this Agreement; and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all
instruments, documents, agreements, certificates,
indentures, notices and other writings, however evidenced.
(ii) In the computation of periods of time from a
specified date to a later specified date, the word "from"
means "from and including"; the words "to" and "until" each
mean "to but excluding", and the word "through" means "to
and including."
(d) Unless otherwise expressly provided herein, (i)
references to agreements (including this Agreement) and other
contractual instruments shall be deemed to include all subsequent
amendments and other modifications thereto, but only to the extent
such amendments and other modifications are not prohibited by the
terms of any Loan Document, and (ii) references to any statute or
regulation are to be construed as including all statutory and
regulatory provisions consolidating, amending, replacing,
supplementing or interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation
of this Agreement.
(f) This Agreement and other Loan Documents may use
several different limitations, tests or measurements to regulate the
same or similar matters. All such limitations, tests and measurements
are cumulative and shall each be performed in accordance with their
terms. Unless otherwise expressly provided, any reference to any
action of the Administrative Agent or the Banks by way of consent,
approval or waiver shall be deemed modified by the phrase "in
its/their sole discretion."
(g) This Agreement and the other Loan Documents are the
result of negotiations among and have been reviewed by counsel to the
Administrative Agent, the Company and the other parties, and are the
products of all parties. Accordingly, they shall not be construed
against the Banks or the Administrative Agent merely because of the
Administrative Agent's or Banks' involvement in their preparation.
1.03 Accounting Priciples. (a) Unless the context otherwise
clearly requires, all accounting terms not expressly defined herein
shall be construed, and all financial computations required under this
Agreement shall be made, in accordance with GAAP, consistently
applied.
(b) References herein to "fiscal year" and "fiscal
quarter" refer to such fiscal periods of the Company.
SECTION 2
THE CREDITS
-----------
2.01 The Revolving Credit. Each Bank severally agrees, on
the terms and conditions set forth herein, to make loans to the
Company (each such loan, a "Loan") from time to time on any Business
Day during the period from the Closing Date to the Maturity Date, in
an aggregate amount not to exceed at any time outstanding the amount
set forth on Schedule 2.01 (such amount as the same may be reduced
under Section 2.05 or 2.07 or as a result of one or more assignments
under Section 11.08, each Bank's "Commitment"); provided, however,
that, after giving effect to any Credit Extension:
(a) the Effective Amount of all Credit Extensions shall
not at any time exceed the lesser of (i) the combined Commitments and
(ii) the Borrowing Base;
(b) if the Effective Amount of all Credit Extensions
would be $50,000,000 or more, the Effective Amount of all Credit
Extensions shall not exceed the Pledged Borrowing Base;
(c) the Effective Amount of L/C Obligations shall not
any time exceed the L/C Commitment; and
(d) the Effective Amount of all Loans of any Bank plus
the participation of such Bank in the Effective Amount of all L/C
Obligations shall not at any time exceed such Bank's Commitment.
Within the limits of each Bank's Commitment, and subject to the other
terms and conditions hereof, the Company may borrow under this Section
2.01, prepay under Section 2.06 and reborrow under this Section 2.01.
2.02 Loan Accounts. (a) The Loans made by each Bank and the
Letters of Credit Issued by the Issuing Bank shall be evidenced by one
or more accounts or records maintained by such Bank or Issuing Bank,
as the case may be, in the ordinary course of business. The accounts
or records maintained by the Administrative Agent, the Issuing Bank
and each Bank shall be rebuttable presumptive evidence of the amount
of the Loans made by the Banks to the Company and the Letters of
Credit Issued for the account of the Company, and the interest and
payments thereon. Any failure so to record or any error in doing so
shall not, however, limit or otherwise affect the obligation of the
Company hereunder to pay any amount owing with respect to the Loans or
any Letter of Credit.
(b) Upon the request of any Bank made through the
Administrative Agent, the Loans made by such Bank may be evidenced by
one or more Notes, instead of or in addition to loan accounts. Each
such Bank shall endorse on the schedules annexed to its Note(s) the
date, amount and maturity of each Loan made by it and the amount of
each payment of principal made by the Company with respect thereto.
Each such Bank is irrevocably authorized by the Company to endorse its
Note(s) and each Bank's record shall be rebuttable presumptive
evidence of the amount of Loans made by such Bank; provided, however,
that the failure of a Bank to make, or an error in making, a notation
thereon with respect to any Loan shall not limit or otherwise affect
the obligations of the Company hereunder or under any such Note to
such Bank.
2.03 Procedure for Borrowing.
(a) Notice of Borrowing and Borrowing Base and
Compliance Certificate. Each Borrowing of Loans shall be made upon the
Company's irrevocable written notice delivered to the Administrative
Agent in the form of a Notice of Borrowing, together with the related
Borrowing Base and Compliance Certificate (which notice must be
received by the Administrative Agent prior to 11:00 a.m. (San
Francisco time), subject to Sections 2.03(b) and (c), (i) three
Business Days prior to the requested Borrowing Date, in the case of
Offshore Rate Loans; and (ii) one Business Day prior to the requested
Borrowing Date, in the case of Base Rate Loans, specifying: (A) the
amount of the Borrowing, which, in the case of Offshore Rate Loans,
shall be in an aggregate minimum amount of $5,000,000 or any multiple
of $1,000,000 in excess thereof and, in the case of Base Rate Loans,
shall be in an aggregate minimum amount of $1,000,000 or any multiple
of $1,000,000 in excess thereof; (B) the requested Borrowing Date,
which shall be a Business Day; (C) the Type of Loans comprising the
Borrowing; and (D) the duration of the Interest Period applicable to
such Loans included in such notice. If the Notice of Borrowing fails
to specify the duration of the Interest Period for any Borrowing
comprised of Offshore Rate Loans, such Interest Period shall be three
months. The Administrative Agent will promptly notify each Bank of its
receipt of any Notice of Borrowing, together with the related
Borrowing Base and Compliance Certificate, and of the amount of such
Bank's Pro Rata Share of that Borrowing.
(b) Hostile Acquisitions or Control Stock Acquisitions.
If the proceeds of any Credit Extension are to be used in whole or in
part in connection with a Hostile Acquisition or a Control Stock
Acquisition, the related Notice of Borrowing or L/C Application and
Borrowing Base and Compliance Certificate must be received by the
Administrative Agent not less than 10 Business Days prior to the
earlier of (i) the public announcement of such acquisition and (ii)
the proposed Credit Extension date. Such Notice of Borrowing or L/C
Application shall specify, in addition to the information set forth
above in Section 2.03(a) or 3.02(a), the name and address of the
Person, the assets or equity of which is being acquired by the
Company.
Any Bank determining in good faith that such Credit
Extension constitutes a conflict of interest for such Bank, shall so
notify the Administrative Agent (who shall notify the Company) not
later than five Business Days before the proposed Credit Extension
Date. If the proceeds of any Credit Extension are to be used in whole
or in part in connection with a Hostile Acquisition, all Banks must
consent to such Credit Extension. If the proceeds of any Credit
Extension are to be used in whole or in part in connection with a
Control Stock Acquisition, the Majority Banks must consent to such
Credit Extension. If any Bank fails to so notify the Administrative
Agent, it shall be deemed to have not consented to such Credit
Extension. As a condition to approving any such Credit Extension, the
Majority Banks may, in their sole discretion (and whether or not there
is any conflict of interest) designate the equity interest to be
acquired thereby as "Designated Stock" in accordance with Section
7.13.
The Company agrees that, in the case of any acquisition of
assets or equity by the Company, whether or not notice must be given
to the Administrative Agent pursuant to this Section 2.03(b), no Bank
nor the Administrative Agent shall, under any circumstances have any
duty to the Company to disclose to the Company any information
concerning the financial condition, operations or intentions of the
Person whose assets or equity the Company intends to acquire that may
be available to such Bank or the Administrative Agent.
(c) Credit Extensions Requiring Collateral. If the
Company is requesting a Credit Extension requiring Collateral pursuant
to Section 2.07(b) or additional Collateral pursuant to Section
2.07(c), the related Notice of Borrowing or L/C Application and
Borrowing Base and Compliance Certificate with respect to such Credit
Extension must be received by the Administrative Agent not less than
four Business Days prior to the proposed Credit Extension Date, and
the Company must comply with such sections prior to such Credit
Extension being made available to the Company.
(d) Making Funds Available. Subject to Sections 2.03(b)
and (c), each Bank will make the amount of its Pro Rata Share of each
Borrowing available to the Administrative Agent for the account of the
Company at the Administrative Agent's Payment Office by 11:00 a.m.
(San Francisco time) on the Borrowing Date requested by the Company in
funds immediately available to the Administrative Agent. The proceeds
of all such Loans will then be made available to the Company by the
Administrative Agent at such office by crediting the account of the
Company on the books of BofA with the aggregate of the amounts made
available to the Administrative Agent by the Banks and in like funds
as received by the Administrative Agent.
(e) Limitation on Interest Periods. After giving effect
to any Borrowing, unless the Administrative Agent shall otherwise
consent, there may not be more than four different Interest Periods in
effect.
2.04 Conversion and Continuation Elections. (a) The Company
may, upon irrevocable written notice to the Administrative Agent in
accordance with Section 2.04(b), elect, as of any Business Day, to (i)
convert any Base Rate Loans (or any part thereof in an amount not less
than $5,000,000, or that is in an integral multiple of $1,000,000 in
excess thereof) into Offshore Rate Loans; (ii) convert any Offshore
Rate Loans (or any part thereof in an amount not less than $1,000,000,
or that is in an integral multiple of $1,000,000 in excess thereof)
into Base Rate Loans; or (iii) continue any Offshore Rate Loans having
Interest Periods expiring on such day (or any part thereof in an
amount not less than $5,000,000, or that is in an integral multiple of
$1,000,000 in excess thereof); provided, however, that if at any time
the aggregate amount of Offshore Rate Loans in respect of any
Borrowing is reduced, by payment, prepayment, or conversion of part
thereof to be less than $5,000,000, such Offshore Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date
the right of the Company to continue such Loans as, and convert such
Loans into Offshore Rate Loans shall terminate.
(b) The Company shall deliver a Notice of
Conversion/Continuation to be received by the Administrative Agent not
later than 11:00 a.m. (San Francisco time) at least (i) three Business
Days in advance of the Conversion/Continuation Date, if the Loans are
to be converted into or continued as Offshore Rate Loans; and (ii) one
Business Day in advance of the Conversion/Continuation Date, if the
Loans are to be converted into Base Rate Loans, specifying: (A) the
proposed Conversion/ Continuation Date; (B) the aggregate amount of
Loans to be converted or continued; (C) the Type of Loans resulting
from the proposed conversion or continuation; and (D) other than in
the case of conversions into Base Rate Loans, the duration of the
requested Interest Period.
(c) If upon the expiration of any Interest Period
applicable to Offshore Rate Loans, the Company has failed to timely
select a new Interest Period to be applicable to such Offshore Rate
Loans, or if any Default or Event of Default then exists, the Company
shall be deemed to have elected to convert such Offshore Rate Loans
into Base Rate Loans effective as of the expiration date of such
Interest Period.
(d) The Administrative Agent will promptly notify each
Bank of its receipt of a Notice of Conversion/Continuation, or, if no
timely notice is provided by the Company, the Administrative Agent
will promptly notify each Bank of the details of any automatic
conversion. All conversions and continuations shall be made ratably
according to the respective outstanding principal amounts of the Loans
with respect to which the notice was given held by each Bank.
(e) Unless the Majority Banks otherwise consent, during
the existence of a Default or Event of Default, the Company may not
elect to have a Loan converted into or continued as an Offshore Rate
Loan.
(f) After giving effect to any conversion or
continuation of Loans, unless the Administrative Agent shall otherwise
consent, there may not be more than four different Interest Periods in
effect.
2.05 Voluntary Termination or Reduction of Commitments. The
Company may, upon not less than 10 Business Days prior notice to
the Administrative Agent, terminate the Commitments, or permanently
reduce the Commitments by an aggregate minimum amount of $1,000,000 or
any multiple of $1,000,000 in excess thereof; unless, after giving
effect thereto and to any prepayments of Loans and Cash
Collateralizations made on the effective date thereof, (a) the
Effective Amount of all Credit Extensions would exceed the combined
Commitments as so reduced, or (b) the Effective Amount of all L/C
Obligations then outstanding would exceed the L/C Commitment. Once
reduced in accordance with this Section, the Commitments may not be
increased. Any reduction of the Commitments shall be applied to each
Bank according to its Pro Rata Share. If and to the extent specified
by the Company in the notice to the Administrative Agent, some or all
of the reduction in the combined Commitments shall be applied to
reduce the L/C Commitment. All accrued commitment and letter of credit
fees to, but not including, the effective date of any reduction or
termination of Commitments, shall be paid on the effective date of
such reduction or termination.
2.06 Optional Prepayments. The Company may, at any time or
from time to time, upon irrevocable notice to the Administrative Agent
given not less than (a) four Business Days, in the case of a
prepayment of Offshore Rate Loans, and (b) one Business Day, in the
case of a prepayment of Base Rate Loans, ratably prepay Loans in whole
or in part, in minimum amounts of $1,000,000 or any multiple of
$1,000,000 in excess thereof. Such notice of prepayment shall specify
the date and amount of such prepayment and the Type(s) of Loans to be
prepaid. The Administrative Agent will promptly notify each Bank of
its receipt of any such notice, and of such Bank's Pro Rata Share of
such prepayment. If such notice is given by the Company, the Company
shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein,
together with accrued interest on all Offshore Rate Loans to each such
date on the amount prepaid and any amounts required pursuant to
Section 4.04.
2.07 Mandatory Prepayments; Mandatory Commitment Reductions;
Collateral Requirements.
(a) Credit Extensions in Excess of Borrowing Base. If,
on any date, the Effective Amount of all Credit Extensions exceeds,
or after giving effect to any proposed Credit Extension would exceed,
the Borrowing Base, the Company shall prepay the Loans and/or Cash
Collateralize the L/C Obligations in an amount equal to such excess.
(b) Credit Extensions of $50,000,000 or More. If, on any
date, the Effective Amount of all Credit Extensions exceeds, or after
giving effect to any proposed Credit Extension would be, $50,000,000
or more, the Company shall grant to the Administrative Agent a first
priority security interest in all Designated Stock owned by the
Company.
(c) Credit Extensions Exceeding Pledged Borrowing Base.
If, on any date, the Effective Amount of all Credit Extensions
exceeds, or after giving effect to any proposed Credit Extension would
be, (i) $50,000,000 or more AND (ii) in excess of the Pledged
Borrowing Base, the Company also shall grant to the Administrative
Agent a first priority security interest in sufficient Eligible
Investments in addition to Designated Stock to cure such deficiency,
in the following order:
(A) first, a first priority security interest in
all Eligible Investments owned by the Company other than
Control Stock and Non-Control Stock (and the Company shall
move custody of such Eligible Investments to the custody of
the Administrative Agent to the extent necessary to give
effect to provisions hereof);
(B) second, a first priority security interest in
all Non-Control Stock; and
(C) finally, a first priority security interest in
all Control Stock.
(d) Commitment Reduction Upon Dispositions. The
Commitments shall automatically reduce by the amount of any Net Cash
Proceeds received by the Company from any Disposition (other than a
sale of MGM preferred stock having a face value not exceeding
$100,000,000 to Seven Network Limited pursuant to an agreement with
Seven Network Limited to acquire such stock), concurrently with its
receipt of such Net Cash Proceeds as follows:
(i) Upon any such Disposition, the Company shall
promptly notify the Administrative Agent of the amount of
the Net Cash Proceeds thereof and shall provide the
Administrative Agent with all relevant computations and
backup information concerning commissions, costs of sale,
and related taxes. The Administrative Agent shall promptly
deliver such information to each Bank. The Company shall
thereupon prepay outstanding Loans and/or Cash Collateralize
the L/C Obligations in an amount equal to the amount by
which the Effective Amount of all Credit Extensions exceeds
the combined Commitments as so reduced, rounded downwards to
the nearest $1,000,000. Prepayments of Loans shall be
applied first to interest then to principal.
(ii) Upon any such Disposition consisting of any
Margin Stock, the Company shall (A) simultaneously provide
to the Administrative Agent (who shall promptly provide such
information to each Bank) such documentation and information
requested by the Administrative Agent or any Bank in order
for the Administrative Agent and such Bank to make the
determinations required by Section 2.15 after giving effect
to such Disposition, and (B), if necessary in the judgment
of the Administrative Agent and the Banks, make any
additional prepayment of the Loans and/or Cash
Collateralization of L/C Obligations in such amount as may
be necessary so that the Effective Amount of the Purpose
Credit outstanding does not exceed the amount permitted by
the Margin Regulations.
(e) Commitment Reduction Upon Disability of Kirk
Kerkorian. Upon the disability (other than a physical disability) of
Kirk Kerkorian, or if Kirk Kerkorian is no longer active in the
management of the Company for any reason:
(i) the Commitments shall automatically and
immediately be reduced to the sum of (A) the Effective
Amount of all Credit Extensions on such date, and (B) an
amount equal to amounts payable by the Company under written
binding commitments in effect as of such date, as documented
to the satisfaction of the Majority Banks; and
(ii) the Commitments shall no longer be revolving,
and thereafter the Commitments shall subsequently be reduced
from time to time by the amount of any prepayments or
repayments of the Loans.
(f) Compliance with Margin Regulations. If the Banks
determine in good faith that for any reason the Effective Amount of
Credit Extensions needs to be reduced in order to comply with the
Margin Regulations, the Company shall prepay outstanding Loans and/or
Cash Collateralize the L/C Obligations in an amount equal to the
amount specified by Administrative Agent at the direction of the Banks
in order to so comply with the Margin Regulations.
(g) Funding Losses. All prepayments of Offshore Rate
Loans hereunder shall be accompanied by accrued interest to each such
date on the amount prepaid and any amounts required pursuant to
Section 4.04.
(h) Pledging Collateral. When required to pledge
Collateral pursuant to Section 2.07(b) or (c), the Company shall
promptly deliver to the Administrative Agent (i) one or more duly
executed Collateral Documents (or amendments to existing Collateral
Documents) in form and substance satisfactory to the Administrative
Agent relating to type of Collateral being hypothecated in order to
obtain a first priority perfected security interest in the Collateral
and/or (ii) if an equity security is being pledged, a correctly
completed questionnaire, together with any additional information, if
and as reasonably requested by any Bank from time to time in order to
determine the applicability of Rule 144, the Margin Regulations or any
other rule or regulation governing the issuance, transfer or
hypothecation of such securities.
2.08 Repayment. The Company shall repay on the Maturity Date
the aggregate principal amount of Loans outstanding on such date.
2.09 Interest. (a) Each Loan shall bear interest on the
outstanding principal amount thereof from the applicable Borrowing
Date at a rate per annum equal to the Offshore Rate plus 1-1/4% per
annum or the Base Rate, as the case may be.
(b) Interest on each Loan shall be paid in arrears on
each Interest Payment Date. Interest shall also be paid on the date of
any prepayment of Offshore Rate Loans for the portion of the Loans so
prepaid and upon payment (including prepayment) in full thereof and,
during the existence of any Event of Default, interest shall be paid
on demand of the Administrative Agent at the request or with the
consent of the Majority Banks.
(c) Notwithstanding Section (a) of this Section, during
the continuation of any Event of Default, the Company shall pay
interest (after as well as before judgment to the extent permitted by
law) on the principal amount of all Loans outstanding, at a rate per
annum which is determined by increasing the interest rate otherwise
payable by adding thereto the rate of 1-1/2% per annum. Interest shall
also be paid on the amount of any interest, fees or commissions not
paid when due at a rate per annum equal to the Base Rate increased as
provided above.
(d) Anything herein to the contrary notwithstanding,
the obligations of the Company to any Bank hereunder shall be subject
to the limitation that payments of interest shall not be required for
any period for which interest is computed hereunder, to the extent
(but only to the extent) that contracting for or receiving such
payment by such Bank would be contrary to the provisions of any law
applicable to such Bank limiting the highest rate of interest that may
be lawfully contracted for, charged or received by such Bank, and in
such event the Company shall pay such Bank interest at the highest
rate permitted by applicable law.
2.10 Commitment Fee. The Company shall pay to the
Administrative Agent for the account of each Bank a commitment fee on
the average daily unused portion of such Bank's Commitment, computed
on a quarterly basis in arrears on the last Business Day of each
calendar quarter based upon the daily utilization for that quarter as
calculated by the Administrative Agent, equal to 3/8 of 1 percent per
annum. For purposes of calculating utilization under this Section, the
Commitments shall be deemed used to the extent of the Effective Amount
of Credit Extensions then outstanding. Such commitment fee shall
accrue from the Closing Date to the Maturity Date and shall be due and
payable quarterly in arrears on each Interest Payment Date for Base
Rate Loans through the Maturity Date, with the final payment to be
made on the Maturity Date; provided that, in connection with any
reduction or termination of Commitments under Section 2.05 or Section
2.07, the accrued commitment fee calculated for the period ending on
such date shall also be paid on the date of such reduction or
termination on the portion reduced, with the following quarterly
payment being adjusted accordingly. The commitment fees provided in
this Section shall accrue at all times after the above-mentioned
commencement date, including at any time during which one or more
conditions in Section 4 are not met.
2.11 Computation of Fees and Interest. (a) All computations
of fees, commissions and interest for Base Rate Loans when the Base
Rate is determined by BofA's "reference rate" shall be made on the
basis of a year of 365 or 366 days, as the case may be, and actual
days elapsed. All other interest shall be computed on the basis of a
360-day year and actual days elapsed (which results in more interest
being paid than if computed on the basis of a 365-day year). Interest
and fees shall accrue during each period during which interest or such
fees are computed from the first day thereof to the last day thereof.
(b) Each determination of an interest rate by the
Administrative Agent shall be conclusive and binding on the Company
and the Banks in the absence of error.
2.12 Payments by the Company. (a) All payments to be made by
the Company shall be made without set-off, recoupment or counterclaim.
Except as otherwise expressly provided herein, all payments by the
Company shall be made to the Administrative Agent for the account of
the Banks at the Administrative Agent's Payment Office, and shall be
made in dollars and in immediately available funds, no later than
11:00 a.m. (San Francisco time) on the date specified herein. The
Administrative Agent will promptly distribute to each Bank its Pro
Rata Share (or other applicable share as expressly provided herein) of
such payment in like funds as received. Any payment received by the
Administrative Agent later than 11:00 a.m. (San Francisco time) shall
be deemed to have been received on the following Business Day and any
applicable interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the
definition of "Interest Period" herein, whenever any payment is due on
a day other than a Business Day, such payment shall be made on the
following Business Day, and such extension of time shall in such case
be included in the computation of interest or fees, as the case may
be.
(c) Unless the Administrative Agent receives notice
from the Company prior to the date on which any payment is due to the
Banks that the Company will not make such payment in full as and when
required, the Administrative Agent may assume that the Company has
made such payment in full to the Administrative Agent on such date in
immediately available funds and the Administrative Agent may (but
shall not be so required), in reliance upon such assumption,
distribute to each Bank on such due date an amount equal to the amount
then due such Bank. If and to the extent the Company has not made such
payment in full to the Administrative Agent, each Bank shall repay to
the Administrative Agent on demand such amount distributed to such
Bank, together with interest thereon at the Federal Funds Rate for
each day from the date such amount is distributed to such Bank until
the date repaid.
2.13 Payments by the Banks to the Administrative Agent. (a)
Unless the Administrative Agent receives notice from a Bank on or
prior to the Closing Date or, with respect to any Borrowing after the
Closing Date, at least one Business Day prior to the date of such
Borrowing, that such Bank will not make available as and when required
hereunder to the Administrative Agent for the account of the Company
the amount of that Bank's Pro Rata Share of the Borrowing, the
Administrative Agent may assume that each Bank has made such amount
available to the Administrative Agent in immediately available funds
on the Borrowing Date and the Administrative Agent may (but shall not
be so required), in reliance upon such assumption, make available to
the Company on such date a corresponding amount. If and to the extent
any Bank shall not have made its full amount available to the
Administrative Agent in immediately available funds and the
Administrative Agent in such circumstances has made available to the
Company such amount, that Bank shall on the Business Day following
such Borrowing Date make such amount available to the Administrative
Agent, together with interest at the Federal Funds Rate for each day
during such period. A notice of the Administrative Agent submitted to
any Bank with respect to amounts owing under this Section (a) shall be
conclusive, absent manifest error. If such amount is so made
available, such payment to the Administrative Agent shall constitute
such Bank's Loan on the date of Borrowing for all purposes of this
Agreement. If such amount is not made available to the Administrative
Agent on the Business Day following the Borrowing Date, the
Administrative Agent will notify the Company of such failure to fund
and, upon demand by the Administrative Agent, the Company shall pay
such amount to the Administrative Agent for the Administrative Agent's
account, together with interest thereon for each day elapsed since the
date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Loans comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any
Borrowing Date shall not relieve any other Bank of any obligation
hereunder to make a Loan on such Borrowing Date, but no Bank shall be
responsible for the failure of any other Bank to make the Loan to be
made by such other Bank on any Borrowing Date.
2.14 Sharing of Payments, Etc. If, other than as expressly
provided elsewhere herein, any Bank shall obtain on account of the
Loans made by it any payment (whether voluntary, involuntary, through
the exercise of any right of set-off, or otherwise) in excess of its
ratable share (or other share contemplated hereunder), such Bank shall
immediately (a) notify the Administrative Agent of such fact, and (b)
purchase from the other Banks such participations in the Loans made by
them as shall be necessary to cause such purchasing Bank to share the
excess payment pro rata with each of them; provided, however, that if
all or any portion of such excess payment is thereafter recovered from
the purchasing Bank, such purchase shall to that extent be rescinded
and each other Bank shall repay to the purchasing Bank the purchase
price paid therefor, together with an amount equal to such paying
Bank's ratable share (according to the proportion of (i) the amount of
such paying Bank's required repayment to (ii) the total amount so
recovered from the purchasing Bank) of any interest or other amount
paid or payable by the purchasing Bank in respect of the total amount
so recovered. The Company agrees that any Bank so purchasing a
participation from another Bank may, to the fullest extent permitted
by law, exercise all its rights of payment (including the right of
set-off, but subject to Section 11.10) with respect to such
participation as fully as if such Bank were the direct creditor of the
Company in the amount of such participation. The Administrative Agent
will keep records (which shall be conclusive and binding in the
absence of error) of participations purchased under this Section and
will in each case notify the Banks following any such purchases or
repayments.
2.15 Compliance with the Margin Regulations
(a) Treatment of Credit Extensions for Purposes of the
Margin Regulations. To the extent necessary to comply with the Margin
Regulations, each Bank shall treat Credit Extensions as two types of
Credit Extensions: Purpose Credit and Non-Purpose Credit, as follows:
(i) The Effective Amount of the Purpose Credit
shall be an amount equal to (A) the Effective Amount of all
Purpose Credit (or such lesser amount as may be agreed to by
the Administrative Agent, all Banks and the Company to
satisfy the requirements of the Margin Regulations) less (B)
all payments and prepayments applied thereto in accordance
with Section 2.15(e).
(ii) The Effective Amount of the Non-Purpose
Credit shall be an amount equal to the Effective Amount of
all Non-Purpose Credit less all payments and prepayments
applied thereto in accordance with Section 2.15(e).
(b) Allocation of Benefits of Security: Margin Stock.
To the extent necessary to comply with the Margin Regulations, the
benefits of (i) the provisions of Sections 2.07, 7.12, 7.13, 8.01,
8.02, 8.03, 8.04 and 8.05, to the extent that such provisions relate
to Margin Stock owned by the Company or the proceeds thereof, and (ii)
any Collateral Documents shall be allocated first to the benefit and
security of the payment of Credit Extensions constituting the Purpose
Credit and of all other amounts payable by the Company under this
Agreement in connection with such Purpose Credit (the "Purpose Credit
Amounts"), and only after the payment in full of the Purpose Credit
Amounts, to the benefit and security of the payment of Credit
Extensions constituting Non-Purpose Credit and of all other amounts
payable by the Company under this Agreement in connection with such
Non-Purpose Credit (the "Non-Purpose Credit Amounts").
(c) Allocation of Benefits of Security: Assets Other
Than Margin Stock. To the extent necessary to comply with the Margin
Regulations, the benefits of the provisions of Sections 2.07, 7.12,
7.13, 8.01, 8.02, 8.03, 8.04 and 8.05, to the extent that such
provisions relate to assets other than Margin Stock owned by the
Company or the proceeds thereof, shall be allocated first to the
benefit and security of the payment of the Non-Purpose Credit Amounts
and, only after the payment in full of all such Non-Purpose Credit
Amounts, to the benefit and security of the payment of the Purpose
Credit Amounts.
(d) Record Keeping. To the extent necessary to comply
with the Margin Regulations, each Bank will mark its records to
identify the Purpose Credit with the benefits and security described
in Section 2.15(b) and the Non-Purpose Credit with the benefits and
security described in Section 2.15(c) and, solely for the purposes of
complying with the Margin Regulations, such Purpose Credit and
Non-Purpose Credit shall be treated as separate Credit Extensions. If
at any time the status under the Margin Regulations of any Margin
Stock owned by the Company shall change to non-Margin Stock, each Bank
shall mark its records to reflect a reduction in the Purpose Credit by
an amount equal to the "maximum loan value" (defined and determined in
accordance with Regulation U) of such Margin Stock as determined by
such Bank at the time of such marking (or such lesser amount as shall
be permitted by the Margin Regulations) and to reflect a corresponding
increase in the Non-Purpose Credit by such amount (or such lesser
amount). If at any time the status under the Margin Regulations of any
non-Margin Stock owned by the Company shall change to Margin Stock,
each Bank shall mark its records to reflect an increase in the Purpose
Credit by an amount equal to the maximum loan value of such Margin
Stock as determined by such Bank at the time of such marking (or such
lesser amount as shall be permitted by the Margin Regulations) and to
reflect a corresponding reduction in the amount of the Non-Purpose
Credit by such amount (or such lesser amount). Each such reduction (or
increase) in the Purpose Credit shall be accomplished by a
proportionate reduction (or increase) in the Purpose Credit of each
Bank. If there is any change in status referred to in this Section
2.15(d) which is known to the Company, the Company shall within five
days of obtaining knowledge thereof give notice of such change to the
Administrative Agent who will promptly notify each Bank. Upon the
request of any Bank or the Administrative Agent from time to time, the
Company shall furnish to such Bank (with a copy to the Administrative
Agent) or the Administrative Agent such information and documentation
as such Bank or the Administrative Agent may require to comply with
this Section 2.15(d).
(e) Payments and Prepayments. To the extent necessary
to comply with the Margin Regulations, each payment and prepayment by
the Company of any Credit Extension made with funds derived from
assets, other than Margin Stock, which are referred to in Section
2.15(c) shall be applied, first, to the payment or prepayment of the
Non-Purpose Credit Amounts and, second, to the payment or prepayment
of the Purpose Credit Amounts. Each such payment and prepayments made
with funds derived from assets consisting of Margin Stock or proceeds
thereof referred to in Section 2.15(b) shall be applied, first, to the
payment or prepayment of the Purpose Credit Amounts and, second, to
the prepayment of the Non-Purpose Credit Amounts. Upon the request of
any Bank or the Administrative Agent from time to time, the Company
shall furnish to such Bank (with a copy to the Administrative Agent)
or the Administrative Agent such information and documentation as such
Bank or the Administrative Agent may require to comply with this
Section 2.15(e).
SECTION 3
THE LETTERS OF CREDIT
---------------------
3.01 The Letter of Credit Subfacility. (a) On the terms and
conditions set forth herein (i) the Issuing Bank agrees, (A) from time
to time on any Business Day during the period from the Closing Date to
the Maturity Date to issue Letters of Credit for the account of the
Company, and to amend or renew Letters of Credit previously issued by
it, in accordance with Sections 3.02(c) and 3.02(d), and (B) to honor
drafts under the Letters of Credit; and (ii) the Banks severally agree
to participate in Letters of Credit Issued for the account of the
Company; provided, that the Issuing Bank shall not be obligated to
Issue, and no Bank shall be obligated to participate in, any Letter of
Credit if as of the date of Issuance of such Letter of Credit (the
"Issuance Date") and after giving effect to such proposed Issuance the
limitations set forth in Section 2.01 would be violated. Within the
foregoing limits, and subject to the other terms and conditions
hereof, the Company's ability to obtain Letters of Credit shall be
fully revolving, and, accordingly, the Company may, during the
foregoing period, obtain Letters of Credit to replace Letters of
Credit which have expired or which have been drawn upon and
reimbursed.
(b) The Issuing Bank is under no obligation to Issue
any Letter of Credit if:
(i) any order, judgment or decree of any
Governmental Authority or arbitrator shall by its terms
purport to enjoin or restrain the Issuing Bank from Issuing
such Letter of Credit, or any Requirement of Law applicable
to the Issuing Bank or any request or directive (whether or
not having the force of law) from any Governmental Authority
with jurisdiction over the Issuing Bank shall prohibit, or
request that the Issuing Bank refrain from, the Issuance of
letters of credit generally or such Letter of Credit in
particular or shall impose upon the Issuing Bank with
respect to such Letter of Credit any restriction, reserve or
capital requirement (for which the Issuing Bank is not
otherwise compensated hereunder) not in effect on the
Closing Date, or shall impose upon the Issuing Bank any
unreimbursed loss, cost or expense which was not applicable
on the Closing Date and which the Issuing Bank in good faith
deems material to it;
(ii) the Issuing Bank has received written notice
from any Bank, the Administrative Agent or the Company, on
or prior to the Business Day prior to the requested date of
Issuance of such Letter of Credit, that one or more of the
applicable conditions contained in Section 5 is not then
satisfied;
(iii) the expiry date of any requested Letter of
Credit is (A) more than 360 days after the date of Issuance,
unless the Majority Banks have approved such expiry date in
writing, or (B) more than 360 days after the Maturity Date,
unless all of the Banks have approved such expiry date in
writing;
(iv) the expiry date of any requested Letter of
Credit is prior to the maturity date of any financial
obligation to be supported by the requested Letter of
Credit;
(v) any requested Letter of Credit does not
provide for drafts, or is not otherwise in form and
substance acceptable to the Issuing Bank, or the Issuance of
a Letter of Credit shall violate any applicable policies of
the Issuing Bank;
(vi) any standby Letter of Credit is for the
purpose of supporting the issuance of any letter of credit
by any other Person; or
(vii) such Letter of Credit is in a face amount
less than $1,000,000 or to be denominated in a currency
other than Dollars.
3.02 Issuance, Amendment and Renewal of Letters of Credit.
(a) Each Letter of Credit shall be issued upon the irrevocable written
request of the Company received by the Issuing Bank (with a copy sent
by the Company to the Administrative Agent, who shall promptly notify
the Banks) at least four days (or such shorter time as the Issuing
Bank may agree in a particular instance in its sole discretion) prior
to the proposed date of issuance. Each such request for issuance of a
Letter of Credit shall be by facsimile, confirmed immediately in an
original writing, in the form of an L/C Application, and shall specify
in form and detail satisfactory to the Issuing Bank: (i) the proposed
date of issuance of the Letter of Credit (which shall be a Business
Day); (ii) the face amount of the Letter of Credit; (iii) the expiry
date of the Letter of Credit; (iv) the name and address of the
beneficiary thereof; (v) the documents to be presented by the
beneficiary of the Letter of Credit in case of any drawing thereunder;
(vi) the full text of any certificate to be presented by the
beneficiary in case of any drawing thereunder; and (vii) such other
matters as the Issuing Bank may require. Each L/C Application shall be
subject to any applicable requirements set forth in Sections 2.03(b),
2.03(c), or 2.07.
(b) At least two Business Days prior to the Issuance of
any Letter of Credit, the Issuing Bank will confirm with the
Administrative Agent (by telephone or in writing) that the
Administrative Agent has received a copy of the L/C Application or L/C
Amendment Application from the Company and, if not, the Issuing Bank
will provide the Administrative Agent with a copy thereof. Unless the
Issuing Bank has received notice on or before the Business Day
immediately preceding the date the Issuing Bank is to issue a
requested Letter of Credit from the Administrative Agent (A) directing
the Issuing Bank not to issue such Letter of Credit because such
issuance is not then permitted under Section 3.01(a) as a result of
the limitations set forth in Section 2.01 or Section 3.01(b)(ii); or
(B) that one or more conditions specified in Section 5 are not then
satisfied; then, subject to the terms and conditions hereof, the
Issuing Bank shall, on the requested date, issue a Letter of Credit
for the account of the Company in accordance with the Issuing Bank's
usual and customary business practices.
(c) From time to time while a Letter of Credit is
outstanding and prior to the Maturity Date, the Issuing Bank will,
upon the written request of the Company received by the Issuing Bank
(with a copy sent by the Company to the Administrative Agent) at least
five days (or such shorter time as the Issuing Bank may agree in a
particular instance in its sole discretion) prior to the proposed date
of amendment, amend any Letter of Credit issued by it. Each such
request for amendment of a Letter of Credit shall be made by
facsimile, confirmed immediately in an original writing, made in the
form of an L/C Amendment Application and shall specify in form and
detail satisfactory to the Issuing Bank: (i) the Letter of Credit to
be amended; (ii) the proposed date of amendment of the Letter of
Credit (which shall be a Business Day); (iii) the nature of the
proposed amendment; and (iv) such other matters as the Issuing Bank
may require. Each L/C Amendment Application shall be subject to any
applicable requirements set forth in Sections 2.03(b), 2.03(c) or
2.07. The Issuing Bank shall be under no obligation to amend any
Letter of Credit if: (A) the Issuing Bank would have no obligation at
such time to issue such Letter of Credit in its amended form under the
terms of this Agreement; or (B) the beneficiary of any such letter of
Credit does not accept the proposed amendment to the Letter of Credit.
The Administrative Agent will promptly notify the Banks of the receipt
by it of any L/C Application or L/C Amendment Application.
(d) The Issuing Bank and the Banks agree that, while a
Letter of Credit is outstanding and prior to the Maturity Date, at the
option of the Company and upon the written request of the Company
received by the Issuing Bank (with a copy sent by the Company to the
Administrative Agent) at least five days (or such shorter time as the
Issuing Bank may agree in a particular instance in its sole
discretion) prior to the proposed date of notification of renewal, the
Issuing Bank shall be entitled to authorize the automatic renewal of
any Letter of Credit issued by it. Each such request for renewal of a
Letter of Credit shall be made by facsimile, confirmed immediately in
an original writing, in the form of an L/C Amendment Application, and
shall specify in form and detail satisfactory to the Issuing Bank: (i)
the Letter of Credit to be renewed; (ii) the proposed date of
notification of renewal of the Letter of Credit (which shall be a
Business Day); (iii) the revised expiry date of the Letter of Credit;
and (iv) such other matters as the Issuing Bank may require. The
Issuing Bank shall be under no obligation so to renew any Letter of
Credit if: (A) the Issuing Bank would have no obligation at such time
to issue or amend such Letter of Credit in its renewed form under the
terms of this Agreement; or (B) the beneficiary of any such Letter of
Credit does not accept the proposed renewal of the Letter of Credit.
If any outstanding Letter of Credit shall provide that it shall be
automatically renewed unless the beneficiary thereof receives notice
from the Issuing Bank that such Letter of Credit shall not be renewed,
and if at the time of renewal the Issuing Bank would be entitled to
authorize the automatic renewal of such Letter of Credit in accordance
with this Section 3.02(e) upon the request of the Company but the
Issuing Bank shall not have received any L/C Amendment Application
from the Company with respect to such renewal or other written
direction by the Company with respect thereto, the Issuing Bank shall
nonetheless be permitted to allow such Letter of Credit to renew, and
the Company and the Banks hereby authorize such renewal, and,
accordingly, the Issuing Bank shall be deemed to have received an L/C
Amendment Application from the Company requesting such renewal.
(e) The Issuing Bank may, at its election (or as
required by the Administrative Agent at the direction of the Majority
Banks), deliver any notices of termination or other communications to
any Letter of Credit beneficiary or transferee, and take any other
action as necessary or appropriate, at any time and from time to time,
in order to cause the expiry date of such Letter of Credit to be a
date not later than the Maturity Date.
(f) This Agreement shall control in the event of any
conflict with any L/C-Related Document (other than any Letter of
Credit).
(g) The Issuing Bank will also deliver to the
Administrative Agent, concurrently or promptly following its delivery
of a Letter of Credit, or amendment to or renewal of a Letter of
Credit, to an advising bank or a beneficiary, a true and complete copy
of each such Letter of Credit or amendment to or renewal of a Letter
of Credit.
3.03 Risk Participations, Drawings and Reimbursements. (a)
Immediately upon the Issuance of each Letter of Credit, s each Bank
shall be deemed to, and hereby irrevocably and unconditionally agrees
to, purchase from the Issuing Bank a participation in such Letter of
Credit and each drawing thereunder in an amount equal to the product
of (i) the Pro Rata Share of such Bank, times (ii) the maximum amount
available to be drawn under such Letter of Credit and the amount of
such drawing, respectively. For purposes of Section 2.01, each
Issuance of a Letter of Credit shall be deemed to utilize the
Commitment of each Bank by an amount equal to the amount of such
participation.
(b) In the event of any request for a drawing under a
Letter of Credit by the beneficiary or transferee thereof, the Issuing
Bank will promptly notify the Company. The Company shall reimburse the
Issuing Bank prior to 10:00 a.m. (San Francisco time), on each date
that any amount is paid by the Issuing Bank under any Letter of Credit
(each such date, an "Honor Date"), in an amount equal to the amount so
paid by the Issuing Bank. In the event the Company fails to reimburse
the Issuing Bank for the full amount of any drawing under any Letter
of Credit by 10:00 a.m. (San Francisco time) on the Honor Date in
respect of such Letter of Credit, the Issuing Bank will promptly
notify the Administrative Agent and the Administrative Agent will
promptly notify each Bank thereof, and the Company shall be deemed to
have requested that Base Rate Loans be made by the Banks to be
disbursed on the Honor Date with respect of Letter of Credit, subject
to the amount of the unutilized portion of the Commitment and subject
to the conditions set forth in Section 5.02. Any notice given by the
Issuing Bank or the Administrative Agent pursuant to this Section
3.03(b) may be oral if immediately confirmed in writing (including by
facsimile); provided that the lack of such an immediate confirmation
shall not affect the conclusiveness or binding effect of such notice.
(c) Each Bank shall upon any notice pursuant to Section
3.03(b) make available to the Administrative Agent for the account of
the relevant Issuing Bank an amount in Dollars and in immediately
available funds equal to its Pro Rata Share of the amount of the
drawing, whereupon the participating Banks shall (subject to Section
3.03(d)) each be deemed to have made a Loan consisting of a Base Rate
Loan to the Company in that amount. If any Bank so notified fails to
make available to the Administrative Agent for the account of the
Issuing Bank the amount of such Bank's Pro Rata Share of the amount of
the drawing by no later than 12:00 noon (San Francisco time) on the
Honor Date, then interest shall accrue on such Bank's obligation to
make such payment, from the Honor Date to the date such Bank makes
such payment, at a rate per annum equal to the Federal Funds Rate in
effect from time to time during such period. The Administrative Agent
will promptly give notice of the occurrence of the Honor Date, but the
failure of the Agent to give any such notice on the Honor Date or in
sufficient time to enable any Bank to effect such payment on such date
shall not relieve such Bank from the obligation of promptly making
available its funds under this Section 3.03 after it does receive such
notice.
(d) With respect to any unreimbursed drawing that is
not converted into Loans consisting of Base Rate Loans to the Company
in whole or in part, because of the Company's failure to satisfy the
conditions set forth in Section 5.02 or for any other reason, the
Company shall be deemed to have incurred from the Issuing Bank an L/C
Borrowing in the amount of such drawing, which L/C Borrowing shall be
due and payable on demand (together with interest) and shall bear
interest at a rate per annum equal to the Base Rate plus 2% per annum,
and each Bank's payment to the Issuing Bank pursuant to Section
3.03(c) shall be deemed payment in respect of its participation in
such L/C Borrowing and shall constitute an L/C Advance from such Bank
in satisfaction of its participation obligation under this Section
3.03.
(e) Each Bank's obligation in accordance with this
Agreement to make the Loans or L/C Advances, as contemplated by this
Section 3.03, as a result of a drawing under a Letter of Credit, shall
be absolute and unconditional and without recourse to the Issuing Bank
and shall not be affected by any circumstance, including (i) any
set-off, counterclaim, recoupment, defense or other right which such
Bank may have against the Issuing Bank, the Company or any other
Person for any reason whatsoever; (ii) the occurrence or continuance
of a Default, an Event of Default or a Material Adverse Effect; or
(iii) any other circumstance, happening or event whatsoever, whether
or not similar to any of the foregoing; provided, however, that each
Bank's obligation to make Loans under this Section 3.03 is subject to
the conditions set forth in Section 5.02.
3.04 Repayment of Participations. (a) Upon (and only upon)
receipt by the Administrative Agent for the account of the Issuing
Bank of immediately available funds from the Company (i) in
reimbursement of any payment made by the Issuing Bank under the Letter
of Credit with respect to which any Bank has paid the Administrative
Agent for the account of the Issuing Bank for such Bank's
participation in the Letter of Credit pursuant to Section 3.03 or (ii)
in payment of interest thereon, the Administrative Agent will pay to
each Bank, in the same funds as those received by the Administrative
Agent for the account of the Issuing Bank, the amount of such Bank's
Pro Rata Share of such funds, and the Issuing Bank shall receive the
amount of the Pro Rata Share of such funds of any Bank that did not so
pay the Administrative Agent for the account of the Issuing Bank.
(b) If the Administrative Agent or the Issuing Bank is
required at any time to return to the Company, or to a trustee,
receiver, liquidator, custodian, or any official in any Insolvency
Proceeding, any portion of the payments made by the Company to the
Administrative Agent for the account of the Issuing Bank pursuant to
Section 3.04(a) in reimbursement of a payment made under the Letter of
Credit or interest or fee thereon, each Bank shall, on demand of the
Administrative Agent, forthwith return to the Administrative Agent or
the Issuing Bank the amount of its Pro Rata Share of any amounts so
returned by the Administrative Agent or the Issuing Bank plus interest
thereon from the date such demand is made to the date such amounts are
returned by such Bank to the Administrative Agent or the Issuing Bank,
at a rate per annum equal to the Federal Funds Rate in effect from
time to time.
3.05 Role of the Issuing Bank. (a) Each Bank and the Company
agree that, in paying any drawing under a Letter of Credit, the
Issuing Bank shall not have any responsibility to obtain any document
(other than any sight draft and certificates expressly required by the
Letter of Credit) or to ascertain or inquire as to the validity or
accuracy of any such document or the authority of the Person executing
or delivering any such document.
(b) No Agent-Related Person nor any of the respective
correspondents, participants or assignees of the Issuing Bank shall be
liable to any Bank for: (i) any action taken or omitted in connection
herewith at the request or with the approval of the Banks (including
the Majority Banks, as applicable); (ii) any action taken or omitted
in the absence of gross negligence or willful misconduct; or (iii) the
due execution, effectiveness, validity or enforceability of any
L/C-Related Document.
