Exhibit 10.1
CONFORMED COPY
$1,750,000,000
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
June 11, 2002
among
Metro-Xxxxxxx-Xxxxx Studios Inc.,
Orion Pictures Corporation,
Bank of America, N.A., as Administrative Agent,
The Lenders Listed Herein,
and
The L/C Issuers Named Herein
______________________________________
Banc of America Securities LLC
X.X. Xxxxxx Securities Inc.
as Co-Lead Arrangers
and Joint Book Managers
Fleet Securities, Inc.
as Arranger
JPMorgan Chase Bank
Fleet National Bank
as Co-Syndication Agents
Bank of Scotland
Societe Generale
The Bank of Nova Scotia
as Co-Documentation Agents
BNP Paribas
as Managing Agent
TABLE OF CONTENTS
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ARTICLE 1
Definitions
Section 1.01. Definitions .................................................. 1
Section 1.02. Accounting Terms and Determinations .......................... 29
Section 1.03. Classes and Types of Loans and Borrowings .................... 29
ARTICLE 2
The Credits
Section 2.01. Outstanding Term Loans; Commitments to Lend .................. 30
Section 2.02. Method of Borrowing .......................................... 32
Section 2.03. Notes ........................................................ 34
Section 2.04. Maturity of Loans; Mandatory Prepayments; Certain
Commitment Reductions ........................................ 34
Section 2.05. Interest Rates ............................................... 39
Section 2.06. Fees ......................................................... 41
Section 2.07. Optional Termination or Reduction of Commitments ............. 41
Section 2.08. Method of Electing Interest Rates ............................ 42
Section 2.09. Mandatory Termination of Commitments ......................... 43
Section 2.10. Optional Prepayments ......................................... 43
Section 2.11. General Provisions as to Payments ............................ 44
Section 2.12. Funding Losses ............................................... 45
Section 2.13. Computation of Interest and Fees ............................. 45
Section 2.14. Letters of Credit ............................................ 45
Section 2.15. Additional Loan Request ...................................... 49
ARTICLE 3
Conditions
Section 3.01. Effective Date ............................................... 50
Section 3.02. Consequences of Effectiveness ................................ 51
Section 3.03. Borrowings and Issuances of Letters of Credit ................ 52
ARTICLE 4
Representations and Warranties
Section 4.01. Corporate Existence and Power ................................ 53
Section 4.02. Corporate and Governmental Authorization; No Contravention ... 53
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Section 4.03. Binding Effect .............................................. 53
Section 4.04. Financial Information; Information Memorandum ............... 53
Section 4.05. Litigation .................................................. 54
Section 4.06. Compliance with ERISA ....................................... 55
Section 4.07. Environmental Compliance .................................... 55
Section 4.08. Taxes ....................................................... 56
Section 4.09. Subsidiaries ................................................ 56
Section 4.10. Regulatory Restrictions on Borrowing ........................ 56
Section 4.11. Full Disclosure ............................................. 56
Section 4.12. Intellectual Property ....................................... 57
Section 4.13. Collateral Documents ........................................ 57
Section 4.14. Solvency .................................................... 57
Section 4.15. Regulation U ................................................ 57
ARTICLE 5
Covenants
Section 5.01. Information ................................................. 58
Section 5.02. Payment of Obligations ...................................... 61
Section 5.03. Maintenance of Property; Insurance .......................... 62
Section 5.04. Conduct of Business and Maintenance of Existence ............ 62
Section 5.05. Compliance with Laws ........................................ 62
Section 5.06. Inspection of Property, Books and Records ................... 63
Section 5.07. Mergers and Sales of Assets; Licensing Agreements ........... 63
Section 5.08. Use of Proceeds ............................................. 64
Section 5.09. Negative Pledge ............................................. 65
Section 5.10. Limitation on Debt .......................................... 67
Section 5.11. [Intentionally Deleted] ..................................... 68
Section 5.12. Sources and Uses of Cash .................................... 68
Section 5.13. Total Borrowed Funds/Library Cash Flow ...................... 68
Section 5.14. Maximum Capital Expenditures ................................ 68
Section 5.15. Minimum Combined Adjusted Net Worth ......................... 69
Section 5.16. Operating Lease Payments .................................... 69
Section 5.17. Restricted Payments ......................................... 70
Section 5.18. Investments ................................................. 70
Section 5.19. Transactions with Affiliates ................................ 72
Section 5.20. Limitation on Restrictions Affecting Subsidiaries ........... 73
Section 5.21. MGM Debt .................................................... 74
Section 5.22. Further Assurances .......................................... 74
Section 5.23. [Intentionally Deleted] ..................................... 76
Section 5.24. Total Borrowed Funds to Film Value .......................... 76
Section 5.25. Library Cash Flows to Combined Cash Interest Expense ........ 76
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ARTICLE 6
Defaults
Section 6.01. Events of Default ............................................ 76
Section 6.02. Notice of Default ............................................ 80
Section 6.03. Cash Cover ................................................... 80
ARTICLE 7
The Agent
Section 7.01. Appointment and Authorization ................................ 81
Section 7.02. Agent and Affiliates ......................................... 81
Section 7.03. Action by Agent .............................................. 81
Section 7.04. Consultation with Experts .................................... 81
Section 7.05. Liability of Agent ........................................... 81
Section 7.06. Indemnification .............................................. 82
Section 7.07. Credit Decision .............................................. 82
Section 7.08. Successor Agent .............................................. 82
Section 7.09. Agent's Fees ................................................. 83
Section 7.10. Arrangers .................................................... 83
ARTICLE 8
Change in Circumstances
Section 8.01. Basis for Determining Interest Rate Inadequate or Unfair ..... 83
Section 8.02. Illegality ................................................... 83
Section 8.03. Increased Cost and Reduced Return ............................ 84
Section 8.04. Taxes ........................................................ 85
Section 8.05. Base Rate Loans Substituted for Affected Euro-Dollar Loans ... 87
Section 8.06. Substitution of Lender ....................................... 88
ARTICLE 9
Guaranty
Section 9.01. The Guaranty ................................................. 88
Section 9.02. Guaranty Unconditional ....................................... 89
Section 9.03. Discharge Only upon Payment in Full; Reinstatement In
Certain Circumstances ........................................ 90
Section 9.04. Waiver by the Borrowers ...................................... 90
Section 9.05. Subrogation .................................................. 90
Section 9.06. Stay of Acceleration ......................................... 90
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Section 9.07. Limitation on the Obligations .............................. 91
ARTICLE 10
Miscellaneous
Section 10.01. Notices .................................................... 91
Section 10.02. No Waivers ................................................. 91
Section 10.03. Expenses; Indemnification .................................. 91
Section 10.04. Sharing of Set-offs ........................................ 92
Section 10.05. Amendments and Waivers; Release of Guarantors or
Collateral; Release of Rainbow Interest .................... 93
Section 10.06. Successors and Assigns ..................................... 94
Section 10.07. Collateral ................................................. 99
Section 10.08. Governing Law; Submission to Jurisdiction .................. 99
Section 10.09. Counterparts; Integration .................................. 99
Section 10.10. Waiver of Jury Trial ....................................... 99
Section 10.11. Confidentiality ............................................ 99
Section 10.12. Non-reliance on Tracinda ................................... 100
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SCHEDULES AND EXHIBITS
Pricing Schedule
Schedule of Lenders
Schedule 1.01 - Library Films
Schedule 4.05 - Material Litigation
Schedule 4.09 - Material Subsidiaries
Schedule 5.09 - Existing Liens
Schedule 5.10 - Outstanding Debt
Schedule 5.18 - Existing Investments
Schedule 5.19 - Transactional Agreements with Affiliates
Exhibit A - Note
Exhibit B - Opinion of Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel for the
Obligors
Exhibit C - Section 8.04(d) Certificate
Exhibit D - Assignment and Assumption Agreement
Exhibit E - Master Assignment and Assumption Agreement
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
AGREEMENT dated as of June 11, 2002 among METRO-XXXXXXX-XXXXX STUDIOS
INC., ORION PICTURES CORPORATION, the LENDERS listed on the signature pages
hereof, the L/C ISSUERS named herein, and BANK OF AMERICA, N.A., as Agent.
MGM Studios and Orion (each as defined below), certain lenders, the L/C
Issuers named therein and Bank of America, N.A., as Agent are parties to the
Second Amended and Restated Credit Agreement dated as of July 21, 2000 (as
originally in effect and as amended from time to time prior to the Effective
Date (as defined below), the "Original Credit Agreement"), and wish to amend the
Original Credit Agreement and restate it as so amended, effective upon the
satisfaction of the conditions specified in Section 3.01, as provided in this
Third Amended and Restated Credit Agreement (as so amended and restated, and as
the same may be amended from time to time after the Effective Date referred to
below, this "Agreement"; references to the Agreement include, for periods prior
to the Effective Date, the Original Credit Agreement as in effect from time to
time).
The parties hereto therefore agree as follows:
ARTICLE 1
Definitions
Section 1.01. Definitions. The following terms, as used herein, have the
following meanings:
"Accepting Tranche B Lenders" has the meaning set forth in Section
2.04(f)(iii).
"Additional Loan Amendment", "Additional Loan Commitment", "Additional
Loan Request" and "Additional Loans" have the respective meanings set forth in
Section 2.15.
"Adjusted London Interbank Offered Rate" has the meaning set forth in
Section 2.05(b).
"Administrative Questionnaire" means, with respect to each Lender, an
administrative questionnaire in the form prepared by the Agent and submitted to
the Agent (with a copy to the Borrowers) duly completed by such Lender.
"Affiliate" means (i) any Person that directly, or indirectly through one
or more intermediaries, controls either Borrower (a "Controlling Person") or
(ii) any Bond Film Sale-Leaseback Company, any Single Purpose Subsidiary, the
Rainbow Subsidiary or any other Person (other than any MGM/Orion Company) which
is controlled by or is under common control with a Controlling Person. As used
herein, the term "control" means possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agent" means Bank of America, N.A. in its capacity as administrative
agent for the Lenders under the Loan Documents, and its successors in such
capacity.
"Applicable Lending Office" means, with respect to any Lender, (i) in the
case of its Base Rate Loans, its Domestic Lending Office and (ii) in the case of
its Euro-Dollar Loans, its Euro-Dollar Lending Office.
"Applicable Pricing Leverage Ratio" has the meaning set forth in the
Pricing Schedule.
"Approved Fund" has the meaning set forth in Section 10.06(f).
"Asset Sale" means any sale, lease, license or other disposition
(including any such transaction effected by way of merger or consolidation) (any
of the foregoing, for purposes of this definition, a "disposition") by any
MGM/Orion Company of any asset, including without limitation any sale-leaseback
transaction, whether or not involving a capital lease, but excluding (i)
dispositions of cash, cash equivalents and other cash management investments and
obsolete, unused or unnecessary equipment and undeveloped real estate, in each
case in the ordinary course of business, (ii) dispositions of any right, title
or interest in an individual Film (other than any Library Film) or group or
slate of Films (other than any Library Film) or Film Related Asset in the
ordinary course of business in connection with any Investment permitted under
Section 5.18, (iii) dispositions of any right, title or interest in an
individual Film (other than any Library Film) or group or slate of Films (other
than any Library Film) or Film Related Asset in the ordinary course of business
in connection with any financing permitted under Section 5.10(h), (iv)
dispositions pursuant to a Sale-Leaseback Transaction, (v) dispositions pursuant
to a Licensing Agreement permitted under Section 5.07(d) or (e), (vi)
dispositions of inventory, including Film Related Assets, but excluding any Film
(including without limitation any Library Film), in the ordinary course of
business, (vii) dispositions of any right, title or interest in an individual
Film (other than any Library Film) or slate of Films (other than any Library
Film) or Film Related Asset in the ordinary course of business pursuant to
transactions constituting split-rights deals, coproduction deals or cofinancing
deals (as such
2
terms are generally understood in the movie industry on the Effective Date),
(viii) dispositions to either Borrower or any Guarantor, (ix) dispositions of
Films or Film Related Assets (other than any Library Film) for consideration at
least equal to the cost of production of such Film or Film Related Asset, as the
case may be (or, if less, the fair market value of such Film or Film Related
Asset at the time of disposition, as determined in good faith by the Borrowers
taking into account current practices in the entertainment industry), (x)
dispositions of any Library Film consisting of an Investment permitted under
Sections 5.18(h), 5.18(k) or 5.18(l), (xi) dispositions of any Film Related
Assets, any Film (other than any Library Film) or group or slate of Films (other
than any Library Film) (any of the foregoing, for purposes of this clause (xi),
a "disposed asset") to any Single Purpose Subsidiary or Permitted Joint Venture
for the purpose of permitting such Single Purpose Subsidiary or Permitted Joint
Venture to develop, produce, finance, acquire, distribute or exploit such
disposed asset so long as the cash consideration received by the Borrower or the
Subsidiary disposing of such disposed asset in any such disposition is at least
equal to the amount invested or spent by the MGM/Orion Companies on or prior to
the date of such disposition with respect to the development, production,
acquisition or financing of such disposed asset (excluding from the calculation
of such amount invested or spent overhead and other selling, general and
administrative costs) and (xii) any disposition of all or a part of the Rainbow
Interest; provided that a disposition of assets not excluded by clauses (i)
through (xii) above during any Fiscal Year shall not constitute an Asset Sale
unless and until (and solely to the extent that) the aggregate Net Cash Proceeds
from such disposition, when combined with all other such dispositions previously
made during such Fiscal Year, exceeds $7,500,000. The description of any
transaction as not constituting an "Asset Sale" does not affect any limitation
on such transaction imposed by Article 5 of this Agreement (other than Section
5.07(b)).
"Assigning Lender" has the meaning set forth in Section 3.02(a).
"Assignment and Assumption" has the meaning set forth in Section
10.06(b).
"Assuming Lender" has the meaning set forth in Section 3.02(a).
"Available Revolving Commitment" means, for any Lender, such Lender's
Revolving Commitment.
"Base Rate" means, for any day, a rate per annum equal to the higher of
(i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day.
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"Base Rate Loan" means a Loan which bears interest by reference to the
Base Rate pursuant to the applicable Notice of Borrowing or Notice of Interest
Rate Election or the provisions of Article 8.
"Base Rate Margin" means a rate per annum determined in accordance with
the Pricing Schedule.
"Bond Film Sale-Leaseback Company" means Seventeen Leasing Corporation,
Eighteen Leasing Corporation, Nineteen Leasing Corporation and any other
Subsidiary that has been or is hereafter established for the sole purpose of
engaging in and performing one or more Sale-Leaseback Transactions with respect
to one or more Bond Films (as defined in the definition of "Excluded Bond
Property" in the Security Agreement), in each case for so long as any such
Person does not engage in any business or conduct any activities other than
Sale-Leaseback Transactions with respect to one or more Bond Films.
"Borrower" means either MGM Studios or Orion, as the context may require,
and "Borrowers" means both of the foregoing (including, in any case as the
context may require, such Person with respect to its obligations as guarantor
under Article 9).
"Borrower Pledge Agreement" means the Amended and Restated Borrower
Pledge Agreement dated as of October 15, 1997 between the Borrowers and the
Agent, as amended from time to time.
"Borrowing" has the meaning set forth in Section 1.03.
"Class" has the meaning set forth in Section 1.03.
"Clawback Obligation" means, at any date, any obligation (a "clawback
obligation") of any MGM/Orion Company constituting a Guarantee of the
obligations of any Person incurred by such Person in connection with the
development, production, financing, acquisition, distribution and exploitation
of any Film or slate or group of Films or any Film Related Asset, or in
accordance with any Licensing Agreement, the amount of which clawback obligation
does not exceed the amount of distributions or other payments received by such
MGM/Orion Company from such Person with respect to such Film or slate or group
of Films or Film Related Asset or Licensing Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute.
"Collateral" means collateral subject to the Collateral Documents.
4
"Collateral Documents" means the Pledge Agreements, the Security
Agreement, any additional pledge agreements, security agreements or mortgages
required to be delivered pursuant to the Loan Documents and any instruments of
assignment, laboratory access letters or other instruments or agreements
executed pursuant to the foregoing.
"Combined Adjusted Net Worth" means at any date (i) the aggregate
stockholders' equity of the Combined Companies as reflected on the balance sheet
of the Combined Companies at such date (or as the same would be reflected on
such balance sheet if such balance sheet were prepared at such date on a
Combined Basis) plus (ii) the aggregate amount of Specified Non-Cash Charges
taken after September 30, 1996 minus (iii) the aggregate amount of cash payments
made by the Combined Companies after September 30, 1996 with respect to items
for which any Specified Non-Cash Charges have been taken after September 30,
1996 minus (iv) all amounts that are included as assets on such balance sheet at
such date (or as the same would be included on such balance sheet if such
balance sheet were prepared at such date) in respect of any Film produced or
acquired by either Borrower or any of their respective Consolidated Subsidiaries
which Film has not been released within 18 months following the date of
completion of principal photography thereof or, if later, the date of
acquisition thereof, minus (v) from and after the Rainbow Release Date, the
amount (if any) included as assets on such balance sheet at the time of any such
determination (or as the same would be included on such balance sheet if such
balance sheet were prepared at such date) in respect of the Rainbow Interest,
all determined on a Combined Basis.
"Combined Basis" has the meaning set forth in Section 1.02.
"Combined Capital Expenditures" means for any period the gross additions
to property, plant and equipment and other capital expenditures of the Combined
Companies determined on a Combined Basis for such period.
"Combined Cash Interest Expense" means for any period the cash interest
expense of the Combined Companies other than any Single Purpose Subsidiaries,
determined on a Combined Basis for such period.