(c) The Company hereby assumes all risks of the acts or
omissions of any beneficiary or transferee with respect to its use of
any Letter of Credit; provided, however, that this assumption is not
intended to, and shall not, preclude the Company's pursuing such
rights and remedies as it may have against the beneficiary or
transferee at law or under any other agreement. No Agent-Related
Person, nor any of the respective correspondents, participants or
assignees of the Issuing Bank, shall be liable or responsible for any
of the matters described in clauses (i) through (vii) of Section 3.06;
provided, however, anything in such clauses to the contrary
notwithstanding, the Company may have a claim against the Issuing
Bank, and the Issuing Bank may be liable to the Company, to the
extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered by the Company which the
Company proves were caused by the Issuing Bank's willful misconduct or
gross negligence or the Issuing Bank's willful failure to pay under
any Letter of Credit after the presentation to it by the beneficiary
of a sight draft and certificate(s) strictly complying with the terms
and conditions of a Letter of Credit. In furtherance and not in
limitation of the foregoing: (i) the Issuing Bank may accept documents
that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the
contrary; and (ii) the Issuing Bank shall not be responsible for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which
may prove to be invalid or ineffective for any reason.
3.06 Obligations Absolute. The obligations of the Company
under this Agreement and any L/C-Related Document to reimburse the
Issuing Bank for a drawing under a Letter of Credit, and to repay any
L/C Borrowing and any drawing under a Letter of Credit converted into
Loans, shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement and each such
other L/C-Related Document under all circumstances, including the
following:
(i) any lack of validity or enforceability of this
Agreement or any L/C-Related Document;
(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the
obligations of the Company in respect of any Letter of
Credit or any other amendment or waiver of or any consent to
departure from all or any of the L/C-Related Documents;
(iii) the existence of any claim, set-off, defense
or other right that the Company may have at any time against
any beneficiary or any transferee of any Letter of Credit
(or any Person for whom any such beneficiary or any such
transferee may be acting), the Issuing Bank or any other
Person, whether in connection with this Agreement, the
transactions contemplated hereby or by the L/C-Related
Documents or any unrelated transaction;
(iv) any draft, demand, certificate or other
document presented under any Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any
respect; or any loss or delay in the transmission or
otherwise of any document required in order to make a
drawing under any Letter of Credit;
(v) any payment by the Issuing Bank under any
Letter of Credit against presentation of a draft or
certificate that does not strictly comply with the terms of
any Letter of Credit; or any payment made by the Issuing
Bank under any Letter of Credit to any Person purporting to
be a trustee in bankruptcy, debtor-in-possession, assignee
for the benefit of creditors, liquidator, receiver or other
representative of or successor to any beneficiary or any
transferee of any Letter of Credit, including any arising in
connection with any Insolvency Proceeding;
(vi) any exchange, release or non-perfection of
any collateral, or any release or amendment or waiver of or
consent to departure from any other guarantee, for all or
any of the obligations of the Company in respect of any
Letter of Credit; or
(vii) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing,
including any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the
Company or a guarantor.
3.07 Cash Collateral Pledge. The Company shall immediately
Cash Collateralize the L/C Obligations upon (i) the request of the
Administrative Agent, (A) if the Issuing Bank has honored any full or
partial drawing request on any Letter of Credit and such drawing has
resulted in an L/C Borrowing hereunder, or (B) if, as of the Maturity
Date, any Letters of Credit may for any reason remain outstanding and
partially or wholly undrawn, or (ii) the occurrence of the
circumstances described in Section 2.07 or 8.12.
3.08 Letter of Credit Fees. (a) The Company shall pay to the
Administrative Agent for the account of each of the Banks a letter of
credit fee with respect to the Letters of Credit equal to 3/8 of 1%
per annum of the average daily maximum amount available to be drawn of
the outstanding Letters of Credit, computed on a quarterly basis in
arrears on the last Business Day of each calendar quarter based upon
Letters of Credit outstanding for that quarter as calculated by the
Administrative Agent. Such letter of credit fees shall be due and
payable quarterly in arrears on the last Business Day of each calendar
quarter during which Letters of Credit are outstanding, commencing on
the first such quarterly date to occur after the Closing Date, through
the Maturity Date (or such later date upon which the outstanding
Letters of Credit shall expire), with the final payment to be made on
the Maturity Date (or such later expiration date).
(b) The Company shall pay to the Issuing Bank from time
to time on demand the normal issuance, presentation, amendment and
other processing fees, and other standard costs and charges, of the
Issuing Bank relating to letters of credit as from time to time in
effect.
3.09 Uniform Customs and Practice. The Uniform Customs and
Practice for Documentary Credits as published by the International
Chamber of Commerce most recently at the time of issuance of any
Letter of Credit shall (unless otherwise expressly provided in the
Letters of Credit) apply to the Letters of Credit.
SECTION 4
TAXES, YIELD PROTECTION AND ILLEGALITY
--------------------------------------
4.01 Taxes. (a) Any and all payments by the Company to each
Bank or the Administrative Agent under this Agreement and any other
Loan Document shall be made free and clear of, and without deduction
or withholding for, any Taxes. In addition, the Company shall pay all
Other Taxes.
(b) If the Company shall be required by law to deduct
or withhold any Taxes, Other Taxes or Further Taxes from or in respect
of any sum payable hereunder to any Bank or the Administrative Agent,
then: (i) the sum payable shall be increased as necessary so that,
after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable
under this Section), such Bank or the Administrative Agent, as the
case may be, receives and retains an amount equal to the sum it would
have received and retained had no such deductions or withholdings been
made; (ii) the Company shall make such deductions and withholdings;
(iii) the Company shall pay the full amount deducted or withheld to
the relevant taxing authority or other authority in accordance with
applicable law; and (iv) the Company shall also pay to each such Bank
or the Administrative Agent for the account of such Bank, at the time
interest is paid, Further Taxes in the amount that the respective Bank
specifies as necessary to preserve the after-tax yield such Bank would
have received if such Taxes, Other Taxes or Further Taxes had not been
imposed.
(c) The Company agrees to indemnify and hold harmless
each Bank and the Administrative Agent for the full amount of all
future i) Taxes, ii) Other Taxes, and iii) Further Taxes in the amount
that the respective Bank specifies as necessary to preserve the
after-tax yield such Bank would have received if such Taxes, Other
Taxes or Further Taxes had not been imposed, and any liability
(including penalties, interest, additions to tax and expenses) arising
therefrom or with respect thereto, whether or not such Taxes, Other
Taxes or Further Taxes were correctly or legally asserted. Payment
under this indemnification shall be made within 30 days after the date
such Bank or the Administrative Agent makes written demand therefor.
(d) Within 30 days after the date of any payment by the
Company of Taxes, Other Taxes or Further Taxes, the Company shall
furnish to each Bank or the Administrative Agent the original or a
certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to such Bank or the Administrative
Agent.
(e) If the Company is required to pay any amount to any
Bank or the Administrative Agent pursuant to Section (b) or (c) of
this Section, then such Bank shall, if not otherwise disadvantageous
to such Bank in its sole judgment, use reasonable efforts (consistent
with legal and regulatory restrictions) to (i) change the jurisdiction
of its Lending Office so as to eliminate any such additional payment
by the Company which may thereafter accrue, and/or (ii) cooperate with
the Company in instituting appropriate actions or proceedings to
eliminate or reduce the amount of such Taxes, Other Taxes or Further
Taxes.
4.02 Illegality. (a) If any Bank determines that the
introduction of any Requirement of Law, or any change in any
Requirement of Law, or in the interpretation or administration of any
Requirement of Law, has made it unlawful, or that any central bank or
other Governmental Authority has asserted that it is unlawful, for any
Bank or its applicable Lending Office to make Offshore Rate Loans,
then, on notice thereof by the Bank to the Company through the
Administrative Agent, any obligation of that Bank to make Offshore
Rate Loans shall be suspended until the Bank notifies the
Administrative Agent and the Company that the circumstances giving
rise to such determination no longer exist.
(b) If a Bank determines that it is unlawful to
maintain any Offshore Rate Loan, the Company shall, upon its receipt
of notice of such fact and demand from such Bank (with a copy to the
Administrative Agent), prepay in full such Offshore Rate Loans of that
Bank then outstanding, together with interest accrued thereon and
amounts required under Section 4.04, either on the last day of the
Interest Period thereof, if the Bank may lawfully continue to maintain
such Offshore Rate Loans to such day, or immediately, if the Bank may
not lawfully continue to maintain such Offshore Rate Loan. If the
Company is required to so prepay any Offshore Rate Loan, then
concurrently with such prepayment, the Company shall borrow from the
affected Bank, in the amount of such repayment, a Base Rate Loan.
(c) If the obligation of any Bank to make or maintain
Offshore Rate Loans has been so terminated or suspended, the Company
may elect, by giving notice to the Bank through the Administrative
Agent that all Loans which would otherwise be made by the Bank as
Offshore Rate Loans shall be instead Base Rate Loans.
4.03 Increased Costs and Reduction of Return. (a) If any
Bank determines that, due to either (i) the introduction of or any
change in or in the interpretation of any law or regulation or (ii)
the compliance by that Bank with any guideline or request from any
central bank or other Governmental Authority (whether or not having
the force of law), there shall be any increase in the cost to such
Bank of agreeing to make or making, funding or maintaining any
Offshore Rate Loans or participating in Letters of Credit, or, in the
case of the Issuing Bank, any increase in the cost to the Issuing Bank
of agreeing to issue, issuing or maintaining any Letter of Credit or
of agreeing to make or making, funding or maintaining any unpaid
drawing under any Letter of Credit, then, within 15 days after written
request by any Bank (with a copy of such request to be sent to the
Administrative Agent), the Company shall pay to the Administrative
Agent for the account of such Bank, such additional amounts as will
compensate such Bank for such increased cost or reduction but only
with respect to the 90-day period immediately preceding the making of
each such demand.
(b) If any Bank shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in
any Capital Adequacy Regulation, (iii) any change in the
interpretation or administration of any Capital Adequacy Regulation by
any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by the
Bank (or its Lending Office) or any corporation controlling the Bank
with any Capital Adequacy Regulation, affects or would affect the
amount of capital required or expected to be maintained by the Bank or
any corporation controlling the Bank and (taking into consideration
such Bank's or such corporation's policies with respect to capital
adequacy and such Bank's desired return on capital) determines that
the amount of such capital is increased as a consequence of its
Commitment, loans, credits or obligations under this Agreement, then,
upon demand of such Bank to the Company through the Administrative
Agent, the Company shall pay to the Bank, from time to time as
specified by the Bank, additional amounts sufficient to compensate the
Bank for such increase; provided, however, that the Company shall not
be obligated to pay any such amount or amounts in excess of 10 basis
points per annum unless the affected Bank shall have given the Company
at least 30 days advance written notice (with a copy to the
Administrative Agent) of its intent to seek compensation under this
Section in excess of 10 basis points per annum from the Company. A
certificate of the Bank setting forth the basis for determining any
additional amount or amounts necessary to compensate the Bank will be
final and conclusive and binding upon all parties hereto absent error.
4.04 Funding Losses. The Company shall reimburse each Bank
and hold each Bank harmless from any loss or expense which the Bank
may sustain or incur as a consequence of: (a) the failure of the
Company to make on a timely basis any payment of principal of any
Offshore Rate Loan; (b) the failure of the Company to borrow, continue
or convert a Loan after the Company has given (or is deemed to have
given) a Notice of Borrowing or a Notice of Conversion/Continuation;
(c) the failure of the Company to make any prepayment in accordance
with any notice delivered under Section 2.06 or 2.07; (d) the
prepayment (including pursuant to Section 2.06 or 2.07) or other
payment (including after acceleration thereof) of an Offshore Rate
Loan on a day that is not the last day of the relevant Interest
Period; or (e) the automatic conversion under Section 2.04 of any
Offshore Rate Loan to a Base Rate Loan on a day that is not the last
day of the relevant Interest Period; including any such loss or
expense arising from the liquidation or reemployment of funds obtained
by it to maintain its Offshore Rate Loans or from fees payable to
terminate the deposits from which such funds were obtained. For
purposes of calculating amounts payable by the Company to the Banks
under this Section and under Section 4.03(a), each Offshore Rate Loan
made by a Bank (and each related reserve, special deposit or similar
requirement) shall be conclusively deemed to have been funded at the
Offshore Rate used in determining the Offshore Rate for such Offshore
Rate Loan by a matching deposit or other borrowing in the interbank
eurodollar market for a comparable amount and for a comparable period,
whether or not such Offshore Rate Loan is in fact so funded.
4.05 Inability to Determine Rates. If the Majority Banks
determine that for any reason adequate and reasonable means do not
exist for determining the Offshore Rate for any requested Interest
Period with respect to a proposed Offshore Rate Loan, or that the
Offshore Rate applicable pursuant to Section 2.09(a) for any requested
Interest Period with respect to a proposed Offshore Rate Loan does not
adequately and fairly reflect the cost to such Banks of funding such
Loan, the Administrative Agent will promptly so notify the Company and
each Bank. Thereafter, the obligation of the Banks to make or maintain
Offshore Rate Loans, as the case may be, hereunder shall be suspended
until the Administrative Agent upon the instruction of the Majority
Banks revokes such notice in writing. Upon receipt of such notice, the
Company may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by it. If the Company does not
revoke such Notice, the Banks shall make, convert or continue the
Loans, as proposed by the Company, in the amount specified in the
applicable notice submitted by the Company, but such Loans shall be
made, converted or continued as Base Rate Loans instead of Offshore
Rate Loans, as the case may be.
4.06 Reserves on Offshore-Rate Loans. The Company shall pay
to each Bank, upon 15 days written request (with a copy to the
Administrative Agent) for compensation under this provision, as long
as such Bank shall be required under regulations of the FRB to
maintain reserves with respect to liabilities or assets consisting of
or including Eurocurrency funds or deposits (currently known as
"Eurocurrency liabilities"), additional costs on the unpaid principal
amount of each Offshore Rate Loan equal to the actual costs of such
reserves allocated to such Loan by the Bank, payable on each date on
which interest is payable on such Loan, but only with respect to the
90-day period immediately preceding the making of each such request.
Each Bank agrees to give prompt notice to the Company (with a copy to
the Administrative Agent) should said compensation no longer be
requested or required. A certificate of any Bank setting forth the
basis for determining any additional amount or amounts necessary to
compensate such Bank will be supported by a reasonably detailed
explanation of the reasons for and the amount of such cost and will be
final and conclusive and binding upon all parties hereto absent error.
4.07 Survival. The agreements and obligations of the Company
in this Section 4 shall survive the payment of all other Obligations.
SECTION 5
CONDITIONS PRECEDENT
5.01 Conditions of Initial Credit Extensions. The obligation
of each Bank to make its initial Credit Extension hereunder is subject
to the condition that the Administrative Agent shall have received on
or before the Closing Date all of the following, in form and substance
satisfactory to the Administrative Agent and each Bank, and in
sufficient copies for each Bank:
(a) Credit Agreement and Notes. This Agreement and any
Notes executed by each party thereto;
(b) Resolutions; Incumbency.
(i) Copies of the resolutions of the board of
directors of the Company authorizing the transactions
contemplated hereby, certified as of the Closing Date by the
Secretary or an Assistant Secretary of the Company; and
(ii) A certificate of the Secretary or Assistant
Secretary of the Company certifying the names and true
signatures of the officers of the Company authorized to
execute, deliver and perform, as applicable, this Agreement,
and all other Loan Documents to be delivered by it
hereunder;
(c) Organization Documents; Good Standing. Each of the
following documents:
(i) the articles or certificate of incorporation
and the bylaws of the Company as in effect on the Closing
Date, certified by the Secretary or Assistant Secretary of
the Company as of the Closing Date; and
(ii) a good standing certificate for the Company
from the Secretary of State (or similar, applicable
Governmental Authority) of its state of incorporation and
each state where the Company is qualified to do business as
a foreign corporation as of a recent date;
(d) Form U-1. A Federal Reserve Form U-1 for each Bank
dated the date hereof duly completed and executed, the statements made
in which shall be such, in the opinion of the Banks, as to permit the
transactions contemplated hereby in accordance with Regulation U;
(e) Opinion of Counsel. Opinions of counsel to the
Borrower in form and substance satisfactory to the Administrative
Agent and the Banks;
(f) Certificate. A certificate signed by a Responsible
Officer, dated as of the Closing Date, stating that:
(i) the representations and warranties contained
in Section 6 are true and correct on and as of such date, as
though made on and as of such date;
(ii) no Default or Event of Default exists or
would result from the Credit Extension; and
(iii) there has occurred since December 31, 1995
no event or circumstance that has resulted or could
reasonably be expected to result in a Material Adverse
Effect; and
(g) Other Documents. Such other approvals, opinions, documents,
questionnaires or materials as the Administrative Agent or any Bank
may request.
5.02 Conditions to All Credit Extensions. The obligation of
each Bank to make any Loan to be made by it (including its initial
Loan) and the obligation of the Issuing Bank to Issue any Letter of
Credit (including the initial Letter of Credit) is subject to the
satisfaction of the following conditions precedent on the relevant
Borrowing Date or Issuance Date:
(a) Notice of Borrowing. The Administrative Agent shall
have received a Notice of Borrowing or in the case of any Issuance of
any Letter of Credit, the Issuing Bank and the Administrative Agent
shall have received an L/C Application or L/C Amendment Application,
as required under Section 3.02;
(b) Borrowing Base and Compliance Certificate. The
Administrative Agent shall have received a Borrowing Base and
Compliance Certificate demonstrating compliance with this Agreement
before and after giving effect to the proposed Borrowing or Issuance;
(c) Continuation of Representations and Warranties. The
representations and warranties in Section 6 shall be true and correct
on and as of such Borrowing Date or Issuance Date with the same effect
as if made on and as of such Borrowing Date or Issuance Date (except
to the extent such representations and warranties expressly refer to
an earlier date, in which case they shall be true and correct as of
such earlier date);
(d) No Existing Default. No Default or Event of Default
shall exist or shall result from such Borrowing or Issuance;
(e) Compliance With Margin Regulations.
(i) Each Bank shall have determined that after
giving effect to such Credit Extension (A) the good faith
value of the Company's assets other than Margin Stock shall
at least equal the sum of the Non-Purpose Credit, (B) such
Credit Extension shall otherwise be in compliance with the
Margin Regulations and (C) the procedures set forth herein
relating to compliance with the Margin Regulations shall, if
complied with, ensure compliance with the Margin
Regulations;
(ii) the Administrative Agent shall have received
from the Company such documentation and information
(certified in a manner acceptable to such Bank by an officer
of the Company) as it or any Bank may in good faith request
in order for any Bank to (i) distinguish between Purpose
Credits and Non-Purpose Credits and (ii) make the
determinations required by clause (i) above; and
(iii) if the Notice of Borrowing relating to such
Borrowing specifies that any portion of the proceeds thereof
will be used to acquire Margin Stock, the Administrative
Agent shall have received a certificate from an officer of
the Company setting forth the Aggregate Cost for the Margin
Stock being acquired;
(f) Collateral Requirements. The Administrative Agent
shall have received any Collateral Documents if and as are required in
accordance with Section 2.07; and
(g) Additional Evidence. The Administrative Agent shall
have received such other approvals, legal opinions, certificates or
other documents as it may reasonably request.
Each Notice of Borrowing and L/C Application or L/C Amendment
Application submitted by the Company hereunder shall constitute a
representation and warranty by the Company hereunder, as of the date
of each such notice and as of each Borrowing Date or Issuance Date, as
applicable, that the conditions in this Section 5.02 are satisfied.
SECTION 6
REPRESENTATIONS AND WARRANTIES
------------------------------
The Company represents and warrants to the Administrative
Agent and each Bank that:
6.01 Corporate Existence. The Company is duly organized,
validly existing and in good standing under the laws of the State of
Nevada, has the corporate power to own its assets and to transact the
business in which it is now engaged and is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction
where its ownership or lease of property or the conduct of its
business requires such qualification except for failures to be so
qualified that would not in the aggregate have a Material Adverse
Effect.
6.02 Corporate Power; Authorization; Enforceable
Obligations. The Company has the corporate power, authority and legal
right to execute, deliver and perform this Agreement and all other
Loan Documents, all other certificates and documents required
hereunder and has taken all necessary corporate action to authorize
its borrowings hereunder on the terms and conditions hereof and its
execution, delivery and performance of this Agreement and all other
Loan Documents, and all related certificates and documents. No consent
of any other person (including, without limitation, stockholders and
creditors of the Company), and no license, permit, approval or
authorization of, exemption by, notice or report to, or registration,
filing or declaration with, any governmental authority is required in
connection with the borrowings hereunder or the execution, delivery,
performance, validity or enforceability of this Agreement or any other
Loan Documents. This Agreement and each other Loan Document have been
executed and delivered by a duly authorized officer of the Company,
and this Agreement and the Loan Documents constitute the legal, valid
and binding obligation of the Company enforceable against the Company
in accordance with their respective terms (except as limited by
applicable bankruptcy, insolvency, reorganization or similar laws
affecting the enforcement of creditors' rights generally).
6.03 No Legal Bar to Loans. The execution, delivery and
performance of this Agreement and the other Loan Documents, and the
use of the proceeds of the borrowings hereunder, will not violate any
provision of any existing law or regulation, of any order, judgment,
award or decree of any court, arbitrator or governmental authority, of
the certificate of incorporation or by-laws of, or any securities
issued by the Company or of any mortgage, indenture, lease, contract
or other agreement, instrument or undertaking to which the Company is
a party or by which the Company or any of its assets may be bound, and
will not result in, or require, the creation or imposition of any Lien
on any of its property, assets or revenues pursuant to the provisions
of any such mortgage, indenture, lease, contract or other agreement,
instrument or undertaking. No approval, consent or other action by, or
notice to or filing with, any Governmental Authority with regulatory
authority over the Company is necessary in connection with the
execution, delivery, performance or enforcement of this Agreement or
any other Loan Document.
6.04 No Material Litigation. No litigation, investigation or
administrative proceeding of or before any court, arbitrator or
governmental authority is pending or, to the Company's knowledge,
threatened against the Company or any of its assets (a) with respect
to this Agreement, any other Loan Document or any of the transactions
contemplated hereby or (b) the results of which, in the opinion of the
Company and its counsel are likely to have a Material Adverse Affect.
6.05 No Default. The Company is not in default in any
material respect in the payment or performance of any of its
obligations or in the performance of any mortgage, indenture, lease,
contract or other agreement, instrument or undertaking to which it is
a party or by which it or any of its assets may be bound, and no
Default or Event of Default has occurred and is continuing. The
Company is not in default under any order, judgment, award or decree
of any court, arbitrator or governmental authority binding upon or
affecting it or by which any of its assets may be bound or affected,
and no such order, judgment, award or decree is likely to have a
Material Adverse Effect.
6.06 Ownership of Property; Liens. The Company has good and
marketable title to or valid leasehold interests in all its property,
real and personal, and none of such property is subject to any Lien of
any nature whatsoever except as permitted by Section 8.01 and except
for covenants, restrictions, rights, easements and minor
irregularities in title which do not interfere with the occupation,
use and enjoyment by the Company of property material to the operation
of the Company's normal course of business as presently conducted or
which do not result in a Material Adverse Effect. All Eligible
Investments beneficially owned by the Company has been duly issued,
fully paid and non-assessable, there are no outstanding warrants,
options or securities convertible into such stock (other than MGM
preferred stock being convertible into MGM common stock, and Seven
Network Limited's agreement with the Company to purchase MGM preferred
stock having a face value not exceeding $100,000,000), and all
Eligible Investments are free and clear of all Liens.
6.07 Taxes. Except as disclosed to the Administrative Agent
and the Banks, the Company has filed or caused to be filed all tax
returns that to the Company's knowledge are required to be filed and
has paid all taxes shown to be due and payable on said returns or on
any assessments made against it (other than those being contested in
good faith by appropriate proceedings for which adequate reserves have
been provided on the books of the Company), and no tax liens have been
filed and, to the best of the Company's knowledge, no claims are being
asserted with respect to any taxes other than those taxes that do not
constitute a Material Adverse Effect.
6.08 ERISA.
(a) The Company has delivered to the Administrative
Agent (with sufficient copies for each Bank) a written description of
each Plan maintained or sponsored by the Company and each such
description is true and complete in all material respects.
(b) Each Plan maintained or sponsored by the Company is
in compliance in all material respects with the applicable provisions
of ERISA, the Code and other Federal or state law, including all
requirements under the Code or ERISA for filing reports (which are
true and correct in all material respects as of the date filed), and
benefits have been paid in accordance with the provisions of the Plan.
(c) No Plan maintained or sponsored by the Company
provides medical or other welfare benefits or extends coverage
relating to such benefits beyond the date of a participant's
termination of employment with such person, except to the extent
required by Section 4980B of the Code and at the sole expense of the
participant or the beneficiary of the participant to the fullest
extent permissible under such Section of the Code. The Company has
complied in all material respects with the notice and continuation
coverage requirements of Section 4980B of the Code.
(d) No ERISA Event has occurred or is reasonably
expected to occur with respect to any Plan maintained or sponsored by
the Company or to which the Company is obligated to contribute.
6.09 Financial Condition. All financial statements, copies
of which have heretofore been furnished to the Administrative Agent,
present fairly the position of the Company as of the statement dates
and the results of operations for the fiscal periods then ended. All
such financial statements, including the related schedules and notes
thereto, have been prepared in accordance with generally accepted
accounting principles applied on a basis consistently maintained
throughout the period involved, except as noted in said financial
statements. The Company has no material contingent obligation,
liability for taxes, long-term lease or unusual forward or long-term
commitment that is not reflected in the foregoing statements (or the
related notes thereto). Since the date of the financial statement
dated July 31, 1996 delivered to the Administrative Agent by the
Company, there has been no Material Adverse Effect, except for changes
that occurred since that date in the Aggregate Market Value of
securities held by the Company.
6.10 Federal Reserve Regulations. No part of the proceeds of
the Loans will be used, directly or indirectly, for a purpose which
violates any law, rule or regulation of any Governmental Authority,
including, without limitation, the provisions of Regulations G, T, U,
or X of the FRB, as amended.
6.11 Environmental Matters. The Company conducts in the
ordinary course of business a review of the effect of existing
Environmental Laws and existing Environmental Claims on its business,
operations and properties, and as a result thereof the Company has
reasonably concluded that such Environmental Laws and Environmental
Claims could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
6.12 Regulated Entities. None of the Company, any Person
controlling the Company, or any Subsidiary, is an "Investment Company"
within the meaning of the Investment Company Act of 1940. The Company
is not subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act, any
state public utilities code, or any other Federal or state statute or
regulation limiting its ability to incur Indebtedness.
6.13 Collateral Documents. The provisions of each of the
Collateral Documents are effective to create in favor of the
Administrative Agent for the benefit of itself and the Banks, a legal,
valid and enforceable first priority security interest in all right,
title and interest of the Company in the Collateral, and no further
action is necessary in order to establish and perfect the
Administrative Agent's security interest of first priority in or first
lien on all Collateral, which security interest constitutes a
perfected security interest in all right, title and interest of the
Company in such Collateral, prior in right to any other security
interests.
6.14 Full Disclosure. None of the representations or
warranties made by the Company or any Subsidiary in the Loan Documents
as of the date such representations and warranties are made or deemed
made, and none of the statements contained in any exhibit, report,
statement or certificate furnished by or on behalf of the Company or
any Subsidiary in connection with the Loan Documents (including the
offering and disclosure materials delivered by or on behalf of the
Company to the Administrative Agent or any Bank prior to the Closing
Date), contains any untrue statement of a material fact or omits any
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which
they are made, not misleading as of the time when made or delivered.
SECTION 7
AFFIRMATIVE COVENANTS
---------------------
So long as any Bank shall have any Commitment hereunder, or
any Loan or other Obligation shall remain unpaid or unsatisfied, or
any Letter of Credit shall remain outstanding, unless the Majority
Banks waive compliance in writing:
7.01 Use of Proceeds of Loans. The Company will use the
proceeds of the Loans made hereunder for working capital purposes of
the Company, and subject to the provisions of Section 2.03(b),
acquisitions of assets or equity interests in other Persons; provided,
however, that no portion of the proceeds of any Loan hereunder shall
be used to acquire any equity in a Person formed, incorporated or
domiciled outside the U.S.
7.02 Payment of Obligations. The Company will, and it will
cause each of its Subsidiaries to, pay its obligations when due and
prior to the date on which penalties attach thereto, except where such
payment is contested in good faith by the Company or its Subsidiaries,
or where the failure to pay such liability would not have a Material
Adverse Effect.
7.03 Notice. The Company will, and it will cause each of its
Subsidiaries to, give prompt written notice to the Administrative
Agent of all Events of Default under any of the terms or provisions of
this Agreement, the resignation or withdrawal of Kirk Kerkorian as the
Company's Chief Executive Officer or the disability of such Person, or
any other matter which has resulted in, or is expected to result in, a
Material Adverse Effect.
7.04 Records. The Company will, and it will cause each of
its Subsidiaries to keep and maintain full and accurate accounts and
records in all material respects of its operations on an accrual basis
and will permit the Administrative Agent, and its respective
designated officers, employees, agents and representatives, to have
access thereto and to make examination thereof at all reasonable
times, to make audits, and to inspect and otherwise check its
properties, real, personal and mixed.
7.05 Information Furnished. It will, and it will cause each
of its Subsidiaries to, furnish to the Administrative Agent (with
sufficient copies for each Bank):
(a) Within 15 days after the close of each fiscal
quarter, its consolidated balance sheet as of the close of such
quarter, its consolidated profit and loss statement for that quarter
and for that portion of the fiscal year ending with such quarter, all
prepared on an accrual basis, which shall include all Eligible
Investments valued at the Aggregate Market Value consistent with that
of the previous year, and all warranted as correct in all material
respects by its Secretary-Treasurer.
(b) Within 10 days after the issuer of any
publicly-traded equity Eligible Investment files its Quarterly Reports
on Form 10-Q or its Annual Reports on Form 10-K of such issuers with
the Securities and Exchange Commission, copies of such reports.
(c) Within 10 days after the close of each calendar
month, a Borrowing Base and Compliance Certificate demonstrating
compliance with the Borrowing Base and Sections 6.07 and 8.12 as of
the date(s) indicated in such certificates.
(d) Upon the acquisition of any securities, a
certificate of a Responsible Officer of the Company describing such
acquisitions, which certificate shall include such information as the
Administrative Agent may request with respect thereto, including
without limitation the Aggregate Market Value thereof and such other
information as may be deemed necessary by the Administrative Agent or
any Bank to assure compliance with the Margin Regulations.
(e) Within 20 days of the occurrence of any such event,
written notes of any of the following ERISA events affecting the
Company or any member of its Controlled Group, together with a copy of
any notice with respect to such event that may be required to be filed
with a Governmental Authority and any notice delivered by a
Governmental Authority to the Company or any member of its Controlled
Group with respect to such event: (i) an ERISA Event; (ii) the
adoption of any new Plan that is subject to Title IV of ERISA or
Section 412 of the Code by any member of the Controlled Group; (iii)
the adoption of any amendment to a Plan that is subject to Title IV of
ERISA or Section 412 of the Code, if such amendment results in a
material increase in benefits or unfunded liabilities; or (iv) the
commencement of contributions by any member of the Controlled Group to
any Plan that is subject to Title IV of ERISA or Section 412 of the
Code.
(f) Such other information concerning its affairs as
the Administrative Agent may reasonably request.
7.06 Maintenance of Corporate Existence. The Company will,
and it will cause each of its Subsidiaries to, maintain and preserve
its corporate existence and all rights, permits, privileges and
franchises presently existing and required in the conduct of its
business (provided, however that the Company shall not be required to
maintain or preserve the corporate existence of any Subsidiary), and
the Company and its Subsidiaries shall not be required to maintain or
preserve any such right, permit, privilege or franchise, if the loss
thereof does not have a Material Adverse Effect; will conduct its
business in an orderly, efficient and customary manner; and will keep
and maintain all of its properties in reasonably good working order
and condition, ordinary wear and tear excepted (provided, however,
nothing shall prevent the Company or its Subsidiaries from
discontinuing the maintenance of any such properties if such
discontinuance does not have a Material Adverse Effect).
7.07 Tangible Net Worth. The Company will at all times
maintain a Tangible Net Worth of not less than $425,000,000.
7.08 Insurance. The Company will maintain insurance with
responsible insurance companies in such amounts and against such risks
as is customarily carried by owners of similar businesses and
property.
7.09 Margin . The Company will take such action from time to time as
shall be necessary to ensure that neither any borrowing nor any other
transaction hereby shall violate or be inconsistent with any Margin
Regulations.
7.10 Inspection of Property and Books and Records. The
Company shall maintain and shall cause each Subsidiary to maintain
proper books of record and account, in which full, true and correct
entries in conformity with GAAP consistently applied shall be made of
all financial transactions and matters involving the assets and
business of the Company and such Subsidiary. The Company shall permit,
and shall cause each Subsidiary to permit, representatives and
independent contractors of the Administrative Agent to visit and
inspect any of their respective properties, to examine their
respective corporate, financial and operating records, and make copies
thereof or abstracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective directors,
officers, and independent public accountants, all at the expense of
the Company and at such reasonable times during normal business hours
and as often as may be reasonably desired, upon reasonable advance
notice to the Company; provided, however, when an Event of Default
exists the Administrative Agent may do any of the foregoing at the
expense of the Company at any time during normal business hours and
without advance notice.
7.11 Environment Laws. The Company shall, and shall cause
each Subsidiary to, conduct its operations and keep and maintain its
property in compliance with all Environmental Laws.
7.12 Release of Collateral. If at any time after the Company
has granted any security interest to the Administrative Agent pursuant
to the provisions of Section 2.07(b) and the Effective Amount of all
Credit Extensions is less than $50,000,000 in the aggregate, the
Administrative Agent shall, upon request of the Company release all
Collateral provided that (a) no Default or Event of Default has
occurred and is continuing at the time of such request or release of
Collateral by the Administrative Agent or (b) no Event of Default has
occurred and been cured within 180 days immediately preceding such
request or release of Collateral.
7.13 Designation of Designated Stock. The Majority Banks may
in their sole discretion from time to time upon notice to the Company
through the Administrative Agent designate certain additional Eligible
Investments which are stock as Designated Stock (including without
limitation in connection with an acquisition requiring the consent of
the Banks pursuant to Section 2.03(b)). Such Designated Stock must be
pledged as Collateral to the Administrative Agent at any time
Collateral is required in accordance with Section 2.07.
7.14 Further Assurances. Promptly upon request by the
Administrative Agent, or the Majority Banks, the Company shall (and
shall cause any of its Subsidiaries to) execute, acknowledge, deliver,
record, re-record, file, re-file, register and re-register, any and
all such further acts, deeds, conveyances, security agreements,
financing statements and continuations thereof, termination
statements, notices of assignment, transfers, certificates, assurances
and other instruments the Administrative Agent or such Banks, as the
case may be, may reasonably require from time to time in order (a) to
carry out more effectively the purposes of this Agreement or any other
Loan Document, (b) to subject to the Liens created by any of the
Collateral Documents any of the properties, rights or interests
covered by any of the Collateral Documents, (c) to perfect and
maintain the validity, effectiveness and priority of any of the
Collateral Documents and the Liens intended to be created thereby and
(d) to better assure, convey, grant, assign, transfer, preserve,
protect and confirm to the Administrative Agent and the Banks the
rights granted or now or hereafter intended to be granted to the
Administrative Agent and the Banks under any Loan Document or under
any other document executed in connection therewith.
SECTION 8
NEGATIVE COVENANTS
------------------
So long as any Bank shall have any Commitment hereunder, or
any Loan or other Obligation shall remain unpaid or unsatisfied, or
any Letter of Credit shall remain outstanding, unless the Majority
Banks waive compliance in writing:
8.01 Encumbrances and Liens. The Company will not, nor will
it permit any of its Subsidiaries to, create, assume or suffer to
exist, any Liens on any or all of its property, real, personal or
mixed, whether now owned or hereafter acquired (it being understood
that nothing herein shall be construed as prohibiting the Company from
subsequently creating Liens by the refinancing of obligations which
were previously secured by Liens permitted hereunder); except:
(a) liens for current taxes, assessments or other
governmental charges which are not delinquent or which remain payable
without penalty, or the validity of which is contested in good faith
by appropriate proceedings.
(b) liens, deposits or pledges made to secure statutory
obligations, surety or appeal bonds, construction or materialmen's
liens relating to aircraft, or bonds for the release of attachments or
for stay of execution, or to secure the performance of bids, tenders,
contracts other than for the payment of borrowed money, leases, or for
purposes of like general nature in the ordinary course of its
business.
(c) liens to secure, and financing statements relating
to, any indebtedness outstanding hereunder or any other indebtedness
owing, or which may be owing, by the Company to the Administrative
Agent or the Banks hereunder.
(d) liens, not otherwise exempted herein, including
purchase money liens, on property other than Margin Stock, which shall
at any one time not exceed $5,000,000 in the aggregate.
(e) liens existing on property (or on any shares of
stock of any corporation other than on Margin Stock), at the time it
is acquired provided such liens do not exceed the value of property or
stock acquired.
provided, however, that notwithstanding anything else contained in
this Agreement, the Company will not, nor will it permit any of its
Subsidiaries to, create, assume or suffer to exist, or enter into any
agreement contemplating or permitting, any Liens on any Designated
Stock.
8.02 Indebtedness. The Company will not incur or create any
indebtedness, direct or indirect, other than:
(a) Credit Extensions hereunder;
(b) indebtedness owing to Kirk Kerkorian in an
aggregate principal amount at any one time outstanding not exceeding
$20,000,000; and
(c) other indebtedness in an aggregate principal amount
not exceeding $10,000,000 at any one time outstanding.
8.03 Liquidation or Merger. The Company will not, nor will
it permit any of its Subsidiaries to, liquidate, dissolve, or enter
into any consolidation, merger, partnership, joint venture or other
combination, or sell, lease or dispose of its business or assets as a
whole or such as in the opinion of the Majority Banks constitutes a
substantial portion thereof; provided, however, that any Subsidiary
may merge into, consolidate with or transfer its business to the
Company or another Subsidiary.
8.04 Loans and Guaranties. Except for the obligations of the
Company with respect to the Letters of Credit and the obligations of
the Company to make an additional $30,000,000 investment in MGM, the
Company will not, nor will it permit any of its Subsidiaries to, make
any loans or advances or become a guarantor or surety, or pledge its
credit in any manner, directly or indirectly, or extend credit;
provided, however, that the Company may make loans or advances,
guaranty, pledge or extend credit in an amount not exceeding in the
aggregate in principal amount $25,000,000.
8.05 Disposal of Assets. The Company will not, nor will it
permit any of its Subsidiaries to, dispose of any of its assets except
for fair and reasonable consideration.
8.06 Retirement of Stock. The Company will not, nor will it
permit any of its Subsidiaries to, acquire or retire any shares of its
capital stock except for value.
8.07 Payment of Dividends. The Company will not, nor will it
permit any of its Subsidiaries to, declare or pay any cash dividends
upon its shares of stock now or hereafter outstanding except for
dividends which, if they had not been declared or paid, would be
undistributed personal holding company income (as defined in Section
545 of the Code). In the event such a dividend is declared or paid and
at the time of such declaration or payment the Tangible Net Worth of
the Company is less than $425,000,000, an equity investment must be
made in the Company promptly in an amount equal to the excess of the
dividend over the tax that would have otherwise been payable pursuant
to Section 541 of the Code had such dividend not been paid. Nothing in
this Section 8.07 shall be construed as preventing the Company from
repaying to Kirk Kerkorian the indebtedness described in Section
8.02(b).
8.08 Default Under Other Agreements or Contracts. The
Company will not, nor will it permit any of its racts Subsidiaries to,
commit or do any act or thing which would constitute an event of
default, which would have a Material Adverse Effect under the
provisions of any other (a) agreement, (b) contract, (c) indenture,
(d) document or (e) instrument executed, or which may be executed by
it.
8.09 ERISA Plans. The Company shall not, and shall not
suffer or permit any of its Subsidiaries to, (i) terminate any Plan
subject to Title IV of ERISA so as to result in any material liability
to the Company or any ERISA Affiliate, (ii) permit to exist any ERISA
Event or any other event or condition, which presents the risk of a
material liability to any member of the Controlled Group, (iii) make a
complete or partial withdrawal (within the meaning of ERISA Section
4201) from any Multiemployer Plan so as to result in any material
liability to the Company or any ERISA Affiliate, (iv) enter into any
new Plan or modify any existing Plan so as to increase its obligations
thereunder which could result in any material liability to any member
of the Controlled Group, (v) permit the present value of all
nonforfeitable accrued benefits under any Plan (using the actuarial
assumptions utilized by the PBGC upon termination of a Plan)
materially to exceed the fair market value of Plan assets allocable to
such benefits, all determined as of the most recent valuation date for
each such Plan or (vi) sponsor or maintain a defined benefit Plan.
8.10 Hostile Acquisitions and Control Stock Acquisitions.
Whether or not the proceeds of any Loans are to be used, the Company
shall not, and shall not suffer or permit any of its Subsidiaries to,
make any (a) Control Stock Acquisition without the consent of the
Majority Banks or (b) Hostile Acquisition without the consent of all
Banks; provided, however, that notwithstanding the foregoing, the
Company shall be entitled to conduct one or more consent solicitations
or proxy solicitations for representation on, or control of, the board
of directors of any Person.
8.11 Borrowing Base; Pledged Borrowing Base. The Company
shall not permit at any time the Effective Amount of Credit Extensions
to exceed the Borrowing Base or, if the Effective Amount of Credit
Extensions is $50,000,000 or more, the Pledged Borrowing Base.
8.12 Accounting Changes. The Company shall not, and shall
not suffer or permit any Subsidiary to, make any significant change in
accounting treatment or reporting practices, except as required by
GAAP, or change the fiscal year of the Company or of any Subsidiary.
SECTION 9
EVENTS OF DEFAULT
-----------------
9.01 Event of Default. Any of the following shall constitute
an "Event of Default":
(a) Non-Payment. The Company fails to pay, when and as
required to be paid herein, any amount of principal of any Loan or L/C
Obligation, or any interest, fee or any other amount payable hereunder
or under any other Loan Document; or
(b) Performance under Agreements. The Company, or any
of its Subsidiaries, should fail to perform or observe any of the
terms, provisions, covenants, conditions, agreements or obligations
contained herein (other than Section 7.03, 7.07 and 8.01 through 8.08,
inclusive, and Section 8.12) or, except as provided in Section
9.01(c), in any other material agreement, contract, indenture,
document or instrument executed, or to be executed by it (a "material
agreement") and where a Default in respect of such material agreement
shall constitute a Material Adverse Effect; or
(c) Performance under Sections Section 7.03, 7.07 and
8.01 through 8.08, inclusive, and Section 8.12. The Company, or any of
its Subsidiaries, should fail to perform or observe any of the terms,
provisions, covenants, conditions, agreements, or obligations
contained in Section 7.03, 7.07 and 8.01 through 8.08, inclusive, and
Section 8.12, and such failure shall continue for more than five days;
or
(d) Insolvency; Voluntary Proceedings. The Company or
any Subsidiary (i) ceases or fails to be solvent, or generally fails
to pay, or admits in writing its inability to pay, its debts as they
become due, subject to applicable grace periods, if any, whether at
stated maturity or otherwise; (ii) voluntarily ceases to conduct its
business in the ordinary course; (iii) commences (or Kirk Kerkorian or
any shareholder of the Company or any Subsidiary commences) any
Insolvency Proceeding with respect to the Company or any Subsidiary;
or (iv) takes any action (or Kirk Kerkorian or any shareholder of the
Company or any Subsidiary takes any action) to effectuate or authorize
any of the foregoing; or
(e) Involunatary Proceedings. (i) Any involuntary
Insolvency Proceeding (other than a proceeding commenced by Kirk
Kerkorian or any shareholder of the Company or any Subsidiary, which
is governed by subsection (d) above) is commenced or filed against the
Company or any Subsidiary, or any writ, judgment, warrant of
attachment, execution or similar process, is issued or levied against
a substantial part of the Company's or any Subsidiary's properties,
and any such proceeding or petition shall not be dismissed, or such
writ, judgment, warrant of attachment, execution or similar process
shall not be released, vacated or fully bonded within 30 days after
commencement, filing or levy; (ii) the Company or any Subsidiary
admits the material allegations of a petition against it in any
Insolvency Proceeding, or an order for relief (or similar order under
non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) the
Company or any Subsidiary acquiesces in the appointment of a receiver,
trustee, custodian, conservator, liquidator, mortgagee in possession
(or agent therefor), or other similar Person for itself or a
substantial portion of its property or business; or
(f) Representation and Warranties. Any representation
or warranty made by the Company herein or in any certificate or
financial or other statement heretofore or hereafter furnished by the
Company or any of its officers to the Administrative Agent or any Bank
hereunder proves to be in any material respect false or misleading as
of the date made; or
(g) Legal Processs. Any judgment, writ of execution,
attachment or garnishment or any lien by legal process, or any other
legal process, be issued for an amount in excess of $1,000,000 against
any of the property of the Company or any of its Subsidiaries which is
not discharged, paid, stayed or appealed within 60 days; or
(h) Appropriation of Property. All, or substantially
all, of the property of the Company should be condemned, seized or
otherwise appropriated; or
(i) Stock Ownership. Kirk Kerkorian should cease to own
100% of all outstanding shares of stock issued by the Company; or any
shares of the Company are owned by any estate, trust, trustee,
devisee, beneficiary, personal representative, heir, spouse, surviving
joint tenant or other successor in interest or any assignee of any
kind; or
(j) Violation of Margin Regulations. Any violation of
the Margin Regulations shall occur as a result of the transactions
contemplated hereby (other than through the failure of any Bank to
take any action to be taken by it pursuant to the provisions of
Section 2.15 or Section 5.02); or
(k) Collateral. At any time when Collateral is required
as set forth in Section 2.07:
(i) any provision of any Collateral Document shall
for any reason cease to be valid and binding on or
enforceable against the Company or any Subsidiary party
thereto or the Company or any Subsidiary shall so state in
writing or bring an action to limit its obligations or
liabilities thereunder; or
(ii) any Collateral Document shall for any reason
(other than pursuant to the terms thereof) cease to create a
valid security interest in the Collateral purported to be
covered thereby or such security interest shall for any
reason cease to be a perfected and first priority security
interest.
9.02 Remedies. If any Event of Default occurs, the
Administrative Agent shall, at the request of, or may, with the
consent of, the Majority Banks, (a) declare the commitment of each
Bank to make Loans and any obligation of the Issuing Bank to Issue
Letters of Credit to be terminated, whereupon such commitments and
obligation shall be terminated; (b) declare an amount equal to the
maximum aggregate amount that is or at any time thereafter may become
available for drawing under any outstanding Letters of Credit (whether
or not any beneficiary shall have presented, or shall be entitled at
such time to present, the drafts or other documents required to draw
under such Letters of Credit) to be immediately due and payable, and
declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or
payable hereunder or under any other Loan Document to be immediately
due and payable, without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived by the Company;
and (c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or
applicable law; provided, however, that upon the occurrence of any
event specified in Section 9.01(d) or (e), the obligation of each Bank
to make Loans and any obligation of the Issuing Bank to Issue Letters
of Credit shall automatically terminate and the unpaid principal
amount of all outstanding Loans and all interest and other amounts as
aforesaid shall automatically become due and payable without further
act of the Administrative Agent, the Issuing Bank or any Bank.
9.03 Rights Not Exclusive. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not
exclusive of any other rights, powers, privileges or remedies provided
by law or in equity, or under any other instrument, document or
agreement now existing or hereafter arising.
SECTION 10
THE ADMINISTRATIVE AGENT
------------------------
10.01 Appointment and Authorization; "Administrative Agent".
(a) Each Bank hereby irrevocably (subject to Section 10.10) appoints,
designates and authorizes the Administrative Agent to take such action
on its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as
are expressly delegated to it by the terms of this Agreement or any
other Loan Document, together with such powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document,
the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall
the Administrative Agent have or be deemed to have any fiduciary
relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist
against the Administrative Agent. Without limiting the generality of
the foregoing sentence, the use of the term "agent" in this Agreement
with reference to the Administrative Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under
agency doctrine of 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. The Co-Agents shall have no rights, duties or
obligations under this Agreement in their capacities as Co-Agents.
(b) The Issuing Bank shall act on behalf of the Banks
with respect to any Letters of Credit Issued by it and the documents
associated therewith until such time and except for so long as the
Agent may agree at the request of the Majority Lenders to act for such
Issuing Bank with respect thereto; provided, however, that the Issuing
Bank shall have all of the benefits and immunities (i) provided to the
Agent in this Section 10 with respect to any acts taken or omissions
suffered by the Issuing Bank in connection with Letters of Credit
Issued by it or proposed to be Issued by it and the application and
agreements for letters of credit pertaining to the Letters of Credit
as fully as if the term "Agent", as used in this Section 10, included
the Issuing Bank with respect to such acts or omissions, and (ii) as
additionally provided in this Agreement with respect to the Issuing
Bank.
10.02 Delegation of Duties. The Administrative Agent may
execute any of its duties under this Agreement or any other Loan
Document by or through agents, employees or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters
pertaining to such duties. The Administrative Agent shall not be
responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
10.03 Liability of Administrative Agent. None of the
Administrative Agent-Related Persons shall (i) be liable for any
action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence
or willful misconduct), or (ii) be responsible in any manner to any of
the Banks for any recital, statement, representation or warranty made
by the Company or any Subsidiary or Affiliate of the Company, or any
officer thereof, contained in this Agreement or in any other Loan
Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by the Administrative
Agent under or in connection with, this Agreement or any other Loan
Document, or the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document, or for
any failure of the Company or any other party to any Loan Document to
perform its obligations hereunder or thereunder. No Administrative
Agent-Related Person shall be under any obligation to any Bank to
ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the properties, books or records of
the Company or any of the Company's Subsidiaries or Affiliates.
10.04 Reliance by Administrative Agent. The Administrative
Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, resolution, notice, consent, certificate,
affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the
proper Person or Persons, and upon advice and statements of legal
counsel (including counsel to the Company), independent accountants
and other experts selected by the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing
to take any action under this Agreement or any other Loan Document
unless it shall first receive such advice or concurrence of the
Majority Banks as it deems appropriate and, if it so requests, it
shall first be indemnified to its satisfaction by the Banks against
any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or consent of the Majority Banks
and such request and any action taken or failure to act pursuant
thereto shall be binding upon all of the Banks.
10.05 Notice of Default. The Administrative Agent shall not
be deemed to have knowledge or notice of the occurrence of any Default
or Event of Default, except with respect to defaults in the payment of
principal, interest and fees required to be paid to the Administrative
Agent for the account of the Banks, unless the Administrative Agent
shall have received written notice from a Bank or the Company
referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". The
Administrative Agent will notify the Banks of its receipt of any such
notice. The Administrative Agent shall take such action with respect
to such Default or Event of Default as may be requested by the
Majority Banks in accordance with Section 8; provided, however, that
unless and until the Administrative Agent has received any such
request, the Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to
such Default or Event of Default as it shall deem advisable or in the
best interest of the Banks.
10.06 Credit Decision; Compliance with Margin Regulations.
Each Bank acknowledges that none of the Administrative Agent-Related
Persons has made any representation or warranty to it, and that no act
by the Administrative Agent hereinafter taken, including any review of
the affairs of the Company and its Subsidiaries, shall be deemed to
constitute any representation or warranty by any Administrative
Agent-Related Person to any Bank to any matter, including compliance
by any Bank or this credit facility with the Margin Regulations. Each
Bank represents to the Administrative Agent that it has, independently
and without reliance upon any Administrative Agent-Related Person and
based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Company and its Subsidiaries, and all
applicable bank regulatory laws (including without limitation, the
Margin Regulations) relating to the transactions contemplated hereby,
and made its own decision to enter into this Agreement and to extend
credit to the Company hereunder. Each Bank also represents that it
will, independently and without reliance upon any Administrative
Agent-Related Person and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other
condition and creditworthiness of the Company and to maintain
compliance with the Margin Regulations. Except for notices, reports
and other documents expressly herein required to be furnished to the
Banks by the Administrative Agent, the Administrative Agent shall not
have any duty or responsibility to provide any Bank with any credit or
other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of the
Company or the Margin Regulations which may come into the possession
of any of the Administrative Agent-Related Persons.
10.07 Indemnification of Administrative Agent. Whether or
not the transactions contemplated hereby are consummated, the Banks
shall indemnify upon demand the Administrative Agent-Related Persons
(to the extent not reimbursed by or on behalf of the Company and
without limiting the obligation of the Company to do so), pro rata,
from and against any and all Indemnified Liabilities; provided,
however, that no Bank shall be liable for the payment to the
Administrative Agent-Related Persons of any portion of such
Indemnified Liabilities resulting solely from such Person's gross
negligence or willful misconduct. Without limitation of the foregoing,
each Bank shall reimburse the Administrative Agent upon demand for its
ratable share of any costs or out-of-pocket expenses (including
Attorney Costs) incurred by the Administrative Agent in connection
with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations,
legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein, to
the extent that the Administrative Agent is not reimbursed for such
expenses by or on behalf of the Company. The undertaking in this
Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of the Administrative Agent.
10.08 Administrative Agent in Individual Capacity. BofA and
its Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and
generally engage in any kind of banking, trust, financial advisory,
underwriting or other business with the Company and its Subsidiaries
and Affiliates as though BofA were not the Administrative Agent or the
Issuing Bank hereunder and without notice to or consent of the Banks.
The Banks acknowledge that, pursuant to such activities, BofA or its
Affiliates may receive information regarding the Company or its
Affiliates (including information that may be subject to
confidentiality obligations in favor of the Company or such
Subsidiary) and acknowledge that the Administrative Agent shall be
under no obligation to provide such information to them. With respect
to its Loans, BofA shall have the same rights and powers under this
Agreement as any other Bank and may exercise the same as though it
were not the Administrative Agent or the Issuing Bank.
10.09 Collateral Matters
(a) The Administrative Agent is authorized on behalf of
itself and all Banks, without the necessity of any notice to or
further consent from the Banks, from time to time to take any action
with respect to any Collateral or the Collateral Documents which may
be necessary to perfect and maintain perfected the security interest
in and Liens upon the Collateral granted pursuant to the Collateral
Documents.
(b) The Banks irrevocably authorize the Administrative
Agent, at its option and in its discretion, to release any Lien
granted to or held by the Administrative Agent upon any Collateral (i)
upon termination of the Commitments and payment in full of all Loans
and all other Obligations known to the Administrative Agent and
payable under this Agreement or any other Loan Document; (ii)
constituting property sold or to be sold or disposed of as part of or
in connection with any disposition permitted hereunder; (iii)
constituting property in which the Company or any Subsidiary owned no
interest at the time the Lien was granted or at any time thereafter;
(iv) consisting of an instrument evidencing Indebtedness or other debt
instrument, if the indebtedness evidenced thereby has been paid in
full; (v) as provided in Section 7.12 or any Collateral Document; or
(vi) if approved, authorized or ratified in writing by the Majority
Banks or all the Banks, as the case may be, as provided in Section
11.01. Upon request by the Administrative Agent at any time, the Banks
will confirm in writing the Administrative Agent's authority to
release particular types or items of Collateral pursuant to this
Section 10.09(b).
10.10 Successor Administrative Agent. The Administrative
Agent may, and at the request of the Majority Banks shall, resign as
Administrative Agent upon 30 days' notice to the Banks. If the
Administrative Agent resigns under this Agreement, the Majority Banks
shall appoint from among the Banks a successor agent for the Banks
which successor agent shall be approved by the Company. If no
successor agent is appointed prior to the effective date of the
resignation of the Administrative Agent, the Administrative Agent may
appoint, after consulting with the Banks and the Company, a successor
agent from among the Banks. Upon the acceptance of its appointment as
successor agent hereunder, such successor agent shall succeed to all
the rights, powers and duties of the retiring Administrative Agent and
the term "Administrative Agent" shall mean such successor agent and
the retiring Administrative Agent's appointment, powers and duties as
Administrative Agent shall be terminated. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent,
the provisions of this Section 10 and Sections 11.04 and 11.05 shall
inure to its benefit as to any actions taken or omitted to be taken by
it while it was Administrative Agent under this Agreement. If no
successor agent has accepted appointment as Administrative Agent by
the date which is 30 days following a retiring Administrative Agent's
notice of resignation, the retiring Administrative Agent's resignation
shall nevertheless thereupon become effective and the Banks shall
perform all of the duties of the Administrative Agent hereunder until
such time, if any, as the Majority Banks appoint a successor agent as
provided for above. Notwithstanding the foregoing, however, BofA may
not be removed as the Administrative Agent at the request of the
Majority Banks unless BofA shall also simultaneously be replaced as
"Issuing Bank" hereunder pursuant to documentation in form and
substance reasonably satisfactory to BofA.
10.11 Withholding Tax. (a) If any Bank is a "foreign
corporation, partnership or trust" within the meaning of the Code and
such Bank claims exemption from U.S. withholding tax under Sections
1441 or 1442 of the Code, such Bank agrees with and in favor of the
Administrative Agent, to deliver to the Administrative Agent:
(i) if such Bank claims an exemption from
withholding tax under a United States tax treaty, two
properly completed and executed copies of IRS Form 1001
before the payment of any interest in the first calendar
year and before the payment of any interest in each third
succeeding calendar year during which interest may be paid
under this Agreement;
(ii) if such Bank claims that interest paid under
this Agreement is exempt from United States withholding tax
because it is effectively connected with a United States
trade or business of such Bank, two properly completed and
executed copies of IRS Form 4224 before the payment of any
interest is due in the first taxable year of such Bank and
in each succeeding taxable year of such Bank during which
interest may be paid under this Agreement; and
(iii) such other form or forms as may be required
under the Code or other laws of the United States as a
condition to exemption from, or reduction of, United States
withholding tax.
Such Bank agrees to promptly notify the Administrative Agent of any
change in circumstances which would modify or render invalid any
claimed exemption or reduction. Each Bank represents and warrants to
the Company that, as of the date it became a party to this Agreement,
it was not subject to any U.S. withholding tax.
(b) If Any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form
1001 and such Bank sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations of the Company to
such Bank, such Bank agrees to notify the Administrative Agent of the
percentage amount in which it is no longer the beneficial owner of
Obligations of the Company to such Bank. To the extent of such
percentage amount, the Administrative Agent will treat such Bank's IRS
Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Administrative Agent
sells, assigns, grants a participation in, or otherwise transfers all
or part of the Obligations of the Company to such Bank, such Bank
agrees to undertake sole responsibility for complying with the
withholding tax requirements imposed by Sections 1441 and 1442 of the
Code.
(d) If any Bank is entitled to a reduction in the
applicable withholding tax, the Administrative Agent may withhold from
any interest payment to such Bank an amount equivalent to the
applicable withholding tax after taking into account such reduction.
However, if the forms or other documentation required by Section (a)
of this Section are not delivered to the Administrative Agent, then
the Administrative Agent may withhold from any interest payment to
such Bank not providing such forms or other documentation an amount
equivalent to the applicable withholding tax imposed by Sections 1441
and 1442 of the Code, without reduction.
(e) If the IRS or any other Governmental Authority of
the United States or other jurisdiction asserts a claim that the
Administrative Agent did not properly withhold tax from amounts paid
to or for the account of any Bank (because the appropriate form was
not delivered or was not properly executed, or because such Bank
failed to notify the Administrative Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax
ineffective, or for any other reason) such Bank shall indemnity the
Administrative Agent fully for all amounts paid, directly or
indirectly, by the Administrative Agent as tax or otherwise, including
penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to the Administrative Agent under
this Section, together with all costs and expenses (including Attorney
Costs). The obligation of the Banks under this Section shall survive
the payment of all Obligations and the resignation or replacement of
the Administrative Agent.
SECTION 11
MISCELLANEOUS
-------------
11.01 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent
with respect to any departure by the Company therefrom, shall be
effective unless the same shall be in writing and signed by the
Majority Banks (or by the Administrative Agent at the written request
of the Majority Banks) and the Company and acknowledged by the
Administrative Agent, and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose
for which given; provided, however, that no such waiver, amendment, or
consent shall, unless in writing and signed by all the Banks and the
Company and acknowledged by the Administrative Agent, do any of the
following:
(a) increase or extend the Commitment of any Bank (or
reinstate any Commitment terminated pursuant to Section 9.02);
(b) postpone or delay any date fixed by this Agreement
or any other Loan Document for any payment of principal, interest,
fees or other amounts due to the Banks, including mandatory
prepayments (or any of them) hereunder or under any other Loan
Document;
(c) reduce the principal of, or the rate of interest
specified herein on any Loan, or (subject to clause (iii) below) any
fees or other amounts payable hereunder or under any other Loan
Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for
the Banks or any of them to take any action hereunder;
(e) release any substantial part of the Collateral
except as provided in Section 7.12 or any Collateral Document; or
(f) amend this Section, or Section 2.07, 2.14, 7.12,
8.10, the definition of "Majority Banks," or any provision herein
providing for consent or other action by all Banks;
provided further, that (i) no amendment, waiver or consent shall,
unless in writing and signed by the Issuing Bank in addition to the
Majority Banks or all the Banks, as the case may be, affect the rights
or duties of the Issuing Bank under this Agreement or any L/C-Related
Document relating to any Letter of Credit Issued or to be Issued by
it, and (ii) no amendment, waiver or consent shall, unless in writing
and signed by the Administrative Agent in addition to the Majority
Banks or all the Banks, as the case may be, affect the rights or
duties of the Administrative Agent under this Agreement or any other
Loan Document.
11.02 Notices. (a) All notices, requests, consents,
approvals, waivers and other communications shall be in writing
(including, unless the context expressly otherwise provides, by
facsimile transmission, provided that any matter transmitted by the
Company by facsimile (i) shall be immediately confirmed by a telephone
call to the recipient at the number specified on Schedule 11.02, and
(ii) shall be followed promptly by delivery of a hard copy original
thereof) and mailed, faxed or delivered, to the address or facsimile
number specified for notices on Schedule 11.02; or, as directed to the
Company or the Administrative Agent, to such other address as shall be
designated by such party in a written notice to the other parties, and
as directed to any other party, at such other address as shall be
designated by such party in a written notice to the Company and the
Administrative Agent.
(b) All such notices, requests and communications
shall, when transmitted by overnight delivery, or faxed, be effective
when delivered for overnight (next-day) delivery, or transmitted in
legible form by facsimile machine, respectively, or if mailed, upon
the third Business Day after the date deposited into the U.S. mail, or
if delivered, upon delivery; except that notices pursuant to Section
2, 3 or 10 to the Administrative Agent shall not be effective until
actually received by the Administrative Agent, and notices pursuant to
Section 3 to the Issuing Bank shall not be effective until actually
received by the Issuing Bank at the address specified for the "Issuing
Bank" on the applicable signature page hereof.
(c) Any agreement of the Administrative Agent and the
Banks herein to receive certain notices by telephone or facsimile is
solely for the convenience and at the request of the Company. The
Administrative Agent and the Banks shall be entitled to rely on the
authority of any Person purporting to be a Person authorized by the
Company to give such notice and the Administrative Agent and the Banks
shall not have any liability to the Company or other Person on account
of any action taken or not taken by the Administrative Agent or the
Banks in reliance upon such telephonic or facsimile notice. The
obligation of the Company to repay the Loans and L/C Obligations shall
not be affected in any way or to any extent by any failure by the
Administrative Agent and the Banks to receive written confirmation of
any telephonic or facsimile notice or the receipt by the
Administrative Agent and the Banks of a confirmation which is at
variance with the terms understood by the Administrative Agent and the
Banks to be contained in the telephonic or facsimile notice.
11.03 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Administrative Agent or
any Bank, any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise
of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right,
remedy, power or privilege.
11.04 Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated hereby
are consummated, pay or reimburse BofA (including in its capacity as
Administrative Agent and Issuing Bank) within five Business Days after
demand for all costs and expenses incurred by BofA (including in its
capacity as Administrative Agent and Issuing Bank) in connection with
the development, preparation, delivery, administration and execution
of, and any amendment, supplement, waiver or modification to (in each
case, whether or not consummated), this Agreement, any Loan Document
and any other documents prepared in connection herewith or therewith,
and the consummation of the transactions contemplated hereby and
thereby, including reasonable Attorney Costs except the allocated cost
of internal legal services and disbursements of internal counsel
incurred by BofA (including in its capacity as Administrative Agent
and Issuing Bank) with respect thereto; and
(b) pay or reimburse the Administrative Agent, the
Arranger and each Bank within five Business Days after demand for all
costs and expenses (including reasonable Attorney Costs) incurred by
them in connection with the enforcement, attempted enforcement, or
preservation of any rights or remedies under this Agreement or any
other Loan Document during the existence of an Event of Default or
after acceleration of the Loans (including in connection with any
"workout" or restructuring regarding the Loans, and including in any
Insolvency Proceeding or appellate proceeding).
11.05 Company Indemnification. Whether or not the
transactions contemplated hereby are consummated, the Company shall
indemnify, defend and hold the Administrative Agent-Related Persons,
and each Bank and each of its respective officers, directors,
employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses and disbursements
(including reasonable Attorney Costs except the allocated cost of
internal legal services and disbursements of internal counsel if no
Default or Event of Default exists) of any kind or nature whatsoever
which may at any time (including at any time following repayment of
the Loans, the termination of the Letters of Credit and the
termination, resignation or replacement of the Administrative Agent or
replacement of any Bank) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this
Agreement or any document contemplated by or referred to herein, or
the transactions contemplated hereby, or any action taken or omitted
by any such Person under or in connection with any of the foregoing,
including with respect to any investigation, litigation or proceeding
(including any Insolvency Proceeding or appellate proceeding) related
to or arising out of this Agreement or the Loans or Letters of Credit
or the use of the proceeds thereof, whether or not any Indemnified
Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); provided, that the Company shall have no
obligation hereunder to any Indemnified Person with respect to
Indemnified Liabilities resulting solely from the negligence or
willful misconduct of such Indemnified Person. The agreements in this
Section shall survive payment of all other Obligations.
11.06 Payments Set Aside. To the extent that the Company
makes a payment to the Administrative Agent or the Banks, or the
Administrative Agent or the Banks exercise their right of set-off, and
such payment or the proceeds of such set-off or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered
into by the Administrative Agent or such Bank in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with
any Insolvency Proceeding or otherwise, then (a) to the extent of such
recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as
if such payment had not been made or such set-off had not occurred
(provided that no interest shall accrue during the period such payment
was held by the Administrative Agent or the Banks), and (b) each Bank
severally agrees to pay to the Administrative Agent upon demand its
pro rata share of any amount so recovered from or repaid by the
Administrative Agent.
11.07 Successors and Assigns. 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 the Company may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of
the Administrative Agent and each Bank.
11.08 Assignments, Participations, etc. (a) Any Bank may,
with the consent of the Company at all times other than during the
existence of an Event of Default and the Administrative Agent, which
consents of the Company and the Administrative Agent shall not be
unreasonably withheld, at any time assign and delegate to one or more
Eligible Assignees (provided that no consent of the Company or the
Administrative Agent shall be required in connection with any
assignment and delegation by a Bank to an Eligible Assignee that is an
Affiliate of such Bank or another Bank) (each an "Assignee") all, or
any ratable part of all, of the Loans, the Commitments, the L/C
Obligations and the other rights and obligations of such Bank
hereunder, in a minimum amount of $25,000,000 for assignments to other
than Affiliates; provided, however, that the Company and the
Administrative Agent may continue to deal solely and directly with
such Bank in connection with the interest so assigned to an Assignee
until (i) written notice of such assignment, together with payment
instructions, addresses and related information with respect to the
Assignee, shall have been given to the Company and the Administrative
Agent by such Bank and the Assignee; (ii) such Bank and its Assignee
shall have delivered to the Company and the Administrative Agent an
Assignment and Acceptance in the form of Exhibit F ("Assignment and
Acceptance") together with any Note or Notes subject to such
assignment and (iii) the assignor Bank or Assignee has paid to the
Administrative Agent a processing fee in the amount of $2,500.
(b) From and after the date that the Administrative
Agent notifies the assignor Bank that it has received (and provided
its consent with respect to) an executed Assignment and Acceptance and
payment of the above-referenced processing fee, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a
Bank under the Loan Documents, and (ii) the assignor Bank shall, to
the extent that rights and obligations hereunder and under the other
Loan Documents have been assigned by it pursuant to such Assignment
and Acceptance, relinquish its rights and be released from its
obligations under the Loan Documents.
(c) Within five Business Days after its receipt of
notice by the Administrative Agent that it has received an executed
Assignment and Acceptance and payment of the processing fee, the
Company shall execute and deliver to the Administrative Agent, new
Notes evidencing such Assignee's assigned Loans and Commitment and, if
the assignor Bank has retained a portion of its Loans and its
Commitment, replacement Notes in the principal amount of the Loans
retained by the assignor Bank (such Notes to be in exchange for, but
not in payment of, the Notes held by such Bank). Immediately upon each
Assignee's making its processing fee payment under the Assignment and
Acceptance, this Agreement shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect the addition of
the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more
commercial banks or other Persons not Affiliates of the Company (a
"Participant") participating interests in any Loans, the Commitment
and L/C Obligations of that Bank and the other interests of that Bank
(the "originating Bank") hereunder and under the other Loan Documents;
provided, however, that (i) the originating Bank's obligations under
this Agreement shall remain unchanged, (ii) the originating Bank shall
remain solely responsible for the performance of such obligations,
(iii) the Company, the Issuing Bank and the Administrative Agent shall
continue to deal solely and directly with the originating Bank in
connection with the originating Bank's rights and obligations under
this Agreement and the other Loan Documents, and (iv) no Bank shall
transfer or grant any participating interest under which the
Participant has rights to approve any amendment to, or any consent or
waiver with respect to, this Agreement or any other Loan Document,
except to the extent such amendment, consent or waiver would require
unanimous consent of the Banks as described in the first proviso to
Section 11.01. In the case of any such participation, the Participant
shall be entitled to the benefit of Sections 4.01, 4.03 and 11.05 as
though it were also a Bank hereunder, and if amounts outstanding under
this Agreement are due and unpaid, or shall have been declared or
shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of set-off
in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating
interest were owing directly to it as a Bank under this Agreement.
(e) Notwithstanding any other provision in this
Agreement, any Bank may at any time create a security interest in, or
pledge, all or any portion of its rights under and interest in this
Agreement and the Note held by it in favor of any Federal Reserve Bank
in accordance with Regulation A of the FRB or U.S. Treasury Regulation
31 CFR ss.203.14, and such Federal Reserve Bank may enforce such
pledge or security interest in any manner permitted under applicable
law.
11.09 Confidentiality. Each Bank agrees to take and to cause
its Affiliates to take normal and reasonable precautions and exercise
due care to maintain the confidentiality of all information identified
as "confidential" or "secret" by the Company and provided to it by the
Company or any Subsidiary, or by the Administrative Agent on the
Company's or such Subsidiary's behalf, under this Agreement or any
other Loan Document, and neither it nor any of its Affiliates shall
use any such information other than in connection with or in
enforcement of this Agreement and the other Loan Documents or in
connection with other business now or hereafter existing or
contemplated with the Company or any Subsidiary; except to the extent
such information (i) was or becomes generally available to the public
other than as a result of disclosure by the Bank, or (ii) was or
becomes available on a non-confidential basis from a source other than
the Company, provided that such source is not bound by a
confidentiality agreement with the Company known to the Bank;
provided, however, that any Bank may disclose such information (A) at
the request or pursuant to any requirement of any Governmental
Authority to which the Bank is subject or in connection with an
examination of such Bank by any such authority; (B) pursuant to
subpoena or other court process; (C) when required to do so in
accordance with the provisions of any applicable Requirement of Law;
(D) to the extent reasonably required in connection with any
litigation or proceeding to which the Administrative Agent, any Bank
or their respective Affiliates may be party; (E) to the extent
reasonably required in connection with the exercise of any remedy
hereunder or under any other Loan Document; (F) to such Bank's
independent auditors and other professional advisors; (G) to any
Participant or Assignee, actual or potential, provided that such
Person agrees in writing to keep such information confidential to the
same extent required of the Banks hereunder; (H) as to any Bank or its
Affiliate, as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which the Company
or any Subsidiary is party or is deemed party with such Bank or such
Affiliate; and (I) to its Affiliates.
11.10 Set-off. In addition to any rights and remedies of the
Banks provided by law, if an Event of Default exists or the Loans have
been accelerated, each Bank is authorized at any time and from time to
time, without prior notice to the Company, any such notice being
waived by the Company to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, such Bank to or for the credit or
the account of the Company against any and all Obligations owing to
such Bank, now or hereafter existing, irrespective of whether or not
the Administrative Agent or such Bank shall have made demand under
this Agreement or any Loan Document and although such Obligations may
be contingent or unmatured. Each Bank agrees promptly to notify the
Company and the Administrative Agent after any such set-off and
application made by such Bank; provided, however, that the failure to
give such notice shall not affect the validity of such set-off and
application.
11.11 Notification of Addresses, Lending Offices, Etc. Each
Bank shall notify the Administrative Agent in writing of . any changes
in the address to which notices to the Bank should be directed, of
addresses of any Lending Office, of payment instructions in respect of
all payments to be made to it hereunder and of such other
administrative information as the Administrative Agent shall
reasonably request.
11.12 Counterparts. This Agreement may be executed in any
number of separate counterparts, each of which, when so executed,
shall be deemed an original, and all of said counterparts taken
together shall be deemed to constitute but one and the same
instrument.
11.13 Severability. The illegality or unenforceability of
any provision of this Agreement or any instrument or agreement
required hereunder shall not in any way affect or impair the legality
or enforceability of the remaining provisions of this Agreement or any
instrument or agreement required hereunder.
11.14 No Third Parties Benefited. This Agreement is made and
entered into for the sole protection and legal benefit of the Company,
the Banks, the Administrative Agent and the Administrative
Agent-Related Persons, and their permitted successors and assigns, and
no other Person shall be a direct or indirect legal beneficiary of, or
have any direct or indirect cause of action or claim in connection
with, this Agreement or any of the other Loan Documents.
11.15 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND
THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF CALIFORNIA; PROVIDED THAT THE ADMINISTRATIVE AGENT
AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF
THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE CENTRAL
DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE COMPANY, THE ADMINISTRATIVE AGENT AND THE BANKS
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE
ADMINISTRATIVE AGENT AND THE BANKS IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS
OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE COMPANY, THE
ADMINISTRATIVE AGENT AND THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY
SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER
MEANS PERMITTED BY CALIFORNIA LAW.
11.16 Waiver of Jury Trial. THE COMPANY, THE BANKS AND THE
ADMINISTRATIVE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY
JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR
RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING
OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR ANY ADMINISTRATIVE AGENT-RELATED PERSON,
PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. THE COMPANY, THE BANKS AND THE ADMINISTRATIVE
AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED
BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY
IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM
OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE
VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
11.17 Entire Agreement. This Agreement, together with the
other Loan Documents, embodies the entire agreement and understanding
among the Company, the Banks and the Administrative Agent, and
supersedes all prior or contemporaneous agreements and understandings
of such Persons, verbal or written, relating to the subject matter
hereof and thereof.
11.18 Amendment and Restatement. This Agreement amends and
restates the Existing Agreement, and all outstandings thereunder shall
be deemed outstandings hereunder, and the security interest in the
collateral granted thereunder shall be deemed to continue
uninterrupted in the Collateral hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered] by their proper and duly
authorized officers as of the day and year first above written.
TRACINDA CORPORATION
By:
----------------------------------
Title:
-------------------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent
By:
----------------------------------
Jon Varnell
Managing Director
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Issuing
Bank and a Bank
By:
----------------------------------
Jon Varnell
Managing Director
COMMERZBANK AKTIENGESELLSCHAFT, LOS
ANGELES BRANCH, as Co-Agent and a
Bank
By:
----------------------------------
Title:
-------------------------------
By:
----------------------------------
Title:
-------------------------------
BANK OF SCOTLAND, as Co-Agent
and a Bank
By:
----------------------------------
Title:
-------------------------------
SCHEDULE 2.01
-------------
COMMITMENTS
AND PRO RATA SHARES
Until After Pro
1/31/98 1/31/98 Rata
Bank Commitment Commitment Share
Bank of America National
Trust and Savings
Association $1,375,000,000 1,203,125,000 85.9375%
Commerzbank, A.G. 125,000,000 109,375,000 7.8125%
Bank of Scotland 100,000,000 87,500,000 6.2500%
=========== ========== =======
TOTAL $1,600,000,000 $1,400,000,000 100.0000%
SCHEDULE 11.02
--------------
OFFSHORE AND DOMESTIC LENDING OFFICES,
--------------------------------------
ADDRESSES FOR NOTICES
---------------------
COMPANY
- -------
Tracinda Corporation
4835 Koval Lane
Las Vegas, NV 89109
Attention: Anthony Mandekic
Secretary-Treasurer
Telephone: (702) 737-8060
Facsimile: (702) 737-1177
BANK OF AMERICA NATIONAL TRUST
- ------------------------------
AND SAVINGS ASSOCIATION,
- ------------------------
as Administrative Agent
NOTICES OF BORROWING, NOTICES OF CONVERSION/
CONTINUATION, COPIES OF L/C APPLICATIONS:
Agency Administrative Services #5596
1455 Market Street, 13th Floor
San Francisco, CA 94103
Attention: Kathy Eddy
Vice President
Telephone: (415) 436-
Facsimile: (415) 436-2700
OTHER NOTICES:
Bank of America National Trust
and Savings Association
555 South Flower Street, 11th Floor
Los Angeles, California 90071
Attention: Janice Hammond
Vice President
Credit Products - Agency Services #5618
Telephone: (213) 228-9861
Facsimile: (213) 228-2299
BANK OF AMERICA NATIONAL TRUST
- ------------------------------
AND SAVINGS ASSOCIATION,
- ------------------------
as Issuing Bank
Bank of America National Trust
and Savings Association
333 South Beaudry Avenue, 19th Floor
Los Angeles, California 90017
Attention: Trade Operations Center-
Standby Letters of Credit #22621
Telephone: (213) 345-6630
Facsimile: (213) 345-6694
BANK OF AMERICA NATIONAL TRUST
- ------------------------------
AND SAVINGS ASSOCIATION,
- ------------------------
as a Bank
DOMESTIC AND OFFSHORE LENDING OFFICE:
1850 Gateway Boulevard, Fourth Floor
Concord, CA 94520
NOTICES (OTHER THAN BORROWING NOTICES AND NOTICES OF
CONVERSION/CONTINUATION):
Bank of America National Trust
and Savings Association
555 South Flower Street, 10th Floor
Los Angeles, California 90071
Attention: Jon Varnell
Managing Director
Credit Products #3283
Telephone: (213) 228-6181
Facsimile: (213) 228-2641
COMMERZBANK AKTIENGESELLSCHAFT
- ------------------------------
Commerzbank Aktiengesellschaft
Los Angeles Branch
660 S. Figueroa Street, Suite 1450
Los Angeles, CA 90017
Attention: Werner Schmidbauer
Vice President
Telephone: (213) 623-8223
Facsimile: (213) 623-0039
BANK OF SCOTLAND
- ----------------
Bank of Scotland
565 5th Avenue
New York, NY 10017
Attention: Cathy Oniffrey
Vice President
Telephone: (212) 557-9460
Facsimile: (212) 450-0870
WITH A COPY TO (OTHER THAN NOTICES RELATING TO BORROWINGS AND PAYMENTS):
Bank of Scotland
660 S. Figueroa St., Ste. 1760
Los Angeles, CA 90017
Attention: J. Craig Wilson
Vice President
Telephone: (213) 629-3057
Facsimile: (213) 489-3594
EXHIBIT A
---------
NOTICE OF BORROWING
-------------------
Date: __________________________, 199
To: Bank of America National Trust
and Savings Association, as Administrative Agent
Ladies and Gentlemen:
The undersigned Company refers to that certain First Amended and
Restated Credit Agreement dated as of October 30, 1996 among Tracinda
Corporation, a Nevada corporation (the "Company"), the banks from time to
time party thereto, and Bank of America National Trust and Savings
Association, as Administrative Agent (as extended, renewed, amended or
restated from time to time, the "Agreement;" the terms defined therein being
used herein as therein defined), and hereby gives you notice irrevocably,
pursuant to Section 2.03 of the Agreement, of the Borrowing specified below:
1. The Business Day of the proposed Borrowing is ____________
________________________, 19__.
2. The aggregate amount of the proposed Borrowing is
$_________________________________.
3. The Borrowing is to be comprised of $____________ of [Base
Rate] [Offshore Rate] Loans.
4. The duration of the Interest Period for the Offshore Rate
Loans included in the Borrowing shall be_____________months.
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the proposed Borrowing,
before and after giving effect and to the application of the proceeds
therefrom:
(a) the representations and warranties of the Company contained
in Section 6 of the Agreement are true and correct as though made on
and as of such date (except to the extent such representations and
warranties relate to an earlier date, in which case they are true and
correct as of such date); and
(b) no Default or Event of Default has occurred and is
continuing, or would result from such proposed Borrowing.
TRACINDA CORPORATION
By:
----------------------------------
Title:
-------------------------------
EXHIBIT B
---------
NOTICE OF CONVERSION/CONTINUATION
---------------------------------
Date:___________________, 199
To: Bank of America National Trust
and Savings Association, as Administrative Agent
Ladies and Gentlemen:
The undersigned Company refers to that certain First Amended and
Restated Credit Agreement dated as of October 30, 1996 among Tracinda
Corporation, a Nevada corporation (the "Company"), the banks from time to
time party thereto, and Bank of America National Trust and Savings
Association, as Administrative Agent (as extended, renewed, amended or
restated from time to time, the "Agreement;" the terms defined therein being
used herein as therein defined), and hereby gives you notice irrevocably,
pursuant to Section 2.04 of the Agreement, of the [conversion]
[continuation] of the Loans specified herein, that:
1. The Conversion/Continuation Date is________________, 19__.
2. The aggregate amount of the Loans to be [converted]
[continued] is $_____________________.
3. The Loans are to be [converted into] [continued as]
[Offshore Rate] [Base Rate] Loans.
4. [If applicable:] The duration of the Interest Period for
the Loans included in the [conversion] (continuation] shall be
months.
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the proposed Conversion/Continuation
Date Credit, before and after giving effect thereto and to the application
of the proceeds therefrom:
(a) the representations and warranties of the Company contained
in Section 6 of the Agreement are true and correct as though made on
and as of such date (except to the extent such representations and
warranties relate to an earlier date, in which case they are true and
correct as of such date); and
(b) no Default or Event of Default has occurred and is
continuing, or would result from such proposed [conversion]
[continuation].
TRACINDA CORPORATION
By:
----------------------------------
Title:
-------------------------------
EXHIBIT C
---------
BORROWING BASE AND COMPLIANCE CERTIFICATE
-----------------------------------------
Date:_____________________, 199
To: Bank of America National Trust
and Savings Association, as Administrative Agent
Ladies and Gentlemen:
The undersigned Company refers to that certain First Amended and
Restated Credit Agreement dated as of October 30, 1996 among Tracinda
Corporation, a Nevada corporation (the "Company"), the banks from time to
time party thereto, and Bank of America National Trust and Savings
Association, as Administrative Agent (as extended, renewed, amended or
restated from time to time, the "Agreement;" the terms defined therein being
used herein as therein defined).
The Company hereby submits this Borrowing Base and Compliance
Certificate, together with the computations in Attachment No. 1 annexed
hereto, which sets forth the Company's current calculations of the Borrowing
Base [WHEN DELIVERED IN CONNECTION WITH A NOTICE OF BORROWING:] [as of the
Business Day prior to the date of this Borrowing Base and Compliance
Certificate.
The undersigned officer, to the best of its knowledge, and Company
certify that (i) the representations and warranties of Company contained in
the Credit Agreement are true, correct and complete in all material respects
on and as of the date hereof to the same extent as though made on as of the
date hereof; (ii) no Default or Event of Default has occurred and is
continuing under said Credit Agreement; (iii) Company has performed in all
material respects all agreements and satisfied all conditions under the
Credit Agreement provided to be performed by it on or before the date
hereof; (iv) the computations set forth in Attachment No. 1 annexed hereto
have been computed in good faith by Company in accordance with the terms of
the Credit Agreement and, to the best of Company's knowledge, are true,
accurate and complete as of the date hereof; and (v) no item of Borrowing
Base Collateral included in the Borrowing Base presently fails to qualify
for inclusion in such Borrowing Base pursuant to the terms and conditions of
the Credit Agreement.
ATTACHMENT NO. 1 TO
-------------------
BORROWING BASE AND COMPLIANCE CERTIFICATE
-----------------------------------------
The computations set forth in this Attachment No. 1 to
Borrowing Base and Compliance Certificate relate to the Borrowing Base
of Tracinda Corporation ("Company") as of [insert date].
BORROWING BASE
Borrowing
Aggregate Source of Base
Mkt. Val. Valuation Value
--------- --------- -----
1. Chrysler Corp. Stock:
Aggregate Market Value $_________ _________
@50% $________
2. Non Control Stock:
_____________________ _____________ ______________
_____________________ _____________ ______________
_____________________ _____________ ______________
_____________________ _____________ ______________
Sum of Values $__________ @50% $________
3. MGM Grand Stock:
Aggregate Market Value $_______________ _________________
@50% $________
5. Control Stock:
_____________________ _____________ ______________
_____________________ _____________ ______________
_____________________ _____________ ______________
Sum of Values $__________ @50% $________
6. MGM:
Aggregate Market Value $_________ ___________________
@50% $________
7. Other Eligible Investments:
_____________________ _____________ ______________
_____________________ _____________ ______________
_____________________ _____________ ______________
_____________________ _____________ ______________
Sum of Values $__________ @50% $________
BORROWING BASE: (Sum of 1-7) $________
CONSOLIDATED TANGIBLE NET WORTH.
-------------------------------
A. Consolidated Tangible Net Worth:
1. Total Assets $________
2. Goodwill, patents, trademarks, trade names, organization expense,
treasury stock, unamortized debt discount and premium, deferred
charges and other like intangibles: $________
3. Liabilities (including accrued and
deferred income taxes and subordinated
liabilities $________
4. Line 1 less Line 2 less Line 3: $________
---- ----
5. Minimum requirement: $425,000,000
EXHIBIT D
---------
FIRST AMENDED AND RESTATED
--------------------------
PLEDGE AGREEMENT
----------------
This FIRST AMENDED AND RESTATED PLEDGE AGREEMENT (this
"Agreement") is entered into as of October 30, 1996 by and between TRACINDA
CORPORATION, a Nevada corporation ("Company") and BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, a national banking association, in its
capacity as the agent for the Secured Parties under the Credit Agreement
referred to below ("Administrative Agent"), and amends and restates (a) that
certain Security Agreement: Secured Party in Possession (Chrysler
Corporation) dated July 21, 1995 made by the Company in favor of Bank of
America National Trust and Savings Association, in its capacity as a bank
("BofA") and (b) that certain Stock Collateral Pledge Agreement dated as of
July 10, 1995 made by the Company in favor of BofA (collectively, the
"Existing Pledge Agreements").
RECITALS
--------
A. Pursuant to that certain First Amended and Restated Credit
Agreement dated as of even date herewith between the Company, the banks from
time to time party thereto ("Banks") and the Administrative Agent (as
amended, restated or supplemented or otherwise modified from time to time,
the "Credit Agreement"), the Banks have agreed to extend credit facilities
to the Company on the terms and conditions set forth therein. The Credit
Agreement amends and restates a Credit Agreement dated as of June 27, 1991,
as amended, between the Company and BofA. Unless otherwise defined herein,
capitalized terms used herein are used with the same defined meanings given
in the Credit Agreement.
B. The Credit Agreement provides, as a condition precedent to
the Banks' obligations to grant or continue extending credit facilities to
the Company, that the Company shall enter into this Agreement, and shall
pledge certain Pledged Collateral to the Administrative Agent for the
benefit of the Secured Parties, all under the terms and conditions set forth
in this Agreement.
NOW, THEREFORE, in consideration of the above Recitals, to induce
the Banks to enter into and extend credit to Company under the Credit
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Secured
Parties hereby agree as follows:
I. Definitions. Terms defined in the Credit Agreement and not
otherwise defined in this Agreement shall have the meanings given those
terms in the Credit Agreement as though set forth herein in full. The
following terms shall have the meanings respectively set forth after each:
"Certificates" means all certificates, instruments or other
documents now or hereafter representing or evidencing any Pledged
Securities.
"Chrysler DTC Account" means Bank of America National Trust
and Savings Association ("BofA") account at DTC (Participant no.
2400) for further benefit of account no. 640-01239 or any
successor or other BofA accounts at DTC containing shares of
Chrysler Corporation capital stock.
"DTC" means The Depository Trust Company.
"Designated Stock" means (i) any and all Designated Stock
owned by the Company listed on Exhibit A hereto; (ii) all
additional shares of any Issuers of Designated Stock from time to
time acquired by the Company in any manner; (iii) any and all
securities now or hereafter issued in substitution, exchange or
replacement therefor, or with respect thereto; and (iv) and any
and all equity interests and the Certificates or other written
evidences representing such equity interests and any interest of
the Company in the entries on the books of any financial
intermediary pertaining thereto now or hereafter acquired by the
Company in any Issuer of Designated Stock.
"Issuers" means the issuers of, or obligors on, any Pledged
Collateral (individually, an "Issuer").
"Pledged Collateral" means (i) any and all Pledged
Securities; (ii) all Certificates representing or evidencing
Pledged Securities; (iii) any and all securities now or hereafter
issued in substitution, exchange or replacement of any of the
foregoing, or with respect to any of the foregoing; (iv) any and
all rights, options to purchase, sell or convert any of the
foregoing; and any warrants, options, puts, calls, rights,
preferences, privileges or other rights to subscribe to or
acquire any of the foregoing; (v) any of the foregoing delivered
to or coming into the possession (actual or constructive),
custody or control of the Administrative Agent or any Affiliate
of the Administrative Agent in any manner or for any purpose
whatever during the existence of this Agreement, including
without limitation, held in the account or accounts listed on
Exhibit A attached hereto, or written evidences representing such
equity interests and any interest of the Company in the entries
on the books of any financial intermediary pertaining thereto,
and (vi) any and all proceeds and products of any of the
foregoing, and any and all collections, dividends (whether in
cash, stock or otherwise), distributions, redemption payments,
liquidation payments, interest or premiums with respect to any of
the foregoing.
"Pledged Securities" means (i) any and all Designated Stock;
(ii) any and all other property of the Company now or hereafter
pledged to the Administrative Agent or an Affiliate of the
Administrative Agent for and on behalf of Secured Parties; (iii)
all Eligible Investments; (iv) all forms of common, preferred or
other capital stock; (v) all forms of bonds, notes, debentures or
other evidence of indebtedness; and (vi) all forms of partnership
interests, investments, joint venture interests, trust units,
mutual fund shares or other evidence of shares or participations
in any investment; in each case whether or not in a brokerage
account, delivered to, and/or in the possession of, the
Administrative Agent or an Affiliate of the Administrative Agent,
or described on any attached exhibit hereto.
"Secured Parties" means the Administrative Agent, the
Administrative Agent-Related Persons, any Indemnified Person, the
Banks, and each of them (individually, a "Secured Party").
2. Creation of Security Interest.
2.1 Pledge of Pledged Collateral. The Company hereby pledges to
the Secured Parties and each of them and grants to Secured Parties and each
of them a security interest in and to all Pledged Collateral for the benefit
of the Secured Parties, together with all products, proceeds, dividends,
redemption payments, liquidation payments, cash, instruments and other
property, and any and all rights, titles, interests, privileges, benefits
and preferences appertaining or incidental to the Pledged Collateral. The
security interest and pledge created by this Section 2.1 shall continue in
effect so long as any Obligation is owed to any Secured Party.
2.2 Delivery of Certain Pledged Collateral. The Company shall
cause to be pledged and delivered to the Administrative Agent all
Certificates and all documentary evidence of any collateral therefor along
with certificates evidencing the Pledged Securities. The Company shall,
upon obtaining any additional shares of any Designated Stock or any other
securities constituting Pledged Securities, promptly deliver to the
Administrative Agent any and all Certificates representing or evidencing the
same. Additional Pledged Collateral may from time to time be delivered to
the Administrative Agent by agreement between Secured Parties and the
Company as Collateral hereunder, whether or not set forth on any exhibit
hereto. All Certificates at any time delivered to the Administrative Agent
shall be in suitable form for transfer by delivery, or shall be accompanied
by duly executed instruments of transfer or assignment in blank, all in form
and substance satisfactory to the Administrative Agent. The Administrative
Agent shall hold all Certificates pledged hereunder on behalf of Secured
Parties pursuant to this Agreement unless and until released in accordance
with Section 2.3.
2.3 Release of Pledged Securities. Pledged Securities that are
required to be released from the pledge and security interest created by
this Agreement pursuant to the Credit Agreement shall be so released by the
Administrative Agent promptly following the Administrative Agent's receipt
of written request therefor by the Company specifying the basis for which
release is requested and such further certificates or other documents as the
Administrative Agent reasonably shall request in its discretion to confirm
that such release is permitted by the Credit Agreement and to confirm
Secured Parties' replacement lien, if any, on appropriate collateral. Any
request for any permitted release shall be transmitted to the Administrative
Agent.
3. Security for Obligations. This Agreement and the pledge and
security interests granted herein secure the prompt payment, in full in
cash, and full performance of, all Obligations, whether for principal,
interest, fees, expenses or otherwise, including, without limitation, all
Obligations of the Company now or hereafter existing under this Agreement,
and all interest that accrues on all or any part of any of the Obligations
after the filing of any petition or pleading against the Company or any
other Person for a proceeding under any bankruptcy or debtor relief law.