"Combined Companies" means (i) MGM Studios and its Consolidated
Subsidiaries and (ii) Orion and its Consolidated Subsidiaries. Unless the
context otherwise requires, whenever an amount is to be determined hereunder
with respect to the Combined Companies, such amount shall be determined on a
Combined Basis.
"Combined Net Income" means for any period (i) the net income of the
Combined Companies for such period, determined in any event before payment of
any dividends on any preferred stock plus (ii) to the extent deducted in
5
determining such net income, any Specified Non-Cash Charges minus (iii) any cash
payments made by the Combined Companies during such period with respect to items
for which any Specified Non-Cash Charges were taken in a prior period, all
determined on a Combined Basis.
"Commitment" means a Revolving Commitment or a Swing Loan Commitment, and
"Commitments" means any combination of the foregoing.
"Commitment Fee Rate" means a rate per annum determined in accordance
with the Pricing Schedule.
"Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with either Borrower within the
meaning of Section 4001 of ERISA or is part of a group which includes either
Borrower and which is treated as a single employer under Section 414(b) or (c)
of the Code.
"Competitor" has the meaning set forth in Section 10.06(f).
"Consolidated Subsidiary" means, with respect to any Person, at any date,
any Subsidiary or other entity the accounts of which would be consolidated with
those of such Person in its consolidated financial statements if such statements
were prepared as of such date (but excluding, at all times after the Rainbow
Release Date, the Rainbow Subsidiary); unless otherwise specified, "Consolidated
Subsidiary" means a Consolidated Subsidiary of either Borrower.
"Credit Exposure" for any Lender at any time means the sum of (i) such
Lender's Revolving Commitment at such time or, if the Revolving Commitments
shall have been terminated, the sum, determined at such time, of (x) the
aggregate outstanding principal amount of such Lender's Revolving Loans plus (y)
such Lender's Percentage of the outstanding principal amount of the Swing Loans
plus (z) such Lender's Letter of Credit Liabilities plus (ii) the aggregate
outstanding principal amount of such Lender's Term Loans at such time.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee which are capitalized in
accordance with generally accepted accounting principles (including without
limitation any such obligations under Sale-Leaseback Transactions to the extent
that such obligations are capitalized in accordance with generally accepted
accounting principles), (v) all non-contingent obligations (and, for purposes of
Sections 5.09,
6
6.01(e) and 6.01(f), all contingent obligations) of such Person to reimburse any
Lender or other Person in respect of amounts paid under a letter of credit or
similar instrument, (vi) all obligations secured by a Lien on any asset of such
Person, whether or not such Debt is otherwise an obligation of such Person and
(vii) all Debt of others Guaranteed by such Person; provided however, that (x)
the "Debt" of any Person does not include any (A) commitments of such Person in
connection with the development, production, acquisition, distribution,
exhibition or exploitation of Films (other than Clawback Obligations), (B)
guaranteed payment obligations of such Person of a nature customary in the film
industry of such Person under license agreements with respect to the
development, production, acquisition, distribution, exhibition or exploitation
of Films, (C) obligations of such Person in respect of Profit Participations,
Residuals and Deferred Payments payable to other Persons in connection with the
development, production, acquisition, distribution, exhibition, exploitation or
financing of Films, (D) obligations of such Person in the nature of progress or
installment payment obligations with respect to a Film owed to the owner of such
Film or cast, crew, writers, distributors, directors, producers, owners of
rights, bond companies or similar Persons for such Film, in respect of the
deferred purchase price of such Film or rights to such Film, or services in, or
in connection with, such Film (in the case of each of (A), (B), (C) and (D)
above, to the extent entered into in the ordinary course of business of such
Person and not otherwise constituting "Debt" of a type referred to in clauses
(i) or (ii) above), (E) obligations of such Person under performance or
completion bonds which have been posted in the ordinary course of business in
connection with the development or production of Films or (F) any Guarantee of
any obligation referred to in clause (A), (B), (C), (D) or (E) and (y) for
purposes of Section 5.10 and the determination of Total Borrowed Funds, the
amount of "Debt" of any MGM/Orion Company which constitutes "Debt" solely
pursuant to clause (vii) of this definition because such MGM/Orion Company is a
partner in a partnership, shall be equal to the principal or face amount of such
Debt multiplied by such MGM/Orion Company's percentage interest in such
partnership, so long as such partnership is solvent and paying and capable of
paying its obligations as they become due.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Deferred Payments" means deferred payments for services payable to cast,
crew, writers, distributors, directors, producers, owners of rights, bond
companies or similar Persons or payments to producers or investors, in
connection with the development, production, acquisition, distribution or
exploitation of Films or Film Related Assets, the amount or payment of which is
contingent upon the performance of such Films or Film Related Assets or deferred
to a fixed time,
7
tied to the performance of such Film or Film Related Assets or to the
achievements of such Person with respect to such Film or Film Related Asset.
"Deferred Tranche B Unscheduled Prepayment Date" has the meaning set
forth in Section 2.04(f)(ii).
"Derivatives Obligations" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
the foregoing transactions) or any combination of the foregoing transactions.
"Domestic Business Day" means any day except a Saturday, Sunday or other
day on which commercial banks in New York City or Los Angeles are authorized by
law to close.
"Domestic Lending Office" means, as to each Lender, its office located at
its address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Lender may hereafter designate as its Domestic Lending Office by
notice to the Borrowers and the Agent.
"Effective Date" has the meaning set forth in Section 3.02.
"Eligible Assignee" has the meaning set forth in Section 10.06(f).
"Entertainment Person" has the meaning set forth in Section 10.06(f).
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, plans, injunctions, permits, concessions, grants, franchises,
licenses, agreements and other governmental restrictions relating to the
environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes into the environment including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or the
clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
8
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Lender, its office, branch
or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Lender as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Borrowers and the Agent.
"Euro-Dollar Loan" means (i) a Loan which bears interest at a Euro-Dollar
Rate pursuant to the applicable Notice of Borrowing or Notice of Interest Rate
Election or (ii) an overdue amount which was a Euro-Dollar Loan immediately
before it became overdue.
"Euro-Dollar Margin" means a rate per annum determined in accordance with
the Pricing Schedule.
"Euro-Dollar Rate" means a rate of interest determined pursuant to
Section 2.05(b) on the basis of an Adjusted London Interbank Offered Rate.
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section
2.05(b).
"Event of Default" has the meaning set forth in Section 6.01.
"Existing Lender" means a "Lender" (as such term is defined in the
Original Credit Agreement) that is a party to the Original Credit Agreement
immediately prior to the effectiveness of this Agreement on the Effective Date.
"Existing Rainbow Investment" means the Investment by the Rainbow
Subsidiary in the Rainbow Partnerships in existence as of the Effective Date,
and any additional Investment made by the Rainbow Subsidiary in the Rainbow
Partnerships after the Effective Date with the proceeds of any Rainbow Financing
or through the reinvestment of distributions therefrom, and any Investment
deemed to have been made as a result of undistributed earnings of the Rainbow
Partnerships.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next
9
succeeding such day, provided that (i) if such day is not a Domestic Business
Day, the Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Domestic Business Day as so published on the next
succeeding Domestic Business Day, and (ii) if no such rate is so published on
such next succeeding Domestic Business Day, the Federal Funds Rate for such day
shall be the average rate quoted to Bank of America, N.A. on such day on such
transactions as determined by the Agent.
"Film Related Asset" means any right in and to any motion picture,
television product, literary work, dramatic work or musical work prior to the
time any such asset becomes a "Film".
"Film Value" means, at any date, the value of (i) the Library Films, (ii)
the MGM/Orion Companies' feature length motion pictures and television programs
described in clause (ii) of the definition of the term "Films" and (iii)
First-Run Feature Films that are owned or all of the MGM/Orion Companies
distribution rights thereto are owned (including by way of license) by an
Obligor and that were released for theatrical distribution in the United States
at least four weeks prior to such date, all to the extent that the foregoing are
subject to a perfected Lien created under the Collateral Documents (to the
extent the Collateral Documents by their terms purport to create a Lien
thereon), and all as set forth in the appraisal report delivered on or most
recently prior to such date pursuant to Section 5.01(j); provided that if the
value set forth in any such appraisal report is expressed as a range, then "Film
Value" means the average of the high and low values of such range.
"Film Value Asset" means at any date a Library Film or any other Film
that is included in clauses (ii) or (iii) of the definition of "Film Value" (or
would be included if a determination of Film Value were to be made at such
date).
"Film Value Asset Disposition" means any Licensing Agreement with respect
to a Library Film, or any Asset Sale or Investment that results directly or
indirectly in a disposition of any Film Value Asset by or from any Obligor to or
in a Person that is not an Obligor (including without limitation any such
disposition consisting of an Asset Sale of the capital stock or other equity
interests of any Obligor that holds a Film Value Asset).
"Films" means motion pictures including, without limitation, feature
films, shorts, television programs, animated programs or other similar product,
and the components thereof (whether or not now known or recognized) to which any
MGM/Orion Company owns any right, title or interest including, without
limitation, (i) the Library Films, (ii) works in progress comprising feature
length motion picture or television projects in principal photography and/or
post-production, projects completed but not yet released, and unreleased or
completed
10
but undelivered pick-ups, (iii) underlying rights in and to the literary,
musical and dramatic and other material associated with or related to or
necessary to the exploitation of the works or projects referred to in clauses
(i) or (ii) including, without limitation, copyrights pertaining thereto, (iv)
to the extent related to the works or projects referred to in clauses (i) or
(ii), sequel, prequel and remake rights, all rights to novelization,
merchandising, character, serialization, games and interactive video, (v) all
other ancillary and subsidiary rights throughout the universe related to such
works and projects, (vi) all negative and positive film, soundtracks, optical,
audio, video and advertising materials and supplies associated with any of such
works or projects, and (vii) all contractual and other rights associated with or
related to such works or projects and the related ancillary and subsidiary
rights whether in any media now known or hereafter developed.
"First-Run Feature Films" means at any date any Films which have not
completed their initial theatrical release in the United States at such date,
determined in accordance with industry practice.
"Fiscal Quarter" means, for either Borrower, a fiscal quarter of such
Borrower, each of which shall end on the same date for each Borrower.
"Fiscal Year" means, for either Borrower, a fiscal year of such Borrower,
each of which shall end on December 31 of the relevant calendar year.
"Foreign Subsidiary" means any Subsidiary of either Borrower which is not
incorporated or organized in the United States or in any State thereof.
"Fund" has the meaning set forth in Section 10.06(f).
"GAAP" has the meaning set forth in Section 1.02.
"Granting Lender" has the meaning set forth in Section 10.06(f).
"Group of Loans" means at any time a group of Loans of the same Class of
Loans consisting of (i) all such Loans to the same Borrower that are Base Rate
Loans at such time or (ii) all such Loans to the same Borrower that are
Euro-Dollar Loans having the same Interest Period at such time; provided that,
if a Loan of any particular Lender is converted to or made as a Base Rate Loan
pursuant to Article 8, such Loan shall be included in the same Group or Groups
of Loans from time to time as it would have been in if it had not been so
converted or made.
"Guarantee" by any Person means any obligation, contingent or otherwise,
of such Person directly or indirectly guaranteeing any Debt or other obligation
of any other Person and, without limiting the generality of the
11
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the holder of such Debt or other obligation of the payment thereof
or to protect such holder against loss in respect thereof (in whole or in part),
provided that the term Guarantee shall not include endorsements for collection
or deposit in the ordinary course of business. The term "Guarantee" used as a
verb has a corresponding meaning.
"Guarantor" means each Person who has executed the Subsidiary Guaranty,
or a supplement thereto as provided in Section 5.22.
"Guarantor Pledge Agreement" means the Amended and Restated Guarantor
Pledge Agreement dated as of October 15, 1997 between each Guarantor party
thereto and the Agent, as amended from time to time.
"Hazardous Substances" means any toxic, radioactive, caustic or otherwise
hazardous substance, including petroleum, its derivatives, by-products and other
hydrocarbons, or any substance having any constituent elements displaying any of
the foregoing characteristics.
"Hedging Obligations" means all obligations of either Borrower to any
Lender or any affiliate of a Lender under (i) any interest rate swap agreement,
interest rate cap agreement or interest rate collar agreement, (ii) any foreign
exchange contract or currency swap agreement or (iii) any similar agreement or
arrangement of a type designed to protect either Borrower against fluctuations
in interest rates or currency exchange rates.
"Home Video Distribution Venture" means a Person (other than a Subsidiary
of either Borrower) (i) the common stock or other equity interests of which are
owned at least 5% but not more than 50% by the MGM/Orion Companies and (ii) that
is principally engaged in the distribution, exhibition or exploitation of Films
and other motion pictures, feature films, shorts, television programs or
animated programs, directly or indirectly destined for viewing by consumers in
their residences, hotels, nursing homes, hospitals, army bases and the like, by
any means or medium now known or hereafter devised, including without limitation
videocassettes, discs, electronic distribution, video on demand and near video
on demand, other than a TV Distribution Venture.
"Indemnitee" has the meaning set forth in Section 10.03(b).
12
"Information Memorandum" means the confidential descriptive memorandum
dated May 2002 furnished to the Lenders in connection with the transactions
contemplated by the Loan Documents.
"Insolvency" means, with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent" means pertaining to a condition of Insolvency.
"Interest Period" means, with respect to each Euro-Dollar Loan, the
period commencing on the date of borrowing specified in the applicable Notice of
Borrowing or on the date specified in the applicable Notice of Interest Rate
Election and ending one, two, three or six months thereafter (or, in the case of
the first Interest Period, the period commencing on the Effective Date and
ending on June 21, 2002 and, in the case of the second Interest Period, the
period commencing on June 21, 2002 and ending on June 28, 2002), as the Borrower
delivering such notice may elect in the applicable notice; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case such Interest Period shall
end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clauses (c) and (d) below, end on the
last Euro-Dollar Business Day of the calendar month at the end of such
Interest Period;
(c) if any Interest Period with respect to any Euro-Dollar Term
Loan includes a date on which a scheduled payment of principal of such
Term Loans is required to be made under Sections 2.04(b) or 2.04(c) but
does not end on such date, then (i) the principal amount of each
Euro-Dollar Term Loan required to be repaid on such date shall have an
Interest Period ending on such date and (ii) the remainder (if any) of
each such Euro-Dollar Term Loan shall have an Interest Period determined
as set forth above; and
(d) any Interest Period with respect to any Loan which would
otherwise end after the Maturity Date with respect to such Loan shall end
on such Maturity Date.
13
"Investment" means, with respect to any Person, any investment by such
Person in any other Person (including an Affiliate) in the form of direct or
indirect loans, Guarantees of Debt or other payment obligations, advances or
capital contributions, purchases or other acquisitions for consideration of
Debt, equity interests or other securities or warrants, options or other rights
to acquire equity interests or other securities and all other items that are
classified as investments on the balance sheet of such Person in accordance with
generally accepted accounting principles as in effect from time to time or that
would be so classified on such balance sheet if such balance sheet were prepared
at the relevant time.
"Investors" means Tracinda.
"L/C Issuer" means Bank of America, N.A. and any other Revolving Lender
that may agree with the Borrowers to issue letters of credit hereunder (and
shall have notified the Agent thereof), in each case as issuer of a letter of
credit hereunder.
"Lead Arrangers" means Banc of America Securities LLC and X.X. Xxxxxx
Securities Inc., each in its capacity as joint lead arranger for the Lenders
under the Loan Documents.
"Lender" means a Term Lender, a Revolving Lender or the Swing Lender and
shall include, as the context may require, any L/C Issuer in such capacity.
"Lender Affiliate" has the meaning set forth in Section 10.06(f).
"Letter of Credit" means a letter of credit issued hereunder by an L/C
Issuer.
"Letter of Credit Commitment" means, at any time, the lesser of (x)
$75,000,000 and (y) the aggregate Available Revolving Commitments at such time.
"Letter of Credit Fee Rate" has the meaning set forth in the Pricing
Schedule.
"Letter of Credit Liabilities" means, for any Revolving Lender and at any
time, such Revolving Lender's Revolving Percentage of the sum of (x) the
aggregate unreimbursed amount then owing by the Borrowers in respect of amounts
drawn under all Letters of Credit and (y) the aggregate amount available for
drawing under all Letters of Credit (determined for each Letter of Credit as the
maximum undrawn amount that would be available thereunder if all conditions to
drawing were satisfied at such time, together with any increases to the face
14
amount thereof that may become available after such date without any action on
the part of any L/C Issuer).
"Library Cash Flows" means for any period the aggregate amount of cash
received by the Obligors during such period (determined on a Combined Basis but
including only Obligors) (A) with respect to Films that were Library Films
during such period and (i) were also Library Films on the Effective Date or (ii)
have been released by an MGM/Orion Company on or prior to December 31, 2001
("Library Cash Flow Films"), but excluding (x) proceeds of any Asset Sale or
Investment that is a Film Value Asset Disposition, (y) any upfront payments with
respect to Licensing Agreements that constitute an initial payment in excess of
10% of the aggregate amount of payments under such Licensing Agreement and (z)
with respect to any Library Cash Flow Film that was disposed of pursuant to an
Investment that is a Film Value Asset Disposition during such period, any cash
the Borrowers in good faith reasonably believe is properly allocable to such
film for the portion of such period during which it was a Library Cash Flow
Film, unless the Obligors have actually received cash distributions from the
Single Purpose Subsidiary or Permitted Joint Venture in which such Investment
was made with respect to such film (but excluding any such distributions that
are subject to a Clawback Obligation) during the portion of such period after
such film was disposed of pursuant to such Film Value Asset Disposition in an
amount at least equal to the amount such Obligors reasonably expected in good
faith to receive at the time of such Film Value Asset Disposition for the
portion of such period following the Film Value Asset Disposition (which amount
was included in the adjustment made pursuant to clause (i) of the definition of
Pro Forma Compliance with respect to such Film Value Asset Disposition) and (B)
in the form of distributions from Single Purpose Subsidiaries or Permitted Joint
Ventures which distributions the Borrowers in good faith reasonably believe are
properly allocable to films that were Library Cash Flow Films prior to their
Investment in or other disposition to a Single Purpose Subsidiaries or Permitted
Joint Venture, but excluding any such distributions that are subject to a
Clawback Obligation.