4. Representations and Warranties.
4.1 Incorporation of Terms. This Agreement is one of the Loan
Documents referred to in the Credit Agreement. All provisions contained in
the Credit Agreement that are specifically stated to be applicable to the
Loan Documents generally are fully applicable to this Agreement and are
incorporated herein by this reference as though set forth in full.
4.2 Representations and Warranties of Company. The Company
represents, warrants and agrees that: (i) the Pledged Collateral is duly
and validly issued, fully paid and nonassessable and duly and validly
pledged with the Administrative Agent in accordance with law, and the
Pledgor agrees to defend the Administrative Agent's right, title and
interest in and to the Pledged Collateral against the claims and demands of
all persons whomsoever; (ii) it has good title to all of the Pledged
Collateral, free and clear of all claims, security interests, mortgages,
pledges, liens and other encumbrances of every nature whatsoever except to
or in favor of the Administrative Agent and that it has the right to pledge
the Pledged Collateral as herein provided; (iii) each Certificate is issued
in the name of Pledgor; (iv) each Certificate has attached thereto a stock
power duly signed in blank by an appropriate officer of Pledgor; (v) the
security interest in the Pledged Collateral created hereby constitutes a
first, prior, and indefeasible security interest with respect to such
collateral; (vii) the possession by the Administrative Agent of the
Certificates representing the Pledged Securities and custody of certain
Chrysler Corporation stock held in the DTC Account will perfect the Secured
Parties' interest therein; and (viii) it shall provide such additional
endorsements, forms and writings and execute all documents and take such
other action as the Administrative Agent deems necessary to create and
perfect a security interest in the Pledged Collateral as the Administrative
Agent may at any time reasonably request in connection with the
administration or enforcement of this Agreement or the administration of the
Pledged Collateral.
5. Further Assurances. The Company agrees that at any time,
and from time to time, at its own expense the Company will promptly execute,
deliver and file or record all further financing statements, instruments and
documents, and will take all further actions, including, without limitation,
requesting MGM or MGM Grand to so execute, deliver, file or take other
actions, that may be necessary or desirable, or that the Administrative
Agent reasonably may request, in order to perfect and protect any pledge or
security interest granted hereby or to enable the Administrative Agent to
exercise and enforce Secured Parties' rights and remedies hereunder with
respect to any Pledged Collateral and to preserve, protect and maintain the
Pledged Collateral and the value thereof, including, without limitation,
payment of all taxes, assessments and other charges imposed on or relating
to the Pledged Collateral. The Company hereby consents and agrees that the
Issuers of, or obligors on, the Pledged Collateral, or any registrar or
transfer agent or trustee for any of the Pledged Collateral, shall be
entitled to accept the provisions of this Agreement as conclusive evidence
of the right of the Administrative Agent to effect any transfer or exercise
any right hereunder, notwithstanding any other notice or direction to the
contrary heretofore or hereafter given by the Company or any other Person to
such Issuers or such obligors or to any such registrar or transfer agent or
trustee.
6. Voting Rights; Dividends; etc. So long as no Event of
Default under the Credit Agreement occurs and remains continuing:
6.1 Voting Rights. The Company shall be entitled to exercise
any and all voting and other consensual rights pertaining to the Pledged
Securities, or any part thereof, for any purpose not inconsistent with the
terms of this Agreement, the Credit Agreement, or the other Loan Documents;
provided, however, that the Company shall not exercise, or shall refrain
from exercising, any such right if it would result in a Default or an Event
of Default.
6.2 Dividend and Distribution Rights. The Company shall be
entitled to receive and to retain and use only those dividends or
distributions paid to the Company with respect to the Pledged Securities as
permitted under the terms of the Credit Agreement; provided, however, that
any and all such dividends or distributions received in the form of capital
stock shall be, and the Certificates representing such capital stock
forthwith shall be delivered to the Administrative Agent to hold as, Pledged
Collateral and shall, if received by the Company, be received in trust for
the benefit of the Secured Parties, be segregated from the other property of
the Company, and forthwith be delivered to the Administrative Agent as
Pledged Collateral in the same form as so received (with any necessary
endorsements).
7. Rights During Event of Default. When an Event of Default
has occurred and is continuing:
7.1 Voting, Dividend, and Distribution Rights. At the option of
the Secured Parties, all rights of the Company to exercise the voting and
other consensual rights which it would otherwise be entitled to exercise
pursuant to Section 6.1 above, and to receive the dividends and
distributions which it would otherwise be authorized to receive and retain
pursuant to Section 6.2 above, shall cease, and all such rights shall
thereupon become vested in the Administrative Agent who shall thereupon have
the sole right to exercise such voting and other consensual rights and to
receive and to hold as Pledged Collateral such dividends and distributions.
The Administrative Agent shall give notice thereof to the Company; provided,
however, that (i) neither the giving of such notice nor the receipt thereof
by the Company shall be a condition to exercise of any rights of Secured
Parties hereunder, and (ii) Secured Parties shall incur no liability for
failing to give such notice.
7.2 Dividends and Distributions Held in Trust. All dividends
and other distributions which are received by the Company contrary to the
provisions of the Credit Agreement or this Agreement shall be received in
trust for the benefit of the Secured Parties, shall be segregated from other
funds of the Company, and forthwith shall be paid over to the Administrative
Agent as Pledged Collateral in the same form as so received (with any
necessary endorsements).
7.3 Irrevocable Proxy. The Company hereby revokes all previous
proxies with regard to the Pledged Securities and appoints the
Administrative Agent as its proxyholder to attend and vote at any and all
meetings of the shareholders of the corporations which issued the Pledged
Securities, and any adjournments thereof, held on or after the date of the
giving of this proxy and prior to the termination of this proxy and to
execute any and all written consents of shareholders of such corporations
executed on or after the date of the giving of this proxy and prior to the
termination of this proxy, with the same effect as if the Company had
personally attended the meetings or had personally voted its shares or had
personally signed the written consents; provided, however, that the
proxyholder shall have rights hereunder only upon the occurrence and during
the continuance of an Event of Default under the Credit Agreement, and that
the Administrative Agent shall have instructed the proxyholder to exercise
voting rights with respect to the Pledged Securities or any of them. The
Company hereby authorizes the Administrative Agent to substitute another
person as the proxyholder and, upon the occurrence or during the continuance
of any Event of Default, hereby authorizes and directs the proxyholder to
file this proxy and the substitution instrument with the secretary of the
appropriate corporation. This proxy is coupled with an interest and is
irrevocable until such time as all Obligations have been paid and performed
in full.
8. Transfers and Other Liens. The Company agrees that, except
as specifically permitted under the Loan Documents, it will not (i) sell,
assign, exchange, transfer or otherwise dispose of, or contract to sell,
assign, exchange, transfer or otherwise dispose of, or grant any option with
respect to, any of the Pledged Collateral, (ii) create or permit to exist
any lien upon or with respect to any of the Pledged Collateral, except for
liens in favor of Secured Parties, or (iii) take any action with respect to
the Pledged Collateral which is inconsistent with the provisions or purposes
of this Agreement or any other Loan Document.
9. Secured Parties May Perform Obligations: If the Company
fails to perform any Obligation contained herein, the Administrative Agent
may, but without any obligation to do so and without notice to or demand
upon the Company, perform the same and take such other action as Secured
Parties may deem necessary or desirable to protect the Pledged Collateral or
Secured Parties' security interests therein, Secured Parties being hereby
authorized (without limiting the general nature of the authority hereinabove
conferred) to pay, purchase, contest and compromise any lien which in the
reasonable judgment of Secured Parties appears to be prior or superior to
Secured Parties' security interests, and in exercising any such powers and
authority to pay necessary expense, employ counsel and pay reasonable
attorneys' fees. The Company hereby jointly and severally agrees to repay
immediately upon demand all sums so expended by any Secured Party, together
with interest from the date of expenditure at the rates provided for in the
Credit Agreement. No Secured Party shall be under any duty or obligation to
(i) preserve, maintain or protect the Pledged Collateral or any of the
Company's rights or interest therein, (ii) exercise any voting rights with
respect to the Pledged Collateral, whether or not an Event of Default has
occurred or is continuing, or (iii) make or give any notices of default,
presentments, demands for performance, notices of nonperformance or
dishonor, protests, notices of protest or notice of any other nature
whatsoever in connection with the Pledged Collateral on behalf of the
Company or any other Person having any interest therein; and Secured Parties
do not assume and shall not be obligated to perform the obligations of the
Company, if any, with respect to the Pledged Collateral.
10. Reasonable Care. The Administrative Agent shall in all
events (and without restriction on the limitations on liability of the
Secured Parties contained herein) be deemed to have exercised reasonable
care in the custody and preservation of the Pledged Collateral in its
possession if the Pledged Collateral is accorded treatment substantially
similar to that which the Administrative Agent accords its own property, it
being understood that the Administrative Agent shall not have any
responsibility for (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Pledged Collateral, whether or not the Administrative Agent has or is deemed
to have knowledge of such matters, or (ii) taking any necessary steps to
preserve rights against any Person with respect to any Pledged Collateral.
11. Events of Default and Remedies.
11.1 Rights Upon Event of Default. Upon the occurrence and
during the continuance of an Event of Default under the Credit Agreement,
the Company shall be in default hereunder and Secured Parties shall have in
any jurisdiction where enforcement is sought, in addition to all other
rights and remedies that Secured Parties may have under this Agreement and
under applicable law or in equity, all rights and remedies of a secured
party under the Uniform Commercial Code as enacted in any such jurisdiction,
and in addition the following rights and remedies, all of which may be
exercised with or without further notice to Company:
(a) to notify any Issuer of or obligors on any Pledged
Collateral, that the same has been pledged to Secured Parties and
that all dividends and other payments thereon are to be made
directly and exclusively to the Administrative Agent; to renew,
extend, modify, amend, accelerate, accept partial payments on,
make allowances and adjustments and issue credits with respect
to, release, settle, compromise, compound, collect or otherwise
liquidate, on terms acceptable to the Secured Parties, in whole
or in part, the Pledged Collateral and any amounts owing thereon
or any guaranty or security therefor; to enter into any other
agreement relating to or affecting the Pledged Collateral; and to
give all consents, waivers and ratification with respect to the
Pledged Collateral and exercise all other rights (including
voting rights), powers and remedies and otherwise act with
respect thereto as if the Administrative Agent were the owner
thereof;
(b) to enforce payment and prosecute any action or
proceeding with respect to any and all of the Pledged Collateral
and take or bring, in Secured Parties' names or in the name of
the Company, all steps, actions, suits or proceedings deemed by
the Administrative Agent necessary or desirable to effect
collection of or to realize upon the Pledged Collateral;
(c) in accordance with applicable law, to take
possession of and operate or control the Pledged Collateral with
or without judicial process;
(d) to endorse, in the name of the Company, all
checks, notes, drafts, money orders, instruments and other
evidences of payment relating to the Pledged Collateral;
(e) to transfer any or all of the Pledged Collateral
into the name of the Administrative Agent or its nominee or
nominees; and
(f) in accordance with applicable law, to foreclose
the liens and security interests created under this Agreement or
under any other agreement relating to the Pledged Collateral by
any available judicial procedure or without judicial process, and
to sell, assign or otherwise dispose of the Pledged Collateral or
any part thereof, either at public or private sale or at any
broker's board or securities exchange, in lots or in bulk, for
cash, on credit or on future delivery, or otherwise, with or
without representations or warranties, and upon such terms as
shall be acceptable to the Administrative Agent;
all at the sole option of and in the sole discretion of the Secured Parties.
11.2 Appointment of a Receiver. Upon the occurrence and
during the continuance of an Event of Default, Secured Parties also shall
have the right, without notice or demand, either in person, by agent or by a
receiver to be appointed by a court (and the Company hereby expressly
consents upon the occurrence and during the continuance of an Event of
Default to the appointment of such a receiver), and without regard to the
adequacy of an security for the Obligations, to take possession of the
Pledged Collateral or any part thereof and to exercise the proxy granted to
Administrative Agent under Section 7.3. Taking possession of the Pledged
Collateral shall not cure or waive any Event of Default or notice thereof or
invalidate any act done pursuant to such notice. The rights, remedies and
powers of any receiver appointed by a court shall be as ordered by said
court.
11.3 Notice of Sale. The Administrative Agent shall give
Company at least five (5) days' written notice of sale of all or any part of
the Pledged Collateral. Any sale of the Pledged Collateral shall be held at
such time or times and at such place or places as Secured Parties may
determine in the exercise of their sole and absolute discretion. Secured
Parties may bid (which bid may be, in whole or in part, in the form of
cancellation of Obligations) for and purchase for the account of Secured
Parties or any nominee of Secured Parties the whole or any part of the
Pledged Collateral. Secured Parties shall not be obligated to make any sale
of the Pledged Collateral if they shall determine not to do so regardless of
the fact that notice of sale of the Pledged Collateral may have been given.
Secured Parties may, without notice or publication, adjourn the sale from
time to time by announcement at the time and place fixed for sale, and such
sale may, without further notice, be made at the time and place to which the
same was so adjourned.
11.4 Public Sales. (a) In the event the Administrative
Agent is permitted to sell any of the Pledged Collateral pursuant to Section
11.1, upon the written request of the Administrative Agent, the Company:
(i) unless in the opinion of counsel for the Secured
Parties such registration is not required, will use its best
efforts to cause to become effective under the Securities Act of
1933, as amended and as from time to time in effect and the rules
and regulations thereunder (the "Securities Act"), a registration
statement or statements relating to any or all of the Pledged
Collateral and will use its best efforts to keep effective each
such registration and cause to be filed such post-effective
amendment or amendments to each such registration statement
(including any amended or supplemented prospectuses required by
the Securities Act) as may be appropriate to permit the sale or
other disposition of any of the Pledged Collateral pursuant to
this Agreement at such time and on such terms as the Secured
Parties may determine;
(ii) will use best efforts to cause to be furnished to
the Administrative Agent such number of copies as the
Administrative Agent may reasonably request of each preliminary
prospectus and prospectus, will promptly notify the
Administrative Agent of the happening of any event as a result of
which any then effective prospectus includes an untrue statement
of a material fact or omits to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading in the light of then existing circumstances and will
use best efforts to cause the Administrative Agent to be
furnished with such number of copies as the Administrative Agent
may reasonably request of such supplement to or amendment of such
prospectus as is necessary to eliminate such untrue statement or
supply such omission;
(iii) will use best efforts to cause each Issuer to and
will itself to the extent permitted by law, indemnify, defend and
hold harmless the Secured Parties, and each of them, from and
against all losses, liabilities, expenses or claims (including
legal expenses and the reasonable costs of investigation) which
any Secured Party may incur, under the Securities Act or
otherwise, insofar as such losses, liabilities, expenses or
claims arise out of or are based upon any alleged untrue
statement of a material fact contained in such registration
statement (or any amendment thereto) or in any preliminary
prospectus or prospectus (or any amendment or supplement
thereto), or arise out of or are based upon any alleged omission
to state a material fact required to be stated therein or
necessary to make the statements in any thereof not misleading,
except to the extent that any such losses, liabilities, expenses
or claims arise solely out of or are based upon any such alleged
untrue statement made or such alleged omission to state a
material fact with respect to information furnished by a Secured
Party and included in any such document on the written authority
of the Administrative Agent;
(iv) will use its best efforts to have qualified, filed
or registered any of the Pledged Collateral under the "Blue Sky"
or other securities laws of such jurisdictions as may be
reasonably requested by the Administrative Agent and will use
best efforts to cause to be kept effective all such
qualifications, filings and registrations;
(v) will, if the offering pursuant to any registration
statement is, at the written request of the Administrative Agent,
to be made through underwriters, itself, if requested by such
underwriters, enter, and use best efforts to cause the Issuer to
enter, into an underwriting agreement in customary form with such
underwriters and to indemnify such underwriters, their officers
and directors and each person who controls such underwriters
within the meaning of the Securities Act to the same extent as
hereinbefore provided with respect to the indemnification of the
Secured Parties;
(vi) will provide (if available) at its expense,
provided such insurance is available at commercially reasonable
rates, a policy or policies of such insurer or insurers
satisfactory to the Secured Parties, in substance indemnifying
and holding harmless to the extent of 100% of the contemplated
aggregate public offering price of the Pledged Collateral, each
Secured Party, each underwriter who may be participating in such
sale, and each other person referred to as being insured under
such policy or policies, from and against any and all losses,
liabilities, claims, damages and expenses, joint or several, to
which any of the assured may become subject under the Securities
Act, or any other statute or common law, arising out of or based
on the ground that any preliminary prospectus, prospectus or
registration statement relating to such sale includes an untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading;
(vii) will use best efforts to take or cause to be
taken all requisite action in connection with any declaration of,
registration with, or approval of any other governmental official
or authority (in addition to that provided for above) before such
Pledged Collateral may be transferred or sold by the
Administrative Agent;
(viii) will use best efforts to cause the
Administrative Agent to be kept advised in writing as to the
progress of each registration, qualification or compliance
pursuant to clauses (i), (iv) or (vii) above and as to the
completion thereof;
(ix) will do any and all other acts and things which
may be reasonably necessary or advisable to enable the
Administrative Agent to consummate any proposed sale or other
disposition of any of the Pledged Collateral pursuant to this
Agreement; and
(x) will bear all costs and expenses of carrying out
its obligations hereunder. The Company agrees that promptly upon
the written request of the Administrative Agent it will use its
best efforts to cause to be withdrawn from registration or, if
the registration statement has been declared effective, to be
deregistered any of the Pledged Collateral the Administrative
Agent requests be withdrawn or deregistered.
(b) The Company agrees that the Secured Parties shall have the
right, at any time when in the Administrative Agent's sole and exclusive
judgment exercised in good faith, the Administrative Agent is, or might be
deemed to be, a controlling person of the Issuer (i) to participate in the
preparation of such registration statement and to require the insertion
therein of material which in its judgment, as aforesaid, should be included;
(ii) at the Company's expense, to retain counsel and/or independent public
accountants to assist them in such participation; and (iii) at the Company's
expense, to receive an opinion or opinions of counsel and a letter or
letters from independent public accountants, addressed to the Secured
Parties, to the same effect as any such opinion and letter delivered to the
Company, the Issuer or any underwriter in connection with such registration
and sale. If any such registration statement refers to the Secured Parties
by name or otherwise, then, the Secured Parties shall have the right to
require (A) the insertion therein of language, in form and substance
satisfactory to it, to the effect that its relationship to the Company or
the Issuer is not to be construed as a recommendation by any Secured Party
of the investment quality of the Issuer's securities covered thereby and
does not imply that they will assist in meeting any future financial
requirements of the Company or the Issuer, or (B) in the event that such
reference to it by name or otherwise is not required by the Securities Act
or any similar federal statute then in force, the deletion of the reference
to it.
(c) The Company agrees that it will give the Administrative
Agent prompt written notification of (i) the filing of any registration
statement pursuant to Section 12 of the 1934 Act (a "1934 Act Registration
Statement") relating to any class of equity securities of any Issuer, and
(ii) the effectiveness of such Registration Statement and the number of
shares of such class of equity securities outstanding at the time such
Registration Statement becomes effective, in order that the Administrative
Agent may be in a position to file any required statements under the 1934
Act or the Securities Act. The Company further agrees that it will (A) at
its expense, upon Administrative Agent's written request, use best efforts
to cause the Issuer to file a 1934 Act Registration Statement relating to
any class of equity securities of the Issuer then held by Administrative
Agent; (B) use best efforts to cause the Issuer to file all reports required
by Section 13 of the 1934 Act within the time periods specified therein or
any extension thereof granted by the Securities and Exchange Commission
pursuant to Rule 12b-25 or any other comparable rule under the 1934 Act; and
(C) use best efforts to cause the Issuer to furnish to Administrative Agent
any information which the Secured Parties may reasonably require for the
purpose of completing Form 144, or any other comparable form, in connection
with any proposed sale by Administrative Agent pursuant to Rule 144 under
the Securities Act, as then in effect, or any other comparable rule, of any
of the Pledged Collateral.
(d) In the event that any action required to be taken by Company
under Subsection 11.4(a)(i), (ii), (iv), (vi), (vii) or (viii), or under
Subsection 11.4(b)(i), (i) or (iii) or under Subsection 11.4(c) involves the
incurring of costs and expenses by any Issuer, it is understood and agreed
that Company shall not be required to take such action unless it shall have
available to it funds in amounts sufficient to reimburse the Issuer for such
costs and expenses to be incurred by the Issuer. Funds shall be deemed
available to the Company for the foregoing purposes if the Secured Parties
are willing to advance funds to the Company for such purposes on
substantially the same terms and conditions as the loans evidenced by the
Note; provided, however, the provisions of this paragraph shall not in any
way constitute a commitment on the part of the Secured Parties to provide
such funds.
11.5 Private Sales. (a) Whether or not any of the Pledged
Collateral has been effectively registered under the Securities Act of 1933
or other applicable laws, the Secured Parties may, in their sole and
absolute discretion, sell all or any part of the Pledged Collateral at
private sale in such manner and under such circumstances as Secured Parties
may deem necessary or advisable.
(b) Without limiting the generality of the foregoing, in
any such event the Secured Parties, in their sole and absolute discretion:
(i) may proceed to make such private sale
notwithstanding that a registration statement for the purposes of
registering such Pledged Collateral or such part thereof shall
have been filed under such Securities Act;
(ii) may approach and negotiate with a restricted
number of potential purchasers to effect such sale; and
(iii) may restrict such sale to purchasers as to their
number, nature of business and investment intention including,
without limitation, to purchasers each of whom will represent and
agree to the satisfaction of the Secured Parties that such
purchaser is purchasing for its own account, for investment, and
not with a view to the distribution or sale of such Pledged
Collateral or any part thereof, it being understood that the
Administrative Agent may require the Company, and the Company
hereby agrees upon the written request of the Administrative
Agent, to cause: (A) a legend or legends to be placed on the
certificates to be delivered to such purchasers to the effect
that the Pledged Collateral represented thereby have not been
registered under the Securities Act and setting forth or
referring to restrictions on the transferability of such
securities; (B) the issuance of stop transfer instructions to the
Issuer's transfer agent, if any, with respect to the Pledged
Collateral, or, if the Issuer transfers its own securities, a
notation in the appropriate records of the Issuer; (C) to
be obtained from the purchasers a signed written agreement that
the Pledged Collateral will not be sold without registration or
other compliance with the requirements of the Securities Act; and
(D) to be delivered to the purchasers a signed written agreement
of the Company and the Issuer that such purchasers shall be
entitled to the rights of the Secured Parties pursuant to this
Section 11.
(c) In the event of any such sale, the Company does hereby
consent and agree that no Secured Party shall incur any responsibility or
liability for selling all or any part of the Pledged Collateral at a price
which the Secured Parties, in their sole and absolute discretion, may deem
reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might be realized if the sale were public and
deferred until after registration as aforesaid. In such event, (A) the sale
shall be deemed to be commercially reasonable in all respects, (B) the
Company shall not be entitled to a credit against the Obligations in an
amount in excess of the purchase price, and (C) no Secured Party shall incur
any liability or responsibility to the Company in connection therewith,
notwithstanding the possibility that a substantially higher price might have
been realized at a public sale. The Company recognizes that a ready market
may not exist for Pledged Collateral which is not regularly traded on a
recognized securities exchange, and that a sale by the Secured Parties of any
such Pledged Collateral for an amount substantially less than a pro rata
share of the fair market value of the issuer's assets minus liabilities may
be commercially reasonable in view of the difficulties that may be
encountered in attempting to sell a large amount of Pledged Collateral or
Pledged Collateral that is privately traded.
11.6 Title of Purchasers. Upon consummation of any sale of
Pledged Collateral pursuant to this Section 11, the Administrative Agent
shall have the right to assign, transfer and deliver to the purchaser or
purchasers thereof the Pledged Collateral so sold. Each such purchaser at
any such sale shall hold the Pledged Collateral sold absolutely free from
any claim or right on the part of the Company, and the Company hereby waives
(to the extent permitted by applicable law) all rights of redemption, stay
and appraisal which it now has or may at any time in the future have under
any rule of law or statute now existing or hereafter enacted. If the sale
of all or any part of the Pledged Collateral is made on credit or for future
delivery, the Administrative Agent shall not be required to apply any
portion of the sale price to the Obligations until such amount actually is
received by the Administrative Agent, and any Pledged Collateral so sold may
be retained by the Administrative Agent until the sale price is paid in full
by the purchaser or purchasers thereof. No Secured Party shall incur any
liability in case any such purchaser or purchasers shall fail to pay for the
Pledged Collateral so sold, and, in case of any such failure, the Pledged
Collateral may be sold again upon like notice.
11.7 Disposition of Proceeds of Sale. The cash proceeds
resulting from the collection, liquidation, sale or other disposition of the
Pledged Collateral shall be applied, first, to the reasonable costs and
expenses (including reasonable attorneys' fees) of retaking, holding,
storing, processing and preparing for sale, selling, collecting and
liquidating the Pledged Collateral, and the like; second, to the satisfaction
of all Obligations, with application as to any particular Obligations to be
in the order set forth in the Credit Agreement or other Loan Documents; and,
third, to all other indebtedness secured hereby in such order and manner as
Secured Parties in their sole and absolute discretion may determine.
12. Rights Cumulative. The rights, powers and remedies provided
herein in favor of the Administrative Agent shall not be deemed exclusive,
but shall be cumulative, and shall be in addition to all other rights and
remedies in favor of the Administrative Agent existing at law or in equity
including, without limitation, all of the rights, powers and remedies
available to a bank under the provisions of the Uniform Commercial Code as
adopted in any appropriate jurisdiction. The Company shall indemnify and
save harmless the Administrative Agent from and against any liability or
damage which it may incur in the exercise and performance of any of its
rights, powers and remedies set forth herein.
13. No Waiver, Etc. No delay on the part of the Administrative
Agent in exercising any of its options, powers or rights, or partial or
single exercise thereof, shall constitute a waiver thereof. None of the
terms and conditions of this Agreement may be changed, waived, modified or
varied in any manner whatsoever unless in writing duly signed by the
Administrative Agent and the Company.
14. Obligations Absolute. The obligations of the Company
hereunder shall remain in full force and effect without regard to, and shall
not be impaired by: (a) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or the like of the
Company or the Issuer; (b) any exercise or non-exercise, or any waiver, by
any Secured Party of any rights, remedy, power or privilege under or in
respect of the Obligations, the Credit Agreement or any Note, or any
security for any of the Obligations (other than this Agreement); or (c) any
amendment to or modification of the Obligations, the Credit Agreement or any
Note or any security for any of the Obligations (other than this Agreement);
whether or not the Company shall have notice or knowledge of any of the
foregoing.
15. Release of Collateral. After the payment in full of all of
the Obligations, the Administrative Agent shall promptly return to the
Company all of the Pledged Collateral and all other property and cash which
have not been used or applied toward the payment in full of the Obligations.
16. Other Agreements. Nothing herein shall in any way modify or
limit the effect of terms or conditions set forth in any other security or
other agreement in connection with the Obligations, whether or not executed
by the Company, but each and every term and condition hereof shall be in
addition thereto.
17. Counterparts. This Agreement may be executed in any number
of separate counterparts, each of which, when so executed, shall be deemed
an original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
18. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
19. Governing Law and Jurisdiction. (a) This Agreement shall
be governed by, and construed in accordance with, the law of the State of
California; provided that the Secured Parties shall retain all rights
arising under Federal law.
(b) Any legal action or proceeding with respect to this
Agreement may be brought in the courts of the state of California or of the
United States for the Central District of California, and by execution and
delivery of this Agreement, each party hereto consents, for itself and in
respect of its property, to the non-exclusive jurisdiction of those courts.
Each party hereto or thereto irrevocably waives any objection, including any
objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any action
or proceeding in such jurisdiction in respect of this Agreement. Each party
hereto or thereto waives personal service of any summons, complaint or
other process, which may be made by any other means permitted by California
law.
20. Subscription Rights. No Secured Party shall be under any
obligation to exercise or to give the Company notice of any subscription
rights or privileges, any rights to exchange, convert or redeem or any other
rights or privileges relating to any of the Pledged Collateral.
21. Entire Agreement. This Agreement embodies the entire
agreement and understanding among the parties hereto and thereto, and
supersedes all prior or contemporaneous agreements and understandings of
such Persons, verbal or written, relating to the subject matter hereof and
thereof.
22. Attorneys' Fees. The Company shall reimburse the Secured
Parties for all costs, expenses or disbursements (including reasonable
attorneys' fees) incurred in exercise of any right, power or remedy
conferred by this Agreement or in the enforcement hereof and such costs,
expenses and disbursements shall be included in the Obligations secured
hereunder.
23. Amendment and Restatement of Existing Pledge Agreements.
The parties hereto agree that this Agreement amends, restates and continues
each of the Existing Pledge Agreements.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
duly executed as of the date first above written.
"Company"
TRACINDA CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as
Administrative Agent
By:
----------------------------------
Jon Varnell
Managing Director
EXHIBIT A TO PLEDGE AGREEMENT
-----------------------------
DESIGNATED STOCK CURRENTLY OWNED BY COMPANY
-------------------------------------------
Number
Name of Issuer and of Type of Stock
State of Incorporation Shares Shares Cert. Nos.
- ---------------------- ------ ------ ----------
MGM GRAND, INC.
a Delaware corporation 1,176,773 common MGA - 5934
4,305,563 common MGA - 5419
1,189,998 common MGM - 2992
8,333,334 common MGA - 2992
500 common MGA - 0637
16,720,691 common MGA - 0638
==========
Total 31,720,859 common
CHRYSLER CORPORATION
a Delaware corporation 99,072,000 common BISD Account
#77001519.
#
P & F ACQUISITION CORP.
a Delaware corporation 200,000 common 1
P & F ACQUISITION CORP.
a Delaware corporation 450,000 Series A
Cumulative
Convertible
Preferred 1
EXHIBIT E
---------
FORM OF NOTE
------------
$_________________ October 30, 1996
FOR VALUE RECEIVED, the undersigned, TRACINDA CORPORATION (the
"Company"), hereby promises to pay to the order of __________________
_______________________ (the "Bank"), on the Maturity Date (as
defined in the Credit Agreement referred to below) the principal amount of
Loans (as defined in the Credit Agreement referred to below) payable by the
Company to the Bank on such Maturity Date under that certain Second Amended
and Restated Credit Agreement dated as of October 30, 1996 (as extended,
renewed, amended or restated from time to time, the "Agreement") among
Tracinda Corporation, a Nevada corporation (the "Company"), the banks from
time to time party thereto, and Bank of America National Trust and Savings
Association, as Administrative Agent; terms defined therein being used
herein as therein defined.
The Company promises to pay interest on the unpaid principal amount of
each Loan from the date of such Loan until such principal amount is paid in
full, at such interest rates, and payable at such times as are specified in
the Credit Agreement.
All payments of principal and interest shall be made to the
Administrative Agent for the account of the Bank in United States dollars in
immediately available funds at Administrative Agent's Payment office.
If any amount is not paid in full when due hereunder, such unpaid amount
shall bear interest, to be paid upon demand, from the due date thereof until
the date of actual payment (and before as well as after judgment) computed
at the per annum rate set forth in the Credit Agreement.
This Note is one of the "Notes" referred to in the Credit Agreement.
Reference is hereby made to the Credit Agreement for rights and obligations
of payment and prepayment, events of default and the right of the Bank to
accelerate the maturity hereof upon the occurrence of such events. This
Note is secured by and entitled to the benefits of the Collateral Documents.
The Company, for itself, its successors and assigns, hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.
The Company agrees to pay all collection expenses, court costs and
reasonable attorneys' fees (including the allocated cost of inhouse counsel)
and disbursements (whether or not litigation is commenced) which may be
incurred in connection with the collection or enforcement of this Note.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF CALIFORNIA.
TRACINDA CORPORATION
By:
------------------------------------------
Title:
---------------------------------------
EXHIBIT F
---------
FORM OF NOTICE OF ASSIGNMENT AND ACCEPTANCE
-------------------------------------------
___________, 19__
TO: Bank of America National Trust
and Savings Association, as Administrative Agent
Reference is made to that certain First Amended and Restated Credit
Agreement dated as of October 30, 1996 among Tracinda Corporation, a Nevada
corporation (the "Company"), the banks from time to time party thereto, and
Bank of America National Trust and Savings Association, as Administrative
Agent (as extended, renewed, amended or restated from time to time, the
"Agreement;" the terms defined therein being used herein as therein defined).
1. We hereby give you notice of, and request your consent to, the
assignment by_________________(the "Assignor") to __________________ (the
"Assignee") of ____% of the right, title and interest of the Assignor in and
to the Loan Documents, including without limitation the right, title and
interest of the Assignor in and to the Commitment of the Assignor, and all
outstanding Loans and Letter of Credit Obligations made by the Assignor.
Before giving effect to such assignment:
(a) the aggregate amount of the Assignor's Commitment is $ _______;
(b) the aggregate principal amount of its outstanding Loans and
L/C Advances is $_________; and
(c) the aggregate principal amount of its participation in L/C
Obligations is $__________.
2. The Assignee hereby represents and warrants that it has
complied with the requirements of Section 11.08 of the Credit Agreement in
connection with this assignment.
3. The Assignee agrees that, upon receiving your consent to such
assignment and from and after ____________ , the Assignee will be bound by
the terms of the Loan Documents, with respect to the interest in the Loan
Documents assigned to it as specified above, as fully and to the same extent
as if the Assignee were the Bank originally holding such interest in the
Loan Documents.
4. The following administrative details apply to the Assignee:
(a) Designated Offshore Market Office:
Assignee name: _______________________
Address: _____________________________
Attention: ___________________________
Telephone: (___) ____________________
Telecopier: (___) ___________________
Telex (Answerback): __________________
(b) Domestic Lending Office:
Assignee name: _______________________
Address: _____________________________
Attention: ___________________________
Telephone: (___) ____________________
Telecopier: (___) ___________________
Telex (Answerback):___________________
(c) Notice Address:
Assignee name: _______________________
Address: _____________________________
_____________________________
_____________________________
Attention: ___________________________
Telephone: (___) ____________________
Telecopier: (___) ___________________
Telex (Answerback):___________________
(d) Payment Instructions:
Account No.: _________________________
At: __________________________
__________________________
__________________________
Ref.: _________________________
Attention: _________________________
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Notice of Assignment and Acceptance to be executed by their respective duly
authorized officials, officers or agents as of the date first above
mentioned.
Very truly yours,
[Name of Assignor]
By:
------------------------------
Title:
---------------------------
[Name of Assignee]
By:
------------------------------
Title:
---------------------------
We hereby consent to the
foregoing assignment.
TRACINDA CORPORATION
By:
--------------------------
Name:
------------------------
Title:
-----------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent
and Issuing Bank
By:
--------------------------
Title:
-----------------------
======================================================================
FIRST AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of October 30, 1996
among
TRACINDA CORPORATION
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent
and Letter of Credit Issuing Bank
COMMERZBANK AKTIENGESELLSCHAFT
and
BANK OF SCOTLAND
as Co-Agents
and
THE FINANCIAL
INSTITUTIONS PARTY HERETO
[GRAPHIC OMITTED]
======================================================================
TABLE OF CONTENTS
Section Page
- ------- ----
SECTION 1....................................................... 1
DEFINITIONS..................................................... 1
1.01 Certain Defined Terms............................... 1
1.02 Other Interpretive Provisions....................... 17
1.03 Accounting Principles............................... 18
SECTION 2....................................................... 19
THE CREDITS..................................................... 19
2.01 The Revolving Credit................................ 19
2.02 Loan Accounts....................................... 19
2.03 Procedure for Borrowing............................. 20
(a) Notice of Borrowing and Borrowing Base and
Compliance Certificate......................... 20
(b) Hostile Acquisitions or Control Stock
Acquisitions................................... 20
(c) Credit Extensions Requiring Collateral......... 21
(d) Making Funds Available......................... 21
(f) Limitation on Interest Periods................. 22
2.04 Conversion and Continuation Elections............... 22
2.05 Voluntary Termination or Reduction of Commitments... 23
2.06 Optional Prepayments................................ 23
2.07 Mandatory Prepayments; Mandatory Commitment
Reductions; Collateral Requirements................. 24
(a) Credit Extensions in Excess of Borrowing Base.. 24
(b) Credit Extensions of $50,000,000 or More....... 24
(c) Credit Extensions Exceeding Pledged
Borrowing Base................................. 24
(d) Commitment Reduction Upon Dispositions......... 25
(e) Commitment Reduction Upon Disability of
Kirk Kerkorian ................................ 25
(f) Compliance with Margin Regulations............. 26
(g) Funding Losses................................. 26
(h) Pledging Collateral............................ 26
2.08 Repayment........................................... 26
2.09 Interest............................................ 26
2.10 Commitment Fee...................................... 27
2.11 Computation of Fees and Interest.................... 28
2.12 Payments by the Company............................. 28
2.13 Payments by the Banks to the Administrative Agent... 29
2.14 Sharing of Payments, Etc............................ 29
2.15 Compliance with the Margin Regulations.............. 30
(a) Treatment of Credit Extensions for Purposes of
the Margin Regulations......................... 30
(b) Allocation of Benefits of Security:
Margin Stock................................... 30
(c) Allocation of Benefits of Security: Assets
Other Than Margin Stock........................ 31
(d) Record Keeping................................. 31
(e) Payments and Prepayments....................... 32
SECTION 3....................................................... 33
THE LETTERS OF CREDIT........................................... 33
3.01 The Letter of Credit Subfacility.................... 33
3.02 Issuance, Amendment and Renewal of Letters of Credit 34
3.03 Risk Participations, Drawings and Reimbursements.... 37
3.04 Repayment of Participations......................... 38
3.05 Role of the Issuing Bank............................ 39
3.06 Obligations Absolute................................ 40
3.07 Cash Collateral Pledge.............................. 41
3.08 Letter of Credit Fees............................... 41
3.09 Uniform Customs and Practice........................ 42
SECTION 4....................................................... 42
TAXES, YIELD PROTECTION AND ILLEGALITY.......................... 42
4.01 Taxes............................................... 42
4.02 Illegality.......................................... 43
4.03 Increased Costs and Reduction of Return............. 44
4.04 Funding Losses...................................... 45
4.05 Inability to Determine Rates........................ 45
4.06 Reserves on Offshore-Rate Loans..................... 46
SECTION 5....................................................... 46
CONDITIONS PRECEDENT............................................ 46
5.01 Conditions of Initial Credit Extensions............. 46
(a) Credit Agreement and Notes..................... 46
(b) Resolutions; Incumbency........................ 47
(c) Organization Documents; Good Standing.......... 47
(d) Form U-1....................................... 47
(e) Opinion of Counsel............................. 47
(f) Certificate.................................... 47
(g) Other Documents................................ 48
5.02 Conditions to All Credit Extensions................. 48
(a) Notice of Borrowing............................ 48
(b) Borrowing Base and Compliance Certificate...... 48
(c) Continuation of Representations and Warranties. 48
(d) No Existing Default............................ 48
(e) Compliance With Margin Regulations............. 49
(f) Collateral Requirements........................ 49
(g) Additional Evidence............................ 49
SECTION 6....................................................... 50
REPRESENTATIONS AND WARRANTIES.................................. 50
6.01 Corporate Existence................................. 50
6.02 Corporate Power; Authorization; Enforceable
Obligations......................................... 50
6.03 No Legal Bar to Loans............................... 50
6.04 No Material Litigation.............................. 51
6.05 No Default.......................................... 51
6.06 Ownership of Property; Liens........................ 51
6.07 Taxes............................................... 52
6.08 ERISA............................................... 52
6.09 Financial Condition................................. 52
6.10 Federal Reserve Regulations......................... 53
6.11 Environmental Matters............................... 53
6.12 Regulated Entities.................................. 53
6.13 Collateral Documents................................ 53
6.14 Full Disclosure..................................... 53
SECTION 7....................................................... 54
AFFIRMATIVE COVENANTS........................................... 54
7.01 Use of Proceeds of Loans............................ 54
7.02 Payment of Obligations.............................. 54
7.03 Notice.............................................. 54
7.04 Records............................................. 54
7.05 Information Furnished............................... 55
7.06 Maintenance of Corporate Existence.................. 56
7.07 Tangible Net Worth.................................. 56
7.08 Insurance........................................... 56
7.09 Margin Regulation Compliance........................ 56
7.10 Inspection of Property and Books and Records........ 56
7.11 Environmental Laws.................................. 57
7.12 Release of Collateral............................... 57
7.13 Designation of Designated Stock..................... 57
7.14 Further Assurances.................................. 57
SECTION 8....................................................... 58
NEGATIVE COVENANTS.............................................. 58
8.01 Encumbrances and Liens.............................. 58
8.02 Indebtedness........................................ 59
8.03 Liquidation or Merger............................... 59
8.04 Loans and Guaranties................................ 59
8.05 Disposal of Assets.................................. 59
8.06 Retirement of Stock................................. 59
8.07 Payment of Dividends................................ 60
8.08 Default Under Other Agreements or Contracts......... 60
8.09 ERISA Plans......................................... 60
8.10 Hostile Acquisitions and Control Stock Acquisitions. 60
8.11 Borrowing Base...................................... 61
8.12 Accounting Changes.................................. 61
SECTION 9....................................................... 61
EVENTS OF DEFAULT............................................... 61
9.01 Event of Default.................................... 61
(a) Non-Payment.................................... 61
(b) Performance under Agreements................... 61
(c) Performance under Sections Section 7.03,
7.07 and 8.01 through 8.08, inclusive,
and Section 8.12............................... 61
(d) Insolvency; Voluntary Proceedings.............. 61
(e) Involuntary Proceedings........................ 62
(f) Representation and Warranties.................. 62
(g) Legal Process.................................. 62
(h) Appropriation of Property...................... 62
(i) Stock Ownership................................ 62
(j) Violation of Margin Regulations................ 63
(k) Collateral..................................... 63
9.02 Remedies............................................ 63
9.03 Rights Not Exclusive................................ 64
SECTION 10...................................................... 64
THE ADMINISTRATIVE AGENT........................................ 64
10.01 Appointment and Authorization;
"Administrative Agent"............................... 64
10.02 Delegation of Duties................................ 65
10.03 Liability of Administrative Agent................... 65
10.04 Reliance by Administrative Agent.................... 65
10.05 Notice of Default................................... 66
10.06 Credit Decision; Compliance with Margin Regulations. 66
10.07 Indemnification of Administrative Agent............. 67
10.08 Administrative Agent in Individual Capacity........ 67
10.09 Collateral Matters.................................. 68
10.10 Successor Administrative Agent...................... 68
10.11 Withholding Tax..................................... 69
SECTION 11...................................................... 71
MISCELLANEOUS................................................... 71
11.01 Amendments and Waivers.............................. 71
11.02 Notices............................................. 72
11.03 No Waiver; Cumulative Remedies...................... 73
11.04 Costs and Expenses.................................. 73
11.05 Company Indemnification............................. 74
11.06 Payments Set Aside.................................. 74
11.07 Successors and Assigns.............................. 75
11.08 Assignments, Participations, etc.................... 75
11.09 Confidentiality..................................... 77
11.10 Set-off............................................. 77
11.11 Notification of Addresses, Lending Offices, Etc..... 78
11.12 Counterparts........................................ 78
11.13 Severability........................................ 78
11.14 No Third Parties Benefited.......................... 78
11.15 Governing Law and Jurisdiction...................... 78
11.16 Waiver of Jury Trial................................ 79
11.17 Entire Agreement.................................... 79
11.18 Amendment and Restatement........................... 79
Section Page
- ------- ----
EXHIBITS
- --------
A Notice of Borrowing
B Notice of Conversion/Continuation
C Borrowing Base and Compliance Certificate
D Pledge Agreement
E Form of Note
F Assignment and Acceptance
SCHEDULES
- ---------
2.01 Commitments
11.02 Addresses
FIRST AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of October 30, 1996
among
TRACINDA CORPORATION
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent
and Letter of Credit Issuing Bank
and
THE FINANCIAL
INSTITUTIONS PARTY HERETO
FIRST AMENDMENT TO
------------------
FIRST AMENDED AND RESTATED CREDIT AGREEMENT,
--------------------------------------------
CONSENT AND WAIVER
------------------
THIS FIRST AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT
AGREEMENT, CONSENT AND WAIVER (this "First Amendment") is dated as of
January 14, 1997 and is entered into by and among TRACINDA
CORPORATION, a Nevada corporation (the "Company"), the several
financial institutions party hereto (the "Banks"), and BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, as Administrative Agent for
the Banks ("Administrative Agent") and Letter of Credit Issuing Bank,
and amends the First Amended and Restated Credit Agreement dated as of
October 30, 1996, among the Company, the Banks, the Letter of Credit
Issuing Bank and the Administrative Agent (the "Agreement")
RECITALS
A. By letter dated December 24, 1996 the Company notified the
Administrative Agent that it desires to contribute approximately 950,000
shares of Chrysler Corporation common stock now held as Collateral and having
a market value of approximately $31,500,000, to a group of about 20
charitable organizations. The Company asked that the Administrative Agent
and the Banks consent to the release of such Collateral.
B. Separately, the Company has requested an amendment to the
Agreement to permit the Company to deliver funds owing to the Administrative
Agent by 1:00 p.m. on any given Business Day instead of 11:00 a.m.
C. The parties also desire to delete all references to
Co-Agents in the Agreement.
D. The Banks, the Administrative Agent, the Collateral Agent
and the Issuing Bank are willing to so consent to such release, waive Section
8.05 of the Agreement (Disposal of Assets) to permit the distribution of such
shares to charitable organizations for no consideration, and to amend the
Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. Terms. All capitalized terms used herein have the same
meanings as in the Agreement unless otherwise defined herein. All references
to the Agreement shall mean the Agreement as hereby amended.
2. Amendments. The parties hereto agree that the Agreement is
amended as follows:
2.1 Section 2.12 of the Agreement is amended by deleting "11:00
a.m. (San Francisco time)" wherever it appears and inserting "1:00 p.m. (San
Francisco time)" in lieu thereof.
2.2 All references to "Co-Agent" or "Co-Agents" on the cover
page and in Section 10.01 of the Agreement and the signature pages to the
Agreement are hereby deleted. A replacement cover page is attached hereto.
3. Consent to Release of Chrysler Corporation Stock; Waiver.
Pursuant to Section 10.09(b)(vi) of the Agreement, the Banks hereby consent
to the release of not more than 1,000,000 shares of Chrysler Corporation
common stock held as Collateral. The exact number of shares shall be
communicated by the Company to the Administrative Agent at the time it
requests such release. There shall be no Commitment reduction or prepayment
of Loans required in connection with this release. Upon such release,
Exhibit A to the Pledge Agreement shall be deemed amended to reflect such
release, and the Administrative Agent shall distribute a revised Exhibit A to
the Banks. The Banks authorize and direct the Administrative Agent to
accomplish the foregoing upon the request of the Company. The Banks and the
Administrative Agent hereby waive Section 8.05 of the Agreement to permit the
Company's disposition of such shares to charitable organizations for no
consideration.
4. Representations and Warranties. The Company represents and
warrants to the Banks and the Administrative Agent that:
4.1 Authorization. The execution, delivery and performance of
this First Amendment by the Company has been duly authorized by all necessary
corporate action by the Company and has been duly executed and delivered by
the Company.
4.2 Binding Obligation. This First Amendment is a legal, valid
and binding agreement of the Company, enforceable in accordance with its
terms, except to the extent enforceability thereof may be limited by
applicable law relating to bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or limiting creditors' rights generally or
by the application of general principles of equity.
4.3 Incorporation of Certain Representations. The
representations and warranties set forth in Section 6 of the Agreement are
true and correct in all material respects on and as of the date hereof as
though made on and as of the date hereof.
4.5 Default. No Default or Event of Default under the
Agreement has occurred and is continuing.
5. Miscellaneous.
5.1 Effectiveness of the Agreements. Except as hereby amended,
the Agreement shall remain in full force and effect.
5.2 Waivers. This First Amendment is specific in time and in
intent and does not constitute, nor should it be construed as, a waiver of
any other right, power or privilege under the Agreement, or under any
agreement, contract, indenture, document or instrument mentioned in the
Agreement; nor does it preclude any exercise thereof or the exercise of any
other right, power or privilege, nor shall any future waiver of any right,
power, privilege or default hereunder, or under any agreement, contract,
indenture, document or instrument mentioned in the Agreement, constitute a
waiver of any other default of the same or of any other term or provision.
5.3 Counterparts. This First Amendment may be executed in any
number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument. This First Amendment shall
not become effective until the Company, the Banks and the Administrative
Agent shall have signed a copy hereof, whether the same or counterparts, and
the same shall have been delivered to the Administrative Agent.
5.4 Jurisdiction. This First Amendment, and any instrument or
agreement required hereunder, shall be governed by and construed under the
laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be duly executed and delivered by their proper and duly
authorized officers as of the day and year first above written.
TRACINDA CORPORATION
By:
-----------------------------
Title:
--------------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent
By:
-----------------------------
Patrick Carroll
Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Issuing
Bank and a Bank
By:
-----------------------------
Jon Varnell
Managing Director
SOCIETE GENERALE
By:
-----------------------------
Title:
--------------------------
COMMERZBANK AKTIENGESELLSCHAFT
By:
-----------------------------
Title:
--------------------------
BANK OF SCOTLAND
By:
-----------------------------
Title:
--------------------------
THE BANK OF NOVA SCOTIA
By:
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Title:
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SECOND AMENDMENT TO FIRST
AMENDED AND RESTATED CREDIT AGREEMENT
AND WAIVER
THIS SECOND AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT
AGREEMENT AND WAIVER (this "Second Amendment") is dated as of April 8, 1997
and is entered into by and among TRACINDA CORPORATION, a Nevada corporation
(the "Company"), the several financial institutions party hereto (the
"Banks"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
Administrative Agent for the Banks (the "Administrative Agent") and Letter of
Credit Issuing Bank, and amends the First Amended and Restated Credit
Agreement dated as of October 30, 1996, among the Company, the Banks, the
Letter of Credit Issuing Bank and the Administrative Agent, as amended by a
First Amendment to Amended and Restated Credit Agreement, Consent and Waiver
dated as of January 14, 1997 (as so amended, the "Agreement")
RECITALS
A. On November 20, 1996 and January 29, 1997, as permitted by
the Agreement, the Company disposed of certain shares of Chrysler common
stock pledged as Collateral pursuant to the Pledge Agreement. In connection
therewith, the Company made prepayments of $33,000,000 and $25,000,000,
respectively. Section 2.07(d)(i) of the Agreement requires that prepayments
first be applied to interest and then to principal. The entirety of the
November 20, 1996 prepayment was applied towards a prepayment of the
outstanding principal amount of the Loans, and the Commitments were reduced
by such amount. The January 29, 1997 prepayment was applied as provided in
Section 2.07(d)(i) of the Agreement, and the Commitments were reduced by the
amount applied towards the prepayment of principal.
B. The Company has asked the Administrative Agent and the
Banks to waive Section 2.07(d)(i) of the Agreement (a) to ratify the
application of the November 20, 1996 prepayment and (b) to change the
application of the January 29, 1997 prepayment to apply the entirety of such
prepayment to principal and a reduction of the Commitments, effective as of
January 29, 1997. In addition, the Company has requested that the Agreement
be amended to permit this type of allocation at all times.
C. The Banks, the Administrative Agent, the Collateral Agent
and the Issuing Bank are willing to waive Section 2.07(d)(i) of the Agreement
to ratify the application of the November 20, 1996 prepayment as aforesaid
and to change the application of the January 29, 1997 prepayment as
aforesaid, effective as of January 29, 1997, and to so amend the Agreement,
on the terms and conditions set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. Terms. All capitalized terms used herein have the same
meanings as in the Agreement unless otherwise defined herein. All references
to the Agreement shall mean the Agreement as hereby amended.
2. Amendments. The parties hereto agree that the Agreement is
amended as follows:
2.1 The definition of "Interest Payment Date" in Section 1.01
of the Agreement is amended and restated in its entirety as follows:
"'Interest Payment Date' means (a) as to any Offshore Rate
Loan, the last day of each Interest Period applicable to such
Offshore Rate Loan; (b) as to accrued interest on any prepaid
Offshore Rate Loan, and any amounts required pursuant to Section
4.04 in connection with any such prepayment, the 10th day of each
January, April, July, and October next following the date such
Offshore Rate Loan was prepaid, (c) as to any Base Rate Loan, the
10th day of each January, April, July, and October, and (d) as to
all Loans, the Maturity Date and any earlier date as such Loan is
due by reason of acceleration."
2.2 The last sentence of Section 2.06 of the Agreement is
amended and restated in its entirety as follows:
"If such notice is given by the Company, the amount specified
therein shall be due and payable on the date specified therein.
Accrued interest on prepaid Loans and any amounts required
pursuant to Section 4.04 in connection with any prepayment of
Offshore Rate Loans shall be due and payable on the next
applicable Interest Payment Date."
2.3 Section 2.07(d)(i) of the Agreement is amended by deleting
the following last sentence thereof: "Prepayments of Loans shall be applied
first to interest then to principal."
2.4 Section 2.07(g) of the Agreement is amended and restated in
its entirety as follows:
"(g) Funding Losses; Interest on Loans. Accrued interest
on prepaid Loans and any amounts required pursuant to Section
4.04 in connection with any prepayment of Offshore Rate Loans
shall be due and payable on the next applicable Interest Payment
Date."
3. Waiver. The Banks and the Administrative Agent hereby
waive Section 2.07(d)(i) of the Agreement (a) to ratify the application of
the November 20, 1996 prepayment as set forth in Recital A to this Second
Amendment and (b) to change the application of the January 29, 1997
prepayment to apply the entirety of such prepayment to principal and a
reduction of the Commitments, effective as of January 29, 1997. This waiver
is specific in time and in intent and does not constitute, nor should it be
construed as, a waiver of any other right, power or privilege under the
Agreement, or under any agreement, contract, indenture, document or
instrument mentioned in the Agreement; nor does it preclude other or further
exercise hereof or the exercise of any other right, power or privilege, nor
shall any waiver of any right, power, privilege or default hereunder, or
under any agreement, contract, indenture, document or instrument mentioned in
the Agreement, or constitute a waiver of any default of the same or of any
other term or provision.
4. Representations and Warranties. The Company represents and
warrants to the Banks and the Administrative Agent that:
4.1 Authorization. The execution, delivery and performance of
this Second Amendment by the Company has been duly authorized by all
necessary corporate action by the Company and has been duly executed and
delivered by the Company.
4.2 Binding Obligation. This Second Amendment is a legal,
valid and binding agreement of the Company, enforceable in accordance with
its terms, except to the extent enforceability thereof may be limited by
applicable law relating to bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or limiting creditors' rights generally or
by the application of general principles of equity.
4.3 Incorporation of Certain Representations. The
representations and warranties set forth in Section 6 of the Agreement are
true and correct in all material respects on and as of the date hereof as
though made on and as of the date hereof.
4.5 Default. Except as waived hereby, no Default or Event of
Default under the Agreement has occurred and is continuing.
5. Miscellaneous.
5.1 Effectiveness of the Agreements. Except as hereby amended,
the Agreement shall remain in full force and effect.
5.2 Waivers. This Second Amendment is specific in time and in
intent and does not constitute, nor should it be construed as, a waiver of
any other right, power or privilege under the Agreement, or under any
agreement, contract, indenture, document or instrument mentioned in the
Agreement; nor does it preclude any exercise thereof or the exercise of any
other right, power or privilege, nor shall any future waiver of any right,
power, privilege or default hereunder, or under any agreement, contract,
indenture, document or instrument mentioned in the Agreement, constitute a
waiver of any other default of the same or of any other term or provision.
5.3 Counterparts. This Second Amendment may be executed in any
number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument. This Second Amendment
shall not become effective until the Company, the Banks and the
Administrative Agent shall have signed a copy hereof, whether the same or
counterparts, and the same shall have been delivered to the Administrative
Agent.
5.4 Jurisdiction. This Second Amendment, and any instrument or
agreement required hereunder, shall be governed by and construed under the
laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be duly executed and delivered by their proper and duly
authorized officers as of the day and year first above written.
TRACINDA CORPORATION
By:
-----------------------------
Title:
--------------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent
By:
-----------------------------
Janice Hammond
Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Issuing
Bank and a Bank
By:
-----------------------------
Jon Varnell
Managing Director
SOCIETE GENERALE
By:
-----------------------------
Title:
--------------------------
COMMERZBANK AKTIENGESELLSCHAFT
By:
-----------------------------
Title:
--------------------------
BANK OF SCOTLAND
By:
-----------------------------
Title:
--------------------------
THE BANK OF NOVA SCOTIA
By:
-----------------------------
Title:
--------------------------
THIRD AMENDMENT TO FIRST
AMENDED AND RESTATED CREDIT AGREEMENT
THIS THIRD AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT
AGREEMENT (this "Third Amendment") is dated as of July 2, 1997 and is
entered into by and among TRACINDA CORPORATION, a Nevada corporation
(the "Company"), the several financial institutions party hereto (the
"Banks"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Administrative Agent for the Banks (the "Administrative Agent") and
Letter of Credit Issuing Bank, and amends the First Amended and
Restated Credit Agreement dated as of October 30, 1996, among the
Company, the Banks, the Letter of Credit Issuing Bank and the
Administrative Agent, as amended by a First Amendment to Amended and
Restated Credit Agreement, Consent and Waiver dated as of January 14,
1997 and a Second Amendment to Amended and Restated Credit Agreement
and Waiver dated as of April 8, 1997 (as so amended, the "Agreement").
RECITALS
The Company has requested, and the Banks, the Administrative
Agent, the Collateral Agent and the Issuing Bank have agreed, to
increase the Commitments to $1,732,000,000 on the terms and conditions
set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. Terms. All capitalized terms used herein have the same
meanings as in the Agreement unless otherwise defined herein.
2. Amendments. The parties hereto agree that the Agreement
is amended as follows:
2.1 Schedule 2.01 to the Agreement is amended and restated
in its entirety as set forth on Schedule 2.01 hereto.
3. Representations and Warranties. The Company represents
and warrants to the Banks and the Administrative Agent that:
3.1 Authorization. The execution, delivery and performance
of this Third Amendment by the Company has been duly authorized by all
necessary corporate action by the Company and has been duly executed
and delivered by the Company.
3.2 Binding Obligation. This Third Amendment is a legal,
valid and binding agreement of the Company, enforceable in accordance
with its terms, except to the extent enforceability thereof may be
limited by applicable law relating to bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
limiting creditors' rights generally or by the application of general
principles of equity.
3.3 Incorporation of Certain Representations. The
representations and warranties set forth in Section 6 of the Agreement
are true and correct in all material respects on and as of the date
hereof as though made on and as of the date hereof.
3.5 Default. No Default or Event of Default under the
Agreement, as hereby amended, has occurred and is continuing.
4. Miscellaneous.
4.1 Effectiveness of the Agreements. Except as hereby
amended, the Agreement shall remain in full force and effect.
4.2 Counterparts. This Third Amendment may be executed in
any number of counterparts and all of such counterparts taken together
shall be deemed to constitute one and the same instrument. This Third
Amendment shall not become effective until the Company, all of the
Banks and the Administrative Agent shall have signed a copy hereof,
whether the same or counterparts, and the same shall have been
delivered to the Administrative Agent.
4.3 Jurisdiction. This Third Amendment, and any instrument
or agreement required hereunder, shall be governed by and construed
under the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this
Third Amendment to be duly executed and delivered by their proper and
duly authorized officers as of the day and year first above written.
TRACINDA CORPORATION
By:
-----------------------------
Title:
--------------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent
By:
-----------------------------
Janice Hammond
Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Issuing
Bank and a Bank
By:
-----------------------------
Jon Varnell
Managing Director
SOCIETE GENERALE
By:
-----------------------------
Title:
--------------------------
THE BANK OF NOVA SCOTIA
By:
-----------------------------
Title:
--------------------------
COMMERZBANK AKTIENGESELLSCHAFT
By:
-----------------------------
Title:
--------------------------
BANK OF SCOTLAND
By:
-----------------------------
Title:
--------------------------
SCHEDULE 2.01
COMMITMENTS
AND PRO RATA SHARES
Until After Pro
1/31/98 1/31/98 Rata
Bank Commitment Commitment Share
---- ---------- ---------- -----
Bank of America National
Trust and Savings
Association $1,004,937,499 $957,359,627 58.0218%
Societe Generale 319,541,667 304,413,251 18.4493%
Commerzbank, A.G. 157,447,917 149,993,685 9.0905%
The Bank of Nova Scotia 157,447,917 149,993,685 9.0905%
Bank of Scotland 92,625,000 88,239,752 5.3479%
-------------- -------------- ---------
TOTAL $1,732,000,000 $1,650,000,000 100.0000%
============== ============== =========
INVESTMENT AGREEMENT dated as of July 11, 1996 (the "Investment
Agreement"), among Seven Network Limited ("Seven"), Tracinda Corporation
("Tracinda") (each, an "Investor") and P&F Acquisition Corp. ("Newco").
This Agreement confirms the understanding of the parties hereto
with respect to the proposed acquisition (the "Transaction") of
Metro-Goldwyn-Mayer Inc., a Delaware corporation ("MGM").
1. Definitions. Terms defined in the Term Sheet and not otherwise
defined herein are used herein as therein defined.
2. Purchase of Capital Stock. Subject to the terms and
conditions set forth herein and in Attachments A and B hereto (the
"Term Sheets"), when the conditions specified in paragraph 6 are
satisfied, each Investor will purchase shares of common stock of Newco
(the "Common Stock") representing 50% of the initial outstanding
Common Stock, and will purchase shares of Newco Series A Convertible
Preferred Stock (the "Preferred Stock") as described in Attachment A
hereto, for the dollar amounts set forth opposite such Investors'
names on the signature page hereof (such Investor's "Commitment").
3. Representations and Warranties of Seven. Seven represents and
warrants to Newco and Tracinda that: (a) Seven is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has full power and authority to
execute, deliver and perform this Agreement and the performance of
Seven's obligations hereunder have been duly authorized by all
necessary action (corporate or other) on the part of Seven; (b) this
Agreement has been duly executed and delivered by Seven and, assuming
the due execution and delivery thereof by Tracinda and Newco, is a
valid and binding obligation of Seven, enforceable in accordance with
its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws
affecting the rights of creditors generally and by general principles
of equity; (c) the execution and delivery of this Agreement by Seven
and the performance of Seven's obligations hereunder will not (i)
require the consent, approval or authorization of, or any
registration, qualification or filing with, any governmental agency or
authority or any other person or (ii) conflict with or result in a
material breach or violation of (A) any material agreement to which
Seven is a party or (B) assuming expiration of all applicable waiting
periods under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), without objection to the
transactions contemplated hereby by the Department of Justice (the
"DOJ") or the Federal Trade Commission (the "FTC"), any applicable law
or regulation; and (d) there is no litigation, governmental or other
proceeding, investigation or controversy pending or, to Seven's
knowledge, threatened against Seven relating to the transactions
contemplated by this Agreement.
4. Representations and Warranties of Tracinda. Tracinda
represents and warrants to Newco and Seven that: (a) Tracinda is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada and has full power and authority
to execute, deliver and perform this Agreement and the performance of
Tracinda's obligations hereunder have been duly authorized by all
necessary action (corporate or other) on the part of Tracinda; (b)
this Agreement has been duly executed and delivered by Tracinda and,
assuming the due execution and delivery thereof by Seven and Newco, is
a valid and binding obligation of Tracinda, enforceable in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws
affecting the rights of creditors generally and by general principles
of equity; (c) the execution and delivery of this Agreement by
Tracinda and the performance of Tracinda's obligations hereunder will
not (i) require the consent, approval or authorization of, or any
registration, qualification or filing with, any governmental agency or
authority or any other person or (ii) conflict with or result in a
material breach or violation of (A) any material agreement to which
Tracinda is a party or (B) assuming expiration of all applicable
waiting periods under the HSR Act without objection to the
transactions contemplated hereby by the DOJ or the FTC, any applicable
law or regulation; and (d) there is no litigation, governmental or
other proceeding, investigation or controversy pending or, to
Tracinda's knowledge, threatened against Tracinda relating to the
transactions contemplated by this Agreement.
5. Representations and Warranties of Newco. Newco represents and
warrants to Seven and Tracinda that: (a) Newco is a newly-formed
corporation, duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has full power and
authority to execute, deliver and perform this Agreement and the
performance of Newco's obligations hereunder have been duly authorized
by all necessary action (corporate or other) on the part of Newco; (b)
this Agreement has been duly executed and delivered by Newco and,
assuming the due execution and delivery thereof by Seven and Tracinda,
is a valid and binding obligation of Newco, enforceable in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws
affecting the rights of creditors generally and by general principles
of equity; (c) Newco has had no previous business activities and has
no liabilities beyond those incurred under the Engagement Letter (as
defined below) and this Agreement; (d) the authorized capital stock of
Newco consists solely of 10,000,000 shares of Common Stock and
1,000,000 shares of Preferred Stock, none of which are outstanding at
the date hereof and, except as provided herein and in the Term Sheets,
Newco does not and, as of the Closing Date will not, have any
obligations to issue any of its capital stock, no options, warrants or
other obligations to issue capital stock of Newco are outstanding and
Newco does not have any obligation to issue any such option, warrant
or other security, and there are no outstanding subscription, voting
or other similar agreements with respect to the issuance of any
capital stock of Newco; (e) the execution and delivery of this
Agreement and the performance of Newco's obligations hereunder will
not (i) require the consent, approval or authorization of, or any
registration, qualification or filing with, any governmental agency or
authority or any other person or (ii) conflict with or result in a
material breach or violation of (A) any material agreement to which
Newco is a party or (B) assuming expiration of all applicable waiting
periods under the HSR Act without objection to the transactions
contemplated hereby by the DOJ or the FTC, any applicable law or
regulation; and (f) there is no litigation, governmental or other
proceeding, investigation or controversy pending or, to Newco's
knowledge, threatened against Newco relating to the transactions
contemplated by this Agreement.
6. Conditions. The obligations of each Investor shall be subject
to the requirement that:
(a) concurrently with such Investor's purchase of Common and
Preferred Stock, Newco shall acquire all of the outstanding capital
stock of MGM at a price and on substantially the terms set forth in
the Stock Purchase Agreement attached as Attachment B hereto; and
(b) the other Investor and Mr. Mancuso shall have complied with
their obligations hereunder.
7. Cooperation. Each party agrees to use all reasonable efforts
to cause the transactions contemplated by this Agreement to be
consummated as promptly as practicable pursuant to the provisions of
definitive documentation embodying the terms of this Agreement and the
Term Sheets. Each party agrees to use all reasonable efforts, acting
in good faith, to resolve, on a mutually acceptable basis, any
disagreements they may have with respect to such definitive
documentation and other material decisions relating to the
transactions contemplated hereby; provided that any failure to agree
on any such matter shall in no way affect the binding nature of any
party's obligations hereunder.
8. J.P. Morgan Engagement. J.P. Morgan will serve as the
exclusive financial adviser to Newco in connection with the
Acquisition and the placement or offering of the Common and Preferred
Stock. J.P. Morgan is entitled to receive certain fees and
reimbursement of certain costs and expenses in accordance with the
engagement letter (the "Engagement Letter") dated July 11, 1996
between J.P. Morgan and Newco, a copy of which letter has been
initialed by J.P. Morgan and has been delivered to Tracinda and Seven.
9. Fees and Expenses. If the Acquisition is not consummated,
each Investor shall pay its own costs and expenses incurred in
connection with the transactions contemplated hereby, and one-half of
all costs and expenses incurred by Newco, Gen-Star (as hereinafter
defined) and Mr. Mancuso in connection with efforts by the management
group to acquire MGM (including any amounts owing under the Engagement
Letter and the predecessor Engagement Letter between J.P. Morgan and
Gen-Star Pictures International LLC ("Gen-Star") and the reasonable
documented fees and expenses of legal counsel and public relations
firms). Excluding any fees (but not expenses) payable to J.P. Morgan
pursuant to the Engagement Letter, the total of such reimbursable
costs and expenses shall not exceed $900,000. If the Acquisition is
consummated, all costs and expenses incurred by each Investor, Newco,
Gen-Star and Mr. Mancuso in connection with efforts by the management
group to acquire MGM shall be borne by Newco.
10. Bidding. So long as this Agreement shall remain in effect, all
material decisions with respect to the Transaction shall require the
unanimous approval of the Investors and Mr. Mancuso.
11. Publicity. Each party hereto agrees to consult with the
other parties and to coordinate the issuance of any press release or
similar public announcement or communication relating to the
transactions contemplated hereby; provided that none of the parties
hereto shall be restrained, after notice, and after reasonable
commercial efforts are made to consult with the other parties, from
making such disclosure as it shall be advised by its outside legal
counsel that it is required to make by law, administrative regulation
or by the regulations of any stock exchange or interdealer quotation
system.
12. Termination. This Investment Agreement shall terminate
without liability to any party hereunder, upon the earlier to occur of
(a) the Closing of the Transaction, (b) two business days after the
receipt by any party hereto of notice or communication from CDR (as
hereinafter defined) that (i) the bid by Newco as contemplated by this
Investment Agreement was unsuccessful or (ii) that CDR was entering
into an agreement with another bidder for MGM, unless, in the case of
(b), each of the parties hereto agrees in writing prior to the end of
such two-day period on the terms of (x) a revised bid and (y) an
extension of this Agreement, or (c) on or after July 31, 1996, upon
the election of any party hereto, if the bid contemplated by this
letter has not been accepted on or before July 31, 1996.
Notwithstanding the foregoing, the obligations of the parties under
paragraphs 9 (as to fees and expenses) and 14 (as to indemnification)
shall survive any such termination.
13. Notices. Promptly upon receipt by any party hereto of any
written notice or communication from Consortium de Realisation
("CDR"), such party shall advise each other party hereto of the
substance of such communication. Notices and other communications
required or permitted hereunder shall be effective if delivered in
person or sent by telecopy or by certified mail, return-receipt
requested, upon such delivery in person, upon receipt by the sending
party of confirmation if by telecopy, or upon receipt, if mailed, in
each case addressed as follows: if to Newco, c/o Gibson, Dunn &
Crutcher, 333 S Grand Avenue, Los Angeles, CA 90071, Attention: Bruce
Meyer (Telephone (213) 229-7979, Telecopy (213) 229-7520); if to
Tracinda, at 4835 Koval Lane, Las Vegas, NV 89109 Attention: Mr.
Jerome York (Telephone (702) ____-____; Telecopy (702) 737-1177) with
a copy to Fried, Frank, Harris, Shriver & Jacobson, One New York
Plaza, New York, New York 10004, Attention: Stephen Fraidin
(Telephone: (212) 859-8000; Telecopy (212) 859-4000); and if to Seven,
c/o Culmen Group, L.P., 201 Main Street, Suite 1955, Fort Worth, Texas
76102, Attention: Michael R. Gleason (Telephone (817) 335-6999;
Telecopy (817) 870-1384) and ATN7, Mobbs Lane, Epping NSW 2121,
Australia, Attention: Gary Rice, Managing Director (Telephone (612)
877-7004, Telecopy (612) 877-7882 or (612) 877-7111; with a copy to
Kelly, Hart & Hullman, 201 Main Street, Fort Worth, TX 76102,
Attention: F. Richard Bernasek (Telephone (817) 332-2500, Telecopy
(817) 878-9280).
14. Indemnification. If the Acquisition is not consummated as a
result of an Investor's breach of its obligations hereunder, the
Investors, on a 50/50 basis shall indemnify Mr. Mancuso for all costs,
expenses, fees and liabilities incurred by Mr. Mancuso in connection
with any lawsuit or claim against him arising out of efforts by the
management group to acquire MGM to the extent such costs, expenses,
fees and liabilities are not covered by his indemnification or other
arrangements from another person. Mr. Mancuso shall use reasonable
efforts to obtain such complete indemnification from MGM and any other
person reasonably suggested by the indemnifying party.
15. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New
York without regard to conflict of laws principles.
16. Assignment. This Agreement may not be assigned in whole or
in part without the prior consent in writing of each other party
hereto except that an Investor may, in lieu of purchasing its
Commitment directly, effect its purchase of Common Stock hereunder
through one wholly-owned subsidiary. If an Investor shall purchase
such Common Stock through a subsidiary, such Investor and its
subsidiary will remain bound by all the terms of this Agreement and
the Investor will retain beneficial ownership of all of the
outstanding equity interests, direct or indirect, of such subsidiary
for so long as such subsidiary owns any securities of Newco.
17. Counterparts. This Agreement may be signed in counterparts.
18. Binding Obligation. It is understood that this Agreement
constitutes a legally binding obligation of the parties hereto.
P&F Acquisition Corp.
By: --------------------
Name: Frank Mancuso
Title: Chairman and Chief Executive Officer
Agreed to:
Common Stock Preferred Stock
Seven Network Limited $200,000,000 $50,000,000
By: --------------------
Name:
Title:
Tracinda Corporation $200,000,000 $400,000,000
By: --------------------
Name:
Title:
TOTAL COMMITMENTS: $400,000,000 $450,000,000
The undersigned hereby agrees with Seven and Tracinda that he
shall serve as Chief Executive Officer of Newco substantially on the
terms agreed among the parties hereto.
--------------------------
Frank Mancuso
SCHEDULE I
----------
SHAREHOLDERS' AND MANAGEMENT AGREEMENT
--------------------------------------
Definitions: Terms defined in the Investment Agreement
(including Attachments A and B thereto)
and not otherwise defined herein are used
herein as therein defined.
Board of Directors: The By-Laws of Newco will provide 7
directors. Each Investor will have the
right to appoint three directors
(collectively, the "Investor Directors")
and Mr. Frank Mancuso ("Mr. Mancuso")
will serve as a director and chairman of
the board of directors for so long as he
is employed by MGM. The Preferred Stock
shall be non-voting until the fourth
anniversary of the Closing. On and after
the fourth anniversary of the Closing,
the Preferred Stock shall be entitled to
vote together with the Common Stock on
all matters submitted to the Common Stock
for voting, with the Preferred Stock
having a number of votes equal to the
number of shares of Common Stock into
which the Preferred Stock is
convertible. Subject to the obligation
to elect Mr. Mancuso to the Board as
described herein, after the Preferred
Stock becomes entitled to vote, each
Investor shall be entitled to
representation on the seven-member.
Board of Directors in proportion to its
relative voting power. Conversion of
Preferred Stock prior to the forth
anniversary of the Closing Date shall not
affect the election of directors under
the Shareholder Agreement.
Until the fourth anniversary of
the Closing, a director may only
be removed or replaced by the
shareholder that appointed such
director. The Investors shall
agree to vote their shares of
Common Stock (and Preferred Stock,
if applicable) to elect Mr.
Mancuso as a director, and shall
not be entitled to remove him as a
director, for so long as he shall
serve as chief executive officer
of MGM.
Approval of all
Investor Directors Required: The following actions will require the
approval of all of the Investor Directors
and (except as to item 10), during the
first three years following the Closing
so long as Mr. Mancuso is Chief Executive
Officer of MGM, the vote of Mr. Mancuso:
(1) incurrence of indebtedness
for borrowed money and
guaranties (as to be defined
in the definitive agreements
relating to the Transaction)
(other than as expressly
provided in the Investment
Agreement or the Term
Sheets) other than as set
forth in the business plan,
if the amount of such
incurrence if the total
principal amount of such
indebtedness would exceed
[$25,000,000] after giving
effect to such incurrence,
subject to certain
exclusions;
(2) issuances of any capital
stock or Securities
convertible into capital
stock of MGM or any of its
subsidiaries, other than
such issuance to Newco or
any one or more of its
direct or indirect
wholly-owned subsidiaries;
(3) issuances of any capital
stock, or Securities
convertible into capital
stock of Newco (other than
as expressly provided in the
Investment Agreement or the
Term Sheets);
(4) sale of substantially all of
the assets of Newco and its
subsidiaries or approval of
any merger or consolidation
involving Newco;
(5) repurchase of Common Stock
or Preferred Stock from any
shareholder, with certain
limited exceptions for
repurchases of Common Stock
issued to Management, as
contemplated below;
(6) amendments to the charter
documents or by-laws of
Newco or any of the
documents relating to the
Transaction;
(7) the adoption of any "poison
pill" or shareholder rights
plan, or any similar
arrangement by Newco;
(8) any transaction or action
which would result in Newco
and its subsidiaries, taken
as a whole, conducting or
engaging in any business
that is material to Newco
and its subsidiaries taken
as a whole that is other
than the business being
conducted by MGM and its
subsidiaries as of the
Closing Date;
(9) any amendment to the
employment or other
agreements between Newco and
Mr. Mancuso, the termination
of Mr. Mancuso's employment
prior to the expiration of
his employment agreement and
the selection of his
successor;
(10) approval of the annual
business plan and budget and
any material variances
therefrom; and
(11) filing a voluntary petition
in bankruptcy.
(12) transactions with affiliates;
Majority Approval
Requirements: The following actions will require the
approval of a majority of the directors
of Newco:
(1) declaration of dividends.
(2) greenlighting of any single
film or other single
production with budgeted
direct negative costs
greater than $[85,000,000];
(3) material acquisitions and asset
sales; and
(4) material joint ventures or
licensing agreements outside
the ordinary course of
business.
Management: Mr. Mancuso will serve as Chief Executive
Officer of Newco and MGM. Except for
those actions requiring approval of the
board of directors of Newco as set forth
above or as required by law, the Chief
Executive Officer will have the authority
to run the business and affairs of Newco
and its subsidiaries including the power
to:
(1) hire and enter into
employment contracts with
officers and employees of
Newco and subsidiaries;
(2) discharge any officer or
employee of Newco or any of
its subsidiaries and to
enter into any settlements
in connection therewith;
(3) greenlight any film or other
production not requiring
approval of the board of
directors;
(4) incur indebtedness not
requiring approval of the
board of directors; and
(5) acquire, sell, transfer,
license or otherwise dispose
of any assets of Newco or
its subsidiaries not
requiring approval of the
board of directors.
Management Employment
Agreements: FM will agree to a five-year contract
with terms and conditions
customary for executives of his
stature within the entertainment
industry. He will use his
reasonable efforts to negotiate
employment contracts with other
key members of his existing
management team.
Management Incentive Plan: Newco will establish a senior management
incentive program for FM and other
executives selected by FM. The program
will be structured in such a way that
economic benefits will accrue to FM and
the other executives in a manner which
will aggregate $130 million in the event
the "enterprise value" of Newco increases
by 100% over a five-year period and $300
million in the event the "enterprise
value" of Newco increases by 200% over a
five-year period. Benefit amounts will
be derived proportionately to reflect
changes in "enterprise value" above and
below such guidelines. To the extent the
increase in the enterprise value exceeds
200%, the aggregate economic benefit to
the incentive program shall be 14% of
such excess. To the extent the increase
in the enterprise value is greater than
zero and less than 100%, the aggregate
economic benefit to the incentive program
shall be 11% of such increase in the
enterprise value. The economic benefits
which the program will accrue will be a
combination of cash, restricted stock,
stock options, warrants and other forms
of consideration and the program will be
structured in a manner to maximize the
after-tax benefits to program
participants, including a mutually agreed
upon equity financing package, and other
reasonable methods to maximize after-tax
value.
The incentive program will provide
for ratable vesting over five
years from date of grant.
Participants in the program at its
inception shall be deemed to have
commenced participation at the
closing of the acquisition of MGM.
Awards under the incentive program
will automatically vest with
respect to any participant in the
program upon certain events,
including but not limited to: (i)
the termination or constructive
termination of the participant
without cause, (ii) the
participant's resignation for good
cause, (iii) the participants
death or disability or (iv) a
change in control of Newco. If any
initial investor in Newco should
dispose of any portion of its
equity, Management shall have the
right to dispose of a similar
percentage of its vested incentive
interest. If an initial public
offering of Newco's Common Stock
or another liquidity event has not
occurred by the fifth anniversary
of the Closing, then from April 1
through April 30 of each year
after such fifth anniversary and
until an initial public offering
of Common Stock or another
liquidity event occurs,
participants in the plan may
require Newco to pay out any
cash-based awards and to redeem
any Common Stock acquired under
the incentive plan based upon the
fair market value of Newco, as
determined as of December 31 of
the prior year by an investment
banking firm of nationally
recognized standing; provided,
however, that Newco's obligations
hereunder will be subject to all
covenants in its credit agreements
and applicable state law.
Participants in the incentive plan
will be entitled to certain
registration rights with respect
to stock-based awards received
under the plan.
Transfers of Common Stock
and Preferred Stock: Until the third anniversary of the
Closing, no holder of shares of Common
Stock or Preferred Stock (the
"Securities") shall transfer any such
Securities. After the third anniversary
of the Closing and prior to the fifth
anniversary of the Closing, holders of
Securities shall be entitled to transfer
any such Securities, subject to the
following:
(1) Any holder wishing to
transfer any Securities shall give
all other holders of Securities
(including management) a
reasonable opportunity to transfer
the same proportion of such
persons Securities in the same
transaction;
(2) Neither Investor shall
reduce such Investor's holdings of
Common Stock to less than 50% of
the number of shares of Common
Stock acquired by such Investor at
the Closing ("Initial Shares");
(3) No transferee of any of
the Securities shall be assigned
any of the corporate governance
rights granted to the Investor in
connection with the Transaction;
(4) In the event that,
during the fourth year after the
Closing, after any such transfer,
any Investor shall hold a smaller
number of Initial Shares than the
other Investor, the
representatives of the Investor on
the seven-member Board shall be
appropriately adjusted so that
each Investor shall have
representation on the Board
proportionate to such Investor's
ownership of Initial Shares
(subject to the obligations to
elect Mr. Mancuso as a director,
as provided elsewhere herein); and
(5) After the fifth
anniversary of the Closing, there
shall be no restrictions
whatsoever on the ability of any
holder of Securities to transfer
any or all of such person's
Securities.
Registration Rights: Each Investor shall be entitled to three
demand and unlimited S-3 and piggyback
registration statements. Members of
management who wish to sell a minimum
number of shares (to be determined) of
Common Stock shall be entitled to _____
demand registration statements and
management shareholders shall be entitled
to unlimited S-3 and piggyback
registration statements. All costs and
expenses incurred in connection with all
of the foregoing registration statements
shall be paid by Newco.
Indemnification: Newco's charter documents will provide
that Newco will indemnify and hold
harmless its officers and directors to
the maximum extent allowable under law,
and Newco will obtain director and
officer liability insurance in amounts
and with such coverages as are agreed
upon by the Investors and Mr. Mancuso's
specific provisions will be included to
clarify that the indemnification will
cover any and all actions taken by
members of management and board in
connection with the auction of MGM and
management's efforts to assemble a bid
group to acquire MGM.
Term of the Shareholders
Agreement: Five years after Closing (except for
provisions that specifically provide that
they extend beyond five years).
AMENDMENT NO.1 TO INVESTMENT AGREEMENT DATED AS OF JULY 11, 1996,
AMONG SEVEN NETWORK LIMITED, TRACINDA CORPORATION AND P&F ACQUISITION CORP.
1. The parties hereto are parties to an Investment Agreement (the
"Investment Agreement") dated July 11, 1996.
2. The parties hereto wish to amend the Investment Agreement and
related attachments as herein provided. Capitalized terms used herein
and not otherwise defined shall have the meaning assigned such terms
in the Investment Agreement.
The parties hereto agree as follows:
1. Amendment to Investor Commitments. The commitment of each
Investor to purchase capital stock of Newco specified on the signature
page to the Investment Agreement is hereby amended as follows:
Common Stock Preferred Stock
------------ ---------------
Seven Network $200,000,000 $ 50,000,000
Tracinda Corporation $200,000,000 $450,000,000
Total Commitments $400,000,000 $500,000,000
============ ============
2. Amendment to Term-Sheet. The number "450,000" in each of (i)
the third line aside the Equity Capitalization caption in the term
sheet and (ii) the fourth line aside the Conversion caption in the
term-sheet, is hereby replaced with the number "500,000".
In addition, the amount of "$375 million" in the fifth line aside
the Debt Capitalization caption in the term-sheet is hereby replaced
with the amount of "$400 million".
3. Miscellaneous. (a) Except as otherwise amended hereby, the
terms of the Investment Agreement remain in full force and effect, and
any references in the Investment Agreement and the related attachments
to the Investment Agreement shall mean the Investment Agreement as
amended by this Amendment No. 1.
(b) This Amendment No. 1 shall be governed by, and construed in
accordance with, the internal laws of the State of New York (without
regard to conflict of law principles).
(c) This Amendment No. 1 may be signed in counterparts.
Very truly yours,
P&F Acquisition Corp.
By:
--------------------
Name: Frank Mancuso
Title: Chairman and Chief
Executive Officer
Tracinda Corporation
By:
--------------------
Name:
Title:
Seven Network Limited
By:
--------------------
Name:
Title:
I agree to the foregoing amendments
to the Investment Agreement.
- -----------------------------------
Frank Mancuso
INVESTMENT AGREEMENT
--------------------
INVESTMENT AGREEMENT, dated as of May 2, 1997 (this "Agreement"), by
and among SEVEN NETWORK LIMITED, a corporation organized under the laws of
the Commonwealth of Australia ("Seven"); TRACINDA CORPORATION, a corporation
organized under the laws of the State of Nevada ("Tracinda"); and P&F
ACQUISITION CORP., a corporation organized under the laws of the State of
Delaware ("P&F").
A. P&F is a party to a Stock Purchase Agreement (the "Orion Stock
Purchase Agreement"), of even date herewith, among Metromedia International
Group, Inc., a corporation organized under the laws of the State of Delaware
("Metromedia"), Orion Pictures Corporation, a corporation organized under the
laws of the State of Delaware ("Orion"), and P&F, relating to the purchase by
P&F of all of the outstanding capital stock of Orion.
B. Seven and Tracinda are parties to a Stock Option Agreement (the
"Seven Option Agreement"), dated as of October 10, 1996, between Seven and
Tracinda, relating to 100,000 shares (the "Seven Option Shares") of the
Series A Convertible Preferred Stock of P&F (the "Preferred Stock").
C. Concurrently with the execution, and pursuant to the terms, of
the Orion Stock Purchase Agreement, and related documents and agreements, the
parties hereto have agreed to enter into an agreement embodying the terms
specified herein.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows;
ARTICLE I
DEFINITIONS
1.1. The following terms, as used herein, have the following meanings:
"Additional Shares" has the meaning given in Section 2.1.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
law to close.
"Common Stock" means the common stock, par value $.01 per share, of P&F.
"Consent and Waiver" means a Consent and Waiver to have been entered
into by Mr. Mancuso and each of the Other Executives relating to the
transactions contemplated herein.
"Investors Shareholder Agreement" means the Investors Shareholder
Agreement, dated as of October 10, 1996, by and among Seven, Tracinda, P&F,
MGM and Mr. Mancuso.
"MGM" means Metro-Goldwyn-Mayer Inc., a corporation organized under the
laws of the State of Delaware.
"Metromedia" has the meaning given in the Preamble.
"Mr. Mancuso" means Frank G. Mancuso.
"Option" means a Series A Option or a Series B Option issued under the
Plan, as applicable.
"Option Closing" has the meaning given in Section 3.1.
"Orion Closing" has the meaning given in Section 2.1.
"Orion Stock Purchase Agreement" has the meaning given in the Preamble.
"Orion Transaction" means the acquisition by P&F of the outstanding
capital stock of Orion on the terms and conditions set forth in the Orion
Stock Purchase Agreement and any related transactions contemplated by the
Orion Stock Purchase Agreement.
"Orion" has the meaning given in the Preamble.
"Other Executives" means the parties specified on the signature pages
to the Shareholders Agreement other than P&F, MGM, Seven, Tracinda and Mr.
Mancuso.
"Plan" means the P&F Acquisition Corp. and Metro-Goldwyn-Mayer, Inc.
1996 Management Stock Option and Bonus Plan.
"Preferred Stock" has the meaning given in the Preamble.
"Seven Option Agreement" has the meaning given in the Preamble.
"Seven Option Shares" has the meaning given in the Preamble.
"Shareholders Agreement" means the Shareholders Agreement, dated as of
October 10, 1996, by and among Seven, Tracinda, P&F, MGM, Mr. Mancuso, and
the Executives.
ARTICLE II
ACQUISITION OF ADDITIONAL SHARES OF COMMON STOCK
2.1. Simultaneously with the closing (the "Orion Closing") of the
Orion Transaction, Tracinda shall purchase from P&F, and P&F shall issue and
sell to Tracinda, 321,000 shares of Common Stock (the "Tracinda Additional
Shares") for a purchase price of $1,000 per share, or an aggregate purchase
price of $321 million (the "Tracinda Purchase Price"). Simultaneously with
the Orion Closing, Seven shall purchase from P&F, and P&F shall issue and
sell to Seven, 39,000 shares of Common Stock (the "Seven Additional Shares"
and, together with the Tracinda Additional Shares, the "Additional Shares"),
for a purchase price of $1,000 per share, or an aggregate purchase price of
$39 million (the "Seven Purchase Price").
2.2. Tracinda and Seven shall pay the Tracinda Purchase Price and the
Seven Purchase Price, respectively, for the Additional Shares to be purchased
by it, simultaneously with the Orion Closing, by wire transfer of immediately
available funds to an account or accounts of P&F designated in writing by P&F
to each of Tracinda and Seven at least three Business Days before the Orion
Closing.
2.3. At the Orion Closing, P&F shall deliver to each of Tracinda and
Seven a certificate representing the shares of Common Stock being issued to
such purchaser, with such legends affixed to the reverse thereof as are
required by Section 4.1(b) of the Shareholders Agreement and Section 4.1(c)
of the Investors Shareholder Agreement. Each of the parties hereto
acknowledges and agrees that the Additional Shares are subject to the terms
of the Shareholders Agreement and the Investors Shareholder Agreement.
ARTICLE III
EXERCISE OF OPTION
3.1. Seven hereby irrevocably and unconditionally exercises its option
pursuant to Section 1(b) of the Seven Option Agreement to acquire the Seven
Option Shares from Tracinda. The closing of the sale of such shares of
Preferred Stock under such option exercise (the "Option Closing") shall take
place at the earlier of (i) June 30, 1997 or (ii) the Orion Closing. At the
Option Closing, Seven shall deliver to Tracinda the option exercise price of
$100.0 million plus the Option Payment Amount (as defined in Section 1(c) of
the Seven Option Agreement) for the Commitment Payment Period (as defined in
Section 1(c) of the Seven Option Agreement) then ending by wire transfer of
immediately available funds to an account or accounts designated in writing
by Tracinda to Seven at least three Business Days before the Option Closing,
and Tracinda shall deliver to Seven a certificate for the Seven Option Shares
in the name of Seven or accompanied by a duly executed stock power.
3.2. P&F hereby agrees to record the transfer of the Seven Option
Shares on the books of P&F, and to issue a certificate in the name of Seven
representing the Seven Option Shares upon the request of Tracinda or Seven,
upon receipt by P&F of the certificate representing the shares to be
transferred by Tracinda, together with a duly endorsed stock power, and any
representation P&F shall reasonably request with respect to Seven's
investment intent. Any certificate for the Seven Option Shares issued in the
name of Seven shall have such legends affixed to the reverse thereof as are
required by Section 4.1(b) of the Shareholders Agreement and Section 4.1(c)
of the Investors Shareholder Agreement.
3.3. This Agreement constitutes the notice required with respect to
such option exercise under Section 1(d) of the Seven Option Agreement. At
the Option Closing, Tracinda agrees to deliver shares of Preferred Stock that
comply with the title and absence of restrictions requirements of Section
2(b) of the Seven Option Agreement. To the extent any of the terms of this
Article III are inconsistent with the notice and closing provisions set forth
in Section 1 of the Seven Option Agreement, the Seven Option Agreement shall
be deemed to be amended to be consistent with this Article III.
3.4. Each of the parties hereto agrees that the sale hereunder of the
Seven Option Shares complies with the terms of the Shareholders Agreement and
Investor Shareholders Agreement relating to the transfer of interests in the
capital stock of P&F and consents to such sale. Each of the parties hereto
acknowledges and agrees that the Seven Option Shares are subject to the terms
of the Shareholders Agreement and the Investor Shareholder Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1. Representations and Warranties of P&F. P&F hereby represents and
warrants to the other parties hereto as follows: (i) P&F has all requisite
corporate power and authority to enter into this Agreement and to consummate
the transactions set forth in Articles II and III hereof; (ii) the execution
and delivery by P&F of this Agreement, and the consummation by P&F of the
transactions set forth in Articles II and III hereof, have been duly
authorized by all necessary corporate action on the part of P&F, including,
but not limited to, Unanimous Investor/Mancuso Approval; (iii) all of the
transactions contemplated by the Orion Stock Purchase Agreement have received
Unanimous Investor/Mancuso Approval; (iv) this Agreement has been duly
executed and delivered by P&F and constitutes a valid and binding obligation
of P&F enforceable against P&F in accordance with its terms, except as the
enforceability hereof may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights generally or general principles of
equity; (v) no consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, is
required by, or with respect to, P&F in connection with the execution and
delivery of this Agreement by P&F or the consummation by P&F of the
transactions set forth in Articles II and III hereof; (vi) the execution and
delivery of this Agreement by P&F and the consummation of the transactions
set forth in Articles II and III hereof by P&F does not conflict with, or
result in a breach of, any law or regulation of any governmental authority
applicable to P&F or any material agreement to which P&F is a party; (vii)
when issued and paid for in accordance with the provisions of Article II
hereof, the shares of Common Stock sold to Tracinda and Seven pursuant to
Article II hereof shall be duly authorized, validly issued, fully paid,
nonassessable, and free of any claims or encumbrances, other than (a) any
claims or encumbrances resulting from actions taken by Tracinda or Seven with
respect to the shares to be received by it hereunder, or (b) pursuant to the
Investors Shareholder Agreement or the Shareholders Agreement; and (viii)(r)
P&F has received an executed Consent and Waiver from Mr. Mancuso and at least
a majority of the Other Executives who, collectively with Mr. Mancuso,
constitute holders of a majority of the outstanding Series A Options and
outstanding Series B Options, (s) each Consent and Waiver executed on or
prior to the date hereof is in full force and effect on the date hereof, each
Consent and Waiver will be in full force and effect as of the Closing Date,
and each Consent and Waiver is, and on the Closing Date will be, valid,
binding, and enforceable against the party who signed it, and (t) executed
Consents and Waivers received by P&F represent Options constituting at least
a Majority-in-Interest (as defined in the Plan).