"Library Films" means the films listed on Schedule 1.01 and all other
Films other than (and only for so long as such Films are) First-Run Feature
Films but only to the extent that any of the foregoing are owned or all of the
MGM/Orion Companies distribution rights thereto are owned (including by way of
license) by an Obligor.
"Licensing Agreements" means any licensing agreements now outstanding or
hereafter executed pursuant to which any MGM/Orion Company grants or licenses to
third parties any right, title or interest with respect to any Film Related
Asset, any Film or any group of Films, as the same may be amended, supplemented
or otherwise modified from time to time.
15
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of this Agreement, any
MGM/Orion Company shall be deemed to own subject to a Lien any asset which it
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such asset.
"Loan" means a Base Rate Loan or a Euro-Dollar Loan and "Loans" means
Base Rate Loans or Euro-Dollar Loans or any combination of the foregoing.
"Loan Documents" means this Agreement, the Notes, the Subsidiary Guaranty
and the Collateral Documents.
"London Interbank Offered Rate" has the meaning set forth in Section
2.05(b).
"Major Casualty Proceeds" means (i) the aggregate insurance proceeds
received in connection with one or more related events by any MGM/Orion Company
under any insurance policy maintained by either Borrower or any of their
respective Subsidiaries covering casualty losses with respect to tangible real
or personal property or improvements or (ii) any award or other compensation
with respect to any condemnation of property (or any transfer or disposition of
property in lieu of condemnation) received by either Borrower or any of their
respective Subsidiaries, in either case only if the amount of such aggregate
proceeds or award or other compensation exceeds $10,000,000.
"Management Stock Incentive Plan" means the Amended and Restated 1996
Management Incentive Plan of MGM as in effect on the Effective Date, and as the
same may be amended or replaced on substantially similar terms.
"Material Adverse Effect" means (i) any material adverse effect upon the
assets or liabilities, or the business, financial position or results of
operations of the Borrowers and their respective Subsidiaries, taken as a whole;
(ii) prior to the Effective Date, a material adverse effect on the ability of
either Borrower or any other Person to consummate the transactions contemplated
hereby to occur on the Effective Date; (iii) a material adverse effect on the
ability of the Obligors to perform their obligations under this Agreement and
the Notes and the other Loan Documents, taken as a whole; or (iv) an adverse
effect on the rights and remedies of the Agent and the Lenders under this
Agreement and the Notes and the other Loan Documents.
16
"Material Subsidiary" means at any date any Subsidiary of either
Borrower, other than (a) any such Subsidiary which has (i) aggregate assets with
a fair market value of less than $1,000,000 and (ii) annual revenues of less
than $1,000,000, in each case calculated on the basis of the latest financial
statements delivered by the Borrowers to the Lenders pursuant to Section
4.04(b), 5.01(a) or 5.01(b), as the case may be, (b) any Bond Film
Sale-Leaseback Company and (c) at all times after the Rainbow Release Date, the
Rainbow Subsidiary.
"Maturity Date" means, (i) with respect to the Tranche A Loans, June 30,
2007, (ii) with respect to the Tranche B Loans, June 30, 2008, (iii) with
respect to the Revolving Loans, the Revolver Maturity Date and (iv) with respect
to any Swing Loan, the earlier of the tenth Euro-Dollar Business Day after such
Swing Loan is made and the Revolver Maturity Date (or, in the case of clause (i)
or (ii), if any such day is not a Euro-Dollar Business Day, the next preceding
Euro-Dollar Business Day).
"MGM" means Metro-Xxxxxxx-Xxxxx Inc., a Delaware corporation, and its
successors.
"MGM Debt" means any Debt of MGM.
"MGM Investment Limit" has the meaning set forth in Section 5.18(j).
"MGM/Orion Company" means either Borrower or any of their respective
Subsidiaries, and "MGM/Orion Companies" means all or any combination of the
foregoing, as the context may require.
"MGM Studios" means Metro-Xxxxxxx-Xxxxx Studios Inc. (formerly known as
Metro-Xxxxxxx-Xxxxx Inc.), a Delaware corporation, together with its successors.
"Multiemployer Plan" means a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" means, with respect to any Reduction Event relating
to the receipt of Major Casualty Proceeds, an amount equal to the cash proceeds
received by any MGM/Orion Company from or in respect of such Reduction Event,
less (x) any expenses reasonably incurred by such Person in respect of such
Reduction Event and (y) the amount of any Debt secured by a Lien on any asset in
respect of which such Major Casualty Proceeds are received and discharged or
required to be repaid (and actually so repaid) from the proceeds thereof.
"Notes" means promissory notes of either Borrower, substantially in the
form of Exhibit A hereto, evidencing the obligation of such Borrower to repay
the
17
Loans made to it, and "Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" has the meaning set forth in Section 2.02(a).
"Notice of Interest Rate Election" has the meaning set forth in Section
2.08(a).
"Notice of Issuance" has the meaning set forth in Section 2.14(b).
"Ordinary Course Library Film Licensing Agreement" means any Licensing
Agreement or series of related Licensing Agreements with respect to one or more
Library Films other than any such Licensing Agreement or series of related
Licensing Agreements that satisfies any of the following criteria:
(i) the aggregate amount of payments under such Licensing
Agreement or series of related Licensing Agreements with respect to one
or more Library Films exceeds $175,000,000; or
(ii) the Borrower or the Subsidiary party thereto conveys,
sells, assigns, transfers or otherwise disposes of, with or without
recourse, its rights to receive payments under any such Licensing
Agreement or series of related Licensing Agreements with respect to one
or more Library Films; or
(iii) the aggregate amount of payments under such Licensing
Agreement or series of related Licensing Agreements with respect to one
or more Library Films exceeds $17,500,000 and the aggregate amount of
payments under all such Licensing Agreement or series of related
Licensing Agreements with respect to one or more Library Films that are
not to be made reasonably pro rata over the period of availability of the
Films which are the subject of such Licensing Agreement or series of
related Licensing Agreements with respect to one or more Library Films
would exceed the greater of (x) 10% of the aggregate amount of all
payments under such Licensing Agreement or series of related Licensing
Agreements with respect to one or more Library Films and (y) $17,500,000.
"Obligor" means each Borrower and each Guarantor.
"Original Credit Agreement" has the meaning set forth in the introductory
paragraphs hereof.
18
"Orion" means Orion Pictures Corporation, a Delaware corporation,
together with its successors.
"Parent" means, with respect to any Lender, any Person controlling such
Lender.
"Participant" has the meaning set forth in Section 10.06(d).
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Permitted Joint Venture" means a Person (other than a Consolidated
Subsidiary of either Borrower) (i) the common stock or other equity interests of
which are owned at least 20% but not more than 50% by the MGM/Orion Companies
and (ii) the Investments in which by the MGM/Orion Companies are permitted under
this Agreement.
"Permitted Subordinated Debt" means Debt issued by one or both Borrowers
that is subordinated to all of the obligations of the relevant Obligor or
Obligors under the Loan Documents, in an aggregate principal amount of up to
$500,000,000, which shall include (i) covenants, events of default and
subordination provisions customary for high-yield debt offered in offerings
registered with the Securities and Exchange Commission under the Securities Act
of 1933, as amended, or issued pursuant to Rule 144A and Regulation S
promulgated thereunder and (ii) no amortization or mandatory redemptions prior
to at least one year after the Maturity Date for the Tranche B Loans, and shall
otherwise have terms and conditions satisfactory to the Agent.
"Person" means an individual, a corporation, a limited liability company,
a partnership, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Plan" means, at any time, any employee benefit plan which is covered by
ERISA and in respect of which MGM or a Commonly Controlled Entity is (or, if
such plan were terminated at such time, would under Section 4069 of ERISA be
deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Pledge Agreement" means the Borrower Pledge Agreement or any Guarantor
Pledge Agreement.
"Pricing Schedule" means the Schedule attached hereto identified as such.
19
"Prime Rate" means the rate of interest publicly announced by Bank of
America, N.A. from time to time as its Prime Rate.
"Profit Participation" means the amount, as customarily determined by the
Borrowers or either of them, of all obligations (other than Residuals and
Deferred Payments) payable by any MGM/Orion Company as compensation for talent,
financiers or to producers and for similar services in connection with the
development, acquisition, production, financing, distribution, exhibition or
exploitation of Films or rights with respect thereto, the payment of which is
contingent upon or triggered by and payable only to the extent of the receipt by
any MGM/Orion Company, as the case may be, of revenues from the exploitation of
such Film or such rights.
"Pro Forma Compliance" means, for any Film Value Asset Disposition and on
the date thereof (the "Disposition Date"), that after giving effect to such Film
Value Asset Disposition the Borrowers shall be in compliance with the covenants
in Article 5 (including without limitation Sections 5.13, 5.15 and 5.25) as of
the Disposition Date (or, in the case of Section 5.13, as of the last day of
Fiscal Quarter then most recently ended) determined after giving effect to the
following pro forma assumptions or adjustments:
(i) Library Cash Flows for the period of four consecutive
Fiscal Quarters ended on or most recently prior to such Disposition Date
(the "reference period") shall be determined by deeming all Film Value
Asset Dispositions occurring after the beginning of the reference period
and not later than the Disposition Date (including the proposed Film
Value Asset Disposition for which such determination is being performed)
to have occurred immediately prior to the beginning of such reference
period; provided that with respect to any Film Value Asset Disposition
consisting of an Investment in a Single Purpose Subsidiary or a Permitted
Joint Venture, if on the Disposition Date pursuant to the terms of the
agreements governing such Film Value Asset Disposition the Borrowers are
entitled to receive cash distributions from the Single Purpose Subsidiary
or Permitted Joint Venture in which such Investment was made with respect
to such Film Value Asset and the Borrowers reasonably believe in good
faith that they will receive such cash distributions, Library Cash Flows
shall be determined by including the aggregate amount of such cash
distributions that the Borrowers reasonably believe in good faith they
would have received during the reference period had the Disposition Date
occurred immediately prior to the beginning of such reference period;
(ii) Film Value shall be as set forth in the appraisal report
delivered on or most recently prior to such Asset Sale Date pursuant to
Section 5.01(j) (averaged, if necessary, in accordance with the
definition
20
thereof), adjusted to give effect to the disposition of all Library Films
and motion pictures and television programs described in clause (ii) of the
definition of "Films" pursuant to all Film Value Asset Dispositions
occurring after the date of such appraisal report and not later than the
Disposition Date (including the proposed Film Value Asset Disposition for
which such determination is being performed); and
(iii) Total Borrowed Funds shall be determined at such Disposition
Date after giving effect to the repayment of any Debt made on such
Disposition Date with the cash proceeds of such Film Value Asset
Disposition (or committed to be made on such Disposition Date and actually
made within two Domestic Business Days (and, if such repayment is not so
made within such time, Total Borrowed Funds and Pro Forma Compliance with
respect to such Film Value Asset Disposition shall be redetermined as of
such Disposition Date giving effect to the fact that such repayment has not
been made)).
"Projected Known Sources" means at any date (the "Test Date"), the sum
(without duplication) of the following amounts, in each case determined for the
Combined Companies on a Combined Basis:
(a) cash and cash equivalents held by the Combined Companies on such date
plus
(a) the aggregate amount, without duplication, of cash projected by the
Borrowers in good faith to be received by the Combined Companies during the
period of four consecutive Fiscal Quarters (the "Test Period") commencing on the
day immediately after such date from the following sources:
(i) any unutilized commitment under a binding agreement by Tracinda
to purchase equity securities of MGM; and
(ii) any unutilized commitment to make advances to any Combined
Company (including without limitation any Commitment to make Loans to the
Borrowers);
but only to the extent, in the case of any agreement or instrument referred to
in clause (i) or (ii) above, that (x) the conditions to requiring such advance
or purchase (as the case may be) would be satisfied on such Test Date if such
advance or purchase were requested by the relevant Combined Company (including,
in the case of any Loan under this Agreement, without limitation, the condition
that no Default exists on such date or after giving effect to such Loan) (or,
with respect to any such condition that can be satisfied only after such Test
Date, the Borrowers reasonably and in good faith believe that such condition
will
21
be satisfied at all relevant times during such Test Period), and (y) such
commitment is subject to no conditions other than performance by the relevant
Combined Company of the agreements under which such commitment or commitments
exist; plus
(c) the aggregate amount, without duplication, of all cash payments
that the Borrowers reasonably and in good faith project to be received by the
Combined Companies during the Test Period from:
(i) royalties and other accounts receivable, but only to the
extent that (x) the relevant obligation to make such royalty payments are
subject to no conditions other than performance by the relevant Combined
Companies of the related agreements and (y) the Borrowers reasonably and in
good faith believe that such condition will be satisfied at all relevant
times during such Test Period;
(ii) revenues with respect to Films and Film Related Assets
(determined by reference to the Combined Companies' ultimates in the case
of any Film, such ultimate to be valued, in the case of any completed Film
that has not yet been released, at a "break-even" cost);
(iii) distributions from Permitted Joint Ventures, but only to
the extent that (x) the right to receive such payment is subject to no
condition other than performance by the relevant Combined Companies of the
relevant agreements under which such distributions would be made and (y)
the Borrowers reasonably and in good faith believe that such condition will
be satisfied at all relevant times during such Test Period. and
(iv) revenues from sales of branded merchandise.
"Projected Known Uses" means at any date (the "Test Date"), the sum
(without duplication) of the following amounts, in each case determined for the
Combined Companies on a Combined Basis, in each case projected by the Borrowers
reasonably and in good faith to be paid during the period of four consecutive
Fiscal Quarters (the "Test Period") commencing immediately after such date: (a)
cash overhead, (b) Combined Cash Interest Expense and the aggregate principal
amount of Debt required to be paid during such Test Period in accordance with
the terms of the relevant Debt agreements in effect on the Test Date, (c) income
taxes to be paid in cash, (d) cash expenses attributable to remaining negative
costs and prints and advertising expenses for Films which have commenced
production or for which orders have been received, (e) Combined Capital
Expenditures, (f) Investments (including, without limitation, Investments in
Permitted Joint Ventures and in MGM) and (g) any other cash
22
expenditures (including, without limitation, Restricted Payments) anticipated to
be made by the Combined Companies during the Test Period.
"Quarterly Dates" means each March 31, June 30, September 30 and December
31.
"Rainbow Financing" means Debt of the Rainbow Subsidiary that, except for a
limited-recourse pledge of the capital stock of the Rainbow Subsidiary by the
Combined Company that holds such capital stock, (i) is not Guaranteed or
otherwise supported by either Borrower or any other Subsidiary and (ii) does not
subject any asset of either Borrower or any other Subsidiary directly or
indirectly, contingently or otherwise, to the satisfaction of such Debt or any
obligation related thereto.
"Rainbow Interest" means the Existing Rainbow Investment and the capital
stock of the Rainbow Subsidiary.
"Rainbow Partnerships" means, together, American Movie Classics Company and
Bravo Company, each a New York general partnership formed prior to the Effective
Date.
"Rainbow Release Date" has the meaning set forth in Section 10.05.
"Rainbow Subsidiary" means MGM Networks US Inc., a Delaware corporation and
a special purpose subsidiary that holds no assets other than the Existing
Rainbow Investment, and does not engage in any business other than the Rainbow
Financing and holding the Existing Rainbow Investment.
"Reduction Amount" means:
(i) in respect of any issuance or portion thereof of Permitted
Subordinated Debt, an amount such that, after giving effect to such
prepayment, the sum of (A) the aggregate principal amount of all Permitted
Subordinated Debt plus (B) the aggregate amount of all Credit Exposures at
such time, does not exceed $2,000,000,000;
(ii) in respect of the receipt of Major Casualty Proceeds that
constitutes a Reduction Event, 100% of the Net Cash Proceeds thereof; and
(iii) in respect of any certification as to anticipated reinvestment
of Major Casualty Proceeds set forth in any Proceeds Certificate being no
longer true, 100% of the Net Cash Proceeds from the relevant receipt of
23
Major Casualty Proceeds not invested prior to such date to repair or
replace affected assets.
"Reduction Event" means (i) the incurrence of any Permitted Subordinated
Debt, but only to the extent that, after giving effect to such incurrence and
any payments made pursuant to clauses (b) and (c) of Section 2.04 or Section
2.10 made or expected to be made within three Euro-Dollar Business Days after
such incurrence (and, in the case of Section 2.10, with respect to which the
Agent has received notice), but before giving effect to any prepayment with
respect to such incurrence under Section 2.04(d), the sum of (A) the aggregate
principal amount of all Permitted Subordinated Debt then outstanding plus (B)
the aggregate amount of all Credit Exposures, exceeds $2,000,000,000 (and only
to the extent of such excess), (ii) receipt of Major Casualty Proceeds, unless,
within 5 Domestic Business Days after receipt thereof, the Obligor receiving
such Major Casualty Proceeds shall have delivered to the Agent a certificate (a
"Proceeds Certificate") of the chief financial officer or the chief accounting
officer of such Borrower, certifying as to (x) the aggregate amount of such
Major Casualty Proceeds and (y) the fact that the MGM/Orion Companies shall
invest such Major Casualty Proceeds to repair or replace affected assets with
180 days after receipt thereof and (iii) the first day on which any
certification made pursuant to any Proceeds Certificate shall cease to be true.
The description of any transaction as falling within the above definition does
not affect any limitation on such transaction imposed by Article 5 of this
Agreement or any rights of any Lender upon the occurrence of an Event of Default
under Article 6 of this Agreement.
"Reference Lenders" means the principal London offices of Bank of America,
N.A. and JPMorgan Chase Bank, and "Reference Lender" means either one of such
Reference Lenders.
"Refunded Swing Loans" has the meaning set forth in Section 2.01(e).
"Register" has the meaning set forth in Section 10.06(c).
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"Reportable Event" means any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. Section
2615.
"Required Lenders" means at any time Lenders having in the aggregate
greater than 50% of the aggregate Credit Exposures at such time.
24
"Residuals" means the amount, as reasonably determined by the Borrowers, or
either of them, of all obligations (other than Profit Participations and
Deferred Payments) payable by any MGM/Orion Company pursuant to guild agreements
or other collective bargaining agreements in connection with the development,
acquisition, production, financing, distribution, exhibition or exploitation of
Films or rights with respect thereto.
"Responsible Officer" means, with respect to either Borrower, any senior
vice president of such Borrower, and any more senior corporate officer of such
Borrower, in any case appointed to such office by the Board of Directors of such
Borrower or any committee thereof.
"Restricted Payment" means (i) any dividend or other distribution on any
shares of either Borrower's capital stock (except dividends payable solely in
shares of such Borrower's capital stock) or (ii) any payment by any MGM/Orion
Company on account of the purchase, redemption, retirement or acquisition of (a)
any shares of either Borrower's capital stock or (b) any option, warrant or
other right to acquire shares of either Borrower's capital stock (but not
including payments of principal, premium (if any) or interest made pursuant to
the terms of convertible debt securities prior to conversion).
"Revolver Maturity Date" means June 30, 2007 (or, if any such day is not a
Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day).
"Revolving Commitment" means, (i) with respect to each Revolving Lender
listed on the Schedule of Lenders, the amount that the Borrower and such
Revolving Lender have agreed upon on the Effective Date constitutes such
Revolving Lender's Revolving Commitment (ii) with respect to each Eligible
Assignee that becomes a Revolving Lender pursuant to Section 10.06(b), the
amount of the Revolving Commitment thereby assumed by it, in each case as such
amount may be increased or reduced from time to time pursuant to Section
10.06(b) or reduced from time to time pursuant to Sections 2.04(d) and 2.07.
"Revolving Credit Period" means the period from and including the Effective
Date to but not including the Revolver Maturity Date.
"Revolving Exposure" means, with respect to each Revolving Lender, at any
time, an amount equal to the sum of (i) the aggregate principal amount of the
Revolving Loans of such Revolving Lender outstanding at such time, (ii) such
Revolving Lender's Revolving Percentage of the aggregate principal amount of the
Swing Loans outstanding at such time and (iii) such Revolving Lender's Letter of
Credit Liabilities at such time.
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"Revolving Lender" means each Lender identified as a Revolving Lender
on the Schedule of Lenders, each Eligible Assignee which becomes a Revolving
Lender pursuant to Section 10.06(b), and their respective successors.
"Revolving Loan" means a loan made by a Revolving Lender pursuant to
Section 2.01(c).
"Revolving Percentage" means, with respect to each Revolving Lender, at
any time, the percentage that such Revolving Lender's Revolving Commitment
constitutes of the aggregate amount of the Revolving Commitments at such time.
"Sale-Leaseback Transaction" means the sale by any MGM/Orion Company of
all of its right, title and interest in and to a Film and the retention by, or
concurrent reconveyance to such Borrower or such Subsidiary of distribution
rights to such Film and an option to repurchase such Film, in consideration of
one or more payments by such Borrower or such Subsidiary of amounts having an
aggregate discounted present value that is less than the purchase price paid by
the purchaser thereof; provided that, concurrently with such reconveyance, such
Borrower or such Subsidiary has defeased its obligation to make the aggregate
amount of such payments.
"Schedule of Lenders" means the Schedule attached hereto identified as
such.
"Security Agreement" means the Amended and Restated Borrower and
Guarantor Security Agreement dated as of October 15, 1997 among the Obligors
party thereto and the Agent, as amended from time to time.
"Signing Date" means the date the obligations of the parties under this
Agreement become effective in accordance with Section 3.01.
"Single Employer Plan" means any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Single Purpose Subsidiary" means at any date any Subsidiary of a
Borrower (other than a Foreign Subsidiary) (i) that has been established for the
sole purpose of, and does not engage in any business or conduct any activities
other than, the development, production, financing, acquisition, distribution or
exploitation of any one Film or slate or group of Films or any Film Related
Asset and (ii) that has no Debt or other obligation that (x) is Guaranteed or
otherwise supported by either Borrower or any other Subsidiary (other than any
other Single Purpose Subsidiary), other than as a result of Clawback Obligations
incurred by either Borrower or such other Subsidiary with respect to such Single
Purpose Subsidiary or (y) subjects any asset of either Borrower or any other
Subsidiary
26
(other than any other Single Purpose Subsidiary) directly or indirectly,
contingently or otherwise, to the satisfaction of such Debt or obligation
thereof, except as a result of the satisfaction of Clawback Obligations incurred
by either Borrower or such other Subsidiary with respect to such Single Purpose
Subsidiary.
"SPC" has the meaning set forth in Section 10.06(f).
"Specified Non-Cash Charges" means any non-cash charges with respect to
capital stock, stock options and "bonus interests", in each case granted
pursuant to the Management Stock Incentive Plan or to any former or current
employees or directors of the Combined Companies under plans or arrangements as
set forth in MGM's filings with the Securities and Exchange Commission from time
to time.
"Subsidiary" means, as to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person; unless
otherwise specified, "Subsidiary" means a Subsidiary of either Borrower.
"Subsidiary Guaranty" means the Amended and Restated Subsidiary
Guaranty Agreement dated as of October 15, 1997 between each Guarantor party
thereto and the Agent, as amended from time to time.
"Swing Lender" means Bank of America, N.A., in its capacity as the
Swing Lender under the swing loan facility described in Section 2.01(d), and its
successors in such capacity.
"Swing Loan" means a Loan made by the Swing Lender pursuant to Section
2.01(d).
"Swing Loan Commitment" means $10,000,000 or, if less, the aggregate
amount of the Available Revolving Commitments.
"Swing Loan Refund Amount" has the meaning set forth in Section
2.01(e).
"Temporary Cash Investment" means any Investment in (i) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, (ii) commercial paper
rated at least A-2 by Standard & Poor's Ratings Services or P-2 by Xxxxx'x
Investors Service, Inc., (iii) time deposits with, including certificates of
deposit issued by, any office located in the United States of any bank or trust
company which is organized under the laws of the United States or any state
thereof and has capital, surplus and undivided profits aggregating at least
$500,000,000 or (iv) repurchase
27
agreements with respect to securities described in clause (i) above entered into
with an office of any bank or trust company meeting the criteria specified in
clause (iii) above, provided in each case that such Investment matures within
one year from the date of acquisition thereof by any MGM/Orion Company.
"Term Lender" means a Tranche A Lender or a Tranche B Lender.
"Term Loan" means a Tranche A Loan or a Tranche B Loan.
"Terminating Lender" means each Lender that is an Existing Lender but
is not a Lender upon the effectiveness of this Agreement on the Effective Date.
"Total Borrowed Funds" means at any date the aggregate amount of Debt
of the Combined Companies described in clauses (i), (ii), (iv) and (vii) (but,
in the case of clause (vii) with respect to Debt of the Combined Companies, only
if such Debt Guaranteed is described in clauses (i), (ii) or (iv) of the
definition thereof) of the definition of Debt (but excluding (a) any obligations
under Sale-Leaseback Transactions which constitute Debt under clause (iv) of the
definition thereof, (b) Debt of any Single Purpose Subsidiary, so long as such
Debt complies with the provisions of clause (ii) of the definition of Single
Purpose Subsidiary and (c) any Rainbow Financing), plus the aggregate amount of
all Clawback Obligations of the Combined Companies (other than a Single Purpose
Subsidiary) that, at such date, are reflected on the balance sheet of the
obligor thereof at such date (or would be required to be so reflected if such
balance sheet were prepared on such date).
"Tracinda" means Tracinda Corporation, a Nevada corporation, and its
successors.
"Tranche A Lender" means each Lender identified as a Tranche A Lender
on the Schedule of Lenders, each Eligible Assignee which becomes a Tranche A
Lender pursuant to Section 10.06(b), and their respective successors.
"Tranche A Loan" means a loan made by a Tranche A Lender pursuant to
Section 2.01(a).
"Tranche B Lender" means each Lender identified as a Tranche B Lender
on the Schedule of Lenders, each Eligible Assignee which becomes a Tranche B
Lender pursuant to Section 10.06(b), and their respective successors.
"Tranche B Loan" means a loan made by a Tranche B Lender pursuant to
Section 2.01(b).
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"Tranche B Prepayment Notice" has the meaning set forth in Section
2.04(f)(i
"Tranche B Unscheduled Prepayment" has the meaning set forth in Section
2.04(f)(i).
"TV Distribution Venture" means a Person (other than a Subsidiary of
either Borrower) (i) the common stock or other equity interests of which are
owned at least 5% but not more than 50% by the MGM/Orion Companies and (ii) that
is principally engaged in the distribution, exhibition or exploitation of
television programming, including Films and other motion pictures, feature
films, shorts, televisions programs or animated programs.
"Type" has the meaning set forth in Section 1.03.
"United States" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.
"Unscheduled Prepayment Date" has the meaning set forth in Section
2.04(f)(i).
"Utilization" has the meaning set forth in the Pricing Schedule.
Section 1.02. Accounting Terms and Determinations. Unless otherwise
specified in the immediately succeeding sentence or otherwise herein, all
accounting terms used herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to be delivered
hereunder shall be prepared in accordance with generally accepted accounting
principles as in effect from time to time, applied on a basis consistent (except
for changes concurred in by the Borrowers' independent public accountants) with
the most recent financial statements of the Combined Companies delivered to the
Lenders ("GAAP"); provided that, if the Borrowers notify the Agent that the
Borrowers wish to amend any covenant in Article 5 or any related definition to
eliminate the effect of any change in generally accepted accounting principles
on the operation of such covenant (or if the Agent notifies the Borrowers that
the Required Lenders wish to amend Article 5 or any related definition for such
purpose), then the Borrowers' compliance with such covenant shall be determined
on the basis of generally accepted accounting principles in effect immediately
before the relevant change in generally accepted accounting principles became
effective, until either such notice is withdrawn or such covenant or definition
is amended in a manner satisfactory to the Borrowers and the Required Lenders.
The term "Combined Basis", when used with respect to the determination of any
amount, means that such amount is to be determined by combining (i) the relevant
amount determined with respect to MGM Studios and its Consolidated
29
Subsidiaries on a consolidated basis and (ii) the relevant amount determined
with respect to Orion and its Consolidated Subsidiaries on a consolidated basis,
all in accordance with GAAP. Unless the context otherwise requires, whenever an
amount herein is expressly to be determined with respect to the Combined
Companies, such amount shall be determined on a Combined Basis.
Section 1.03. Classes and Types of Loans and Borrowings. The term
"Borrowing" denotes the aggregation of Loans of one or more Lenders to be made
to a single Borrower pursuant to Article 2 on the same date, all of which Loans
are of the same Class and Type (subject to Article 8) and, except in the case of
Base Rate Loans, have the same initial Interest Period. Loans hereunder are
distinguished by "Class" and by "Type". The "Class" of a Loan (or of a
Commitment to make such a Loan or of a Borrowing comprised of such Loans or of a
Group of such Loans) refers to the determination whether such Loan is a Tranche
A Loan, Tranche B Loan, a Revolving Loan or a Swing Loan, each of which
constitutes a Class. The "Type" of a Loan refers to the determination whether
such Loan is a Euro-Dollar Loan or a Base Rate Loan. Identification of a Loan
(or a Borrowing) by both Class and Type (e.g., a "Tranche B Euro-Dollar Loan")
indicates that such Loan is both a Tranche B Loan and a Euro-Dollar Loan (or
that such Borrowing or Group of Loans is comprised of such Loans).
ARTICLE 2
The Credits
Section 2.01. Outstanding Term Loans; Commitments to Lend . (a) Tranche
A Loans. Each Tranche A Lender has made a single loan to each Borrower in a
principal amount outstanding on the Effective Date equal to the principal amount
agreed upon on the Effective Date between such Tranche A Lender and the
Borrower. The Tranche A Loans are not revolving in nature and amounts of such
loans repaid or prepaid may not be reborrowed. On the Effective Date, the
aggregate outstanding principal amount of all Tranche A Loans will be
$300,000,000.
(b) Tranche B Loans. Each Tranche B Lender has made a single loan to
each Borrower in a principal amount outstanding on the Effective Date equal to
the principal amount agreed upon on the Effective Date between such Tranche B
Lender and the Borrower. The Tranche B Loans are not revolving in nature and
amounts of such loans repaid or prepaid may not be reborrowed. On the Effective
Date, the aggregate outstanding principal amount of all Tranche B Loans will be
$850,000,000.
30
(c) Revolving Loans. During the Revolving Credit Period, each Revolving
Lender severally agrees, on the terms and conditions set forth in this
Agreement, to make revolving loans to the Borrowers from time to time in amounts
such that the Revolving Exposure of such Revolving Lender at such time shall not
exceed the amount of its Available Revolving Commitment at such time. Each
Borrowing under this subsection shall be in an aggregate principal amount of
$5,000,000 or any larger multiple of $1,000,000 (except that any such Borrowing
may be in the aggregate amount available in accordance with Section 3.03(b)) and
shall be made from the several Revolving Lenders ratably in proportion to their
respective Revolving Commitments; provided, that the failure of any Revolving
Lender at any time to fulfill its obligation to make a Revolving Loan on the
terms and conditions set forth in this Agreement shall not in itself excuse any
other Revolving Lender from its obligation to make a Revolving Loan. Within the
foregoing limits, the Borrowers may borrow under this subsection, prepay
Revolving Loans to the extent permitted by Section 2.10 and reborrow at any time
during the Revolving Credit Period under this subsection. On the Effective Date,
the aggregate amount of all Revolving Commitments will be $600,000,000.
(d) Swing Loans. During the Revolving Credit Period, the Swing Lender
agrees, on the terms and conditions set forth in this Agreement, to make loans
to the Borrowers pursuant to this subsection from time to time in amounts such
that at any time (i) the aggregate principal amount of Swing Loans outstanding
at such time does not exceed the Swing Loan Commitment and (ii) the aggregate
Revolving Exposure at such time does not exceed the aggregate amount of the
Available Revolving Commitments at such time. Each Borrowing under this
subsection shall be in an aggregate principal amount of $5,000,000 or any larger
multiple thereof (except that any such Borrowing may be in the aggregate amount
of the Swing Loan Commitment available in accordance with the immediately
preceding sentence). Within the foregoing limits, the Borrowers may borrow under
this subsection, prepay Swing Loans to the extent permitted by Section 2.10 and
reborrow at any time during the Revolving Credit Period under this subsection.
(e) Conversion of Swing Loans to Revolving Loans. The Swing Lender, at
any time and from time to time in its sole and absolute discretion may, on
behalf of either Borrower (each of which hereby irrevocably directs the Swing
Lender to act on its behalf), on notice given by the Swing Lender no later than
10:30 A.M. (New York City time) on the proposed date of Borrowing for the
Revolving Loans referred to below, request each Revolving Lender to make, and
each Revolving Lender hereby agrees to make, a Revolving Loan, in an amount
(such amount with respect to each Lender, its "Swing Loan Refund Amount") equal
to such Revolving Lender's Revolving Percentage of the aggregate principal
amount of the Swing Loans (the "Refunded Swing Loans") outstanding on the
31
date of such notice and with respect to which such notice relates, to repay the
Swing Lender. Unless any of the events described in clause (g) or (h) of Section
6.01 with respect to the relevant Borrower shall have occurred and be continuing
(in which case the procedures of Section 2.01(f) shall apply), each Revolving
Lender shall make such Revolving Loan available to the Agent at its address
specified in or pursuant to Section 10.01 in immediately available funds, not
later than 12:00 Noon (New York City time), on the date specified in such
notice. Each such Revolving Loan shall initially be made as a Base Rate Loan.
The Agent shall pay the proceeds of such Revolving Loans to the Swing Lender,
which shall immediately apply such proceeds to repay Refunded Swing Loans.
Effective on the day such Revolving Loans are made, the portion of the Swing
Loans so paid shall no longer be outstanding as Swing Loans, shall no longer be
due as Swing Loans under the Notes held by the Swing Lender, and shall be due as
Revolving Loans under the respective Notes issued to the Revolving Lenders
(including the Swing Lender) in accordance with their respective Revolving
Percentages.
(f) Purchase of Participations in Swing Loans. If prior to the time
Revolving Loans would have otherwise been made pursuant to Section 2.01(e), one
of the events described in clause (g) or (h) of Section 6.01 with respect to the
relevant Borrower shall have occurred and be continuing, each Revolving Lender
shall, on the date such Revolving Loans were to have been made pursuant to the
notice referred to in Section 2.01(e) (the "Refunding Date"), purchase an
undivided participating interest in the Swing Loans in an amount equal to such
Revolving Lender's Swing Loan Refund Amount. On the Refunding Date, each
Revolving Lender shall transfer to the Swing Lender, in immediately available
funds, such Lender's Swing Loan Refund Amount, and upon receipt thereof the
Swing Lender shall deliver to such Revolving Lender a Swing Loan participation
certificate dated the date of the Swing Lender's receipt of such funds and in
the Swing Loan Refund Amount of such Revolving Lender.