4.2. Representations and Warranties of Seven. Seven hereby represents
and warrants to the other parties hereto as follows: (i) Seven has all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions set forth in Articles II and III hereof; (ii) the
execution and delivery by Seven of this Agreement, and the consummation by
Seven of the transactions set forth in Articles II and III hereof, have been
duly authorized by all necessary corporate action on the part of Seven;
(iii) this Agreement has been duly executed and delivered by Seven and
constitutes a valid and binding obligation of Seven enforceable against Seven
in accordance with its terms, except as the enforceability hereof may be
limited by bankruptcy, insolvency or other similar laws affecting creditors'
rights generally or general principles of equity; (iv) no consent, approval,
order or authorization of, or registration, declaration or filing with, any
court, administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign is required by, or with respect to,
Seven in connection with the execution and delivery by Seven of this
Agreement or the consummation by Seven of the transactions set forth in
Articles II and III hereof; and (v) the execution and delivery by Seven of
this Agreement and the consummation by Seven of the transactions set forth in
Articles II and III hereof does not conflict with, or result in a breach of,
any law or regulation of any governmental authority applicable to Seven or
any material agreement to which Seven is a party.
4.3. Representations and Warranties of Tracinda. Tracinda hereby
represents and warrants to the other parties hereto as follows: (i) Tracinda
has all requisite corporate power and authority to enter into this Agreement
and to consummate the transactions set forth in Articles II and III hereof;
(ii) the execution and delivery by Tracinda of this Agreement, and the
consummation by Tracinda of the transactions set forth in Articles II and III
hereof, have been duly authorized by all necessary corporate action on the
part of Tracinda; (iii) this Agreement has been duly executed and delivered
by Tracinda and constitutes a valid and binding obligation of Tracinda
enforceable against Tracinda in accordance with its terms, except as the
enforceability hereof may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights generally or general principles of
equity; (iv) no consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, is required by, or with respect to, Tracinda in connection with the
execution and delivery of this Agreement by Tracinda or the consummation by
Tracinda of the transactions set forth in Articles II and III hereof; (v) the
execution and delivery of this Agreement by Tracinda and the consummation by
Tracinda of the transactions set forth in Articles II and III hereof does not
conflict with, or result in a breach. of, any law or regulation of any
governmental authority applicable to Tracinda or any material agreement to
which Tracinda is a party, and (vi) the Seven Option Shares, upon exercise of
the option and payment therefor in accordance with Article III hereof and the
Seven Option Agreement, will be transferred to Seven or its permitted
assignee free and clear of all liens, claims, charges, encumbrances or other
similar restrictions, other than the restrictions specified in the
Shareholders Agreement and the Investors Shareholder Agreement.
ARTICLE V
COVENANTS
5.1. Subject to the terms and conditions of this Agreement, each party
hereto will use its best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things reasonably necessary or reasonably
desirable to consummate the transactions contemplated by this Agreement.
5.2. P&F shall seek to obtain, prior to the Orion Closing, an executed
Consent and Waiver from each holder of Options who has not delivered a
Consent and Waiver prior to the execution of this Agreement. Following the
Closing, P&F shall seek to obtain, upon the execution by any Other Executive
of a Stock Option Agreement after the date of the Orion Closing which relates
to any Option granted prior to the Orion Closing, a Consent and Waiver from
such Other Executive.
ARTICLE VI
CONDITIONS TO CLOSING
The obligations of each of Seven, Tracinda and P&F to consummate its
obligations pursuant to Article II hereof are subject to the satisfaction on
or prior to the Orion Closing of each of the following conditions:
6.1. All of the conditions to the obligations of the parties to the
Orion Stock Purchase Agreement to be performed at or prior to the Orion
Closing shall have been satisfied or waived, and the Orion Closing shall
occur simultaneously with the consummation of the transactions set forth in
Article II hereof.
6.2. The New Orion Credit Facility (as defined in the Orion Stock
Purchase Agreement) shall be in full force and effect, with full funds
available thereunder, on substantially the terms and conditions set forth in
the Bank Commitment Letter (as defined in the Orion Stock Purchase Agreement).
6.3. (a) Each other party hereto shall have performed and satisfied
each of its obligations hereunder required to be performed or satisfied
hereunder at or prior to the Orion Closing, (b) each of the representations
and warranties of each other party hereto contained in this Agreement shall
be true and correct, at and as of the date of the Orion Closing, with the
same force and effect as if made on the date of the Orion Closing, (c) each
party hereto shall have received a certificate of an officer of each other
party hereto, that the foregoing is true and correct as to such party.
ARTICLE VII
GENERAL PROVISIONS
7.1. Notices. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission and by courier
service (with proof of service), hand delivery or certified or registered
mail (return receipt requested and first-class postage prepaid), addressed as
follows:
If to P&F, to:
P&F Acquisition Corp.
2500 Broadway
Santa Monica, CA 90404-3061
Attention: General Counsel
Telephone: (310) 449-3993
Telecopy: (310) 449-3011
with a copy to:
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, CA 90071
Attention: Bruce Meyer
Telephone: (213) 229-7979
Telecopy: (213) 229-7520
Tracinda Corporation
4835 Koval Lane
Las Vegas, NV 89109
Attention: Richard E. Sobelle
Telephone: (702) 737-8060
Telecopy: (702) 737-1177
If to Tracinda, to:
Tracinda Corporation
4835 Koval Lane
Las Vegas, NV 89109
Attention: Secretary/Treasurer
Telecopy: (702) 737-1177
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Attention: Stephen Fraidin, P.C.
Telephone: (212) 859-8140
Telecopy: (212) 859-4000
If to Seven, to:
Seven Network Limited
c/o Culmen Group, L.P.
201 Main Street
Suite 1955
Fort Worth, TX 76102
Attention: Michael R. Gleason
Telephone: (817) 335-6999
Telecopy: (817) 870-1384
and:
ATN7
Mobbs Lane
Epping NSW 2121, Australia
Attention: Gary Rice, Managing Director
Telephone: (612) 877-7004
Telecopy: (612) 877-7882 or (612) 877-7111
with a copy to:
Kelly, Hart & Hallman
201 Main Street
Fort Worth, TX 76102
Attention: F. Richard Bernasek
Telephone: (817) 332-2500
Telecopy: (817) 878-9280
or to such other address as any party shall specify by written notice so
given, and such notice shall be deemed to have been delivered as of the date
so telecommunicated, personally delivered or mailed.
7.2. Expenses. Subject to the occurrence of the Orion Closing, P&F
shall pay all out-of-pocket expenses (including, but not limited to,
attorneys' fees and expenses) incurred by Tracinda and Seven, in connection
with the Orion Transaction and the transactions contemplated by this
Agreement, promptly upon the delivery to P&F of documentation thereof.
7.3. Assignment; Binding Effect; Benefit; Successors. (a) Except as
otherwise expressly provided in this Agreement, neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto (whether by operation of law or otherwise);
provided, however, that each of Tracinda and Seven may assign its rights
under this Agreement to any of their respective direct or indirect wholly
owned Subsidiaries so long as (i) such assignee agrees to be bound by the
terms of this Agreement to the same extent as the applicable assignor,
pursuant to a written agreement with P&F that is reasonably acceptable to it,
(ii) the applicable assignor continues to be bound by, and is not released
from, any of its obligations under this Agreement and (iii) the applicable
assignor will cause the applicable direct or indirect wholly owned subsidiary
to continue to be a direct or indirect wholly owned subsidiary of the
applicable assignor for so long as such assignee shall have any rights under
this Agreement. For the purpose of this Agreement, all capital stock of P&F
owned by any direct or indirect wholly owned Subsidiary of Tracinda or Seven,
as applicable, shall be deemed owned by Tracinda or Seven, as applicable.
Subject to the first sentence of this Section 7.3(a), this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. Except as expressly provided in this
Agreement, notwithstanding anything contained in this Agreement to the
contrary, nothing in this Agreement, express or implied, is intended to
confer on any person other than the parties hereto any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
(b) In the event that P&F or MGM shall enter into a merger,
consolidation or other similar type transaction, all of the terms of this
Agreement relating to P&F and MGM, as applicable, shall apply to the
surviving corporation.
7.4. Entire Agreement. This Agreement, the exhibits and schedules
hereto and any certificate delivered by the parties in connection herewith
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings (oral
and written) among the parties with respect thereto.
7.5. Certain Remedies. If either Seven or Tracinda shall not purchase
Additional Shares at the Orion Closing as required by Article II hereof, the
other Investor shall have the right, but not the obligation, to purchase such
other Investor's Additional Shares pursuant to Article II hereof. The
decision by an Investor to purchase shares of Common Stock which the other
Investor had been obligated to purchase pursuant to Article II hereof shall
not be deemed to affect or eliminate any other remedy available to any other
party hereto under applicable law or the terms of this Agreement. In
addition, if financing in addition to the sum of (a) the Tracinda Purchase
Price, (b) the Seven Purchase Price, and (c) any available bank financing, is
required for P&F to consummate the Orion Transaction, then Tracinda shall
have the right, but not the obligation, to provide such additional financing
by purchasing additional shares of Common Stock at the same purchase price
per share, and on the same terms and conditions, as provided in Article II
with respect to the Tracinda Additional Shares.
7.6. Termination. The obligations of the parties under Article II
hereof shall terminate without further action upon the termination of the
Orion Stock Purchase Agreement in accordance with the terms thereof. Except
as expressly provided in this Section 7.6, this Agreement shall only be
terminable upon the written agreement of all parties hereto.
7.7. Amendment. This Agreement may not be amended or modified except
by an instrument in writing signed by or on behalf of each of the parties
hereto.
7.8. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware (without
regard to conflict of laws principles which would require the application of
the laws of any other State). Each party hereto hereby consents to process
being served in any action or proceeding in respect of this Agreement by the
mailing of a copy thereof to the address set forth in Section 7.1 hereof and
agrees that such service upon receipt shall constitute good and sufficient
service of process or notice thereof. Nothing in this Section 7.8 shall
affect or eliminate any right to serve process in any other matter permitted
by law.
7.9. Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
of this Agreement, each of which may be signed by less than all of the
parties hereto, but together all such copies are signed by all of the parties
hereto.
7.10. Headings. Headings of the Articles and Sections of this Agreement
are for the convenience of the parties only and shall be given no substantive or
interpretive effect whatsoever.
7.11. Interpretation. In this Agreement unless the context otherwise
requires, words describing the singular number shall include the plural and
vice versa, "including" shall mean including, without limitation, and words
denoting any gender shall include all genders and words denoting natural
persons shall include corporations and partnerships and vice versa.
7.12. Incorporation of Exhibits and Schedules. All exhibits and
schedules hereto are hereby incorporated herein and made a part hereof for
all purposes as if fully set forth herein.
7.13. Severability. Any term or provisions of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or otherwise affecting the validity or enforceability of any of the
terms or provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, the provision
shall be interpreted to be only so broad as is enforceable.
7.14. Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any Delaware
court, this being in addition to any other remedy to which they may be
entitled at law or in equity.
IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf as of the day and year first
written above.
SEVEN NETWORK LIMITED
By:
Kerry Stokes
Chairman
TRACINDA CORPORATION
By:
Anthony Mandekic
Secretary/Treasurer
P&F ACQUISITION CORP.
By:
David G. Johnson
Executive Vice President
The undersigned, an indirect wholly
owned subsidiary of Seven Network
Limited, hereby agrees to be bound by
the terms of this Agreement to the same
extent as Seven Network Limited.
MILTONSTAR PTY LIMITED
By:
Kerry Stokes
Chairman
FORM OF
INVESTMENT AGREEMENT
--------------------
THIS INVESTMENT AGREEMENT, dated as of November ___, 1997 (this
"Agreement") is by and between TRACINDA CORPORATION, a corporation
organized under the laws of the State of Nevada ("Tracinda") and
METRO-GOLDWYN-MAYER INC., a corporation organized under the laws of
the State of Delaware ("MGM").
A. The Company intends to commence with an Approved Initial
Public Offering (as defined below) of the Common Stock (as defined
below) of MGM and to enter into certain related transactions.
B. Concurrently with the IPO Closing (as defined below), the
parties hereto have agreed to enter into an agreement embodying the
terms specified herein.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
1.1. The following terms, as used herein, have the following
meanings:
"Additional Shares" has the meaning given in Section 2.1.
"Approved Initial Public Offering" has the meaning set forth in
the Investors Shareholder Agreement as the same may be amended from
time to time.
"Business Day" means a day other than a Saturday, Sunday or other
day on which commercial banks in New York, New York are authorized or
required by law to close.
"Common Stock" means the common stock, par value $.01 per share,
of MGM.
"Investors Shareholder Agreement" means the Amended and Restated
Investors Shareholder Agreement, dated as of August 4, 1997, by and
among Seven, Tracinda, MGM, MGM Studios and Mr. Mancuso.
"IPO Closing" has the meaning set forth in the Investors
Shareholder Agreement as the same may be amended from time to time.
"MGM Studios" means Metro-Goldwyn-Mayer Studios Inc., a
corporation organized under the laws of the State of Delaware.
"Mr. Mancuso" means Frank G. Mancuso.
"Purchase Price" has the meaning given in Section 2.1.
"Seven" means Seven Network Limited.
"Shareholders Agreement" means the Amended and Restated
Shareholders Agreement, dated as of August 4, 1997, by and among
Seven, Tracinda, MGM, MGM Studios, Mr. Mancuso, and the other parties
thereto.
ARTICLE II
ACQUISITION OF ADDITIONAL SHARES OF COMMON STOCK
2.1. Simultaneously with the IPO Closing, Tracinda shall purchase
from MGM, and MGM shall issue and sell to Tracinda, ________<F1>
shares of Common Stock (the "Additional Shares") for a purchase price of
$_____<F2> per share, or an aggregate purchase price of $75 million
(the "Purchase Price").
2.2. Tracinda shall pay the Purchase Price for the Additional
Shares to be purchased by it, simultaneously with the IPO Closing, by
wire transfer of immediately available funds to an account or accounts
of MGM designated in writing by MGM to Tracinda at least three
Business Days before the IPO Closing.
2.3. At the IPO Closing, MGM shall deliver to Tracinda a
certificate representing the shares of Common Stock being issued to
such purchaser, with such legends affixed to the reverse thereof as
are required by Section 3.1 of the Shareholders Agreement and Section
4.2 of the Investors Shareholder Agreement. Each of the parties hereto
acknowledges and agrees that the Additional Shares are subject to the
terms of the Shareholders Agreement and the Investors Shareholder
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of MGM. MGM hereby represents
and warrants to the other party hereto as follows: (i) MGM has all
requisite corporate power and authority to enter into this Agreement
and to consummate the transactions set forth in Article II hereof;
(ii) the execution and delivery by MGM of this Agreement, and the
consummation by MGM of the transactions set forth in Article II
hereof, have been duly authorized by all necessary corporate
- --------
[FN]
/1/ The number of shares of Common Stock constituting the
Additional Shares shall be determined at the pricing of the Approved
Initial Public Offering and shall equal (i) $75 million divided by
(ii) the initial public offering price of the shares sold to the
public in the Approved Initial Public Offering, net of underwriting
discounts and commissions.
/2/ The purchase price per share shall be determined at the
pricing of the Approved Initial Public Offering and shall equal the
initial public offering price of the shares sold to the public in the
Approved Initial Public Offering, net of underwriting discounts and
commissions.
</FN>
action on the part of MGM; (iii) this Agreement has been duly executed
and delivered by MGM and constitutes a valid and binding obligation of
MGM enforceable against MGM in accordance with its terms, except as
the enforceability hereof may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights generally or general
principles of equity; (iv) no consent, approval, order or
authorization of, or registration, declaration or filing with, any
court, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, is required by, or
with respect to, MGM in connection with the execution and delivery of
this Agreement by MGM or the consummation by MGM of the transactions
set forth in Article II hereof; (v) the execution and delivery of this
Agreement by MGM and the consummation of the transactions set forth in
Article II hereof by MGM does not conflict with, or result in a breach
of, any law or regulation of any governmental authority applicable to
MGM or any material agreement to which MGM is a party; and (vi) when
issued and paid for in accordance with the provisions of Article II
hereof, the shares of Common Stock sold to Tracinda pursuant to
Article II hereof shall be duly authorized, validly issued, fully
paid, nonassessable, and free of any claims or encumbrances, other
than (a) any claims or encumbrances resulting from actions taken by
Tracinda with respect to the shares to be received by it hereunder, or
(b) pursuant to the Investors Shareholder Agreement or the
Shareholders Agreement.
3.2. Representations and Warranties of Tracinda. Tracinda hereby
represents and warrants to the other party hereto as follows: (i)
Tracinda has all requisite corporate power and authority to enter into
this Agreement and to consummate the transactions set forth in Article
II hereof; (ii) the execution and delivery by Tracinda of this
Agreement, and the consummation by Tracinda of the transactions set
forth in Article II hereof, have been duly authorized by all necessary
corporate action on the part of Tracinda; (iii) this Agreement has
been duly executed and delivered by Tracinda and constitutes a valid
and binding obligation of Tracinda enforceable against Tracinda in
accordance with its terms, except as the enforceability hereof may be
limited by bankruptcy, insolvency or other similar laws affecting
creditors' rights generally or general principles of equity; (iv) no
consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality,
domestic or foreign, is required by, or with respect to, Tracinda in
connection with the execution and delivery of this Agreement by
Tracinda or the consummation by Tracinda of the transactions set forth
in Article II hereof; and (v) the execution and delivery of this
Agreement by Tracinda and the consummation by Tracinda of the
transactions set forth in Article II hereof does not conflict with, or
result in a breach of, any law or regulation of any governmental
authority applicable to Tracinda or any material agreement to which
Tracinda is a party.
ARTICLE IV
COVENANTS
4.1. Subject to the terms and conditions of this Agreement, each
party hereto will use its best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things reasonably
necessary or reasonably desirable to consummate the transactions
contemplated by this Agreement.
ARTICLE V
CONDITIONS TO CLOSING
The obligations of each of Tracinda and MGM to consummate its
obligations pursuant to Article II hereof are subject to the
satisfaction on or prior to the IPO Closing of each of the following
conditions:
5.1. All of the conditions to be performed at or prior to the IPO
Closing shall have been satisfied or waived, and the IPO Closing shall
occur simultaneously with the consummation of the transactions set
forth in Article II hereof.
5.2. (a) The other party hereto shall have performed and
satisfied each of its obligations hereunder required to be performed
or satisfied hereunder at or prior to the IPO Closing, (b) each of the
representations and warranties of the other party hereto contained in
this Agreement shall be true and correct, at and as of the date of the
IPO Closing, with the same force and effect as if made on the date of
the IPO Closing, and (c) each party hereto shall have received a
certificate of an officer of each other party hereto, that the
foregoing is true and correct as to such party.
ARTICLE VI
GENERAL PROVISIONS
6.1. Notices. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission and by
courier service (with proof of service), hand delivery or certified or
registered mail (return receipt requested and first-class postage
prepaid), addressed as follows:
If to MGM, to:
Metro-Goldwyn-Mayer Inc.
2500 Broadway
Fifth Floor
Santa Monica, CA 90404-3061
Attention: David Johnson
Telephone: (310) 449-3993
Telecopy: (310) 449-3011
with a copy to:
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, CA 90071
Attention: Bruce Meyer
Telephone: (213) 229-7979
Telecopy: (213) 229-7520
Tracinda Corporation
4835 Koval Lane
Las Vegas, NV 89109
Attention: Richard E. Sobelle
Telephone: (702) 737-8060
Telecopy: (702) 737-1177
If to Tracinda, to:
Tracinda Corporation
4835 Koval Lane
Las Vegas, NV 89109
Attention: Secretary/Treasurer
Telecopy: (702) 737-1177
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Attention: Stephen Fraidin, P.C.
Telephone: (212) 859-8140
Telecopy: (212) 859-4000
or to such other address as any party shall specify by written notice
so given, and such notice shall be deemed to have been delivered as of
the date so telecommunicated, personally delivered or mailed.
6.2. Expenses. Subject to the occurrence of the IPO Closing, MGM
shall pay all out-of-pocket expenses (including, but not limited to,
attorneys' fees and expenses) incurred by Tracinda in connection with
the transactions contemplated by this Agreement, promptly upon the
delivery to MGM of documentation thereof.
6.3. Assignment; Binding Effect; Benefit; Successors. (a) Except
as otherwise expressly provided in this Agreement, neither this
Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto (whether by operation
of law or otherwise); provided, however, that Tracinda may assign its
rights under this Agreement to any of its direct or indirect wholly
owned subsidiaries so long as (i) such assignee agrees to be bound by
the terms of this Agreement to the same extent as the applicable
assignor, pursuant to a written agreement with MGM that is reasonably
acceptable to it, (ii) the applicable assignor continues to be bound
by, and is not released from, any of its obligations under this
Agreement and (iii) the applicable assignor will cause the applicable
direct or indirect wholly owned subsidiary to continue to be a direct
or indirect wholly owned subsidiary of the applicable assignor for so
long as such assignee shall have any rights under this Agreement. For
the purpose of this Agreement, all capital stock of MGM owned by any
direct or indirect wholly owned subsidiary of Tracinda shall be deemed
owned by Tracinda. Subject to the first sentence of this Section
6.3(a), this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and
assigns. Except as expressly provided in this Agreement,
notwithstanding anything contained in this Agreement to the contrary,
nothing in this Agreement, express or implied, is intended to confer
on any person other than the parties hereto any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
(b) In the event that MGM shall enter into a merger,
consolidation or other similar type transaction, all of the terms of
this Agreement relating to MGM shall apply to the surviving
corporation.
6.4. Entire Agreement. This Agreement and any certificate
delivered by the parties in connection herewith constitute the entire
agreement among the parties with respect to the subject matter hereof
and supersedes all prior agreements and understandings (oral or
written) among the parties with respect thereto.
6.5. Termination. Except as expressly provided in this Section
6.5, this Agreement shall only be terminable upon the written
agreement of all parties hereto.
6.6. Amendment. This Agreement may not be amended or modified
except by an instrument in writing signed by or on behalf of each of
the parties hereto.
6.7. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware
(without regard to conflict of laws principles which would require the
application of the laws of any other State). Each party hereto hereby
consents to process being served in any action or proceeding in
respect of this Agreement by the mailing of a copy thereof to the
address set forth in Section 6.1 hereof and agrees that such service
upon receipt shall constitute good and sufficient service of process
or notice thereof. Nothing in this Section 6.7 shall affect or
eliminate any right to serve process in any other manner permitted by
law.
6.8. Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument. Each counterpart may
consist of a number of copies of this Agreement, each of which may be
signed by less than all of the parties hereto, but together all such
copies are signed by all of the parties hereto.
6.9. Headings. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only and shall be
given no substantive or interpretive effect whatsoever.
6.10. Interpretation. In this Agreement unless the context
otherwise requires, words describing the singular number shall include
the plural and vice versa, "including" shall mean including, without
limitation, and words denoting any gender shall include all genders
and words denoting natural persons shall include corporations and
partnerships and vice versa.
6.11. Severability. Any term or provisions of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or otherwise
affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
6.12. Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions
of this Agreement were not performed in accordance with its specific
terms or was otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any Delaware court, this being in addition to any
other remedy to which they may be entitled at law or in equity.
IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf as of the day and
year first written above.
TRACINDA CORPORATION
By:
---------------------------
Name:
Title:
METRO-GOLDWYN-MAYER INC.
By:
---------------------------
Name:
Title:
======================================================================
FORM OF
AMENDED AND RESTATED INVESTORS SHAREHOLDER AGREEMENT
by and among
SEVEN NETWORK LIMITED
TRACINDA CORPORATION
METRO-GOLDWYN-MAYER STUDIOS INC.
METRO-GOLDWYN-MAYER INC.
and
FRANK G. MANCUSO
Dated as of August 4, 1997
======================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS................................................... 1
Section 1.1. Definitions..................................... 1
ARTICLE II REPRESENTATIONS AND WARRANTIES................................ 4
Section 2.1. Representations and Warranties of the Company... 4
Section 2.2. Representations and Warranties of Seven......... 4
Section 2.3. Representations and Warranties of Tracinda...... 5
Section 2.4. Representations and Warranties of MGM Studios... 5
ARTICLE III CORPORATE GOVERNANCE; CERTAIN CORPORATE ACTIONS............... 5
Section 3.1. Voting of Shares................................ 5
Section 3.2. Composition of the Board of Directors of the
Company, MGM Studios, Orion and the Committees
of the Company.................................. 6
Section 3.3. Approval of Certain Matters..................... 11
ARTICLE IV FIRST REFUSAL................................................. 11
Section 4.1. First Refusal................................... 11
Section 4.2. Legend.......................................... 14
ARTICLE V PREEMPTIVE RIGHTS............................................. 14
Section 5.1. Certain Pre-emptive Rights...................... 14
ARTICLE VI BUSINESS; CERTIFICATE OF INCORPORATION AND BYLAWS............. 15
Section 6.1. Entertainment Business.......................... 15
Section 6.2. Certificate of Incorporation and By-laws........ 16
Section 6.3. Conversion of Preferred Stock................... 16
ARTICLE VII GENERAL PROVISIONS............................................ 16
Section 7.1. Notices......................................... 16
Section 7.2. Assignment; Binding Effect; Benefit; Successors. 18
Section 7.3. Entire Agreement................................ 18
Section 7.4. Amendment....................................... 19
Section 7.5. Governing Law................................... 19
Section 7.6. Counterparts; Effective Date.................... 19
Section 7.7. Headings........................................ 19
Section 7.8. Interpretation.................................. 19
Section 7.9. Severability.................................... 19
Section 7.10. Enforcement of Agreement........................ 20
Section 7.11. Certain Rights.................................. 20
Page
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Section 7.12. Termination of Original Investors Shareholder
Agreement........................................ 20
Section 7.13. Antidilution Adjustment.......................... 20
FORM OF AMENDED AND RESTATED INVESTORS
--------------------------------------
SHAREHOLDER AGREEMENT
---------------------
THIS AMENDED AND RESTATED INVESTORS SHAREHOLDER AGREEMENT, dated
as of August 4, 1997 (this "Agreement"), by and among SEVEN NETWORK
LIMITED, a corporation organized under the laws of the
Commonwealth of Australia ("Seven"); TRACINDA CORPORATION, a
corporation organized under the laws of the State of Nevada
("Tracinda"); METRO-GOLDWYN-MAYER INC., a corporation organized under
the laws of the state of Delaware and formerly known as P&F
Acquisition Corp. ( the "Company"); METRO-GOLDWYN-MAYER STUDIOS INC.,
a corporation organized under the laws of the State of
Delaware and formerly known as Metro-Goldwyn-Mayer Inc. ("MGM
Studios"); and FRANK G. MANCUSO ("Mr. Mancuso"), amends and supersedes
that certain Investors Shareholder Agreement, dated as of
October 16, 1996, by and among Seven, the Company, Tracinda,
MGM Studios and Mr. Mancuso (the "Original Investors Shareholder
Agreement").
A. The Company intends to commence with an Approved Initial
Public Offering (as defined below) of the Common Stock (as defined
below) of the Company and to enter into certain related transactions.
B. The parties hereto have agreed to enter into this Agreement
for the purpose of amending and restating in its entirety the
provisions of the Original Investors Shareholder Agreement as provided
herein.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions.
"Affiliate": of any Person, means (i) any other Person
controlling, controlled by or under common control with such
Person, (ii) any director or executive officer of such Person or of
any Affiliate of such Person and (iii) any family member of any
director or executive officer of such Person or any director or
executive officer of any Affiliate of such Person.
"Agreement": as defined in the preamble to this Agreement.
"Antidilution Adjustment": as defined in Section 7.13.
"Approved Initial Public Offering": shall mean an offering of
Common Stock of the Company to the public through a syndicate of
underwriters co-managed by Merrill Lynch Pierce Fenner & Smith, Inc.
and J. P. Morgan Securities, Inc. and others (with Merrill Lynch
Pierce Fenner & Smith, Inc. acting as book running manager)
pursuant to an effective registration statement under the Securities
Act by the Company (other than in connection with any employee
benefit plan maintained by the Company or any corporation controlled
by it) provided that the following conditions are met:
(i) the initial public offering price of such shares of
Common Stock (before deduction of underwriters' discounts and
commissions and the out-of-pocket expenses of the Company
incurred in connection therewith) shall be not less than $833.34
per share of Common Stock;
(ii) the aggregate initial offering price of all such
shares so sold in such public offering (before deduction of
underwriters' discounts and commissions and the out-of-pocket
expenses of the Company incurred in connection therewith) shall
be not less than $175 million nor more than $375 million;
(iii) the underwriters shall not have been granted an
over-allotment option to purchase more than 15% of the shares of
Common Stock initially sold to the underwriters at a price equal
to the initial public offering price and such over-allotment
option shall only be exercisable within 30 days after the IPO
Closing; and
(iv) concurrently with the IPO Closing, the Company
shall sell to Tracinda shares of Common Stock in a private
placement transaction meeting the following conditions:
(A) the price per share of the Common Stock sold
in such private placement transaction to Tracinda shall be
equal to the initial public offering price of the Common
Stock offered to the public (net of deduction of
underwriters' discounts and commissions);
(B) the aggregate price for all the shares of
Common Stock so sold in such private placement transaction
to Tracinda shall be equal to $75 million; and
(C) the number of shares of the Common Stock
sold in such private placement transaction to Tracinda shall
be equal to $75 million divided by the initial public
offering price of the Common Stock offered to the public
(net of deduction of underwriters' discounts and
commissions).
"Commission": the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
"Common Stock": the common stock of the Company.
"Company": as defined in the preamble to this Agreement.
"Employment Agreement": the Amended and Restated Employment
Agreement by and among Mr. Mancuso, the Company and MGM Studios,
dated as of August 4, 1997.
"Exchange Act": the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"First Refusal Notice": as defined in Section 4.1(a).
"HSR Act": the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"IPO Closing": shall mean the closing of an Approved Initial
Public Offering at which the Company first receives the
funds described in the definition of "Approved Initial Public
Offering", whether or not the underwriters have at such time exercised
any over-allotment option.
"IPO Closing Date": shall mean the date of the IPO Closing.
"MGM Studios": as defined in the preamble to this Agreement.
"Non-Transferring Party": as defined in Section 4.1(a).
"Original Investors Shareholder Agreement": as defined in the
preamble to this Agreement.
"Orion": Orion Pictures Corporation.
"Person": any natural person, corporation, partnership, limited
liability company, firm, association, trust, government,
governmental agency, or other legal entity, whether acting in an
individual, fiduciary or other capacity.
"Preferred Stock": shall mean the Series A Convertible Preferred
Stock of the Company.
"Response Period": as defined in Section 4.1(a).
"Securities Act": the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder, as
the same shall be in effect at the time.
"Seven": as defined in the preamble to this Agreement.
"Shareholders Agreement": the Amended and Restated Shareholders
Agreement dated as of August 4, 1997 among MGM Studios, the Company,
Tracinda, Seven, Mr. Mancuso and the other parties thereto.
"Stock Split": as defined in Section 7.13.
"Subsidiary": of any Person shall mean any corporation or other
legal entity of which such Person (either alone or through or together
with any other direct or indirect Subsidiary) owns, directly
or indirectly, 50% or more of the stock or other equity interests,
the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such
corporation or other legal entity.
"Tracinda": as defined in the preamble to this Agreement.
"Transfer": as defined in Section 4.1(a).
"Transferring Party": as defined in Section 4.1(a).
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations and Warranties of the Company. The
Company hereby represents and warrants to the other parties
hereto as follows: (i) the Company has all requisite corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby; (ii) the execution and delivery
by the Company of this Agreement, and the consummation by
the Company of the transactions contemplated hereby, have been
duly authorized by all necessary corporate action on the part of
the Company; (iii) this Agreement has been duly executed and delivered
by the Company and constitutes a valid and binding obligation of
the Company enforceable against the Company in accordance with its
terms, except as the enforceability hereof may be limited by
bankruptcy, insolvency or other similar laws affecting creditors'
rights generally or general principles of equity; (iv) no consent,
approval, order or authorization of, or registration, declaration
or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign,
is required by, or with respect to, the Company in connection with
the execution and delivery of this Agreement by the Company or
the consummation by the Company of the transactions contemplated
hereby; and (v) the execution and delivery of this Agreement by
the Company and the consummation of the transactions contemplated
hereby by the Company does not conflict with, or result in a
breach of, any law or regulation of any governmental authority
applicable to the Company or any material agreement to which the
Company is a party.
Section 2.2. Representations and Warranties of Seven. Seven
hereby represents and warrants to the other parties hereto as follows:
(i) Seven has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions
contemplated hereby; (ii) the execution and delivery by Seven of
this Agreement, and the consummation by Seven of the transactions
contemplated hereby, have been duly authorized by all necessary
corporate action on the part of Seven; (iii) this Agreement has
been duly executed and delivered by Seven and constitutes a valid
and binding obligation of Seven enforceable against Seven in
accordance with its terms, except as the enforceability hereof may
be limited by bankruptcy, insolvency or other similar laws affecting
creditors' rights generally or general principles of equity; (iv) no
consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality,
domestic or foreign, is required by, or with respect to, Seven in
connection with the execution and delivery by Seven of this Agreement
or the consummation by Seven of the transactions contemplated hereby;
and (v) the execution and delivery by Seven of this Agreement and
the consummation by Seven of the transactions contemplated hereby
does not conflict with, or result in a breach of, any law or
regulation of any governmental authority applicable to Seven or any
material agreement to which Seven is a party.
Section 2.3. Representations and Warranties of Tracinda.
Tracinda hereby represents and warrants to the other parties
hereto as follows:(i) Tracinda has all requisite corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby; (ii) the execution and delivery by
Tracinda of this Agreement, and the consummation by Tracinda of the
transactions contemplated hereby, have been duly authorized by all
necessary corporate action on the part of Tracinda; (iii) this
Agreement has been duly executed and delivered by Tracinda and
constitutes a valid and binding obligation of Tracinda enforceable
against Tracinda in accordance with its terms, except as the
enforceability hereof may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights generally or general
principles of equity; (iv) no consent, approval, order or
authorization of, or registration, declaration or filing with, any
court, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, is required by, or
with respect to, Tracinda in connection with the execution and
delivery of this Agreement by Tracinda or the consummation by Tracinda
of the transactions contemplated hereby; and (v) the execution and
delivery of this Agreement by Tracinda and the consummation by
Tracinda of the transactions contemplated hereby does not conflict
with, or result in a breach of, any law or regulation of any
governmental authority applicable to Tracinda or any material
agreement to which Tracinda is a party.
Section 2.4. Representations and Warranties of MGM Studios. MGM
Studios hereby represents and warrants to the other parties hereto as
follows: (i)MGM Studios has all requisite corporate power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby; (ii) the execution and delivery
by MGM Studios of this Agreement, and the consummation by
MGM Studios of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of MGM
Studios; (iii) this Agreement has been duly executed and delivered by
MGM Studios and constitutes a valid and binding obligation of
MGM Studios enforceable against MGM Studios in accordance with its
terms, except as the enforceability hereof may be limited by
bankruptcy, insolvency or other similar laws affecting creditors'
rights generally or general principles of equity; (iv) no consent,
approval, order or authorization of, or registration, declaration
or filing with, any court, administrative agency or commission
or other governmental authority or instrumentality, domestic or
foreign, is required by, or with respect to, MGM Studios in
connection with the execution and delivery of this Agreement by MGM
Studios or the consummation by MGM Studios of the transactions
contemplated hereby; and (v) the execution and delivery of this
Agreement by MGM Studios and the consummation by MGM Studios of the
transactions contemplated hereby does not conflict with, or result in
a breach of, any law or regulation of any governmental authority
applicable to MGM Studios or any material agreement to which MGM
Studios is a party.
ARTICLE III
CORPORATE GOVERNANCE; CERTAIN CORPORATE ACTIONS
Section 3.1. Voting of Shares.
(a) Until the fifteenth anniversary of the IPO Closing Date,
Seven shall (i) vote all of the shares of capital stock of the Company
beneficially owned by Seven, and shall take all other necessary or
desirable actions within its control (including, without limitation,
by attendance at meetings in person or by proxy for the purpose of
obtaining a quorum and execution of written consents in lieu of
meetings), to effectuate the provisions of this Agreement and (ii) use
its best efforts to cause the Persons designated by it to serve on the
Company's, MGM Studios' and Orion's boards of directors pursuant to
this Article III to take all actions necessary to effectuate the
terms of this Agreement.
(b) Until the fifteenth anniversary of the IPO Closing Date,
Tracinda shall (i) vote all of the shares of capital stock of the
Company beneficially owned by Tracinda, and shall take all other
necessary or desirable action within its control (including, without
limitation, by attendance at meetings in person or by proxy for the
purpose of obtaining a quorum and execution of written consents in
lieu of meetings) to effectuate the provisions of this Agreement and
(ii) use its best efforts to cause the Persons designated by it to
serve on the Company's, MGM Studios' and Orion's boards of directors
pursuant to this Article III to take all actions necessary to
effectuate the terms of this Agreement.
(c) Until the fifteenth anniversary of the IPO Closing Date,
each of the Company and MGM Studios shall take all necessary or
desirable actions within its respective control (including, without
limitation, by calling special board and stockholder meetings) to
effectuate the provisions of this Agreement.
(d) Until the fifteenth anniversary of the IPO Closing Date,
Mr. Mancuso shall vote all of the shares of capital stock of the
Company beneficially owned by him, and shall take all other necessary
and desirable action within his control (including, without
limitation, by attendance at meetings in person or by proxy for the
purpose of obtaining a quorum and execution of written consents in
lieu of meetings) to effectuate the provisions of this Agreement.
Section 3.2. Composition of the Board of Directors of the
Company, MGM Studios, Orion and the Committees of the Company.
(a) Until the fifteenth anniversary of the IPO Closing Date,
Seven shall vote all of the shares of capital stock of the Company
from time to time beneficially owned by Seven, and shall take all
necessary or desirable action within its control, Tracinda shall vote
all of the shares of capital stock of the Company from time to time
beneficially owned by Tracinda, and shall take all necessary or
desirable actions within its control, the Company shall vote all
shares of capital stock of MGM Studios beneficially owned by it, and
shall take all necessary or desirable action within its control, Mr.
Mancuso shall vote all shares of capital stock of the Company from
time to time owned by him and shall take all necessary or desirable
action, and MGM Studios shall take all necessary or desirable action
within its control, in each case, so that the composition of the
boards of directors of each of the Company, MGM Studios, Orion and the
committees of the Company shall be as follows:
(i) The authorized board of directors of the Company
shall consist of eleven members (subject to the provisions set
forth in clause (D) below) and the members of such board of
directors shall be determined as follows:
(A) four persons shall be nominated by Tracinda so
long as Tracinda beneficially owns 400,000 or more shares of
Common Stock or two persons shall be nominated by Tracinda
so long as Tracinda beneficially owns less than 400,000, but
at least 250,000, shares of Common Stock; provided, however,
that Tracinda's right to nominate persons to the board of
directors of the Company pursuant to this clause (A) shall
expire on the date that Tracinda no longer beneficially owns
at least 250,000 shares of Common Stock; provided, further,
that if at any time Tracinda is entitled to nominate less
than four directors pursuant to this clause (A), a majority
of the remaining directors of the Company shall be entitled
to nominate a number of directors (who need not qualify as
"independent directors" as specified in clause (D) of this
Section 3.2(a)(i)) equal to the amount of such reduction in
directors that Tracinda may nominate; and provided, further,
that so long as Tracinda owns at least 250,000 shares of
Common Stock, for each selection by the board of directors
of the Company pursuant to the immediately preceding proviso
of a person who is affiliated with or an associate of Seven
(as such terms are defined in the rules promulgated under
the Exchange Act), a person who is affiliated with or
associated with Tracinda shall be selected by the board of
directors to serve as a director of the Company;
(B) two persons shall be nominated by Seven;
provided, however, that Seven's right to nominate two
persons to the board of directors of the Company shall
expire on the date that Seven no longer beneficially owns at
least 250,000 shares of Common Stock and thereafter such
number of directors (who need not qualify as "independent
directors" as specified in clause (D) of this Section
3.2(a)(i)) shall be nominated by a majority of the remaining
directors of the Company;
(C) two persons shall be nominated by the Chairman
and Chief Executive Officer of the Company (one of which
persons shall be Mr. Mancuso so long as he serves as Chief
Executive Officer of the Company); and
(D) three persons who are not affiliated or
associated with either Tracinda or Seven and who otherwise
meet the requirements of the New York Stock Exchange for
serving as "independent directors" shall be nominated and
selected by a majority of the members of the board of
directors of the Company, which majority, so long as
Tracinda beneficially owns at least 400,000 shares of Common
Stock, must include Tracinda's nominees on the board of
directors of the Company; provided, however, that
notwithstanding anything to the contrary in this Agreement,
each of Tracinda and Seven shall only be obligated to vote
the shares of capital stock from time to time beneficially
owned by them for nominees selected pursuant to this clause
(D) if such nominee(s) are acceptable to Tracinda or Seven,
as the case may be, and shall have the right to vote against
such nominee(s) if such nominee(s) are not acceptable to
Tracinda or Seven, as the case may be; provided further,
however, that the number of "independent directors" on the
board of directors shall be subject to reduction from three
persons to two persons if a majority of the existing board
of directors so determines.
(ii) The compensation committee of the board of
directors of the Company shall include members to be determined
as follows:
(A) one person nominated to the board of directors
of the Company by Tracinda, so long as Tracinda beneficially
owns 250,000 or more shares of Common Stock; provided,
however, that Tracinda's right to include in the
compensation committee of the board of directors of the
Company a person Tracinda has nominated to the board of
directors of the Company pursuant to this clause (A) shall
expire on the date that Tracinda no longer beneficially owns
at least 250,000 shares of Common Stock; provided, further,
that if at any time Tracinda does not have the right to
include its nominee on the compensation committee of the
board of directors of the Company pursuant to this clause
(A), the member of the compensation committee of the board
of directors of the Company shall be a director (who need
not qualify as an "independent director" as specified in
clause (C) of this Section 3.2(a)(ii)) nominated by a
majority of the remaining directors of the Company;
(B) one person nominated to the board of directors
of the Company by Seven; provided, however, that Seven's
right to include in the compensation committee of the board
of directors of the Company one person nominated by it to
the board of directors of the Company shall expire on the
date that Seven no longer beneficially owns at least 250,000
shares of Common Stock and thereafter such member of the
compensation committee of the board of directors of the
Company shall be a director (who need not qualify as an
"independent director" as specified in clause (C) of this
Section 3.2(a)(ii)) nominated by a majority of the remaining
directors of the Company; and
(C) one person who is not affiliated or associated
with either Tracinda or Seven and who otherwise meets the
requirements of the New York Stock Exchange for serving as
an "independent director" and who was nominated and selected
as a director by a majority of the members of the board of
directors of the Company, which majority, so long as
Tracinda beneficially owns at least 400,000 shares of Common
Stock, must include Tracinda's nominees to the board of
directors of the Company.
(iii) The executive committee of the board of directors
of the Company shall consist of six members to be determined as
follows:
(A) three persons nominated to the board of
directors of the Company by Tracinda, so long as Tracinda
beneficially owns 400,000 or more shares of Common Stock or
two persons nominated to the board of directors of the
Company by Tracinda, so long as Tracinda beneficially owns
less than 400,000, but at least 250,000, shares of Common
Stock; provided, however, that Tracinda's right to include
in the executive committee of the board of directors of the
Company persons Tracinda has nominated to the board of
directors of the Company pursuant to this clause (A) shall
expire on the date that Tracinda no longer beneficially owns
at least 250,000 shares of Common Stock; provided, further,
that if at any time Tracinda is entitled to include in the
executive committee of the board of directors of the Company
less than three persons Tracinda has nominated to the board
of directors of theCompany pursuant to this clause (A), a
majority of thedirectors of the Company shall be entitled to
select anumber of members of the executive committee of the
board of directors of the Company equal to the amount of
such reduction in members of the executive committee of the
board of directors of the Company that Tracinda may select;
(B) one person nominated to the board of directors
of the Company by Seven; provided, however, that Seven's
right to include in the executive committee of the board of
directors of the Company a person nominated by it to the
board of directors of the Company shall expire on the date
that Seven no longer beneficially owns at least 250,000
shares of Common Stock and thereafter such number of members
of the executive committee of the board of directors of the
Company shall be selected by a majority of the directors of
the Company; and
(C) two persons nominated to the board of
directors of the Company by the Chairman and Chief Executive
Officer of the Company (one of which persons shall be Mr.
Mancuso so long as he serves as Chief Executive Officer of
the Company).
(iv) The authorized boards of directors of each of MGM
Studios and Orion shall consist of six members (all of whom shall
be directors of the Company) and the members of such boards of
directors shall be determined as follows:
(A) three persons shall be selected by Tracinda so
long as Tracinda beneficially owns 400,000 or more shares of
Common Stock or two persons shall be selected by Tracinda so
long as Tracinda beneficially owns less than 400,000, but at
least 250,000, shares of Common Stock; provided, however,
that Tracinda's right to select persons for the boards of
directors of each of MGM Studios and Orion pursuant to this
clause (A) shall expire on the date that Tracinda no longer
beneficially owns at least 250,000 shares of Common Stock;
provided, further, that if at any time Tracinda is entitled
to select less than three directors pursuant to this clause
(A), a majority of the directors of the Company shall be
entitled to select a number of directors equal to the amount
of such reduction in directors Tracinda may select;
(B) one person shall be selected by Seven;
provided, however, that Seven's right to select one person
for the boards of directors of each of MGM Studios and Orion
shall expire on the date that Seven no longer beneficially
owns at least 250,000 shares of Common Stock and thereafter
such number of directors shall be selected by a majority of
the directors of the Company; and
(C) two persons shall be selected by the Chairman
and Chief Executive Officer of the Company (one of which
persons shall be Mr. Mancuso so long as he serves as Chief
Executive Officer of the Company).