(g) Payments on Participated Swing Loans. Whenever, at any time after
the Swing Lender has received from any Revolving Lender such Revolving Lender's
Swing Loan Refund Amount pursuant to Section 2.01(f), the Swing Lender receives
any payment on account of the Swing Loans in which the Revolving Lenders have
purchased participations pursuant to Section 2.01(f), the Swing Lender will
promptly distribute to each such Revolving Lender its ratable share (determined
on the basis of the Swing Loan Refund Amounts of all of the Revolving Lenders)
of such payment (appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Revolving Lender's participating
interest was outstanding and funded); provided, however, that in the event that
such payment received by the Swing Lender is required to be returned, such
Revolving Lender will return to the Swing Lender any portion thereof previously
distributed to it by the Swing Lender.
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(h) Obligations to Refund or Purchase Participations in Swing Loans
Absolute. Each Revolving Lender's obligation to transfer the amount of a
Revolving Loan to the Swing Lender as provided in Section 2.01(e) or to purchase
a participating interest pursuant to Section 2.01(f) shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (i) any set-off, counterclaim, recoupment, defense or other right
which such Revolving Lender, either Borrower or any other Person may have
against the Swing Lender or any other Person, (ii) the occurrence or continuance
of a Default or an Event of Default or the termination or reduction of any
Commitments, (iii) any adverse change in the condition (financial or otherwise)
of either Borrower or any other Person, (iv) any breach of this Agreement by
either Borrower, any other Lender or any other Person or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.
Section 2.02. Method of Borrowing. (a) The relevant Borrower shall give
the Agent notice (a "Notice of Borrowing") not later than 12:00 Noon (New York
City time) on (1) the date of each Base Rate Borrowing (other than a Revolving
Borrowing the proceeds of which are to be applied to repay Refunded Swing Loans)
and (2) the third Euro-Dollar Business Day before each Euro-Dollar Borrowing:
(i) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Base Rate Borrowing or a Euro-Dollar
Business Day in the case of a Euro-Dollar Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) whether the Loans comprising such Borrowing are to bear
interest initially at a rate based on the Base Rate or at a Euro-Dollar
Rate; provided that all Swing Loans shall bear interest at a rate based
on the Base Rate;
(iv) in the case of a Euro-Dollar Borrowing, the duration of
the initial Interest Period applicable thereto, subject to the
provisions of the definition of Interest Period; and
(v) in the case of a Swing Loan, the Maturity Date with
respect thereto, subject to the provisions of the definition of
Maturity Date.
In no event shall (i) the total number of Groups of Loans at any one time
outstanding exceed 20 or (ii) the total number of Swing Borrowings made in any
one calendar week exceed 3.
33
(b) Upon receipt of a Notice of Borrowing, the Agent shall promptly
notify each Lender of the contents thereof and of such Lender's ratable share of
such Borrowing (if any) and such Notice of Borrowing shall not thereafter be
revocable by such Borrower.
(c) Not later than 12:00 Noon (New York City time) on the date of each
Borrowing (or, solely in the case of either a Base Rate Borrowing or a Swing
Borrowing, 1:00 P.M. (New York City time)), each Lender (or, in the case of a
Swing Borrowing, the Swing Lender) shall make available its ratable share of
such Borrowing, in Federal or other funds immediately available in New York
City, to the Agent at its address referred to in Section 10.01. Unless the Agent
determines that any applicable condition specified in Article 3 has not been
satisfied, the Agent will make the funds so received from the Lenders available
to such Borrower by crediting an account of such Borrower maintained with the
Agent and specified by such Borrower prior to the date of such Borrowing or, if
no such account has been specified, at the Agent's aforesaid address.
(d) Unless the Agent shall have received notice from a Lender prior to
the date of any Borrowing that such Lender will not make available to the Agent
such Lender's share of such Borrowing, the Agent may assume that such Lender has
made such share available to the Agent on the date of such Borrowing in
accordance with subsection (c) of this Section and the Agent may, in reliance
upon such assumption, make available to such Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have so
made such share available to the Agent, such Lender and such Borrower severally
agree to repay to the Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to such Borrower until the date such amount is repaid to the Agent, at
(i) in the case of such Borrower, a rate per annum equal to the higher of the
Federal Funds Rate and the interest rate applicable thereto pursuant to Section
2.05 and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender
shall repay to the Agent such corresponding amount, such amount so repaid shall
constitute such Lender's Loan included in such Borrowing for purposes of this
Agreement.
Section 2.03. Notes. (a) The Loans of each Lender to each Borrower
shall be evidenced by a single Note of such Borrower payable to the order of
such Lender for the account of its Applicable Lending Office in an amount equal
to the aggregate unpaid principal amount of such Lender's Loans.
(b) Each Lender may, by notice to either Borrower and the Agent,
request that its Loans of a particular Type or Class to such Borrower be
evidenced by a separate Note in an amount equal to the aggregate unpaid
principal amount of such Loans. Each such Note shall be in substantially the
form of Exhibit A hereto with appropriate modifications to reflect the fact that
it evidences solely
34
Loans of the relevant Type or Class. Each reference in this Agreement to the
"Note" of such Lender shall be deemed to refer to and include any or all of such
Notes, as the context may require.
(c) Upon receipt of each Lender's Notes pursuant to Section 3.01, the
Agent shall forward such Notes to such Lender. Each Lender shall record the
date, amount, Type and Class of each Loan made by it to each Borrower and the
date and amount of each payment of principal made with respect thereto, and may,
if such Lender so elects in connection with any transfer or enforcement of its
Note of either Borrower, endorse on the schedule forming a part thereof
appropriate notations to evidence the foregoing information with respect to each
such Loan to such Borrower then outstanding; provided that the failure of any
Lender to make any such recordation or endorsement, or any error in making such
recordation or endorsement, shall not affect the obligations of either Borrower
hereunder or under the Notes or any other Loan Document. Each Lender is hereby
irrevocably authorized by each Borrower so to endorse its Notes and to attach to
and make a part of any Note a continuation of any such schedule as and when
required.
Section 2.04. Maturity of Loans; Mandatory Prepayments; Certain
Commitment Reductions. (a) Maturity of Loans. Each Loan of each Class shall
mature, and the outstanding principal amount thereof shall be due and payable
(together with accrued interest thereon), on the Maturity Date for such Class of
Loans.
(b) Tranche A Scheduled Amortization. In addition, the Borrowers shall
repay, and there shall become due and payable, on each date set forth below, an
aggregate principal amount of the Tranche A Loans equal to the percentage set
forth below opposite such date of the aggregate principal amount of Tranche A
Loans outstanding on the Effective Date (as such amount may be reduced pursuant
to Section 2.04(e) and Section 2.10(d)); provided that if the amount of the
Tranche A Loans shall be increased after the Effective Date as a result of any
Additional Loans, such percentages set forth below for all remaining dates prior
to the Maturity Date for Tranche A Loans shall automatically be increased to
provide for the amortization of 66 2/3% of the aggregate principal amount of
such Additional Loans under this clause (b) in equal installments over such
dates:
Date Percentage
---- ----------
12/31/03 4.7619%
03/31/04 4.7619%
06/30/04 4.7619%
09/30/04 4.7619%
12/31/04 4.7619%
03/31/05 4.7619%
35
Date Percentage
---- ----------
06/30/05 4.7619%
09/30/05 4.7619%
12/31/05 4.7619%
03/31/06 4.7619%
06/30/06 4.7619%
09/30/06 4.7619%
12/31/06 4.7619%
03/31/07 4.7619%
Maturity Date relating All remaining
to Tranche A Loans amounts
(c) Tranche B Scheduled Amortization. In addition, the Borrowers shall
repay, and there shall become due and payable, on each date set forth below an
aggregate principal amount of the Tranche B Loans equal to the percentage set
forth below opposite such date of the aggregate initial outstanding principal
amount of all Tranche B Loans (plus, from and after the date of any increase of
the Tranche B Loans through Additional Loans, the aggregate amount of such
Additional Loans):
Date Percentage
---- ----------
Each Quarterly Date from
and including 12/31/03
through and including
3/31/08 0.25%
Maturity Date relating All remaining
to Tranche B Loans amounts
(d) Mandatory Prepayments and Revolving Commitments Reduction. Subject
to Section 2.04(f) in the case of a prepayment of the Term Loans in part, the
Term Loans shall be prepaid and the Revolving Commitments shall be reduced in
the event that any Reduction Event shall occur, in an amount equal to the
Reduction Amount with respect thereto, and, in any case, within three
Euro-Dollar Business Days after the date of such Reduction Event; provided that
if the Reduction Amount in respect of any Reduction Event is less than
$1,000,000, such prepayment or reduction shall be made upon receipt of proceeds
such that, together with all other such amounts not previously applied, the
Reduction Amount is equal to at least $1,000,000 and provided further, that, at
the election of the Borrowers, if the amount of any such prepayment to be made
exceeds the
36
amount of Base Rate Loans then outstanding, such excess amount shall be
deposited in escrow pursuant to arrangements in form and substance satisfactory
to the Agent, and such excess shall not be required to be prepaid until the last
day of the Interest Periods relating to outstanding Euro-Dollar Loans in an
aggregate principal amount equal to or greater than such excess amount unless an
Event of Default has occurred and is continuing or the Required Lenders
otherwise determine in their sole discretion and so notify the Borrowers. The
Borrowers shall give the Agent at least five Euro-Dollar Business Days' notice
of each prepayment required pursuant to this subsection.
(e) Application of Prepayments, Repayments and Revolving Commitment
Reductions.
(i) The prepayments and reductions required pursuant to
subsection (d) shall be effected in the following order: first, the
Borrowers shall prepay the Term Loans until the Term Loans have been
paid in full (subject to Section 2.04(f) in the case of a prepayment
of the Term Loans in part), second, the Revolving Commitments shall be
reduced and third, solely if such prepayment is to be made after the
Revolving Credit Period, the Borrowers shall prepay Revolving Loans
until the Revolving Loans have been paid in full.
(ii) Subject to Section 2.04(f), each prepayment of the Term
Loans made by the Borrowers pursuant to subsection (d) shall be
allocated pro rata on the basis of principal amount between the then
outstanding Tranche A Loans and Tranche B Loans.
(iii) If on the date of any reduction of the Revolving
Commitments pursuant to subsection (d) the aggregate Revolving
Exposure on such date exceeds the aggregate Available Revolving
Commitments on such date, the Borrowers shall apply an amount equal to
such excess to prepay the Revolving Credit Loans or Swing Loans (or
both) and/or cash collateralize Letters of Credit so that after giving
effect thereto the Revolving Exposure of each Revolving Lender does
not exceed its Revolving Commitment as then reduced. Amounts to be
applied pursuant to the preceding sentence shall be applied first to
repay the principal amount of the Swing Loans then outstanding until
all such Swing Loans shall have been repaid in full, second to repay
the principal amount of the Revolving Loans then outstanding until all
such Revolving Loans shall have been repaid in full and third if any
excess then remains such excess shall be deposited in the Cash
Collateral Account established pursuant to Section 6(C) of the
Security Agreement to be held, applied or released for application as
provided in the Security Agreement. In determining Revolving Exposure
for purposes of this clause (iii), Letter of
37
Credit Liabilities shall be reduced to the extent that they are cash
collateralized as contemplated by the previous sentence.
(iv) Subject to clause (ii) of this subsection, each repayment
or prepayment of Loans of any Class made by either Borrower pursuant
to this Section shall be applied to such Group or Groups of Loans of
such Class as such Borrower may designate in the applicable Notice of
Borrowing or Notice of Interest Rate Election (or, failing such
designation, as determined by the Agent), and, except as provided in
subsection (f) with respect to Tranche B Loans, shall be applied to
repay ratably the Loans of such Class of the several Lenders included
in such Group or Groups.
(v) The amount of any prepayment of the Term Loans made by the
Borrowers pursuant to subsection (d) as a result of any event set
forth in clause (i) in the definition of "Reduction Event" shall be
applied to reduce the amount of subsequent scheduled repayments of the
Term Loans pursuant to subsection (b) above in inverse order of
maturity. The amount of any prepayment of the Term Loans made by the
Borrowers pursuant to subsection (d) as a result of any event set
forth in clause (ii) or (iii) in the definition of "Reduction Event"
shall be applied to reduce the amount of subsequent scheduled
repayments of the Term Loans pursuant to subsection (b) above ratably
to all remaining amortization payments.
(f) Option of Tranche B Lenders Not to Accept Prepayments.
(i) The Borrowers shall (x) at least one Domestic Business Day
prior to any date (an "Unscheduled Prepayment Date") on which any
prepayment of the Tranche B Loans (a "Tranche B Unscheduled
Prepayment"), other than a prepayment of the Tranche B Loans in whole,
would, but for the provisions of this subsection (f), otherwise have
been made pursuant to Section 2.04(d) or 2.10(a), deliver a notice
conforming to the requirements of subsection (f)(ii) (a "Tranche B
Prepayment Notice") to the Agent and (y) on or prior to such
Unscheduled Prepayment Date, deposit in the Tranche B Prepayment
Account established pursuant to Section 6(A) of the Security Agreement
an amount equal to the principal amount that would have been payable by
the Borrowers pursuant to Section 2.04(d) or 2.10(a) on such
Unscheduled Prepayment Date in respect of such Tranche B Unscheduled
Prepayment. Such Tranche B Unscheduled Prepayment shall not occur on
such Unscheduled Payment Date but shall instead be deferred as
hereinafter provided in this subsection (f). Upon receipt of any
Tranche B Prepayment Notice, the Agent shall promptly notify each
Tranche B Lender of the contents hereof.
38
(ii) Each Tranche B Prepayment Notice shall be in writing,
shall refer to this Section 2.04(f) and shall (w) set forth the amount
of the Tranche B Unscheduled Prepayment and the prepayment that the
applicable Tranche B Lender will be entitled to receive if it accepts
prepayment of its Tranche B Loans in accordance with this subsection,
(x) contain an offer to prepay on a specified date (each such date, a
"Deferred Tranche B Unscheduled Prepayment Date"), which shall not be
less than 20 days or more than 25 days after the date of such Tranche
B Prepayment Notice, the Tranche B Loans of such Tranche B Lender by
an aggregate principal amount equal to such Tranche B Lender's ratable
share of such Tranche B Unscheduled Prepayment (determined by
reference to the outstanding principal amount of such Lender's Tranche
B Loan as a proportion of the aggregate outstanding principal amount
of the Tranche B Loans of all of the Tranche B Lenders), (y) request
such Tranche B Lender to notify the Borrowers and the Agent in
writing, no later than the fifth Domestic Business Day prior to the
Deferred Tranche B Unscheduled Prepayment Date, of such Tranche B
Lender's acceptance or rejection (in each case, in whole and not in
part) of such offer of prepayment and (z) inform such Tranche B Lender
that the failure by such Tranche B Lender to reject such offer in
writing on or before the fifth day prior to such Deferred Tranche B
Unscheduled Prepayment Date shall be deemed an acceptance of such
prepayment offer. Each Tranche B Prepayment Notice shall be given by
telecopy, confirmed hand delivery or overnight courier service, in
each case addressed to the Agent and each Tranche B Lender as provided
in Section 10.01.
(iii) On each Deferred Tranche B Unscheduled Prepayment Date,
the Agent shall withdraw from the Tranche B Prepayment Account the
aggregate amount required to prepay the Tranche B Loans of each of the
Tranche B Lenders that shall have accepted (or been deemed to have
accepted) prepayment in accordance with the related Tranche B
Prepayment Notice (each, an "Accepting Tranche B Lender") and shall
cause such amount to be applied on behalf of the Borrowers to prepay
the outstanding Tranche B Loans of the Accepting Tranche B Lenders.
(iv) Any amount remaining in the Tranche B Prepayment Account
on any Deferred Tranche B Unscheduled Prepayment Date after giving
effect to the prepayments required by clause (iii) above (exclusive of
any interest or profits with respect to amounts held in the Tranche B
Prepayment Account) shall be withdrawn and applied by the Agent (x) to
prepay the principal of the then outstanding Tranche B Loans of the
Accepting Tranche B Lenders and, if the Borrowers so elect, the then
outstanding Tranche A Loans, in each case ratably in proportion to
their then outstanding principal amounts (including the Tranche A
Loans only if
39
the Borrowers so elect), and/or (y) after all Term Loans have been
repaid, to reduce the Revolving Credit Commitments, all in accordance
with subsection (d) above or Section 2.10(a), as applicable.
Section 2.05. Interest Rates. (a) Each Base Rate Loan shall bear interest
on the outstanding principal amount thereof, for each day from and including the
date such Loan is made to but excluding the date it becomes due or is converted
into a Euro-Dollar Loan, at a rate per annum equal to the sum of (x) the Base
Rate Margin plus (y) the Base Rate for such day. Such interest shall be payable
quarterly in arrears on each Quarterly Date (or, if any such day is not a
Domestic Business Day, the next succeeding Domestic Business Day). Any overdue
principal of or interest on any Base Rate Loan shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to the sum of 2% plus
the rate otherwise applicable to Base Rate Loans for such day.
(b) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period applicable
thereto, from and including the first day thereof to but excluding the last day
thereof, at a rate per annum equal to the sum of the Euro-Dollar Margin for such
day plus the Adjusted London Interbank Offered Rate applicable to such Interest
Period. Such interest shall be payable for each Interest Period on the last day
thereof and, if such Interest Period is longer than three months, at intervals
of three months after the first day thereof and, with respect to the principal
amount of any Euro-Dollar Loan converted to a Base Rate Loan, on each date a
Euro-Dollar Loan is so converted.
The "Adjusted London Interbank Offered Rate" applicable to any Interest
Period means a rate per annum equal to the quotient obtained (rounded upward, if
necessary, to the next higher 1/100 of 1%) by dividing (i) the applicable London
Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.
The Adjusted London Interbank Offered Rate shall be adjusted automatically on
and as of the effective date of any change in the Euro-Dollar Reserve
Percentage.
The "London Interbank Offered Rate" applicable to any Interest Period
means the average (rounded upward, if necessary, to the next higher 1/16 of 1%)
of the respective rates per annum at which deposits in dollars are offered to
each of the Reference Lenders in the London interbank market at approximately
11:00 A.M. (London time) two Euro-Dollar Business Days before the first day of
such Interest Period in an amount approximately equal to the principal amount of
the Euro-Dollar Loan of such Reference Lender to which such Interest Period is
to apply and for a period of time comparable to such Interest Period.
40
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member Lender of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Lender to
United States residents).
(c) Any overdue principal of or interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day until paid at a rate per annum
equal to the higher of (i) the sum of 2% plus the Euro-Dollar Margin for such
day plus the quotient obtained (rounded upward, if necessary, to the next higher
1/100 of 1%) by dividing (x) the average (rounded upward, if necessary, to the
next higher 1/16 of 1%) of the respective rates per annum at which one day (or,
if such amount due remains unpaid more than three Euro-Dollar Business Days,
then for such other period of time not longer than three months as the Agent may
select) deposits in dollars in an amount approximately equal to such overdue
payment due to each of the Reference Lenders are offered to such Reference
Lender in the London interbank market for the applicable period determined as
provided above by (y) 1.00 minus the Euro-Dollar Reserve Percentage (or, if the
circumstances described in Section 8.01(a) or 8.01(b) shall exist, at a rate per
annum equal to the sum of 2% plus the rate applicable to Base Rate Loans for
such day) and (ii) the sum of 2% plus the Euro-Dollar Margin for such day plus
the Adjusted London Interbank Offered Rate applicable to such Loan at the date
such payment was due.
(d) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to the Borrowers and the
participating Lenders of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
(e) Each Reference Lender agrees to use its best efforts to furnish
quotations to the Agent as contemplated by this Section. If any Reference Lender
does not furnish a timely quotation, the Agent shall determine the relevant
interest rate on the basis of the quotation or quotations furnished by the
remaining Reference Lender or Lenders or, if none of such quotations is
available on a timely basis, the provisions of Section 8.01 shall apply.
Section 2.06. Fees. (a) During the Revolving Credit Period, the Borrowers
shall pay to the Agent for the account of each Revolving Lender a commitment fee
at the Commitment Fee Rate (determined daily in accordance with the Pricing
Schedule) on the daily amount by which such Revolving Lender's
41
Revolving Commitment exceeds its Revolving Exposure. Such commitment fee shall
accrue from and including the Effective Date to but excluding the date of
termination of the Revolving Commitments in their entirety.
(b) The Borrowers shall pay (i) to the Agent for the account of the
Revolving Lenders ratably in proportion to their Revolving Commitments, a letter
of credit fee accruing daily on the aggregate letter of credit amount under all
Letters of Credit at the Letter of Credit Fee Rate (determined in accordance
with the Pricing Schedule) and (ii) to each L/C Issuer a letter of credit
fronting fee accruing daily on the aggregate letter of credit amount under all
Letters of Credit issued by such L/C Issuer at a rate per annum equal to 1/4 of
1%.
(c) Accrued fees under Sections 2.06(a) and (b) shall be payable
quarterly in arrears on each Quarterly Date (or, if any such day is not a
Domestic Business Day, the next succeeding Domestic Business Day) and on the
date of termination of the Revolving Commitments in their entirety (and, if
later, the date on which the aggregate Letter of Credit Liabilities shall have
been reduced to $0).
Section 2.07. Optional Termination or Reduction of Commitments. During
the Revolving Credit Period the Borrowers may, upon at least three Domestic
Business Days' notice to the Agent, (i) terminate the Revolving Commitments at
any time, if no Revolving Loans, no Swing Loans or Letter of Credit Liabilities
are outstanding at such time or (ii) ratably reduce from time to time by an
aggregate amount of $5,000,000 or a larger multiple of $1,000,000, the aggregate
amount of the Revolving Commitments in excess of the aggregate Revolving
Exposure at such time.
Section 2.08. Method of Electing Interest Rates. (a) The Loans included
in each Borrowing shall initially be of the Type specified by the relevant
Borrower in the applicable Notice of Borrowing, subject to the limitations set
forth in Section 2.02; provided that the Type of any Loans outstanding under the
Original Credit Agreement immediately prior to the Effective Date shall be the
Type which such Loans are immediately prior to the Effective Date. On and after
the Effective Date, the relevant Borrower may from time to time elect to change
or continue the Type of Loans in each Group of Loans (other than any Group of
Loans which are Swing Loans), subject in each case to the provisions of Article
8, as follows:
(i) if such Loans are Base Rate Loans, such Borrower may elect
to convert such Loans to Euro-Dollar Loans as of any Euro-Dollar Business
Day; provided that no Base Rate Loans shall be converted to Euro-Dollar
Loans if at the time such conversion is to be effective, an Event of
Default has occurred and is continuing; and
42
(ii) if such Loans are Euro-Dollar Loans, such Borrower may
elect to convert such Loans to Base Rate Loans as of any Domestic
Business Day or to continue such Loans as Euro-Dollar Loans for an
additional Interest Period as of any Euro-Dollar Business Day, subject to
Section 2.12 in the case of any such conversion or continuation effective
on any day other than the last day of the then current Interest Period
applicable to such Loans; provided that no Euro-Dollar Loans shall be
continued as Euro-Dollar Loans if at the time such continuation is to be
effective, an Event of Default has occurred and is continuing.
Each such election shall be made by delivering a notice (a "Notice of
Interest Rate Election") to the Agent not later than 12:00 Noon (New York City
time) on the third Euro-Dollar Business Day before the conversion or
continuation selected in such notice is to be effective. A Notice of Interest
Rate Election may, if it so specifies, apply to only a portion of the aggregate
principal amount of the relevant Group of Loans; provided that (i) such portion
is allocated ratably among the Loans comprising such Group and (ii) the portion
to which such Notice applies, and the remaining portion to which it does not
apply, are each $5,000,000 or any larger multiple of $1,000,000. If no Notice of
Interest Election is timely received prior to the end of an Interest Period for
any Group of Loans, such Borrower shall be deemed to have elected that such
Group of Loans be converted to Base Rate Loans as of the last day of such
Interest Period. In no event shall the total number of Groups of Loans at any
time outstanding exceed 20.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such
notice applies;
(ii) the date on which the conversion or continuation selected
in such notice is to be effective, subject to the provisos set forth in
Sections 2.08(a)(i) and 2.08(a)(ii);
(iii) if the Loans comprising such Group are to be converted, the
new Type of Loans and, if the Loans being converted are to be Euro-Dollar
Loans, the duration of the next succeeding Interest Period applicable
thereto; and
(iv) if such Loans are to be continued as Euro-Dollar Loans for
an additional Interest Period, the duration of such additional Interest
Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
43
(c) Upon receipt of a Notice of Interest Rate Election from either
Borrower pursuant to Section 2.08(a), the Agent shall promptly notify each
Lender of the contents thereof and such notice shall not thereafter be revocable
by such Borrower.
(d) An election by either Borrower to change or continue the rate of
interest applicable to any Group of Loans pursuant to this Section shall not
constitute a "Borrowing" subject to the provisions of Section 3.03.
Section 2.09. Mandatory Termination of Commitments. (a) Revolving
Commitments. The Revolving Commitments shall terminate on the Revolver Maturity
Date.
(b) Swing Loan Commitment. The Swing Loan Commitment shall terminate on
the Revolver Maturity Date.
Section 2.10. Optional Prepayments. (a) Subject, in the case of any
Borrowing of Euro-Dollar Loans to Section 2.12 and, in the case of any Borrowing
of Tranche B Loans, to Section 2.04(f), either Borrower may, upon at least one
Domestic Business Day's notice to the Agent, prepay any Group of Base Rate Loans
or upon at least three Euro-Dollar Business Days' notice to the Agent, prepay
any Group of Euro-Dollar Loans, in each case in whole at any time, or from time
to time in part in amounts aggregating $5,000,000 (or, solely in the case of any
Group of Loans which are Swing Loans, $1,000,000) or any larger multiple of
$1,000,000, by paying the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment. Each such optional prepayment shall
be applied to prepay ratably the Loans of the several Lenders included in such
Group.
(b) Upon receipt of a notice of prepayment pursuant to this Section, the
Agent shall promptly notify each Lender of the contents thereof and of such
Lender's ratable share of such prepayment and such notice shall not thereafter
be revocable by such Borrower.
(c) Subject to Section 2.04(f), each prepayment of the Term Loans made by
either Borrower pursuant to this Section 2.10 shall be allocated pro rata on the
basis of principal amount between the then outstanding Tranche A Loans and
Tranche B Loans.
(d) Each prepayment of the Term Loans of either Class made by either
Borrower pursuant to this Section shall be applied as follows: first, to reduce
the amount of the subsequent scheduled repayments of the Term Loans (if any) of
such Class to be made within 180 days of the date such prepayment is made in
forward order until such amount shall have been paid in full and thereafter to
44
reduce the amount of subsequent scheduled repayments to the Term Loans of such
Class in inverse order of maturity.
Section 2.11. General Provisions as to Payments. (a) The Borrowers shall
make each payment of principal of, and interest on, the Loans and of Letter of
Credit Liabilities and of fees hereunder (other than fees payable directly to
any L/C Issuer), not later than 1:00 P.M. (New York City time) on the date when
due, in Federal or other funds immediately available in New York City, to the
Agent at its address referred to in Section 10.01. The Agent will promptly
distribute to each Lender its ratable share of each such payment received by the
Agent for the account of the Lenders. Whenever any payment of principal of, or
interest on, the Base Rate Loans or of Letter of Credit Liabilities or of fees
shall be due on a day which is not a Domestic Business Day, the date for payment
thereof shall be extended to the next succeeding Domestic Business Day. Whenever
any payment of principal of, or interest on, the Euro-Dollar Loans shall be due
on a day which is not a Euro-Dollar Business Day, the date for payment thereof
shall be extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case the date
for payment thereof shall be the next preceding Euro-Dollar Business Day. If the
date for any payment of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from the relevant
Borrower prior to the date on which any payment is due from such Borrower to the
Lenders hereunder that such Borrower will not make such payment in full, the
Agent may assume that such Borrower has made such payment in full to the Agent
on such date and the Agent may, in reliance upon such assumption, cause to be
distributed to each Lender on such due date an amount equal to the amount then
due such Lender. If and to the extent that such Borrower shall not have so made
such payment, each Lender shall repay to the Agent forthwith on demand such
amount distributed to such Lender together with interest thereon, for each day
from the date such amount is distributed to such Lender until the date such
Lender repays such amount to the Agent, at the Federal Funds Rate.
Section 2.12. Funding Losses. If either Borrower makes any payment of
principal with respect to any Euro-Dollar Loan or any Euro-Dollar Loan is
converted (pursuant to Article 2, 6 or 8 or otherwise) on any day other than the
last day of an Interest Period applicable thereto, or the last day of an
applicable period fixed pursuant to Section 2.05(c), or if either Borrower fails
to borrow, prepay, convert or continue any Euro-Dollar Loans after notice has
been given to any Lender in accordance with Section 2.02(a), 2.04(d), 2.08 or
2.10, such Borrower shall reimburse each Lender within 15 days after demand for
any resulting loss or expense incurred by it (or, without duplication, by an
existing or prospective Participant in the related Loan), including (without
limitation) any
45
loss incurred in obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period after any such payment or
conversion or failure to borrow, prepay, convert or continue, provided that such
Lender shall have delivered to such Borrower a certificate as to the amount of
such loss or expense, which certificate shall be conclusive in the absence of
manifest error.
Section 2.13. Computation of Interest and Fees. Interest based on the
Prime Rate hereunder shall be computed on the basis of a year of 365 days (or
366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
Section 2.14. Letters of Credit. (a) Subject to the terms and conditions
hereof, each L/C Issuer agrees to issue letters of credit hereunder from time to
time before the tenth day before the Revolver Maturity Date upon the request of
either Borrower (the "Letters of Credit"); provided that, immediately after each
Letter of Credit is issued, (i) the aggregate amount of the Letter of Credit
Liabilities shall not exceed the Letter of Credit Commitment and (ii) the
aggregate amount of the Revolving Exposures shall not exceed the aggregate
amount of the Available Revolving Commitments. Upon the date of issuance by an
L/C Issuer of a Letter of Credit, the L/C Issuer shall be deemed, without
further action by any party hereto, to have sold to each Revolving Lender, and
each Revolving Lender shall be deemed, without further action by any party
hereto, to have purchased from the L/C Issuer, a participation in such Letter of
Credit and all of the related Letter of Credit Liabilities pro rata to their
respective Revolving Percentages.
(b) The relevant Borrower shall give the L/C Issuer notice (a copy of
which shall be provided to the Agent) at least three Domestic Business Days
prior to the requested issuance of a Letter of Credit specifying the date such
Letter of Credit is to be issued, and describing the terms of such Letter of
Credit and the nature of the transactions to be supported thereby (such notice,
including any such notice given in connection with the extension or renewal of a
Letter of Credit, a "Notice of Issuance"). Upon receipt of a Notice of Issuance,
the L/C Issuer shall promptly notify the Agent, and the Agent shall promptly
notify each Revolving Lender of the contents thereof and of the amount of such
Revolving Lender's participation in such Letter of Credit. The issuance by the
L/C Issuer of each Letter of Credit shall, in addition to the conditions
precedent set forth in Section 3.03, be subject to the conditions precedent that
such Letter of Credit shall be in such form and contain such terms as shall be
satisfactory to the L/C Issuer and that such Borrower shall have executed and
delivered such other instruments and agreements relating to such Letter of
Credit as the L/C Issuer shall have reasonably requested. Such Borrower shall
also pay to the L/C Issuer for its own account issuance, drawing, amendment and
extension charges in the amounts and
46
at the times as agreed between such Borrower and the L/C Issuer. The extension
or renewal of any Letter of Credit shall be deemed to be an issuance of such
Letter of Credit, and if any Letter of Credit contains a provision pursuant to
which it is deemed to be extended unless notice of termination is given by the
L/C Issuer, upon timely notice to the L/C Issuer from the Borrower requesting
termination of such Letter of Credit, the L/C Issuer shall timely give such
notice of termination unless it has theretofore timely received a Notice of
Issuance and the other conditions to issuance of a Letter of Credit have also
theretofore been met with respect to such extension. No Letter of Credit shall
have a term extending or be extendible beyond the date which is ten days prior
to the Revolver Maturity Date.
(c) Upon receipt from the beneficiary of any Letter of Credit of any
notice of a drawing under such Letter of Credit, the L/C Issuer shall notify the
Agent and the Agent shall promptly give notice (a "Draw Notice") to such
Borrower and each Revolving Lender as to the amount to be paid as a result of
such demand or drawing and the payment date. Upon receipt of a Draw Notice by
such Borrower, such Borrower shall be irrevocably and unconditionally obligated
to reimburse the L/C Issuer for any amounts paid by the L/C Issuer upon any
drawing under any Letter of Credit, without presentment, demand, protest or
other formalities of any kind on the second Domestic Business Day following the
date of receipt. Regardless of if and when a Draw Notice is given to or received
by such Borrower, all such amounts paid by the L/C Issuer and remaining unpaid
by such Borrower shall bear interest, payable on demand, for each day from and
including the date of payment by the L/C Issuer until paid at a rate per annum
equal to (x) to but not including the due date determined in accordance with the
preceding sentence, the rate applicable to Base Rate Revolving Loans for such
day and (y) on and after such due date, the sum of 2% plus the rate applicable
to Base Rate Revolving Loans for such day. In addition, each Revolving Lender
will pay to the Agent, for the account of the L/C Issuer, immediately upon the
L/C Issuer's demand at any time during the period commencing after such drawing
until reimbursement therefor in full by such Borrower, an amount equal to such
Lender's ratable share of such drawing (in proportion to its participation
therein), together with interest on such amount for each day from the date of
the L/C Issuer demand for such payment (or, if such demand is made after 12:00
Noon (New York City time) on such date, from the next succeeding Domestic
Business Day) to the date of payment by such Lender of such amount at the
Federal Funds Rate. The L/C Issuer will pay to each Revolving Lender ratably all
amounts received from such Borrower for application in payment of its
reimbursement obligations in respect of any Letter of Credit, but only to the
extent such Revolving Lender has made payment to the L/C Issuer in respect of
such Letter of Credit pursuant hereto.
(d) The obligations of the Borrowers and each Revolving Lender under
subsection (c) above shall be absolute, unconditional and irrevocable, and shall
be
47
performed strictly in accordance with the terms of this Agreement, under all
circumstances whatsoever, including without limitation the following
circumstances:
(i) any lack of validity or enforceability of this Agreement or
any Letter of Credit or any document related hereto or thereto;
(ii) any amendment or waiver of or any consent to departure from
all or any of the provisions of this Agreement or any Letter of Credit or
any document related hereto or thereto;
(iii) the use which may be made of the Letter of Credit by, or
any acts or omission of, a beneficiary of a Letter of Credit (or any
Person for whom the beneficiary may be acting);
(iv) the existence of any claim, set-off, defense or other
rights that either Borrower may have at any time against a beneficiary of
a Letter of Credit (or any Person for whom the beneficiary may be
acting), the Lenders (including the L/C Issuer) or any other Person,
whether in connection with this Agreement or the Letter of Credit or any
document related hereto or thereto or any unrelated transaction;
(v) any statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent or invalid in any
respect or any statement therein being untrue or inaccurate in any
respect whatsoever;
(vi) payment under a Letter of Credit against presentation to
the L/C Issuer of a draft or certificate that does not comply with the
terms of the Letter of Credit; or
(vii) any other act or omission to act or delay of any kind by
any Lender (including the L/C Issuer), the Agent or any other Person, but
for the provisions of this subsection (vii), constitute a legal or
equitable discharge of either Borrower's or the Lender's obligations
hereunder.