(b) Each of Seven and Tracinda, respectively, shall have the
exclusive right (which, to the extent the same may be required by law,
may only be exercised indirectly, through the parties hereto voting at
meetings of the stockholders of the Company and/or through the calling
of a special meeting of the stockholders of the Company) (i) to
remove, with or without cause, any director designated by it in
accordance with this Section 3.2 and (ii) to designate and elect any
replacement for a director designated by it in accordance with this
Section 3.2, upon the death, resignation, retirement, disqualification
or removal from office of such director. The board of directors of the
Company shall have the right to remove Mr. Mancuso as a director of
the Company, with or without cause, upon the termination of his
employment as Chief Executive Officer of MGM Studios subject to the
terms of Mr. Mancuso's employment agreement which shall remain in
effect following execution hereof. Except as specified in the
immediately preceding sentence, the board of directors of the Company
shall not have the right to remove Mr. Mancuso as a director of the
Company. Except consistent with the terms of this Agreement, the board
of directors of the Company shall not be authorized to fill a vacancy
on the board of directors of the Company caused by the death,
resignation, retirement, disqualification or removal of a director
designated pursuant to this Section 3.2. To the extent, that at any
time, the composition of the board of directors of the Company is not
consistent with provisions of this Section 3.2, each of the parties
hereto shall take all necessary or desirable action, including by
calling a special meeting of the stockholders of the Company, to give
effect to the provisions of this Section 3.2. In the event that Mr.
Mancuso shall cease to act as Chief Executive Officer of the Company,
promptly thereafter the parties hereto shall take all necessary or
desirable actions, including a calling of a special meeting of the
stockholders of the Company, to remove the other person then serving
as a director of the Company, MGM Studios and Orion pursuant to
Section 3.2(a)(i)(C) and Section 3.2(a)(iv)(C) and then serving as a
member of the executive committee of the board of directors of the
Company pursuant to Section 3.2(a)(iii)(C) unless such other person is
acceptable to the new Chief Executive Officer of the Company.
(c) If Mr. Mancuso shall cease to act as Chief Executive
Officer of the Company, Mr. Mancuso hereby agrees to his resignation
as a director of both the Company and MGM Studios and all other
positions held by Mr. Mancuso at MGM Studios, the Company and their
respective Subsidiaries, effective as of the time he ceases to act as
chief executive officer of the Company. For so long as Mr. Mancuso
shall serve as a member of the board of directors of the Company and
MGM Studios, Mr. Mancuso shall act as the chairman of the board of
directors of both the Company and MGM Studios. It shall be a condition
precedent to the nomination by Mr. Mancuso pursuant to Section
3.2(a)(i)(C) and Section 3.2(a)(iv)(C) of a person to serve as a
director of the Company, MGM Studios and Orion and the selection by
Mr. Mancuso pursuant to Section 3.2(a)(iii)(C) of a person to serve on
the executive committee of the board of directors of the Company that
such person shall have agreed to his resignation as a director of the
Company, MGM Studios and Orion and a member of the executive committee
of the board of directors of the Company (but not any other positions
with the Company or MGM Studios) at such time as Mr. Mancuso shall no
longer serve as the Chief Executive Officer of the Company.
(d) Each of the parties hereto shall take all such action,
and execute all such documents, as is necessary or desirable to effect
the provisions of this Section 3.2. Each of Tracinda and Seven agrees
to use its best efforts to obtain the resignation from the boards of
directors of the Company, MGM Studios and Orion of the requisite
number of persons nominated by it in order to accomplish any reduction
in the number of directors contemplated by clauses (A) and (B),
respectively, of Section 3.2(a)(i) and Section 3.2(a)(iv) and in the
number of members of the compensation and executive committees of
the board of directors contemplated by clauses (A) and (B),
respectively, of Section 3.2(a)(ii) and Section 3.2(a)(iii).
(e) Until October 10, 2001, the obligations imposed by this
Article III shall be binding upon any transferee of Seven or Tracinda
except that the provisions of this Article III shall not be binding
on:
(i) any person (other than an Affiliate of Tracinda or
Seven) who acquires shares of Common Stock from Tracinda or Seven
pursuant to a public offering registered under the Securities Act
or pursuant to Rule 144 or Regulation S promulgated thereunder;
or
(ii) any person (other than an Affiliate of Tracinda or
Seven) who acquires not more than 100,000 shares of Common Stock
from Tracinda or Seven, as the case may be, in one transaction or
a series of related transactions.
Section 3.3. Approval of Certain Matters. Until the earlier to
occur of (i) the fifteenth anniversary of the IPO Closing Date and
(ii) the date that Seven no longer beneficially owns at least 250,000
shares of Common Stock, neither the Company nor MGM Studios nor any of
their Subsidiaries shall (A) sell or agree to sell or (B) license or
agree to license for a period of more than three years in
substantially all major territories of the world in one transaction or
a series of related transactions all or 85% or more of the films then
in the library of the Company, MGM Studios and their Subsidiaries
unless such sale, license or agreement shall have been unanimously
approved by the board of directors of the Company. Thereafter, any
such sale, license or agreement shall only require the approval of a
majority of a quorum of directors at a duly called meeting of the
board of directors of the Company.
ARTICLE IV
FIRST REFUSAL
Section 4.1. First Refusal.
(a) If prior to October 10, 2001, either Tracinda or Seven (as
appropriate in this Article IV, the "Transferring Party"), desires to
sell, transfer, assign, pledge or otherwise dispose of (a "Transfer"),
directly or indirectly, in whole or part, all or any portion of the
shares of capital stock of the Company beneficially owned by it, the
Transferring Party shall provide the other party (the
"Non-Transferring Party") with a written notice (the "First Refusal
Notice") (which First Refusal Notice may be sent concurrently with the
Tag-Along Notice which may be required to be sent with respect to such
transaction pursuant to Section 3.2 of the Shareholders Agreement)
setting forth:
(i) the number and class of shares of capital stock
of theCompany proposed to be Transferred;
(ii) that the Transferring Party has received a bona
fide written offer from a prospective purchaser of said shares of
capital stock of the Company;
(iii) the name and address of the prospective
purchaser;
(iv) the material terms and conditions of such proposed
transaction; and
(v) that the Transferring Party is offering to Transfer
such shares of capital stock of the Company to the
Non-Transferring Party on the same terms and conditions as
contained in the bona fide offer. The Non-Transferring Party
shall have 20 calendar days following the receipt of the First
Refusal Notice to respond as to whether it desires to purchase
the shares of capital stock of the Company specified in the First
Refusal Notice. Such 20 calendar day period shall be referred to
as the "Response Period."
Within the Response Period, the Non-Transferring Party shall, by
notice in writing to the Transferring Party, have the opportunity and
right to purchase (on the terms and conditions specified in the First
Refusal Notice) the shares of capital stock of the Company specified
in the First Refusal Notice. If the Non-Transferring Party shall not
respond within the Response Period, then such party shall be deemed to
have waived its right to purchase the shares of capital stock of the
Company specified in the First Refusal Notice. If the Non-
Transferring Party fails to exercise or waives its right to purchase
the shares of capital stock of the Company referred to in the First
Refusal Notice, then the Transferring Party shall be free, for a
six-month period, to enter into a definitive agreement to Transfer
such shares of capital stock of the Company to such third party on
terms equivalent to or better than the terms specified in the First
Refusal Notice without restriction under this Agreement; it being
understood, however, that if the Transferring Party does not enter
into such definitive agreement within such six-month period, or such
definitive agreement is subsequently terminated, the Transferring
Party shall once again be subject to all the provisions of this
Section 4.1.
(b) Each acceptance made hereunder shall constitute a
separate and binding contract obligating the Transferring Party to
sell, and the Non- Transferring Party to purchase, the shares of
capital stock of the Company accepted at the price and upon the terms
and conditions as set forth in the First Refusal Notice. The parties
agree to negotiate in good faith to consummate the transaction as soon
as possible, but in no event later than the date 30 calendar days
after the appropriate Response Period has elapsed (as such period may
be extended up to a maximum period of two months (unless further
extension is agreed to by the Transferring Party) by any applicable
waiting period required under the HSR Act or any other applicable
law). At the closing, the Transferring Party shall deliver the
certificate or certificates representing the shares of capital stock
of the Company to be sold, duly endorsed for transfer or accompanied
by duly executed stock powers, against receipt from the
Non-Transferring Party of the purchase price for such shares of
capital stock of the Company, in cash by wire transfer of immediately
available funds or certified check, at the option of the Transferring
Party, all in accordance with the terms and conditions set forth in
the First Refusal Notice. Notwithstanding any provision of this
Agreement to the contrary, in the event of failure by the
Non-Transferring Party to close said transaction within the required
time periods, the Transferring Party shall be entitled, in addition to
all other available remedies, to treat such failure as a waiver under
Section 4.1(a) of this Agreement by the Non-Transferring Party,
entitling the Transferring Party to take the action specified in
Section 4.1(a) of this Agreement pursuant to such waiver.
(c) If the purchase price specified in the First Refusal Notice
includes any property other than cash, the First Refusal Notice shall
state how the non-cash property was valued, unless the Transferring
Party and the proposed transferee expressly agree otherwise as stated
in the First Refusal Notice and, the Non-Transferring Party may pay
cash in an amount equal to the fair market value of any non-cash
property determined in the following manner:
(i) The fair market value of securities which are
publicly traded shall be deemed to be the average of the daily
closing prices (or, if no closing price is available, the average
of the last bid and ask prices) of such securities for the five
consecutive trading days immediately prior to the date of the
First Refusal Notice; and
(ii) The fair market value of any other property shall
be determined by the good faith agreement of the parties or, if
the parties are unable to agree, by an appropriate expert
mutually selected by the parties.
(d) The provisions of this Section 4.1 shall terminate, with
respect to such capital stock of the Company, upon the transfer, in
compliance with this Section 4.1, by Tracinda or Seven of such capital
stock to any Person other than Tracinda or Seven or their respective
Affiliates.
(e) Nothing contained in the provisions of this Section 4.1 shall
affect the tag-along rights of any party pursuant to Section 3.2 of
the Shareholders Agreement.
(f) The provisions of this Section 4.1 shall not apply to any
bona fide pledge to a bank or other institutional financial lender.
(g) Notwithstanding anything contained herein to the contrary,
the provisions of this Section 4.1 shall not apply to, in the case of
each of Tracinda and Seven, (i) the transfer of, or the grant of
options for the acquisition of, up to 7,500 shares of Common Stock
(such number to be appropriately adjusted in the event that the
Company should effect any stock dividend, stock split, reverse stock
split, or any similar transaction after the date hereof) beneficially
owned by it to officers, directors, employees, consultants and
affiliates so long as such transferee shall agree in writing to be
bound by all the terms of this Agreement applicable to its transferor
as if the transferee originally had been a party to this Agreement and
(ii) the transfer and assignment of all or any portion of the capital
stock of the Company beneficially owned by it to any direct or
indirect wholly owned subsidiary of such entity so long as (y) such
transferee shall agree in writing to be bound by all the terms of this
Agreement applicable to its transferor as if the transferee originally
had been a party to this Agreement and (z) the transferor agrees to
cause such direct or indirect wholly owned subsidiary to continue to
be a direct or indirect wholly owned subsidiary of the transferor for
so long as such direct or indirect wholly owned subsidiary
beneficially owns any such capital stock of the Company.
Section 4.2. Legend. The parties hereby acknowledge and agree
that each of the certificates representing the Common Stock shall
include the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY BE OFFERED OR
SOLD ONLY IF REGISTERED UNDER THE SECURITIES ACT OF 1933 OR IF AN
EXEMPTION FROM REGISTRATION IS AVAILABLE. THESE SHARES ARE
SUBJECT TO CERTAIN LIMITATIONS ON SALE, TRANSFER OR OTHER
DISPOSITION AND CERTAIN AGREEMENTS WITH RESPECT TO VOTING SET
FORTH IN AN AMENDED AND RESTATED INVESTORS SHAREHOLDER AGREEMENT
DATED AS OF AUGUST 4, 1997 BY AND AMONG SEVEN NETWORK LIMITED,
TRACINDA CORPORATION, METRO-GOLDWYN-MAYER STUDIOS INC.,
METRO-GOLDWYN-MAYER INC. AND MR. FRANK G. MANCUSO (THE
"AGREEMENT"). A COPY OF THE AGREEMENT IS ON FILE WITH THE
SECRETARY OF METRO-GOLDWYN-MAYER INC.
ARTICLE V
PREEMPTIVE RIGHTS
Section 5.1. Certain Pre-emptive Rights. If at any time prior
to the fifteenth anniversary of the IPO Closing Date, the Company
shall propose to issue to any Person any shares of its Common Stock
or any securities exercisable for the purchase of or convertible into
Common Stock (other than (i) the issuance of Common Stock or
securities exercisable for the purchase of or convertible into Common
Stock pursuant to a firm commitment underwritten public offering
or pursuant to Rule 144A or Regulation S promulgated under the
Securities Act, (ii) the issuance of Common Stock or securities
exercisable for the purchase of or convertible into Common Stock
pursuant to a registration statement directly or indirectly to the
holders of the outstanding capital stock of a corporation or other
business entity with a class of equity securities registered under
the Exchange Act in connection with the Company's acquisition of
such corporation or other business or substantially all of its
assets (whether by merger, consolidation, purchase of stock or
assets or otherwise), (iii) the grant of stock options to officers,
directors or employees of the Company or any of its Subsidiaries
pursuant to stock option plans approved by the board of directors of
the Company or the issuance of Common Stock upon the exercise of any
such stock option, or (iv) the issuance of Common Stock to officers,
directors or employees of the Company or any of its Subsidiaries to
fulfill the Company's obligations pursuant to any savings plans or
retirement plans approved by the board of directors of the Company),
Seven, Tracinda and Mr. Mancuso shall have the right to elect at any
time within 10 days after receipt of notice from the Company, as
applicable:
(a) if such issuance is of Common Stock, to subscribe for
and purchase for cash a number of shares of Common Stock such that
after giving effect to such issuance to such other Person and such
purchase by any one or more of Seven, Tracinda and Mr. Mancuso, as the
case may be, each party so electing shall continue to beneficially own
the same percentage of outstanding Common Stock that such electing
party beneficially owned prior to such issuance to such other Person
and such purchase by any one or more of Seven, Tracinda and
Mr. Mancuso, as the case may be; and
(b) if such issuance is of securities exercisable for the
purchase of or convertible into Common Stock, to subscribe for and
purchase for cash a number of such securities equal to the product of
the aggregate number of such securities to be issued (including
pursuant to this Section 5.1) multiplied by the percentage of the then
outstanding Common Stock that is beneficially owned by Seven, Tracinda
or Mr. Mancuso, as the case may be.
The price to be paid in any such purchase by any one or more of Seven,
Tracinda and Mr. Mancuso and the other terms of purchase shall be the
same as applicable to the purchase of Common Stock or such other
securities by such other Person, except that in all cases the price to
be paid by Seven, Tracinda and Mr. Mancuso shall be paid in cash. In
the event that such shares of Common Stock or such other securities
are to be issued to such other Person for property or services, the
price per share or other security to be paid by Seven, Tracinda and
Mr. Mancuso shall be equal to the fair market value per share or other
security of the property or services to be received by the Company
from such other Person, as such fair market value is determined by the
"independent directors" of the Company elected to the board of
directors of the Company pursuant to the provisions of clause (D)
Section 3.2(a)(i) of this Agreement. The rights of Seven and Tracinda
set forth in this Section 5.1 shall terminate with respect to each
such party at such time as such party beneficially owns less than
250,000 shares of Common Stock. The rights of Mr. Mancuso set forth in
this Section 5.1 shall terminate at such time as Mr. Mancuso is no
longer the Chief Executive Officer of the Company.
ARTICLE VI
BUSINESS; CERTIFICATE OF INCORPORATION AND BYLAWS
Section 6.1. Entertainment Business. The parties hereto agree to
use their best efforts to ensure that neither the Company nor any of
its Subsidiaries shall engage in any business activity except the
entertainment business unless (i) all directors of the board of
directors shall have approved such engagement in other business
activities or (ii) a majority of the board of directors shall have
approved such engagement in other business activities and such
engagement in other business activities shall have been approved by
the stockholders of the Company in accordance with the applicable
provisions of the Delaware General Corporation Law; provided, however,
that the obligations of the parties hereto provided for in this
sentence shall terminate on the fifteenth anniversary of the IPO
Closing Date. As used in this Section 6.1 the "entertainment business"
shall include the acquisition, development, production, marketing,
distribution, exhibition, publication or use of intellectual property
for purposes of providing entertainment, education or information and
all services and activities reasonably related thereto, including the
services and activities currently provided or conducted by the Company
and its Subsidiaries. The parties hereto may amend or terminate this
Section 6.1 by mutual agreement except that no such amendment or
termination shall require (i) the approval of Seven at any time when
it beneficially owns less than 250,000 shares of Common Stock, (ii)
the approval of Tracinda at any time when it beneficially owns less
than 250,000 shares of Common Stock or (iii) the approval of Mr.
Mancuso after such time as he shall no longer serve as the Chief
Executive Officer of the Company.
Section 6.2. Certificate of Incorporation and By-laws. Each of
the parties hereto will take all necessary actions, including, if
necessary, by amending the Certificate of Incorporation and By-laws
of the Company and/or MGM Studios, to assure that the Certificate
of Incorporation and By-laws of each of the Company and MGM Studios
do not contain any provision which is inconsistent with the terms of
this Agreement.
Section 6.3. Conversion of Preferred Stock. Each of Seven,
Tracinda and Mr. Mancuso agrees to convert, on the IPO Closing Date,
all shares of Preferred Stock beneficially owned (as determined in
accordance with the rules promulgated under Section 13 of the
Exchange Act) by such holder on the date hereof, which conversions
shall be effected in accordance with the terms of the certificate
of designations establishing such Preferred Stock. Each of the
parties hereto shall use its best efforts to cause each person who
beneficially owns Preferred Stock but who is not a party hereto
to convert the same to Common Stock on the IPO Closing Date.
ARTICLE VII
GENERAL PROVISIONS
Section 7.1. Notices. Any notice required to be given hereunder
shall be sufficient if in writing, and sent by facsimile
transmission and by courier service (with proof of service), hand
delivery or certified or registered mail (return receipt requested and
first-class postage prepaid), addressed as follows:
If to the Company or MGM Studios, to:
Metro-Goldwyn-Mayer Inc.
2500 Broadway, Fifth Floor
Santa Monica, CA 90404-3061
Attention: David Johnson
Telephone: (310) 449-3993
Telecopy: (310) 449-3011
with a copy to:
Gibson, Dunn & Crutcher LLP
333 S. Grand Avenue
Los Angeles, CA 90071
Attention: Bruce D. Meyer
Telephone: (213) 229-7979
Telecopy: (213) 229-7520
If to Tracinda, to:
Tracinda Corporation
4835 Koval Lane
Las Vegas, NV 89109
Attention: Secretary / Treasurer
Telecopy: (702) 737-1177
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Attention: Stephen Fraidin, P.C.
Telephone: (212) 859-8140
Telecopy: (212) 859-4000
If to Seven, to:
Seven Network Limited
c/o Culmen Group, L.P.
201 Main Street
Suite 1955
Fort Worth, TX 76102
Attention: Michael R. Gleason
Telephone: (817) 335-6999
Telecopy: (817) 870-1384
and:
ATN7
Mobbs Lane
Epping NSW 2121, Australia
Attention: Gary Rice, Managing Director
Telephone: (602) 877-7000
Telecopy: (612) 996-77191
with a copy to:
Kelly, Hart & Hallman
201 Main Street
Fort Worth, TX 76102
Attention: F. Richard Bernasek
Telephone: (817) 332-2500
Telecopy: (817) 878-9280
or to such other address as any party shall specify by written notice
so given, and such notice shall be deemed to have been delivered as of
the date so telecommunicated, personally delivered or mailed.
Section 7.2. Assignment; Binding Effect; Benefit; Successors.
(a) Except as otherwise expressly provided in this
Agreement, neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto
(whether by operation of law or otherwise); provided, however, that
each of Tracinda and Seven may assign its rights under this Agreement
to any of their respective direct or indirect wholly owned
Subsidiaries so long as (i) such assignee agrees to be bound by the
terms of this Agreement to the same extent as the applicable
assignor pursuant to a written agreement with the Company and
MGM Studios that is reasonably acceptable to each of them,
(ii) the applicable assignor continues to be bound by, and is not
released from, any of its obligations under this Agreement and
(iii) the applicable assignor will cause the applicable direct or
indirect wholly owned subsidiary to continue to be a direct or
indirect wholly owned subsidiary of the applicable assignor for
so long as such assignee shall have any rights under this Agreement.
For the purpose of this Agreement, all capital stock of the
Company owned by any direct or indirect wholly owned Subsidiary of
Tracinda or Seven, as applicable, shall be deemed owned by Tracinda or
Seven, as applicable. Subject to the first sentence of this Section
7.2(a), this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and
assigns. Except as expressly provided in this Agreement,
notwithstanding anything contained in this Agreement to the contrary,
nothing in this Agreement, express or implied, is intended to confer
on any person other than the parties hereto any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
(b) In the event that the Company or MGM Studios shall enter
into a merger, consolidation or other similar type transaction, all of
the terms of this Agreement relating to the Company and MGM Studios,
as applicable, shall apply to the surviving corporation.
Section 7.3. Entire Agreement. Upon the effectiveness hereof,
this Agreement, the Shareholders Agreement, the Employment Agreement
and any certificate delivered by the parties in connection herewith
constitute the entire agreement among the parties with respect to
the subject matter hereof and supersedes all prior agreements and
understandings (oral and written) among the parties with respect
thereto.
Section 7.4. Amendment. This Agreement may not be amended or
modified except by an instrument in writing signed by or on
behalf of each of the parties hereto, except as otherwise provided in
Section 6.1 hereof.
Section 7.5. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the internal laws of
the State of Delaware (without regard to conflict of laws principles
which would require the application of the laws of any other State).
Each of the parties hereto agrees that any legal action or proceeding
with respect to this Agreement may be brought in the Courts of the
State of Delaware or the United States District Court located in the
State of Delaware and, by execution and delivery of this Agreement,
each party hereto hereby irrevocably submits itself in respect of its
property, generally and unconditionally to the non-exclusive
jurisdiction of the aforesaid courts in any legal action or proceeding
arising out of this Agreement. Each of the parties hereto hereby
irrevocably waives any objection which it may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Agreement brought in the
courts referred to in the preceding sentence. Each party hereto hereby
consents to process being served in any such action or proceeding by
the mailing of a copy thereof to the address set forth in Section 7.1
hereof and agrees that such service upon receipt shall constitute good
and sufficient service of process or notice thereof. Nothing in this
Section 7.5 shall affect or eliminate any right to serve process in
any other matter permitted by law.
Section 7.6. Counterparts; Effective Date. This Agreement may be
executed by the parties hereto in separate counterparts, each of
which when so executed and delivered shall be an original, but all
such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies of
this Agreement, each of which may be signed by less than all of the
parties hereto, but together all such copies are signed by all of the
parties hereto. This Agreement shall become effective at the time
of the IPO Closing.
Section 7.7. Headings. Headings of the Articles and Sections of
this Agreement are for the convenience of the parties only
and shall be given no substantive or interpretive effect whatsoever.
Section 7.8. Interpretation. In this Agreement, unless the
context otherwise requires, words describing the singular number
shall include the plural and vice versa, "including" shall
mean including, without limitation, and words denoting any
gender shall include all genders and words denoting natural persons
shall include corporations and partnerships and vice versa.
Section 7.9. Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall,
as to that jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or
otherwise affecting the validity or enforceability of any of the terms
or provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
Section 7.10. Enforcement of Agreement. The parties hereto agree
that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance
with its specific terms or was otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any Delaware court,
this being in addition to any other remedy to which they may be
entitled at law or in equity.
Section 7.11. Certain Rights. If either Seven or Tracinda shall
violate or breach the terms of this Agreement or the Shareholders
Agreement (the "breaching party") then, notwithstanding anything
to the contrary in this Agreement or the Shareholders Agreement,
upon written notice provided to the breaching party and, upon
the running of a 30-day cure period after the delivery of such
written notice during which the breaching party fails to cure such
violation or breach, the rights (but not the obligations) of the
breaching party under the terms of this Agreement and the Shareholders
Agreement shall terminate (but such termination shall not affect the
rights of any other party under this Agreement or the Shareholders
Agreement). This Section 7.11 is not intended for the benefit of, or
to give rights to, any party other than Tracinda or Seven.
Section 7.12. Termination of Original Investors Shareholder
Agreement. Seven, Tracinda, the Company, MGM Studios and Mr. Mancuso
hereby mutually agree that, effective as of the IPO Closing Date, the
Original Investors Shareholder Agreement and that certain Letter
Agreement dated as of August 4, 1997 among the parties hereto shall
terminate and be of no further force or effect, and none of them shall
have any further rights, duties or obligations thereunder from and
after the effective date of such termination. Until such time as the
IPO Closing Date shall occur, the Original Investors Shareholder
Agreement shall remain in full force and effect and shall be
unaffected hereby.
Section 7.13. Antidilution Adjustment. Prior to or concurrent
with the consummation of the IPO Closing, the Company will effect, in
one or more transactions, a net stock split of the Common Stock (the
"Stock Split"). As a result of the Stock Split, the following changes
will be made in this Agreement, before it becomes effective (the
"Antidilution Adjustment"):
(a) The number of shares of Common Stock in Sections
3.2(a)(i)(A), 3.2 (a)(i)(B), 3.2(a)(i)(D), 3.2(e)(ii), 3.3,
5.1, and 6.1 hereof, prior to the Antidilution Adjustment,
will be multiplied by the Stock Split; and
(b) The $833.34 amount in the definition of Approved Initial
Public Offering, prior to the Antidilution Adjustment, will
be divided by the Stock Split.
Except as otherwise provided herein, all dollar amounts changed as a
result of the Antidilution Adjustment will be rounded to the nearest
penny.
IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf as of the day and
year first written above.
SEVEN NETWORK LIMITED
By:--------------------------------------
Name:
Title:
TRACINDA CORPORATION
By:-------------------------------------
Name:
Title:
METRO-GOLDWYN-MAYER STUDIOS INC.
By:-------------------------------------
Name:
Title:
METRO-GOLDWYN-MAYER INC.
By:-------------------------------------
Name:
Title:
-------------------------------------
MR. FRANK G. MANCUSO
The undersigned, an indirect wholly
owned subsidiary of Seven Network
Limited, hereby agrees to be bound
by the terms of this Agreement to
the same extent as Seven Network
Limited.
MILTONSTAR PTY LIMITED
By:--------------------------------
Name:
Title:
===============================================================================
FORM OF
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
by and among
METRO-GOLDWYN-MAYER INC.
SEVEN NETWORK LIMITED
TRACINDA CORPORATION
METRO-GOLDWYN-MAYER STUDIOS INC.
MR. FRANK G. MANCUSO
and
THE OTHER PARTIES SPECIFIED ON THE
SIGNATURE PAGES HERETO
Dated as of August 4, 1997
===============================================================================
TABLE OF CONTENTS
ARTICLE I DEFINITIONS..............................................1
Section 1.1 Definitions..............................................1
ARTICLE II REPRESENTATIONS AND WARRANTIES...........................4
Section 2.1 Representations and Warranties of the Company............4
Section 2.2 Representations and Warranties of Seven..................4
Section 2.3 Representations and Warranties of Tracinda...............5
Section 2.4 Representations and Warranties of MGM Studios............5
Section 2.5 Representations and Warranties of the Executives.........6
ARTICLE III LEGEND; TAG-ALONG RIGHTS.................................6
Section 3.1 Legend...................................................6
Section 3.2 "Tag-Along" Rights.......................................7
ARTICLE IV REGISTRATION RIGHTS......................................10
Section 4.1 Demand Registrations.....................................10
Section 4.2 Piggyback Registrations..................................11
Section 4.3 Holdback Agreements......................................11
Section 4.4 Registration Procedures..................................12
Section 4.5 Registration Expenses....................................15
Section 4.6 Indemnification..........................................15
Section 4.7 Participation in Underwritten Registrations..............17
Section 4.8 Current Public Information...............................18
Section 4.9 Preparation; Reasonable Investigation....................18
Section 4.10 Certain Rights of Holders................................18
Section 4.11 Form S-8.................................................19
ARTICLE V GENERAL PROVISIONS.......................................19
Section 5.1 Notices..................................................19
Section 5.2 Assignment; Binding Effect; Benefit; Successors..........21
Section 5.3 Entire Agreement.........................................21
Section 5.4 Amendment................................................21
Section 5.5 Governing Law; Effective Date............................22
Section 5.6 Counterparts.............................................22
Section 5.7 Headings.................................................22
Section 5.8 Interpretation...........................................22
Section 5.9 Severability.............................................23
Section 5.10 Enforcement of Agreement.................................23
Section 5.11 Termination of Original Shareholders Agreement...........23
Section 5.12 Antidilution Adjustment..................................23
FORM OF AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
---------------------------------------------------
THIS AMENDED AND RESTATED SHAREHOLDERS AGREEMENT, dated as of
August 4, 1997 (this "Agreement"), by and among METRO-GOLDWYN-MAYER
INC., a corporation organized under the laws of the State of Delaware
and formerly known as P&F Acquisition Corp. (the "Company"), SEVEN
NETWORK LIMITED, a corporation organized under the laws of the
Commonwealth of Australia ("Seven"); TRACINDA CORPORATION, a
corporation organized under the laws of the State of Nevada
("Tracinda"); METRO-GOLDWYN-MAYER STUDIOS INC., a corporation
organized under the laws of the State of Delaware ("MGM Studios") and
formerly known as Metro-Goldwyn-Mayer Inc.; Mr. Frank G. Mancuso ("Mr.
Mancuso"), and the Persons listed on the signature pages hereto
(Mr.Mancuso and each such Person is herein referred to as an
"Executive" and together as the "Executives")[F1], amends and
supersedes that certain Shareholders Agreement, dated as of October
10, 1996, by and among MGM Studios, Seven, Tracinda, the Company, Mr.
Mancuso and the other parties thereto (the "Original Shareholders
Agreement").
[FN]
[F1] At the execution of this Agreement, the signature pages
hereto will indicate the names of the Executives, who shall not
exceed 18 in number.
</FN>
A. The Executives will be granted options ("Options") to acquire
shares of capital stock of the Company pursuant to the Plan (as
defined below).
B. Mr. Mancuso executed an amended and restated employment
agreement with the Company and MGM Studios dated as of August 4, 1997
pursuant to which Mr. Mancuso may acquire from time to time shares of
capital stock of the Company.
C. The Company intends to commence with an Approved Initial
Public Offering (as defined below) of the Common Stock (as defined
below) of the Company and to enter into certain related transactions.
D. The parties hereto have agreed to enter into this Agreement
for the purpose of amending and restating in its entirety the
provisions of the Original Shareholders Agreement as provided herein.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS.
"Affiliate": of any Person, means (i) any other Person
controlling, controlled by or under common control with such Person,
(ii) any director or executive officer of such Person or of any
Affiliate of such Person and (iii) any family member of any director
or executive officer of such Person or any director or executive
officer of any Affiliate of such Person.
"Agreement": as defined in the preamble to this Agreement.
"Antidilution Adjustment": as defined in Section 5.12.
"Approved Initial Public Offering": has the meaning set forth in
the Investors Shareholder Agreement as the same may be amended from
time to time in accordance with the terms thereof.
"Commission": means the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act.
"Common Stock": means the common stock of the Company.
"Company": as defined in the preamble to this Agreement.
"Demand Registrations": as defined in Section 4.1(a).
"Exchange Act": means the Securities Exchange Act of 1934, as
amended, and rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.
"Executives": as defined in the preamble to this Agreement.
"Investors Shareholder Agreement": the Amended and Restated
Investors Shareholder Agreement dated as of August 4, 1997 by and
among MGM Studios, the Company, Tracinda, Seven and Mr. Mancuso.
"IPO Closing": means the closing of an Approved Initial Public
Offering at which the Company first receives the funds described in
the definition of "Approved Initial Public Offering," whether or not
the underwriters have at such time exercised any over-allotment
option.
"IPO Closing Date": means the date of the IPO Closing.
"MGM Studios": as defined in the preamble to this Agreement.
"Notice Date": as defined in Section 3.2.
"Options": as defined in the preamble to this Agreement.
"Original Shareholders Agreement": as defined in the preamble to
this Agreement.
"Other Securityholders": as defined in Section 3.2.
"Permitted Transferee": means:
(a) (i) the successors in interest to such Executive, in the
case of a Transfer upon the death of such Executive, provided that
each such successor in interest would be a Permitted Transferee under
clauses (a)(ii) or (a)(iv) of this definition, (ii) such Executive's
spouse, parents, grandparents, siblings and descendants (whether by
blood or adoption, and including stepchildren) and the spouses of such
persons, (iii) such Executive, with respect to the disposition of the
community property interest of such Executive's spouse in all or any
part of the Common Stock upon the dissolution of the marriage of the
Executive and his or her spouse or upon the death of such spouse, (iv)
any transferee occasioned by the incompetence of such Executive and
(v) in the case of a Transfer during such Executive's lifetime, any
Person in which no Person has any interest (directly or indirectly)
except for any of such Executive, such Executive's spouse, parents,
grandparents, siblings and descendants (whether by blood or adoption,
and including stepchildren) and the spouses of such persons; and
(b) the beneficiaries or the grantor of any trust all the
beneficiaries of which are natural persons; provided, however, that
each such beneficiary or grantor of such trust is a Person who would
be a Permitted Transferee under clause (a) of this definition.
"Person": means any natural person, corporation, partnership,
limited liability company, firm, association, trust, government,
governmental agency, or other legal entity, whether acting in an
individual, fiduciary or other capacity.
"Piggyback Registration": as defined in Section 4.2(a).
"Plan": means, collectively, the Stock Incentive Plan and the
Stock Option Agreement.
"Registrable Securities": means (i) any shares of Common Stock
owned by, or otherwise hereafter acquired by, Tracinda, Seven or any
Executive and (ii) any securities issued as a dividend on or other
distribution with respect to or in exchange, replacement or in
subdivision of, any such Common Stock. As to any particular
Registrable Securities, such securities shall cease to be Registrable
Securities when (i) a registration statement with respect to the sale
of such securities shall have been declared effective under the
Securities Act and such securities shall have been disposed of in
accordance with such registration statement, or (ii) such securities
shall have been sold (other than in a privately negotiated sale)
pursuant to Rule 144 (or any successor provision) under the Securities
Act and in compliance with the requirements of paragraphs (c), (e),
(f)and (g)of Rule 144.
"Registration Expenses": as defined in Section 4.5(a).
"Securities Act": means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder, as the
same shall be in effect at the time.
"Series A Options": as defined in the Plan.
"Series B Options": as defined in the Plan.
"Seven": as defined in the preamble to this Agreement.
"Short-Form Registrations": as defined in Section 4.1(a).
"Stock Incentive Plan": means the Company's Amended and Restated
1996 Stock Incentive Plan, in substantially the form attached hereto
as Exhibit A.
"Stock Split": as defined in Section 5.12.
"Stock Option Agreement": means the Company's several Stock
Option Agreements, in substantially the form attached hereto as
Exhibit B, entered into pursuant to the Stock Incentive Plan.
"Subsidiary": of any Person means any corporation or other legal
entity of which such Person (either alone or through or together with
any other direct or indirect Subsidiary) owns, directly or indirectly,
50% or more of the stock or other equity interests, the holders of
which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal
entity.
"Tag-Along Notice": as defined in Section 3.2.
"Tag-Along Sale": as defined in Section 3.2.
"Tracinda": as defined in the preamble to this Agreement.
"Transfer": as defined in Section 3.2.
"Transferring Party": as defined in Section 3.2.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to the other parties
hereto as follows: (i) the Company has all requisite corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby; (ii) the execution and delivery by
the Company of this Agreement, and the consummation by the Company of
the transactions contemplated hereby, have been duly authorized by all
necessary corporate action on the part of the Company; (iii) this
Agreement has been duly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as the
enforceability hereof may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights generally or general
principles of equity and except to the extent that the indemnity
provisions set forth in Article IV may not be valid under applicable
securities laws or by reason of public policy; (iv) no consent,
approval, order or authorization of, or registration, declaration or
filing with, any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, is
required by, or with respect to, the Company in connection with the
execution and delivery of this Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby;
and (v) the execution and delivery of this Agreement by the Company
and the consummation of the transactions contemplated hereby by the
Company does not conflict with, or result in a breach of, any law or
regulation of any governmental authority applicable to the Company or
any material agreement to which the Company is a party.
SECTION 2.2. REPRESENTATIONS AND WARRANTIES OF SEVEN.
Seven hereby represents and warrants to the other parties hereto
as follows: (i) Seven has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby; (ii) the execution and delivery by Seven of this
Agreement, and the consummation by Seven of the transactions
contemplated hereby, have been duly authorized by all necessary
corporate action on the part of Seven; (iii) this Agreement has been
duly executed and delivered by Seven and constitutes a valid and
binding obligation of Seven enforceable against Seven in accordance
with its terms, except as the enforceability hereof may be limited by
bankruptcy, insolvency or other similar laws affecting creditors'
rights generally or general principles of equity and except to the
extent that the indemnity provisions set forth in Article IV may not
be valid under applicable securities laws or by reason of public
policy; (iv) no consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative
agency or commission or other governmental authority or
instrumentality, domestic or foreign, is required by, or with respect
to, Seven in connection with the execution and delivery by Seven of
this Agreement or the consummation by Seven of the transactions
contemplated hereby; and (v) the execution and delivery by Seven of
this Agreement and the consummation by Seven of the transactions
contemplated hereby does not conflict with, or result in a breach of,
any law or regulation of any governmental authority applicable to
Seven or any material agreement to which Seven is a party.
SECTION 2.3. REPRESENTATIONS AND WARRANTIES OF TRACINDA.
Tracinda hereby represents and warrants to the other parties
hereto as follows: (i) Tracinda has all requisite corporate power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby; (ii) the execution and delivery by
Tracinda of this Agreement, and the consummation by Tracinda of the
transactions contemplated hereby, have been duly authorized by all
necessary corporate action on the part of Tracinda; (iii) this
Agreement has been duly executed and delivered by Tracinda and
constitutes a valid and binding obligation of Tracinda enforceable
against Tracinda in accordance with its terms, except as the
enforceability hereof may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights generally or general
principles of equity and except to the extent that the indemnity
provisions set forth in Article IV may not be valid under applicable
securities laws or by reason of public policy; (iv) no consent,
approval, order or authorization of, or registration, declaration or
filing with, any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, is
required by, or with respect to, Tracinda in connection with the
execution and delivery of this Agreement by Tracinda or the
consummation by Tracinda of the transactions contemplated hereby; and
(v) the execution and delivery of this Agreement by Tracinda and the
consummation by Tracinda of the transactions contemplated hereby does
not conflict with, or result in a breach of, any law or regulation of
any governmental authority applicable to Tracinda or any material
agreement to which Tracinda is a party.
SECTION 2.4. REPRESENTATIONS AND WARRANTIES OF MGM STUDIOS.
MGM Studios hereby represents and warrants to the other parties
hereto as follows: (i) MGM Studios has all requisite corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby; (ii) the execution and delivery by
MGM Studios of this Agreement, and the consummation by MGM Studios of
the transactions contemplated hereby, have been duly authorized by all
necessary corporate action on the part of MGM Studios; (iii) this
Agreement has been duly executed and delivered by MGM Studios and
constitutes a valid and binding obligation of MGM Studios enforceable
against MGM Studios in accordance with its terms, except as the
enforceability hereof may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights generally or general
principles of equity and except to the extent that the indemnity
provisions set forth in Article IV may not be valid under applicable
securities laws or by reason of public policy; (iv) no consent,
approval, order or authorization of, or registration, declaration or
filing with, any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, is
required by, or with respect to, MGM Studios in connection with the
execution and delivery of this Agreement by MGM Studios or the
consummation by MGM Studios of the transactions contemplated hereby;
and (v) the execution and delivery of this Agreement by MGM Studios
and the consummation by MGM Studios of the transactions contemplated
hereby does not conflict with, or result in a breach of, any law or
regulation of any governmental authority applicable to MGM Studios or
any material agreement to which MGM Studios is a party.
SECTION 2.5. REPRESENTATIONS AND WARRANTIES OF THE EXECUTIVES.
Each of the Executives (as to himself only) hereby represents and
warrants to the other parties hereto, as of the date of the execution
of this Agreement by such Executive, as follows: (i) such Executive
has all requisite power and authority to enter into this Agreement and
to consummate the transactions contemplated hereby; (ii) this
Agreement has been duly executed and delivered by such Executive and
constitutes a valid and binding obligation of such Executive
enforceable against such Executive in accordance with its terms,
except as the enforceability hereof may be limited by bankruptcy,
insolvency or other similar laws affecting creditors' rights generally
or general principles of equity and except to the extent that the
indemnity provisions set forth in Article IV may not be valid under
applicable securities laws or by reason of public policy; (iii) no
consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality,
domestic or foreign, is required by, or with respect to, such
Executive in connection with the execution and delivery of this
Agreement by such Executive or the consummation by Executive of the
transactions contemplated hereby; and (iv) the execution and delivery
of this Agreement by such Executive and the consummation by such
Executive of the transactions contemplated hereby does not conflict
with, or result in a breach of, any law or regulation of any
governmental authority applicable to such Executive or any material
agreement to which such Executive is a party.
ARTICLE III
LEGEND; TAG-ALONG RIGHTS
SECTION 3.1. LEGEND. Tracinda and Seven hereby acknowledge and
agree that each of the certificates representing the shares of Common
Stock beneficially owned by each of them shall include the following
legend: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY BE OFFERED OR SOLD
ONLY IF REGISTERED UNDER THE SECURITIES ACT OF 1933 OR IF AN EXEMPTION
FROM REGISTRATION IS AVAILABLE. THESE SHARES ARE SUBJECT TO CERTAIN
LIMITATIONS ON TRANSFER AND CERTAIN OTHER MATTERS SET FORTH IN AN
AGREEMENT DATED AS OF AUGUST 4, 1997 BY AND AMONG SEVEN NETWORK
LIMITED, TRACINDA CORPORATION, METRO-GOLDWYN-MAYER STUDIOS INC.,
METRO-GOLDWYN-MAYER INC., MR. FRANK G. MANCUSO, AND CERTAIN OTHER
PERSONS (THE "AGREEMENT"). A COPY OF THE AGREEMENT IS ON FILE WITH THE
SECRETARY OF METRO-GOLDWYN-MAYER INC.
SECTION 3.2. "TAG-ALONG" RIGHTS.
(a) If either of Seven or Tracinda (a "Transferring Party")
desires to sell, transfer, assign, pledge or otherwise dispose of
("Transfer") directly or indirectly, in whole or in part, any shares
of Common Stock beneficially owned by it (a "Tag-Along Sale"), the
Transferring Party shall provide the Company and each of the
Executives and Tracinda or Seven, as the case may be (the "Other
Securityholders"), with written notice (the "Tag Along Notice")
setting forth:
(i) the number of shares of Common Stock proposed to be
Transferred;
(ii) the name and address of the prospective purchaser;
(iii) all material terms and conditions of such
proposed transaction including the date of the proposed closing of
such transaction and the proposed amount and the form of consideration
to be paid for such Common Stock;
(iv) that the Transferring Party is offering each of
the Other Securityholders the right to participate in such Transfer on
a pro rata basis on the same terms and conditions as are applicable to
the Transferring Party;
(v) the aggregate number of shares of Common Stock
beneficially owned by such Transferring Party as of the date of the
Tag Along Notice (the "Notice Date") from the Transferring Party to
the Company;
(vi) the Company's calculation of the maximum number of
shares of Common Stock that each such Other Securityholder is entitled
to include in the Tag-Along Sale (as computed in accordance with the
equation set forth in subsection (a) of this Section 3.2); and
(vii) a copy of the proposed agreements for the
Tag-Along Sale.
The Company shall have the obligation to provide the calculation
described in clause (vi) above to the Transferring Party upon request
by the Transferring Party and shall take full and complete
responsibility for the accuracy and completeness of such calculation.
Within 20 calendar days following the delivery of the Tag Along
Notice, each Other Securityholder, by notice in writing to the
Transferring Party, shall have (i) in the case of the Executives, the
right to exercise any Options held by such Executives to the extent
required to realize the rights of such Executives provided in this
Section 3.2 and (ii) the opportunity to sell to the prospective
purchaser (upon the same terms and conditions as the Transferring
Party) on the proposed date of the closing of the applicable
transaction as specified in the applicable Tag Along Notice up to that
number of shares of Common Stock specified in the Tag Along Notice
owned by such Other Securityholder (excluding any shares of Common
Stock acquired pursuant to open market purchases) as shall equal the
product of (x) a fraction, the numerator of which is the number of
shares of Common Stock specified in the Tag Along Notice beneficially
owned by such Other Securityholder as of the date of such proposed
sale (excluding any shares of Common Stock acquired pursuant to open
market purchases), and the denominator of which is the aggregate
number of shares of Common Stock specified in the Tag Along Notice
beneficially owned as of the date of such proposed sale by the
Transferring Party and all of the Other Securityholders (excluding any
shares of Common Stock acquired pursuant to open market purchases),
and (y) the number of shares of Common Stock proposed to be sold;
provided, however, that to the extent the prospective purchaser agrees
to purchase Common Stock in excess of the amount specified in the Tag
Along Notice, such excess amount shall be allocated among the
Transferring Party and the Other Securityholders on a pro-rata basis
based on the allocation procedures specified above; provided further,
however, that to the extent that one or more Other Securityholders
elect not to participate in such sale, the amount of Common Stock
which such Other Securityholder(s) would otherwise have been entitled
to sell in such sale shall not be reallocated to the remaining Other
Securityholders who elect to participate in such sale; and provided
further, however, that in exercising these rights with respect to an
Executive's Series A Option or Series B Option (1) the Series A Option
must be exercised, to the extent then vested, before the Series B
Option, to the extent then vested, is exercised, (2) thereafter, the
Series B Option, to the extent then vested, must be exercised before
the Series A Option, to the extent not vested, is exercised, (3) then,
the balance of the Series A Option must be exercised before the
balance of the Series B Option is exercised and (4) thereafter, the
balance of the Series B Option will be exercisable. The amount of
shares of Common Stock to be sold by the Transferring Party shall be
reduced if and to the extent necessary to provide for such sale of
shares of Common Stock by the Other Securityholders. If an Other
Securityholder does not elect to participate in such sale within the
20 calendar day period referred to above, the Transferring Party shall
be entitled to consummate such sale not later than 90 days after the
end of such 20 calendar day period on terms no more favorable to the
Transferring Party than those stated in the Tag Along Notice without
the participation of such Other Securityholder and all rights of such
Other Securityholder to exercise Options in connection with such sale
shall terminate. An Other Securityholder shall not be deemed to have
entered into a legally binding agreement to sell shares unless and
until such Other Securityholder shall have entered into a definitive
purchase agreement with the prospective transferee which shall include
customary conditions precedent to such Other Securityholder's
obligations thereunder, including, without limitation, the obtaining
of all necessary regulatory approvals, and which shall provide for the
same terms and conditions applicable to the Transferring Party,
including (without limitation) representations, warranties and
indemnities; provided that the maximum indemnity obligation of the
Other Securityholder under any such agreement (in its capacity as a
selling shareholder) shall be limited to the purchase price received
by such Other Securityholder in the applicable transaction and the
indemnity obligations of the Other Securityholder under any such
agreement (in its capacity as a selling shareholder) shall be several,
and not joint, with the other parties selling shares pursuant to the
agreement. The provisions of this Section 3.2 shall not inure to the
benefit of or be binding upon any transferee of Common Stock from
Tracinda or Seven (except in connection with any transfer by either of
them to one or more of their Affiliates) or from any Executive (other
than a Permitted Transferee of an Executive).