Nothing in this subsection (d) is intended to limit the right of either
Borrower to make a claim against the L/C Issuer for damages as contemplated by
the proviso to the first sentence of subsection (e).
(e) Each Borrower hereby indemnifies and holds harmless each L/C Issuer
and the Agent (and, to the extent any other Lender shall have contributed toward
or indemnified against any such claim, damage, loss, liability, cost or expense,
incurred by an L/C Issuer or the Agent, each such other Lender) from and against
any and all claims, damages, losses, liabilities, costs or expenses
48
which it may incur (including, without limitation, any claims, damages, losses,
liabilities, costs or expenses which the L/C Issuer may incur by reason of or in
connection with the failure of any other Lender to fulfill or comply with its
obligations to such L/C Issuer hereunder), and none of the Lenders (including an
L/C Issuer) nor the Agent nor any of their officers or directors or employees or
agents shall be liable or responsible, by reason of or in connection with the
execution and delivery or transfer of or payment or failure to pay under any
Letter of Credit, including without limitation any of the circumstances
enumerated in subsection (d) above, as well as (i) any error, omission,
interruption or delay in transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, (ii) any error in interpretation of
technical terms, (iii) any loss or delay in the transmission of any document
required in order to make a drawing under a Letter of Credit, (iv) any
consequences arising from causes beyond the control of the L/C Issuer, including
without limitation any government acts, or (v) any other circumstances
whatsoever in making or failing to make payment under such Letter of Credit;
provided that no Borrower shall be required to indemnify any Lender for any
claims, damages, losses, liabilities, costs or expenses, and each Borrower shall
have a claim against the L/C Issuer for direct (but not consequential) damage
suffered by it, to the extent found by a court of competent jurisdiction to have
been caused by (x) the willful misconduct or gross negligence of the L/C Issuer
in determining whether a request presented under any Letter of Credit complied
with the terms of such Letter of Credit or (y) the L/C Issuer's failure to pay
under any Letter of Credit after the presentation to it of a request strictly
complying with the terms and conditions of the Letter of Credit. Nothing in this
subsection (e) is intended to limit the obligations of either Borrower under any
other provision of this Agreement. To the extent the Borrowers do not indemnify
an L/C Issuer as required by this subsection, the Revolving Lenders agree to do
so ratably in accordance with their Revolving Commitments.
Section 2.15. Additional Loan Request. (a) At any time after the
Effective Date, if no Default shall then have occurred and be continuing, the
Borrowers may request an increase of the amount of one or more existing tranches
or the addition of one or more new tranches of term loans to be made to one or
both Borrowers under this Agreement as "Loans" (such request and loans,
respectively, an "Additional Loan Request" and the "Additional Loans"); provided
that, after giving effect to any such Additional Loans made pursuant to any
Additional Loan Request, (x) no Default shall have occurred and be continuing,
(y) on a pro forma basis (determined for this purpose, as if such increase had
occurred on the first day of the period of four Fiscal Quarters then most
recently ended), the Borrowers would be in compliance with Sections 5.12, 5.13,
5.24 and 5.25 as of such date or, if applicable, as of the last day of the
Fiscal Quarter then most recently ended and (z) after giving effect to such
increase, (A) the aggregate amount of all Credit Exposures would not exceed
$1,750,00,000 and (B) the aggregate amount of all Credit Exposures plus the
aggregate
49
outstanding principal amount of all Permitted Subordinated Debt would not exceed
$2,000,000,000. Any Additional Loans that consist of a new tranche of loans
shall provide for a final maturity date not earlier than the Maturity Date of
the Tranche B Loans and de minimis amortization prior to the final maturity date
of such new tranche of loans, and shall provide for payments or offers of
payment with respect to Reduction Events that are ratable with or subsequent to
payments or offers of payment with respect to Tranche B Loans. Any new tranche
of loans shall otherwise be pari passu with and treated similarly (including
with respect to Collateral) to the other Loans.
(b) To make an Additional Loan Request, the Borrowers shall send a
written notice thereof to the Agent not less than 30 days prior to the proposed
effective date of thereof, setting forth in reasonable detail the proposed
aggregate amount of Additional Loans, interest rate margins with respect
thereto, maturity date and amortization schedule and other material information
with respect thereto. Upon receipt of such Additional Loan Request, the Agent
shall distribute such notice to the Lenders, together with an offer to each
Lender at such time to assume a commitment with respect to such Additional Loans
(an "Additional Loan Commitment") ratably in accordance with their respective
Credit Exposures at such time (or, in the case of any increase of an existing
tranche of Loans, ratably in accordance with their respective Credit Exposures
with respect to such tranche) (its "Pro Rata Share"). Each Lender will use its
best efforts to respond to such offer, either positively or negatively, within
10 days after receipt thereof, but shall have no obligation to accept an
Additional Loan Commitment or make any Additional Loan; provided that any Lender
that fails to respond within such period shall be deemed to have declined to
participate in such offer. If one or more of the existing Lenders declines so to
participate, the Borrowers may offer the remaining amounts of the Additional
Loan Commitments to existing Lenders or new financial institutions or funds
(each of which new financial institutions or funds is subject to the prior
written approval of the Agent, which shall not be unreasonably withheld), which
shall, upon execution by such financial institution or fund (and the
effectiveness of any amendments with respect to the Additional Loans referred to
below), become Lenders with a Additional Loan Commitment in the amount provided
in such acceptance. The Additional Loans and/or Additional Loan Commitments
shall be made or effective on the date prescribed therefor in the request with
respect thereto, as such date may be extended from time to time by the Borrowers
to accommodate the procedures described herein. Any Lender which does not agree
to accept a Additional Loan Commitment shall have no obligation to make any
Additional Loan. If such Additional Loan Request requires any amendment or
amendments to this Agreement or any other Loan Document, the Agent will
cooperate with the Borrowers to prepare a proposed amendment or amendments
reflecting such Additional Loan Request and shall distribute such proposed
amendment or amendments to the Lenders; provided that if the Additional Loan
Commitments and/or Additional Loans conform to the
50
requirements of this Section 2.15 and such amendment or amendments are
accordingly solely to conform this Agreement and other Loan Documents to reflect
such Additional Loan Commitments and/or Additional Loans (an "Additional Loan
Amendment"), such Additional Loan Amendments shall not require the consent of
any Lender other than the Lenders providing the Additional Loan Commitments
and/or Additional Loans.
ARTICLE 3
Conditions
Section 3.1. Signing Date. This obligations of the parties hereto shall
become effective on the date when each of the following conditions shall have
been satisfied:
(a) the Agent shall have received from each Borrower and each Lender
either a counterpart hereof signed by such party or facsimile or other written
confirmation satisfactory to the Agent confirming that such party has signed a
counterpart hereof;
(b) the Agent shall have received an opinion of Xxxxxx, Xxxx & Xxxxxxxx
LLP, special counsel for the Obligors, substantially in the form of Exhibit B
and dated the Signing Date;
(c) the Agent shall have received a Perfection Certificate (as defined in
the Security Agreement) as of the Signing Date duly completed by the Borrowers,
together with duly executed financing statements on Form UCC-1 or UCC-3 in form
sufficient for filing in all jurisdictions in which such filing is necessary to
perfect or continue the perfection of Liens created by the Collateral Documents
and all necessary documents for filing with the U.S. Patent and Trademark Office
and the U.S. Copyright Office, and the delivery of any promissory notes and
stock certificates comprising the Collateral;
(d) after giving effect to the amendment and restatement of the Original
Credit Agreement effected hereby, (i) no Default shall have occurred and be
continuing and (ii) the representations and warranties of the Obligors contained
in the Loan Documents shall be true in all material respects on and as of the
Signing Date; and
(e) the Agent shall have received all documents the Agent may reasonably
request relating to the existence of the Obligors, the corporate authority for
and the validity of the Loan Documents, and any other matters relevant hereto,
all in form and substance reasonably satisfactory to the Agent.
51
Section 3.02. Consequences of Effectiveness. (a) On the initial Borrowing
date specified in the Notice of Borrowing delivered on the Signing Date (the
"Effective Date"), without further action by any of the parties thereto (but
subject to the funding of the Loans and other transactions set forth in this
Section 3.02), (i) the Original Credit Agreement will be automatically amended
and restated to read as this Agreement reads and (ii) the rights and obligations
of the Terminating Lenders under the Original Credit Agreement will terminate,
provided that their rights under Sections 2.12, 8.04 and 10.03(b) of the
Original Credit Agreement will survive. On and effective as of the Effective
Date (immediately prior to the other amendments effected by this Agreement, but
subject to payment of principal of and accrued interest on the amounts of Loans
assigned by each Assigning Lender (as defined below)), each Existing Lender with
a decreased principal amount of Loans of any tranche or a decreased Revolving
Commitment after giving effect to the Effective Date, including without
limitation the Terminating Lenders (each, an "Assigning Lender"), shall be
deemed to have assigned to each Lender with an increased principal amount of
Loans of any tranche or an increased Revolving Commitment after giving effect to
the Effective Date, including without limitation any Lender that was not an
Existing Lender (each, an "Assuming Lender") (and each Assuming Lender shall be
deemed to have assumed and purchased), in each case ratably, a portion of its
Revolving Commitment and outstanding Loans of such affected tranche or tranches
each of its outstanding Loans, such that after giving effect to all of the
foregoing and additional Loans made and Revolving Commitments undertaken on the
Effective Date, the Terminating Lenders shall have had all such amounts reduced
to zero and each Lender shall have the Revolving Commitment amount and
outstanding Loans of each tranche as agreed. As soon as practicable following
the Effective Date, the Borrowers shall reimburse each Assigning Lender in
accordance with Section 2.12 for any funding losses incurred in connection with
the purchase of any Loans on the Effective Date as if such Loans had been
prepaid on the Effective Date. Each party hereto agrees that the transactions
contemplated by this Section 3.02 comply with Section 10.06 notwithstanding the
limitations or assignment amounts expressed therein, and that the $3,500
processing fee referred to in Section 10.06(b) is waived solely with respect to
the assignments effected by this Section 3.02.
(b) The interest rates determined in accordance with Section 2.05 of
this Agreement shall be effective on the Effective Date; provided that, the
interest rate applicable to each Euro-Dollar Loan outstanding on the Effective
Date for each day during the then current Interest Period applicable thereto
shall be the rate per annum equal to the sum of the Euro-Dollar Margin (as
defined in this Agreement) for such day plus the Adjusted London Interbank
Offered Rate applicable to such Loan for such Interest Period (as determined
pursuant to Section 2.05 of the Original Credit Agreement).
52
(c) On and after the Effective Date, the rights and obligations of the
parties hereto shall be governed by the provisions hereof. The rights and
obligations of the parties to the Original Credit Agreement with respect to the
period prior to the Effective Date shall continue to be governed by the
provisions thereof as in effect prior to the Effective Date, except that all
interest and fees accrued under the Original Credit Agreement to but excluding
the Effective Date shall be paid on the Effective Date.
Section 3.03. Borrowings and Issuances of Letters of Credit. The
obligation of any Lender to make a Loan on the occasion of any Borrowing (other
than the obligation of any Lender to make a Refunding Swing Loan), and the
obligation of an L/C Issuer to issue (which shall include, for purposes of this
Section, any renewal or extension of the term of) any Letter of Credit are each
subject to the satisfaction of the following conditions:
(a) receipt by the Agent of a Notice of Borrowing as required by
Section 2.01 or receipt by an L/C Issuer of a Notice of Issuance as required by
Section 2.14(b);
(b) solely in the case of a Revolving Borrowing, a Swing Borrowing or
issuance of a Letter of Credit the fact that, immediately after such Borrowing
or the issuance of such Letter of Credit, as the case may be, the aggregate
Revolving Exposure will not exceed the aggregate amount of the Available
Revolving Commitments;
(c) the fact that, immediately before and after such Borrowing or
issuance of a Letter of Credit, as the case may be, no Default shall have
occurred and be continuing;
(d) the fact that the representations and warranties of the Obligors
contained in the Loan Documents shall be true in all material respects on and as
of the date of such Borrowing; and
(e) in the case of the borrowing on the Effective Date, the Agent and
the Lead Arrangers shall receive payment in full of all fees, expenses and other
amounts due and payable hereunder (including (i) interest and fees payable
pursuant to Section 3.02(c) and (ii) fees and expenses payable pursuant to
Section 10.03) or pursuant to any letter agreement between either Borrower and
the Agent or the Lead Arrangers relating to the transactions contemplated by the
Loan Documents.
Each Borrowing and issuance of a Letter of Credit hereunder shall be
deemed to be a representation and warranty by the Borrowers on the date of such
53
Borrowing or issuance of a Letter of Credit, as the case may be, as to the facts
specified in clauses (b), (c) and (d) of this Section.
ARTICLE 4
Representations and Warranties
Each Borrower represents and warrants that:
Section 4.01. Corporate Existence and Power. Each Obligor is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, and has all corporate powers and
all material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted, except to the extent that
the failure to have such licenses, authorizations, consents and approvals could
not in the aggregate reasonably be expected to have a Material Adverse Effect.
Section 4.02. Corporate and Governmental Authorization; No Contravention.
The execution, delivery and performance by each Obligor of the Loan Documents to
which it is a party (i) are within the corporate powers of such Obligor and have
been duly authorized by all necessary corporate action, (ii) require no action
by or in respect of, or filing with, any governmental body, agency or official,
other than actions or filings which have been taken or made on or prior to the
Effective Date or, solely with respect to filings necessary to perfect any
security interest created under any of the Collateral Documents, will be made on
or prior to 5 Domestic Business Days after the Effective Date, (iii) do not
contravene, or constitute a default under, any provision (A) of applicable law
or regulation, (B) of the articles or certificate of incorporation or by-laws of
such Obligor, (C) of any agreement or instrument under which Debt has or may be
incurred binding upon MGM or any of its Subsidiaries, (D) of any other agreement
or instrument binding upon MGM or any of its Subsidiaries which contravention or
default could reasonably be expected to have a Material Adverse Effect or (E) of
any judgment, injunction, order or decree binding upon MGM or any of its
Subsidiaries or (iv) result in the creation or imposition of any Lien on any
material asset of MGM or any of its Subsidiaries.
Section 4.03. Binding Effect. The Loan Documents (other than the Notes)
to which each Obligor is a party constitute valid and binding agreements of such
Obligor and each Note of each Borrower, when executed and delivered in
accordance with this Agreement, will constitute a valid and binding obligation
of such Borrower, in each case enforceable in accordance with its terms except
(i) as may be limited by bankruptcy, insolvency or similar laws affecting
creditors'
54
rights generally and (ii) as may be limited by equitable principles of general
applicability.
Section 4.04. Financial Information; Information Memorandum. (a) The
consolidated balance sheet of MGM and its consolidated Subsidiaries as of
December 31, 2001 and the related consolidated statements of income and cash
flows for the Fiscal Year then ended, reported on by Xxxxxx Xxxxxxxx LLP, a copy
of which has been delivered to each of the Lenders, fairly present, in
conformity with generally accepted accounting principles, the combined financial
position of the Combined Companies as of such date and their combined results of
operations and cash flows for such Fiscal Year.
(b) The unaudited consolidated balance sheet of MGM and its
consolidated Subsidiaries as of March 31, 2002 and the related unaudited
consolidated statements of income and cash flows for the Fiscal Quarter then
ended fairly present, in conformity with generally accepted accounting
principles applied on a basis consistent with the financial statements referred
to in subsection (a), the combined financial position of the Combined Companies
as of such date and their combined results of operations and cash flows for the
Fiscal Quarter then ended.
(c) At all times during the periods referred to in clauses (a) and (b)
above, all assets and liabilities of MGM and its consolidated Subsidiaries
(other than capital stock of the Borrowers held by MGM) were held or maintained
by such consolidated Subsidiaries, and, except for capital stock of the
Borrowers, MGM had no assets or liabilities separate and apart from those of its
consolidated Subsidiaries.
(d) The projections set forth in the Information Memorandum were
prepared in good faith on assumptions believed to be reasonable at the time of
preparation thereof.
(e) Since March 31, 2002 there has been no material adverse change in
the assets or liabilities or the business, financial position or results of
operations of the Combined Companies, considered as a whole, except for any such
change as a result of (x) any change resulting from general economic, financial
or market conditions not specific to the Borrowers and their respective
Subsidiaries or the business in which they operate or (y) any change resulting
from conditions or circumstances generally affecting the business in which the
Borrowers and their respective Subsidiaries operate (including losses from the
release of Films in the ordinary course of business).
Section 4.05. Litigation. Except as set forth in Schedule 4.05, there is
no action, suit or proceeding pending against, or to the knowledge of either
Borrower
55
threatened against or affecting, MGM or any of its Subsidiaries or questioning
the validity or enforceability of the Loan Documents, in each case before any
court or arbitrator or any governmental body, agency or official which could
reasonably be expected to have a Material Adverse Effect.