(b) The provisions of this Section 3.2 shall not apply to:
(i) any transaction in which shares of Common Stock are
proposed to be sold publicly pursuant to a registration statement
filed under the Securities Act or pursuant to Rule 144 or Regulation S
promulgated under the Securities Act; or
(ii) any one transaction or series of related
transactions involving the transfer by the Transferring Party of less
than 1% of the then issued and outstanding shares of Common Stock; or
(iii) any bona fide pledge to a bank or other
institutional financial lender; or
(iv) any sale from one party to this Agreement to
another party to this Agreement.
(c) The obligations provided for in this Section 3.2 shall
terminate with respect to each Transferring Party at such time as such
Transferring Party beneficially owns less than 250,000 shares of
Common Stock.
(d) If an Option held by an Executive has vested pursuant to
the terms of the Plan but is not exercisable pursuant to the terms of
the Plan at the time of a Tag-Along Sale pursuant to this Section 3.2,
the Executive shall be entitled to exercise such Option as described
in subsection (a) of this Section 3.2.
(e) Notwithstanding anything contained herein to the
contrary, the provisions of this Section 3.2 shall not apply to, in
the case of each of Tracinda and Seven, (i) the transfer of, or the
grant of options for the acquisition of, up to 7,500 shares of Common
Stock (such number to be appropriately adjusted in the event that the
Company should effect any stock dividend, stock split, reverse stock
split, or any similar transaction after the date hereof) beneficially
owned by it to officers, directors, employees, consultants and
affiliates so long as such transferee shall agree in writing to be
bound by all the terms of this Agreement applicable to its transferor
as if the transferee originally had been a party to this Agreement and
(ii) the transfer and assignment of all or any portion of the capital
stock of the Company beneficially owned by it to any direct or
indirect wholly owned subsidiary of such entity so long as (y) such
transferee shall agree in writing to be bound by all the terms of this
Agreement applicable to its transferor as if the transferee originally
had been a party to this Agreement and (z) the transferor agrees to
cause such direct or indirect wholly owned subsidiary to continue to
be a direct or indirect wholly owned subsidiary of the transferor for
so long as such direct or indirect wholly owned subsidiary
beneficially owns any such capital stock of the Company.
ARTICLE IV
REGISTRATION RIGHTS
SECTION 4.1. DEMAND REGISTRATIONS.
(a) Requests for Registration. Subject to Sections 4.1(c)
and 4.3 hereof, each of Seven, Tracinda and each Executive shall have
the right to make up to three requests, in the case of each of Seven
and Tracinda, and up to two requests with respect to all of the
Executives, for registration under the Securities Act of all or part
of their Registrable Securities on Form S-1 or any similar long-form
registration or on Form S-3 or any similar short-form registration
("Short-Form Registrations"); provided that no request for a Demand
Registration may be made at anytime prior to 180 days after the IPO
Closing Date; and provided, further, that any request for a Demand
Registration shall not be otherwise deemed to be effective unless such
request includes Registrable Securities which have an estimated value
of no less than $50,000,000. Each request for a Demand Registration
shall specify the approximate number of Registrable Securities
requested to be registered and the anticipated per share price range
for such offering. All registrations requested pursuant to this
Section 4.1(a) are referred to herein as "Demand Registrations."
(b) Short-Form Registrations. Demand Registrations will be
Short-Form Registrations whenever the Company is permitted to use any
applicable short form, unless the party requesting such Demand
Registration is entitled to request, and agrees to bear the
incremental Registration Expenses for, registration on Form S-1 at a
time when use of Short-Form Registration is available. The Company
will use its best efforts to make Short-Form Registrations available
for the sale of Registrable Securities. Demand Registration requests
may be for shelf registrations if the Company is then eligible to
effect shelf registrations.
(c) Restrictions on Demand Registrations. The Company will
not be obligated to effect any Demand Registration within six months
after the effective date of a previous Demand Registration. During any
two-year period, the Company may make a one-time election to postpone
the filing or the effectiveness of a registration statement for a
Demand Registration for up to six months if the board of directors of
the Company determines, in its good faith judgment, that (i) such
Demand Registration would reasonably be expected to have a material
adverse effect on, interfere with or delay any proposal or plan by the
Company or any of its subsidiaries to engage in any acquisition of
assets (other than in the ordinary course of business) or any merger,
consolidation, tender offer or similar transaction, (ii) the filing of
a registration statement or a sale of Registrable Securities pursuant
thereto would require disclosure of material information that the
Company has a bona fide business purpose for preserving as
confidential or (iii) the Company is unable to comply with the
registration requirements of the Commission; provided that, in such
event, the holders of Registrable Securities initially requesting such
Demand Registration will be entitled to withdraw such request and, if
such request is withdrawn, such request for Demand Registration will
not count as a request for Demand Registration hereunder and the
Company will pay all Registration Expenses in connection with such
withdrawn registration request.
(d) Selection of Underwriters. The party requesting a Demand
Registration will have the right to select the managing underwriters
to administer the offering, who shall be of national prominence and
reasonably acceptable to the Company.
SECTION 4.2. PIGGYBACK REGISTRATIONS.
(a) Right to Piggyback. Whenever at anytime after the IPO
Closing Date, the Company proposes to register any of its equity
securities under the Securities Act (other than a registration on Form
S-4 or Form S-8 or any successor or similar forms) and the
registration form to be used may be used for the registration of
Registrable Securities (a "Piggyback Registration"), whether or not
for sale for its own account, the Company will give prompt written
notice to each of Tracinda, Seven and the Executives of its intention
to effect such a registration and the class or classes of equity
securities of the Company to be registered and will include in such
registration all Registrable Securities of the same class or classes
with respect to which the Company has received written requests for
inclusion therein within 20 days after the receipt of the notice from
the Company.
(b) Priority on Primary Registrations. If a Piggyback
Registration is an underwritten primary registration on behalf of the
Company, and the managing underwriters advise the Company in writing
that in their opinion the number of securities requested to be
included in such registration exceeds the number which can be sold in
such offering within a price range reasonably acceptable to the
Company, the Company will include in such registration (i) first, the
securities the Company proposes to sell and (ii) second, all other
securities (including the Registrable Securities) requested to be
included in such registration, pro rata among the respective holders
thereof on the basis of the number of securities owned by each such
holder.
(c) Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of
holders of securities of the Company, and the managing underwriters
advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the
number which can be sold in such offering within a price range
reasonably acceptable to such holders, the Company will include in
such registration the securities (including the Registrable
Securities) requested to be included in such registration, pro rata
among the respective holders thereof on the basis of the number of
securities owned by each such holder.
SECTION 4.3. HOLDBACK AGREEMENTS.
(a) If requested in writing by the Company or the managing
underwriters, if any, of any registration effected pursuant to Section
4.1 or 4.2, each of Seven, Tracinda and the Executives agrees not to
effect any public sale or distribution (including sales pursuant to
Rule 144) of equity securities of the Company, or any securities
convertible into or exchangeable or exercisable for such securities,
during the time period reasonably requested by the managing
underwriters, not to exceed the period commencing with the date seven
days prior to and ending with the date 90 days, or such longer period,
not to exceed 180 days, as the applicable managing underwriter shall
request, after the effective date of any underwritten Demand
Registration, any underwritten Piggyback Registration or other
underwritten registration by the Company of its securities (except as
part of such underwritten registration).
(b) If requested in writing by the managing underwriters of
any registration effected pursuant to Section 4.1 or 4.2, the Company
agrees (i) not to effect any public sale or distribution of its equity
securities, or any securities convertible into or exchangeable or
exercisable for such securities, during the time period reasonably
requested by the managing underwriters, not to exceed the period
commencing with the date seven days prior to and ending with the date
90 days, or such longer period, not to exceed 180 days, as the
applicable managing underwriter shall request, after the effective
date of any underwritten Demand Registration or any underwritten
Piggyback Registration (except as part of such underwritten
registration or pursuant to registrations on Form S-4 or Form S-8 or
any successor forms), and (ii) to use its best efforts to cause each
holder of its capital stock, which such holder purchased from the
Company at any time after the date of this Agreement (other than in a
registered public offering), to so agree.
(c) If the Company has previously filed a registration
statement with respect to Registrable Securities pursuant to Section
4.1 or 4.2, and if such previous registration has not been withdrawn
or abandoned, the Company will not file or cause to be effected any
other registration of any of its equity securities or securities
convertible or exchangeable into or exercisable for its equity
securities under the Securities Act (except on Form S-4 or Form S-8 or
any successor forms), whether on its own behalf or at the request of
any holder or holders of such securities, until a period of at least
90 days, or such longer period, not to exceed 180 days, as the
applicable managing underwriter shall request, has elapsed from the
effective date of such previous registration.
SECTION 4.4. REGISTRATION PROCEDURES. Whenever Tracinda, Seven or
an Executive has requested that any Registrable Securities be
registered pursuant to this Agreement, the Company will use its best
efforts to effect the registration and the sale of such Registrable
Securities in accordance with the intended method of disposition
thereof, and pursuant thereto the Company will as expeditiously as
possible:
(a) prepare and file with the Commission a registration
statement with respect to such Registrable Securities and thereafter
use its best efforts to cause such registration statement to become
effective (provided that, before filing a registration statement or
prospectus or any amendments or supplements thereto, the Company will
furnish to the counsel selected by the holders of a majority of the
Registrable Securities covered by such registration statement copies
of all such documents proposed to be filed, which documents will be
subject to review of such counsel);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for a period of either (i) not less than six
months (subject to extension pursuant to Section 4.7(b)) or, if such
registration statement relates to an underwritten offering, such
longer period as in the opinion of counsel for the underwriters a
prospectus is required by law to be delivered in connection with sales
of Registrable Securities by an underwriter or dealer or (ii) such
shorter period as will terminate when all of the securities covered by
such registration statement have been disposed of in accordance with
the intended methods of disposition by the seller or sellers thereof
set forth in such registration statement (but in any event not before
the expiration of any longer period required under the Securities
Act), and to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such
registration statement until such time as all of such securities have
been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such
registration statement;
(c) furnish to each seller of Registrable Securities such
number of copies of such registration statement, each amendment and
supplement thereto, the prospectus included in such registration
statement (including each preliminary prospectus) and such other
documents as such seller may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such seller;
(d) use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of
such jurisdictions as any seller reasonably requests and do any and
all other acts and things which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of such Registrable Securities owned by such seller
(provided that the Company will not be required to (i) qualify
generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii)
subject itself to taxation in any such jurisdiction or (iii) consent
to general service of process in any such jurisdiction);
(e) notify each seller of such Registrable Securities, at
any time when a prospectus relating thereto is required to be
delivered under the Securities Act, upon discovery that, or upon the
discovery of the happening of any event as a result of which, the
prospectus included in such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the
statements therein not misleading in the light of the circumstances
under which they were made, and the Company will prepare and file with
the Commission and, at the request of any such seller, furnish to such
seller a reasonable number of copies of, a supplement or amendment to
such prospectus so that, as thereafter delivered to the purchasers of
such Registrable Securities, such prospectus will not contain an
untrue statement of a material fact or omit to state any fact
necessary to make the statements therein not misleading in the light
of the circumstances under which they were made;
(f) cause all such Registrable Securities to be listed on
each securities exchange on which similar securities issued by the
Company are then listed and, if not so listed, to be listed on the
Nasdaq National Market;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such
registration statement;
(h) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other
actions as the holders of a majority of the Registrable Securities
being sold or the underwriters, if any, reasonably request in order to
expedite or facilitate the disposition of such Registrable Securities
(including, without limitation, effecting a stock split or a
combination of shares);
(i) make available for inspection by any seller of
Registrable Securities, any underwriter participating in any
disposition pursuant to such registration statement, and any attorney,
accountant or other agent retained by any such seller or underwriter,
all financial and other records, pertinent corporate documents and
properties of the Company, and cause the officers, directors,
employees and independent accountants of the Company to supply all
information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration
statement;
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months
beginning with the first day of the first full calendar quarter of the
Company after the effective date of the registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of
the Securities Act and Rule 158 thereunder;
(k) in the event of the issuance of any stop order
suspending the effectiveness of a registration statement, or of any
order suspending or preventing the use of any related prospectus or
suspending the qualification of any securities included in such
registration statement for sale in any jurisdiction, the Company will
use its reasonable best efforts promptly to obtain the withdrawal of
such order;
(l) obtain a "cold comfort" letter, dated the effective date
of such registration statement (and, if such registration includes an
underwritten public offering, dated the date of the closing under the
underwriting agreement), signed by the independent public accountants
of the Company in customary form and covering such matters of the type
customarily covered by "cold comfort" letters as the holders of a
majority of the Registrable Securities being sold reasonably request
(provided that such Registrable Securities constitute at least 10% of
the securities covered by such registration statement); and
(m) provide a legal opinion of the outside counsel of the
Company, dated the effective date of such registration statement (and,
if such registration includes an underwritten public offering, dated
the date of the closing under the underwriting agreement), with
respect to the registration statement, each amendment and supplement
thereto, the prospectus included therein (including the preliminary
prospectus) and such other documents relating thereto in customary
form and covering such matters of the type customarily covered by
legal opinions of such nature. The Company may require each seller of
Registrable Securities as to which any registration is being effected
to furnish the Company such information regarding such seller and the
distribution of such securities as the Company may from time to time
reasonably request in writing.
SECTION 4.5. REGISTRATION EXPENSES.
(a) Except as provided in Section 4.1(b), the Company shall
pay all Registration Expenses relating to any registration of
Registrable Securities hereunder. "Registration Expenses" shall mean
any and all fees and expenses incident to the Company's performance of
or compliance with this Article IV, including, without limitation: (i)
Commission, stock exchange or National Association of Securities
Dealers, Inc. registration and filing fees and all listing fees and
fees with respect to the inclusion of securities on the Nasdaq
National Market, (ii) fees and expenses of compliance with state
securities or "blue sky" laws and in connection with the preparation
of a "blue sky" survey, including, without limitation, reasonable fees
and expenses of blue sky counsel, (iii) printing expenses, (iv)
messenger and delivery expenses, (v) fees and disbursements of counsel
for the Company, (vi) with respect to each registration, reasonable
fees and disbursements of one counsel for the selling shareholders
(other than the Company) (selected by the holders making the Demand
Registration request, in the case of a registration pursuant to
Section 4.1, and selected by the holders of a majority of the
Registrable Securities included in such registration, in the case of a
registration pursuant to Section 4.2) as well as of one local counsel,
(vii) fees and disbursements of all independent public accountants
(including the expenses of any audit and/or "cold comfort" letter) and
fees and expenses of other persons, including special experts,
retained by the Company, and (viii) any other fees and disbursements
of underwriters, if any, customarily paid by issuers or sellers of
securities.
(b) Notwithstanding the foregoing, (i) the provisions of
this Section 4.5 shall be deemed amended to the extent necessary to
cause these expense provisions to comply with "blue sky" laws of each
state in which the offering is made and (ii) in connection with any
registration hereunder, each holder of Registrable Securities being
registered shall pay all underwriting discounts and commissions and
transfer taxes, if any, attributable to the Registrable Securities
included in the offering by such holder.
SECTION 4.6. INDEMNIFICATION.
(a) The Company and MGM Studios jointly and severally agree
to indemnify and hold harmless, to the extent permitted by law, each
holder of Registrable Securities, its officers, directors, employees
and agents and each Person who controls such holder (within the
meaning of the Securities Act) against any losses, claims, damages or
liabilities, joint or several, to which such holder or any such
director, officer, employee, agent or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based
upon (i) any untrue or alleged untrue statement of a material fact
contained (A) in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or (B) in
any application or other document or communication (in this Section
4.6 collectively called an "application") executed by or on behalf of
the Company or based upon written information furnished by or on
behalf of the Company filed in any jurisdiction in order to qualify
any securities covered by such registration statement under the "blue
sky" or securities laws thereof, (ii) any omission or alleged omission
of a material fact required to be stated therein or necessary to make
the statements therein not misleading or (iii) any violation by the
Company of the Securities Act or any state securities law, or any rule
or regulation promulgated under the Securities Act or any state
securities law, or any other law applicable to the Company relating to
any such registration or qualification, and the Company will reimburse
such holder and each such director, officer and controlling person for
any legal or any other expenses incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or
is based upon an untrue statement or alleged untrue statement, or
omission or alleged omission, made in such registration statement, any
such prospectus or preliminary prospectus or any amendment or
supplement thereto, or in any application, in reliance upon and in
conformity with written information prepared and furnished to the
Company by such holder expressly for use therein or by such holder's
failure to deliver a copy of the registration statement or prospectus
or any amendments or supplements thereto after the Company has
furnished such holder with a sufficient number of copies of the same.
In connection with an underwritten offering, the Company will
indemnify such underwriters, their officers and directors and each
Person who controls such underwriters (within the meaning of the
Securities Act) to the same extent as provided above with respect to
the indemnification of the holders of Registrable Securities.
(b) In connection with any registration statement in which a
holder of Registrable Securities is participating, each such holder
will furnish to the Company in writing such information and documents
concerning such holder as the Company reasonably requests for use in
connection with any such registration statement or prospectus and, to
the extent permitted by law, will indemnify and hold harmless the
Company, MGM Studios, their respective directors and officers and each
other Person who controls or is controlled by the Company and the
directors and officers of each such controlling or controlled Person
(within the meaning of the Securities Act) against any losses, claims,
damages, liabilities, joint or several, to which the Company or any
such director or officer or controlling or controlled Person may
become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or
are based upon (i) any untrue or alleged untrue statement of a
material fact contained in the registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto
or in any application or (ii) any omission or alleged omission of a
material fact required to be stated therein or necessary to make the
statements therein not misleading, but only to the extent that such
untrue statement or omission is made in such registration statement,
any such prospectus or preliminary prospectus or any amendment or
supplement thereto, or in any application, in reliance upon and in
conformity with written information concerning such holder prepared
and furnished to the Company by such holder in writing expressly for
use therein, and such holder will reimburse the Company and each such
director, officer and controlling or controlled Person for any legal
or any other expenses incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided that the obligation to indemnify will be
individual to each holder and will be limited to the net amount of
proceeds received by such holder from the sale of Registrable
Securities pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder will
(i) give prompt written notice to the indemnifying party of any claim
with respect to which it seeks indemnification and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between
such indemnified and indemnifying parties may exist with respect to
such claim, permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified
party. If such defense is assumed, the indemnified party will not be
subject to any liability for any settlement made by the indemnifying
party without its consent (but such consent will not be unreasonably
withheld). An indemnifying party who is not entitled to, or elects not
to, assume the defense of a claim will not be obligated to pay the
fees and expenses of more than one counsel for all parties indemnified
by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest
may exist between such indemnified party and any other of such
indemnified parties with respect to such claim. If the indemnifying
party assumes the defense, the indemnified party may engage its own
counsel at its own sole cost and expense. All fees and expenses of
counsel to any indemnified party required to be paid by any
indemnifying party shall be paid by such indemnifying party as
incurred by such indemnified party.
(d) The indemnification provided for under this Agreement
will remain in full force and effect regardless of any investigation
made by or on behalf of the indemnified party or any officer,
director, employee, agent or controlling or controlled Person of such
indemnified party and will survive the transfer of securities by any
holder thereof. If the indemnification provided for herein is
unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the
relative fault of the indemnifying party or parties, on the one hand,
and the indemnified party or parties, on the other hand, in connection
with the statements or omissions that resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable
considerations; provided, however, that in no event shall any
contribution by any holder or any director, officer, employee, agent
or controlling or controlled Person thereof exceed the amount of the
net proceeds received by such holder from the sale of Registrable
Securities pursuant to such registration statement.
SECTION 4.7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
(a) If requested by the underwriters for any underwritten
offering pursuant to a Demand Registration requested under Section
4.1, the Company shall enter into a customary underwriting agreement
with the underwriters. Such underwriting agreement shall be
satisfactory in form and substance to the Person who requested such
registration and shall contain such representations and warranties by,
and such other agreements on the part of, the Company and such other
terms as are generally prevailing in agreements of that type,
including, without limitation, indemnities and contribution
agreements. Such underwriting agreement shall also contain such
representations, warranties, indemnities and contributions by the
participating holders as are customary in agreements of that type. In
the case of a registration pursuant to Section 4.2 hereof, if the
Company shall have determined to enter into any underwriting
agreements in connection therewith, all of the holders' Registrable
Securities to be included in such registration shall be subject to
such underwriting agreement. Such underwriting agreement shall also
contain such representations, warranties, indemnities and
contributions by the participating holders as are customary in
agreements of that type.
(b) Each Person that is participating in any registration
hereunder agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 4.4(e)
above, such Person will forthwith discontinue the disposition of its
Registrable Securities pursuant to the registration statement until
such Person's receipt of the copies of a supplemented or amended
prospectus as contemplated by such Section 4.4(e). In the event the
Company shall give any such notice, the applicable time period
mentioned in Section 4.4(b) during which a registration statement is
to remain effective shall be extended by the number of days during the
period from and including the date of the giving of such notice
pursuant to this paragraph to and including the date when each seller
of a Registrable Security covered by such registration statement shall
have received the copies of the supplemented or amended prospectus
contemplated by Section 4.4(e).
SECTION 4.8. CURRENT PUBLIC INFORMATION. At all times, the
Company will file all reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations
adopted by the Commission thereunder, and will take such further
action as any holder or holders of Registrable Securities may
reasonably request, all to the extent required to enable such holders
to sell Registrable Securities pursuant to Rule 144.
SECTION 4.9. PREPARATION; REASONABLE INVESTIGATION. In connection
with the preparation and filing of each registration statement under
the Securities Act, the Company will give the holders of Registrable
Securities registered under such registration statement and their
respective counsel, underwriters and accountants, the opportunity to
participate in the preparation of such registration statement, each
prospectus included therein or filed with the Commission, and each
amendment thereof or supplement thereto, and will give each of them
such access to its books and records and such opportunities to discuss
the business, finances and accounts of the Company and its
Subsidiaries with its officers, directors and the independent public
accountants who have certified its financial statements as shall be
necessary, in the opinion of such holders' and such underwriters'
respective counsel, to conduct a reasonable investigation within the
meaning of the Securities Act.
SECTION 4.10. CERTAIN RIGHTS OF HOLDERS. The Company will not
file any registration statement under the Securities Act which refers
to any holder of Registrable Securities by name or otherwise as the
holder of any securities of the Company, unless it shall first have
given such holder the right to require:
(a) the insertion therein of language, in form and substance
satisfactory to such holder, to the effect that, in the opinion of
such holder, the holding of such holder of such securities does not
make such holder a "controlling person" of the Company within the
meaning of the Securities Act and is not to be construed as a
recommendation by such holder of the investment quality of the
Company's securities covered thereby and that such holding does not
imply that such holder will assist in meeting any future financial
requirements of the Company, or
(b) in the event that such reference to such holder by name
or otherwise is not required by the Securities Act or any rules and
regulations promulgated thereunder, the deletion of the reference to
such holder.
SECTION 4.11. FORM S-8. The Company will, within 6 months
following the IPO Closing Date, cause to become effective a
registration statement on Form S-8 with the Commission with respect to
shares of capital stock of the Company subject to Options.
ARTICLE V
GENERAL PROVISIONS
SECTION 5.1. NOTICES. Any notice required to be given hereunder
shall be sufficient if in writing, and sent by facsimile transmission
and by courier service (with proof of service), hand delivery or
certified or registered mail (return receipt requested and first-class
postage prepaid), addressed as follows:
If to the Company or MGM Studios, to:
Metro-Goldwyn-Mayer Inc.
2500 Broadway
Fifth Floor
Santa Monica, CA 90404-3061
Attention: David Johnson
Telephone: (310) 449-3993
Telecopy: (310) 449-3011
with a copy to:
Gibson, Dunn & Crutcher LLP
333 S. Grand Avenue
Los Angeles, CA 90071
Attention: Bruce D. Meyer
Telephone: (213) 229-7979
Telecopy: (213) 229-7520
If to Tracinda, to:
Tracinda Corporation
4835 Koval Lane
Las Vegas, NV 89109
Attention: Secretary / Treasurer
Telecopy: (702) 737-1177
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Attention: Stephen Fraidin, P.C.
Telephone: (212) 859-8140
Telecopy: (212) 859-4000
If to Seven, to:
Seven Network Limited
c/o Culmen Group, L.P.
201 Main Street
Suite 1955
Fort Worth, TX 76102
Attention: Michael R. Gleason
Telephone: (817) 335-6999
Telecopy: (817) 870-1384
and:
ATN7
Mobbs Lane
Epping NSW 2121, Australia
Attention: Gary Rice, Managing Director
Telephone: (602) 877-7000
Telecopy: (612) 996-77191
with a copy to:
Kelly, Hart & Hallman
201 Main Street
Fort Worth, TX 76102
Attention: F. Richard Bernasek
Telephone: (817) 332-2500
Telecopy: (817) 878-9280
if to an Executive, to the address of such Executive set forth in
the signature pages hereof or to such other address as any party shall
specify by written notice so given, and such notice shall be deemed to
have been delivered as of the date so telecommunicated, personally
delivered or mailed.
SECTION 5.2. ASSIGNMENT; BINDING EFFECT; BENEFIT; SUCCESSORS.
(a) Except as otherwise expressly provided in this
Agreement, neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto
(whether by operation of law or otherwise); provided, however, that
the registration and related rights specified in Article IV shall
inure to the benefit of any transferee of Registrable Securities
pursuant to a Transfer permitted under the terms of this Agreement;
provided, further, however, that each of Tracinda and Seven may assign
its rights under this Agreement to any of their respective direct or
indirect wholly owned Subsidiaries so long as (i) such assignee agrees
to be bound by the terms of this Agreement to the same extent as the
applicable assignor, (ii) the applicable assignor continues to be
bound by, and is not released from, any of its obligations under this
Agreement, and (iii) the applicable assignor will cause the applicable
direct or indirect wholly owned Subsidiary to continue to be a direct
or indirect wholly owned Subsidiary of the applicable assignor for so
long as such assignee shall have rights under this Agreement. For the
purpose of this Agreement, all capital stock of the Company owned by
any direct or indirect wholly owned Subsidiary of Tracinda or Seven,
as applicable, shall be deemed owned by Tracinda or Seven, as
applicable. Subject to the first sentence of this Section 5.2, this
Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. Except as
expressly provided in this Agreement, notwithstanding anything
contained in this Agreement to the contrary, nothing in this
Agreement, express or implied, is intended to confer on any person
other than the parties hereto any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
(b) In the event that the Company shall enter into a merger,
consolidation or other similar type transaction, all of the terms of
this Agreement relating to the Company, as applicable, shall apply to
the surviving corporation.
SECTION 5.3. ENTIRE AGREEMENT. Upon the effectiveness hereof,
this Agreement and any certificate delivered by the parties in
connection herewith constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior
agreements and understandings (oral and written) among the parties
with respect thereto.
SECTION 5.4. AMENDMENT.
(a) Subject to Section 5.4(b), this Agreement may not be
amended or modified except by an instrument in writing signed by or on
behalf of each of the parties hereto which, with respect to the
Executives, shall refer to the holders of a majority of shares of
capital stock of the Company owned by the Executives and subject to
the terms of this Agreement.
(b) The provisions of Article IV of this Agreement which are
solely for the benefit of Tracinda, Seven and/or the Company may be
amended without the consent of the Executives. Any other provision of
Article IV may be amended without the consent of the Executives
provided that, in the case of this sentence, such amendment does not
materially and adversely affect the rights of the Executives under
this Agreement.
SECTION 5.5. GOVERNING LAW; EFFECTIVE DATE. This Agreement shall
be governed by, and construed in accordance with, the internal laws of
the State of Delaware (without regard to conflict of laws principles
which would require the application of the laws of any other State).
Each of the parties hereto agrees that any legal action or proceeding
with respect to this Agreement may be brought in the Courts of the
State of Delaware or the United States District Court located in the
State of Delaware and, by execution and delivery of this Agreement,
each party hereto hereby irrevocably submits itself in respect of its
property, generally and unconditionally to the non-exclusive
jurisdiction of the aforesaid courts in any legal action or proceeding
arising out of this Agreement. Each of the parties hereto hereby
irrevocably waives any objection which it may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Agreement brought in the
courts referred to in the preceding sentence. Each party hereto hereby
consents to process being served in any such action or proceeding by
the mailing of a copy thereof to the address set forth in Section 5.1
hereof and agrees that such service upon receipt shall constitute good
and sufficient service of process or notice thereof. Nothing in this
Section 5.5 shall affect or eliminate any right to serve process in
any other manner permitted by law. This Agreement shall become
effective at the time of the IPO Closing. Prior to the issuance of any
Options or shares of capital stock of the Company to any Executive of
the Company, MGM Studios or any of their respective Subsidiaries, the
Company shall cause such Executive to become a party to this
Agreement.
SECTION 5.6. COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts
shall together constitute one and the same instrument. Each
counterpart may consist of a number of copies of this Agreement, each
of which may be signed by less than all of the parties hereto, but
together all such copies are signed by all of the parties hereto.
SECTION 5.7. HEADINGS. Headings of the Articles and Sections of
this Agreement are for the convenience of the parties only and shall
be given no substantive or interpretive effect whatsoever.
SECTION 5.8. INTERPRETATION. In this Agreement, unless the
context otherwise requires, words describing the singular number shall
include the plural and vice versa, "including" shall mean including,
without limitation, and words denoting any gender shall include all
genders and words denoting natural persons shall include corporations
and partnerships and vice versa.
SECTION 5.9. SEVERABILITY. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall,
as to that jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or
otherwise affecting the validity or enforceability of any of the terms
or provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
SECTION 5.10. ENFORCEMENT OF AGREEMENT. The parties hereto agree
that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with its
specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the
terms and provisions hereof in any Delaware court, this being in
addition to any other remedy to which they may be entitled at law or
in equity.
SECTION 5.11. TERMINATION OF ORIGINAL SHAREHOLDERS AGREEMENT.
Seven, Tracinda, the Company, MGM Studios, and Executives hereby
mutually agree that, effective as of the IPO Closing Date, the
Original Shareholders Agreement shall terminate and be of no further
force or effect and none of them shall have any further rights, duties
or obligations thereunder from and after the effective date of such
termination. Until such time as the IPO Closing Date shall occur, the
Original Shareholders Agreement shall remain in full force and effect
and shall be unaffected hereby, except that no party hereto shall be
entitled to effect a Piggyback Registration pursuant to the Approved
Initial Public Offering.
SECTION 5.12. ANTIDILUTION ADJUSTMENT. Prior to or concurrent
with the consummation of the IPO Closing, the Company will effect, in
one or more transactions, a net stock split of the Common Stock (the
"Stock Split"). As a result of the Stock Split, before this Agreement
becomes effective, the number of shares of Common Stock in Section
3.2(c) will be multiplied by the Stock Split (the "Antidilution
Adjustment"). By way of illustration, if the Stock Split is 50 for 1
by virtue of the Antidilution Adjustment, the 250,000 number in
Section 3.2(c) of this Agreement will become 12,500,000.
IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf as of the day and
year first written above.
SEVEN NETWORK LIMITED
By:
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Name:
Title:
TRACINDA CORPORATION
By:
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Name:
Title:
METRO-GOLDWYN-MAYER STUDIOS INC.
By:
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Name:
Title:
METRO-GOLDWYN-MAYER INC.
By:
-----------------------------------------------------
Name:
Title:
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Frank G. Mancuso
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[Executive]
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[Executive]
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[Executive]
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[Executive]
The undersigned, an indirect wholly owned subsidiary of Seven
Network Limited, hereby agrees to be bound by the terms of this
Agreement to the same extent as Seven Network Limited.
MILTONSTAR PTY LIMITED
By:
-----------------------------
Name:
Title:
EXHIBIT A
SEE EXHIBIT 10.5
EXHIBIT B
SEE EXHIBIT 10.5
FORM OF AMENDED AND RESTATED STOCK OPTION AGREEMENT
This Amended and Restated Stock Option Agreement (this
"Agreement") is made and entered into as of August 4, 1997 ("Date of
Grant"), by and between Metro-Goldwyn-Mayer Inc., a Delaware
corporation formerly known as P&F Acquisition Corp. (the "Company")
and Tracinda Corporation, a Nevada corporation ("Optionee"), and
amends and supersedes that certain Stock Option Agreement, dated as of
October 10, 1996, by and among the Company and the Optionee (the
"Original Stock Option Agreement").
THE SECURITIES REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THAT ACT OR THE COMPANY
SHALL HAVE RECEIVED AN OPINION OF COUNSEL (WHICH COUNSEL AND OPINION
SHALL BE SATISFACTORY TO THE COMPANY'S COUNSEL) THAT REGISTRATION OF
SUCH SECURITIES UNDER THAT ACT AND UNDER THE PROVISIONS OF APPLICABLE
STATE SECURITIES LAWS IS NOT REQUIRED.
WHEREAS, Optionee provided certain services in connection
with the formation of the Company and the acquisition by the Company
of the outstanding stock of Metro-Goldwyn-Mayer Studios Inc., a
Delaware corporation formerly known as Metro-Goldwyn-Mayer Inc. ("MGM
Studios");
WHEREAS, as consideration for such services, the Company
granted to Optionee, and desires to restate the grant to Optionee of,
an option to purchase shares of the Common Stock, par value $.01 per
share, of the Company ("Common Shares");
WHEREAS, the Company intends to commence with an Approved
Initial Public Offering of the Common Shares and to enter into certain
related transactions; and
WHEREAS, the parties hereto have agreed to enter into this
Agreement for the purpose of amending and restating in its entirety
the provisions of the Original Stock Option Agreement as provided
herein.
NOW, THEREFORE, in consideration of the foregoing recitals
and the covenants set forth herein, the parties hereto hereby agree as
follows:
1. CERTAIN DEFINITIONS. Terms not otherwise defined
elsewhere in this Agreement shall be as defined below:
1.1 "Investors Shareholder Agreement" means that certain
Amended and Restated Investors Shareholder Agreement dated as of
August 4, 1997, by and among the Company, MGM Studios, Tracinda
Corporation ("Tracinda"), Seven Network Limited ("Seven") and Mr.
Frank G. Mancuso.
2. GRANT OF OPTION; CERTAIN TERMS AND CONDITIONS. The
Company hereby grants to Optionee, and Optionee hereby accepts, as of
the Date of Grant, an option to purchase 3,750 Common Shares (the
"Option") at a price per share equal to $267.00 (the "Exercise
Price"), subject to adjustment as provided in Section 5 of this
Agreement. The Option shall expire at 5:00 p.m., Pacific Standard (or
Daylight Savings, if applicable) Time, on October 10, 2002 (the
"Option Expiration Date"), and shall be subject to all of the terms
and conditions set forth in this Agreement.
3. EXERCISABILITY OF OPTION. The Option shall become
exercisable in whole or in part at any time on or after October 10,
1997.
4. EXERCISE OF OPTION. Optionee may exercise the Option by
the delivery to the Company of a written notice of such exercise (the
"Exercise Notice"), which Exercise Notice shall specify the number of
Common Shares to be purchased pursuant to such Exercise Notice (the
"Exercised Shares") and the aggregate Exercise Price for such
Exercised Shares, together with payment in full of such aggregate
Exercise Price in cash or by check payable to the Company.
5. ADJUSTMENTS. The number of Common Shares to be issued
pursuant to the Option and the Exercise Price thereof shall be
adjusted from time to time as follows:
(a) If the Company shall at any time or from time to time
declare or pay a dividend, or make a distribution, on the
outstanding Common Shares in shares of capital stock of the
Company or subdivide the outstanding Common Shares into a greater
number of Common Shares or combine the outstanding Common Shares
into a smaller number of Common Shares, or issue by
reclassification of its Common Shares any shares of its capital
stock, then, in each such case:
(i) the number of Common Shares for which the
Option is exercisable shall be adjusted so that the Optionee
shall be entitled to receive, upon exercise thereof, the
number of shares of capital stock of the Company that the
Optionee would have been entitled to receive after the
happening of any of the events described above had the
Option been exercised in full immediately prior to the
happening of such event or the record date thereof,
whichever is earlier; and
(ii) an adjustment made pursuant to this Section
5(a) shall become effective for purposes of subclause (i) of
this Section 5(a), (A) in the case of any such dividend or
distribution, immediately after the close of business on the
record date for the determination of holders of Common
Shares entitled to receive such dividend or distribution, or
(B) in the case of any subdivision, combination or
reclassification, at the close of business on the day upon
which such corporate action becomes effective.
(b) If at any time or from time to time the Company shall
declare, order, pay or make, in respect of its capital stock, a
dividend or other distribution (including, without limitation,
any cash dividend, distribution of stock or other securities or
property or rights, options or warrants to subscribe for
securities of the Company or any of its subsidiaries, but
excluding capital stock of the Company the issuance of which is
subject to Section 5(a)), then, and in each such case, the
Optionee shall be entitled to receive, upon the exercise thereof,
for each Common Share issuable upon the exercise thereof, such
additional stock or other securities or property, cash, rights,
options or warrants to subscribe for securities of the Company or
any of its subsidiaries per Common Share as if such Common Share
had been issued prior to the record date for such dividend or
distribution. An adjustment made pursuant to this Section 5(b)
shall become effective immediately after the close of business on
the record date fixed for the determination of stockholders
entitled to receive such dividend or distribution. The provisions
of this Section 5(b) shall not apply to payment of regular
quarterly cash dividends on Common Shares after October 1, 2001.
(c) In the event of any adjustment provided for in this
Section 5 in the number of Common Shares to be issued pursuant to
the Option, the Exercise Price payable upon exercise of the
Option shall be adjusted such that the adjustment to the Exercise
Price payable upon the exercise of the Option shall be inversely
proportionate to the adjustment in the number of Common Shares to
be issued pursuant to the Option.
(d) The number of Common Shares into which the Option is
exercisable and the Exercise Price, in each case as adjusted as
herein provided, shall remain in effect until further adjustment
as required herein.
6. NOTICES. All notices and other communications required or
permitted to be given pursuant to this Agreement shall be in writing
and shall be deemed given if delivered personally or five days after
mailing by certified or registered mail, postage prepaid, return
receipt requested, addressed as follows:
If to the Company, to:
Metro-Goldwyn-Mayer Inc.
2500 Broadway Street
Santa Monica, CA 90404
Attention: Chief Executive and Financial Officers
If to Optionee, to:
Tracinda Corporation
4835 Koval Lane
Las Vegas, Nevada 89109
Attention: Secretary/Treasurer
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Stephen Fraidin, P.C.
or at such other address as either shall specify by written notice so
given, and such notice shall be deemed to have been delivered as of
the date so telecommunicated, personally delivered or mailed.
7. NONTRANSFERABILITY. Neither the Option nor any interest
therein may be sold, assigned, conveyed, gifted, pledged, hypothecated
or otherwise transferred in any manner.
8. STOCKHOLDER RIGHTS. Optionee shall not be entitled to
vote, receive dividends or be deemed for any purpose the holder of any
Common Shares (or any other securities issuable upon the exercise of
the Option) until the Option shall have been duly exercised, either in
whole or in part, to purchase Common Shares in accordance with the
provisions of this Agreement.
9. OTHER AGREEMENTS. Optionee and the Company hereby
acknowledge that all Common Shares of the Company are subject to and
entitled to the benefits of (i) that certain Amended and Restated
Shareholders Agreement dated as of August 4, 1997 (the "Shareholders
Agreement") by and among the Company, MGM Studios, Tracinda, Seven,
Mr. Frank G. Mancuso and certain other persons and (ii) the Investors
Shareholder Agreement.
10. OPTION AND SHARES ISSUABLE UPON EXERCISE NOT REGISTERED.
Optionee, by accepting the Option, acknowledges that the Option is
not, and the Common Shares and other securities issuable upon exercise
thereof may not be, registered under the Securities Act of 1933 (the
"Securities Act"), and represents that it has acquired the Option for
its own account and not with a present view to, or in connection with,
any distribution thereof in violation of the Securities Act. Unless
and until registered under the Securities Act, each stock certificate
representing the Common Shares and other securities purchased upon
exercise of the Option shall be stamped or otherwise imprinted with
the following legends:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY BE
OFFERED OR SOLD ONLY IF REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR IF AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
THESE SHARES ARE SUBJECT TO CERTAIN LIMITATIONS ON TRANSFER
AND CERTAIN OTHER MATTERS SET FORTH IN AN AGREEMENT DATED AS
OF AUGUST 4, 1997 BY AND AMONG SEVEN NETWORK LIMITED,
TRACINDA CORPORATION, METRO-GOLDWYN-MAYER STUDIOS INC.,
METRO-GOLDWYN-MAYER INC., MR. FRANK G. MANCUSO, AND CERTAIN
OTHER PERSONS (THE "AGREEMENT"). A COPY OF THE AGREEMENT IS
ON FILE WITH THE SECRETARY OF METRO-GOLDWYN-MAYER INC."
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY BE
OFFERED OR SOLD ONLY IF REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR IF AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
THESE SHARES ARE SUBJECT TO CERTAIN LIMITATIONS ON SALE,
TRANSFER OR OTHER DISPOSITION AND CERTAIN AGREEMENTS WITH
RESPECT TO VOTING SET FORTH IN AN AMENDED AND RESTATED
INVESTORS SHAREHOLDER AGREEMENT DATED AS OF AUGUST 4, 1997
BY AND AMONG SEVEN NETWORK LIMITED, TRACINDA CORPORATION,
METRO-GOLDWYN-MAYER STUDIOS INC., METRO-GOLDWYN-MAYER INC.
AND MR. FRANK G. MANCUSO (THE "AGREEMENT"). A COPY OF THE
AGREEMENT IS ON FILE WITH THE SECRETARY OF
METRO-GOLDWYN-MAYER INC.
11. GOVERNING LAW. This Agreement and the Option granted
hereunder shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware.
12. EFFECTIVE DATE. This Agreement shall become effective at
the time of the execution hereof.
13. TERMINATION OF ORIGINAL STOCK OPTION AGREEMENT. Optionee
and the Company hereby mutually agree that, effective as of the
execution hereof, the Original Stock Option Agreement shall terminate
and be of no further force or effect, and neither of them shall have
any further rights, duties or obligations thereunder from and after
the effective date of such termination. Until such time as this
Agreement is executed, the Original Stock Option Agreement shall
remain in full force and effect and shall be unaffected hereby.
IN WITNESS WHEREOF, the Company and Optionee have duly
executed this Agreement as of the Date of Grant.
METRO-GOLDWYN-MAYER INC.
By: _____________________________
Title: _____________________________
TRACINDA CORPORATION
By: _____________________________
Title: _____________________________
November 12, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
J.P. MORGAN & CO.
BEAR, STEARNS & CO. INC.
FURMAN SELZ LLC
as U.S. Representatives of the several U.S. Underwriters
to be named in the within-mentioned U.S. Purchase Agreement
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
MERRILL LYNCH INTERNATIONAL
J.P. MORGAN SECURITIES LTD.
BEAR, STEARNS INTERNATIONAL LIMITED
FURMAN SELZ LLC
as Lead Managers of the several International Managers
to be named in the within-mentioned International Purchase Agreement
c/o Merrill Lynch International
Ropemaker Place
25 Ropemaker Street
London EC24 9L4
England
Re: Proposed Public Offering by Metro-Goldwyn-Mayer Inc.
Dear Sirs:
The undersigned, a stockholder of Metro-Goldwyn-Mayer Inc.,
a Delaware corporation (the "Company"), understands that (i) Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"), J.P. Morgan & Co., Bear, Stearns & Co. Inc. and
Furman Selz LLC (collectively, the "U.S. Representatives") propose to
enter into a purchase agreement (the "U.S. Purchase Agreement") with
the Company and (ii) Merrill Lynch International, J.P. Morgan
Securities Ltd., Bear, Stearns International Limited and Furman Selz
LLC (collectively, the "International Representatives" and,
collectively, with the U.S. Representatives, the "Representatives")
propose to enter into a purchase agreement (the "International
Purchase Agreement" and, collectively, with the U.S. Purchase
Agreement, the "Purchase Agreement") with the Company, the Purchase
Agreements collectively, providing for the public offering of shares
(the "Securities") of the Company's common stock, par value $.01 per
share (the "Common Stock"). In recognition of the benefit that such an
offering will confer upon the undersigned as a stockholder of the
Company, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the undersigned
agrees with each underwriter to be named in the Purchase Agreements
that, during a period of 180 days from the date of the Purchase
Agreements, the undersigned will not, without the prior written
consent of Merrill Lynch, directly or indirectly, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or
warrant for the sale of, or otherwise dispose of or transfer any
shares of the Company's Common Stock or any securities convertible
into or exchangeable or exercisable for Common Stock, whether now
owned or hereafter acquired by the undersigned or with respect to
which the undersigned has or hereafter acquires the power of
disposition, or file any registration statement under the Securities
Act of 1933, as amended, with respect to any of the foregoing or (ii)
enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap
transaction is to be settled by delivery of Common Stock or other
securities, in cash or otherwise; provided, however, that the U.S.
Representatives acknowledge that the undersigned has pledged and may
pledge in the future any such shares of the Company's Common Stock now
or hereafter owned by the undersigned pursuant to its existing and any
future pledge or loan agreements; provided further, however, that the
undersigned may transfer, or grant options to purchase, up to an
aggregate of 312,502 of such shares of Common Stock to the
undersigned's directors, officers, employees and affiliates so long as
such transferee or optionee agrees in writing to be bound by a letter
agreement substantially in the form of this Letter Agreement.
Very truly yours,
TRACINDA CORPORATION
/s/ Jerome B. York
---------------------------
Name: Jerome B. York
Title: Vice Chairman
JOINT FILING AGREEMENT
Pursuant to Rule 13d-1(f) promulgated under the Securities
Exchange Act of 1934, as amended, each of the undersigned agrees and
acknowledges that the Schedule 13D to which this Agreement is attached
as an exhibit is being filed on behalf of each of them.
DATED: November 18, 1997
TRACINDA CORPORATION,
a Nevada corporation
By: /s/ Anthony L. Mandekic
-----------------------
Anthony L. Mandekic
Secretary/Treasurer
Kirk Kerkorian
By: /s/ Anthony L. Mandekic
-----------------------
Anthony L. Mandekic
Attorney-in-Fact
Power of Attorney
The undersigned hereby appoints Anthony Mandekic as
attorney-in-fact of the undersigned for the purpose of executing any
and all filings by the undersigned under the Securities Exchange Act
of 1934, as amended (including Schedules 13G and 13D, Forms 3, 4 and
5), with respect to the securities of Metro-Goldwyn-Mayer Inc. This
limited power of attorney shall remain in effect until revoked in
writing.
/s/ Kirk Kerkorian
--------------------------
Kirk Kerkorian
Dated: November , 1997