Section 4.06. Compliance with ERISA. Neither a Reportable Event nor an
"accumulated funding deficiency" (within the meaning of Section 412 of the Code
or Section 302 of ERISA) has occurred during the five-year period prior to the
date on which this representation is made or deemed made with respect to any
Plan, and each Plan has complied in all material respects with the applicable
provisions of ERISA and the Code, except in each case to the extent that the
same could not reasonably be expected to have a Material Adverse Effect. No
termination of a Single Employer Plan has occurred, and no Lien in favor of the
PBGC or a Plan has arisen, during such five-year period, except to the extent
that the same could not reasonably be expected to have a Material Adverse
Effect. The present value of all accrued benefits under each Single Employer
Plan (based on those assumptions used to fund such Plans) did not, as of the
last annual valuation date prior to the date on which this representation is
made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits, except to the extent that the same could not reasonably
be expected to have a Material Adverse Effect. Neither MGM nor any Commonly
Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan, and neither MGM nor any Commonly Controlled Entity would
become subject to any liability under ERISA if MGM or any such Commonly
Controlled Entity were to withdraw completely from all Multiemployer Plans as of
the valuation date most closely preceding the date on which this representation
is made or deemed made, except in each case to the extent that the same could
not reasonably be expected to have a Material Adverse Effect. No such
Multiemployer Plan is in Reorganization or Insolvent. Neither MGM nor any of its
Subsidiaries has any liability for any post-retirement welfare benefits.
Section 4.07. Environmental Compliance. In the ordinary course of its
business, each Borrower conducts an ongoing review of the effect of
Environmental Laws on the business, operations and properties of such Borrower
and its Subsidiaries, in the course of which it identifies and evaluates
associated liabilities and costs (including, without limitation, any capital or
operating expenditures required for clean-up or closure of properties presently
or previously owned, any capital or operating expenditures required to achieve
or maintain compliance with environmental protection standards imposed by law or
as a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site disposal
of wastes or Hazardous Substances, and any actual or potential liabilities to
third parties, including
56
employees, and any related costs and expenses). On the basis of this review,
each Borrower has reasonably concluded that such associated liabilities and
costs, including the costs of compliance with Environmental Laws, are unlikely
to have a Material Adverse Effect.
Section 4.08. Taxes. MGM and its Subsidiaries have filed all United
States Federal income tax returns and all other material tax returns which are
required to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by MGM or any Subsidiary (other
than any such taxes being contested in good faith by appropriate proceeding and
with respect to which appropriate reserves in accordance with generally accepted
accounting principles have been taken). The charges, accruals and reserves on
the books of MGM and its Subsidiaries in respect of taxes or other governmental
charges are, in the opinion of the Borrowers, adequate.
Section 4.09. Subsidiaries. (a) Each of the Material Subsidiaries of
either Borrower is a corporation or other business entity duly incorporated or
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, and has all corporate or other
powers and all material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted, except to the
extent that the failure of such Material Subsidiaries to maintain their
respective good standing or to have such licenses, authorizations, consents and
approvals could not in the aggregate reasonably be expected to have a Material
Adverse Effect (or its existence has been terminated as permitted under Section
5.04 or it has merged or consolidated with another Person as permitted under
Section 5.07(a)).
(b) Schedule 4.09 lists all of the Material Subsidiaries of each
Borrower (including any Material Subsidiary the existence of which has been
terminated as permitted under Section 5.04, which has merged or consolidated
with another Person as permitted under Section 5.07(a) or, in the case of the
Rainbow Subsidiary after the Rainbow Release Date, which has ceased to be a
Material Subsidiary). Each Material Subsidiary of a Borrower (other than Foreign
Subsidiaries and Single Purpose Subsidiaries) is a Guarantor. Each Guarantor is
a direct or indirect wholly-owned Subsidiary of a Borrower.
Section 4.10. Regulatory Restrictions on Borrowing. None of the Borrowers
is an "investment company" within the meaning of the Investment Company Act of
1940, as amended, a "holding company" within the meaning of the Public Utility
Holding Company Act of 1935, as amended, or otherwise subject to any regulatory
scheme which restricts its ability to incur debt.
Section 4.11. Full Disclosure. No information heretofore or hereafter
furnished by any Obligor to the Agent or any Lender for purposes of or in
57
connection with the Loan Documents or any transaction contemplated thereby
contains or, taken together with all information so furnished will contain, any
untrue statement of a material fact or omits or will omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
Section 4.12. Intellectual Property. Except as set forth in Schedule
4.05, each of the Borrowers and their respective Subsidiaries owns, or is a
licensed to use, all trademarks, tradenames, copyrights (including without
limitation any copyrights relating to Library Films), technology, know-how and
processes necessary for the conduct of their respective businesses as currently
conducted (the "Intellectual Property"), except to the extent that the failure
to own or be licensed to use any such Intellectual Property could not in the
aggregate reasonably be expected to have a Material Adverse Effect. No claim has
been asserted and is pending by any Person challenging or questioning the use of
any Intellectual Property or the validity or effectiveness of any such
Intellectual Property, nor does either Borrower know of any valid basis for any
such claim, except, in each case, for claims which could not in the aggregate
reasonably be expected to have a Material Adverse Effect. The use of
Intellectual Property by any MGM/Orion Company does not infringe on the rights
of any Person, except to the extent that such infringements could not in the
aggregate reasonably be expected to have a Material Adverse Effect.
Section 4.13. Collateral Documents. The representations and warranties
made by the Obligors in the Collateral Documents are true and correct in all
material respects.
Section 4.14. Solvency. As of the Effective Date after giving effect to
the transactions contemplated hereby to occur on the Effective Date, and at all
times thereafter: (i) the aggregate fair market value of the business and/or
assets of each Borrower, and of the Obligors, taken as a whole, will in each
case exceed its or their respective liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities), (ii) each Borrower will,
and the Obligors, taken as a whole, will, have sufficient cash flow to enable it
or them (as the case may be) to pay its or their debts as they mature and (iii)
the MGM/Orion Companies will not have unreasonably small capital for the
business in which the MGM/Orion Companies are engaged.
Section 4.15. Regulation U. After giving effect to the issuance of any
Letters of Credit and the application of the proceeds of any Loans, not more
than 25% of the value of the assets of the Borrowers and their respective
Subsidiaries is represented by "margin stock" as defined in Regulation U.
58
ARTICLE 5
Covenants
Each Borrower agrees that, so long as any Lender has any Commitment
hereunder or any amount payable under any Note or any Letter of Credit Liability
remains unpaid:
Section 5.01. Information. The Borrowers will deliver to the Agent
electronically, in form satisfactory for posting on IntraLinks or other
electronic posting system identified by the Agent by notice to the Borrowers,
and the Agent shall promptly make the same available to the Lenders through
IntraLinks or such other system and notify the Lenders thereof (but in the case
of any information that cannot reasonably be so provided, the Borrowers shall
deliver such information to the Agent with sufficient copies for all Lenders,
and the Agent shall deliver promptly upon receipt to the Lenders):
(a) as soon as available and in any event within 105 days after the
end of each Fiscal Year, (i) an audited combined balance sheet of the Combined
Companies as of the end of such Fiscal Year and the related audited combined
statements of operations and cash flows for such Fiscal Year, setting forth in
each case in comparative form the figures for the previous Fiscal Year, all
reported on without material qualification by independent public accountants of
nationally recognized standing and (ii) an unaudited combined statement of cash
flows of the Combined Companies for such Fiscal Year, setting forth in
reasonable detail a calculation of combined cash flows from operations of the
Combined Companies for such Fiscal Year (determined in a manner consistent with
the statements of cash flows included in the Information Memorandum);
(b) as soon as available and in any event within 45 days after the end
of each of the first three Fiscal Quarters of each Fiscal Year, (i) an unaudited
combined balance sheet of the Combined Companies as of the end of such Fiscal
Quarter and the related unaudited combined statements of operations and cash
flows for such Fiscal Quarter and for the portion of the Fiscal Year ended at
the end of such Fiscal Quarter, setting forth in the case of such statements of
operations and cash flows, in comparative form the figures for the corresponding
Fiscal Quarter and the corresponding portion of the previous Fiscal Year, all
certified (subject to normal year-end adjustments) as to fairness of
presentation, generally accepted accounting principles and consistency by the
chief financial officer or the chief accounting officer of each Borrower and
(ii) an unaudited combined statement of cash flows of the Combined Companies for
such Fiscal Quarter and the portion of the Fiscal Year ended at the end of such
Fiscal Quarter, setting forth in reasonable detail a calculation of combined
cash flows from operations of Combined Companies for such Fiscal Quarter and the
portion of the Fiscal Year ended at the end of such Fiscal Quarter (determined
in a manner
59
consistent with the statements of cash flows included in the Information
Memorandum);
(c) simultaneously with the delivery of each set of financial
statements referred to in Sections 5.01(a) and 5.01(b), (A) a certificate of the
chief financial officer or the chief accounting officer of each Borrower, (i)
setting forth in reasonable detail the calculations required to establish (x)
whether the Borrowers were in compliance with the requirements of Sections 5.10
to 5.18, inclusive, on the date of such financial statements and (y) the
Clawback Obligations at the last day of the Fiscal Quarter or Fiscal Year as to
which such financial statements relate, (ii) setting forth (x) the aggregate
fair market value of all Film Value Assets that have been disposed of pursuant
to Film Value Asset Dispositions since the date of the immediately prior
certificate delivered pursuant to this Section 5.01(c) (or in the case of the
first certificate delivered hereunder, since the Effective Date) (other than
pursuant to Ordinary Course Library Film Licensing Agreements), (y) whether the
Borrowers are in compliance with the provisions of Section 5.25 on the date of
such financial statements and, for purposes of such calculation, Film Value
shall be as set forth in the appraisal report delivered on or most recently
prior to such date pursuant to Section 5.01(j) (averaged, if necessary, in
accordance with the definition thereof) and adjusted to give effect to all Film
Value Asset Dispositions (other than pursuant to Ordinary Course Library Film
Licensing Agreements) consummated after the date as of which such appraisal
report has been prepared (but including any payments to be made (but not yet
made) to any Obligor pursuant to the agreements governing any such Film Value
Asset Disposition and constituting a portion of the purchase price with respect
to the Film Value Asset disposed pursuant to such Film Value Asset Disposition);
and (z) in reasonable detail, the calculations required to make such
determination, (iii) listing all new Material Subsidiaries of either Borrower
since the date of the previous certificate delivered pursuant to this Section
5.01(c) and (iv) stating whether, to his or her knowledge, any Default exists on
the date of such certificate and, if any Default then exists, setting forth the
details thereof and the action which the Borrowers are taking or propose to take
with respect thereto and (B) from the chief financial officer or the chief
accounting officer of each Borrower, a report setting forth in reasonable detail
a discussion and analysis of the Borrowers' financial condition and results of
operations for the Fiscal Quarter then ended;
(d) simultaneously with the delivery of each set of financial
statements referred to in Section 5.01(a)(i), a statement of the firm of
independent public accountants which reported on such statements (i) whether
anything has come to their attention to cause them to believe that any Default
under Sections 5.11 to 5.16, inclusive, existed on the date of such statements
and (ii) confirming the accuracy of the calculations set forth in the officer's
certificate delivered simultaneously therewith pursuant to Section 5.01(c);
60
(e) reasonably promptly after any Responsible Officer obtains
knowledge of any Default, if such Default is then continuing, a certificate of
the chief financial officer or the chief accounting officer of the relevant
Borrower setting forth the details thereof and the action which the Borrowers
are taking or propose to take with respect thereto;
(f) as soon as reasonably practicable after any Responsible Officer
obtains knowledge thereof, notice of any event or condition which has had or
could reasonably be expected to have a Material Adverse Effect and the nature of
such Material Adverse Effect;
(g) as soon as reasonably practicable after any Responsible Officer
obtains knowledge of the commencement of, or of a threat of the commencement of,
an action, suit or proceeding against MGM or any of its Subsidiaries before any
court or arbitrator or any governmental body, agency or official which could
reasonably be expected to have a Material Adverse Effect or which questions the
validity or enforceability of the Loan Documents, a certificate of a senior
financial officer of each Borrower setting forth the nature of such pending or
threatened action, suit or proceeding and such additional information with
respect thereto as may be reasonably requested by any Lender;
(h) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their
equivalents) (if any) which either Borrower or MGM shall have filed with the
Securities and Exchange Commission;
(i) written notice of the following events, as soon as possible and in
any event within 30 days after any of the appropriate officers or employees of
MGM with responsibility for MGM's Plans and the compliance by such Plans with
ERISA and the Code knows or has reason to know thereof: (i) the occurrence or
expected occurrence of any Reportable Event with respect to any Plan, the filing
of an application for a waiver of the minimum funding standard with respect to a
Plan under Section 412 of the Code, the creation of any Lien in favor of PBGC or
a Plan or any withdrawal from, or the termination, reorganization or Insolvency
of, any Multiemployer Plan or (ii) the institution of proceedings or the taking
of any other action by the PBGC or MGM or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the terminating,
reorganization or Insolvency of, any Plan;
(j) (i) not later than April 30, 2003 and April 30 of every second
calendar year thereafter and October 31 of each calendar year, beginning with
October 31, 2002, a bring-down appraisal report prepared and certified by the
61
chief financial officer or the chief accounting officer of the Borrowers, as to
the Film Value as of the last day of the immediately preceding Fiscal Year (in
the case of any such appraisal report required to be delivered on or prior to
April 30 of any calendar year) or as of June 30 of the then current Fiscal Year
(in the case of any such appraisal report required to be delivered after April
30 and on or prior to October 31 of any calendar year), performed using the
methods and procedures used in, and prepared in a form substantially consistent
with, the appraisal referred to in clause (ii) and (ii) not later than April 30,
2004 and April 30 of every second calendar year thereafter, an appraisal report
prepared by a qualified independent appraiser selected by the Borrowers and
reasonably satisfactory to the Agent, as to the Film Value as of the last day of
the immediately preceding Fiscal Year, performed, in the case of Library Films,
using the methods and procedures used in, and prepared in a form substantially
consistent with, the appraisal of the Library Films of MGM Studios prepared by
Ernst & Young dated on or about April 30, 2002;
(k) within 30 days after the end of each Fiscal Year, the operating
and capital expenditure budgets and cash flow forecasts of each of the Borrowers
and their respective Consolidated Subsidiaries and the Combined Companies for
the immediately succeeding Fiscal Year, which budgets and forecasts shall be in
format and scope reasonably consistent with the projections, budgets and
forecasts set forth in the Information Memorandum; and
(l) from time to time such additional information regarding the
financial position or business of the Borrowers and their respective
Subsidiaries or any other Obligor as the Agent, at the request of any Lender,
may reasonably request.
In providing the information described in clauses (a) and (b) above, the
Borrowers may deliver such information with respect to MGM and the Combined
Companies on a consolidated basis instead of separate reports of the Combined
Companies on a Combined Basis, but only for so long as MGM has no separate
assets (other than the capital stock of the Borrowers) and no separate
liabilities, and the chief financial officer or the chief accounting officer so
certifies in connection with and at the time of such delivery.
Section 5.02. Payment of Obligations. Each Borrower will pay and
discharge, and will cause each of its Material Subsidiaries to pay and
discharge, at or before maturity, all their respective material obligations and
liabilities (including, without limitation, tax liabilities and claims of
materialmen, warehousemen and the like which if unpaid might by law give rise to
a Lien), except (i) where the same may be contested in good faith by appropriate
proceedings, and will maintain, and will cause each Material Subsidiary to
maintain, in accordance with generally accepted accounting principles,
appropriate reserves for the accrual of any of the same and (ii) where the
failure to
62
pay or discharge such obligations and liabilities could not reasonably be
expected to have a Material Adverse Effect.
Section 5.03. Maintenance of Property; Insurance. (a) Each Borrower will
keep, and will cause each of its Material Subsidiaries to keep, all property
useful and necessary in its business in good working order and condition,
ordinary wear and tear excepted, except where the failure to do so could not, in
the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) Each Borrower will, and will cause each of its Material Subsidiaries
to, maintain (in the name of such Borrower or such Subsidiary) with financially
sound and responsible insurance companies, insurance on their respective
properties in at least such amounts, against at least such risks and with such
risk retention as are usually maintained, insured against or retained, as the
case may be, in the same general area by companies of established repute engaged
in the same or a similar business (but including in any event public liability
insurance and "errors and omissions" insurance); and will furnish to the
Lenders, upon request from the Agent, information presented in reasonable detail
as to the insurance so carried.
Section 5.04. Conduct of Business and Maintenance of Existence. Each
Borrower will continue, and will cause each of its Material Subsidiaries to
continue, to engage in business of the same general type as now conducted by
such Borrower and its Material Subsidiaries and other businesses reasonably
incidental thereto and will preserve, renew and keep in full force and effect,
and will cause each of its Material Subsidiaries to preserve, renew and keep in
full force and effect their respective corporate existence and their respective
rights, privileges and franchises necessary or desirable in the normal conduct
of business, except to the extent that the failure to keep in full force and
effect such rights, privileges and franchises could not in the aggregate
reasonably be expected to have a Material Adverse Effect; provided that (i)
either Borrower may liquidate or terminate the corporate existence of any of its
Material Subsidiaries if, prior to or contemporaneously with such liquidation or
termination, substantially all of the assets of such Material Subsidiary are
distributed, contributed or otherwise transferred to a Borrower or a Guarantor
and (ii) nothing in this Section 5.04 shall prohibit any transaction explicitly
permitted by the proviso set forth in Section 5.07(a).
Section 5.05. Compliance with Laws. Each Borrower will comply, and will
cause each of its Material Subsidiaries to comply, in all material respects with
all applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including, without limitation, Environmental Laws and
ERISA and the rules and regulations thereunder) except (i) where the necessity
of compliance therewith is contested in good faith by appropriate proceedings or
(ii)
63
to the extent that failure to so comply could not in the aggregate reasonably be
expected to have a Material Adverse Effect.
Section 5.06. Inspection of Property, Books and Records. Each Borrower will
keep, and will cause each of its Subsidiaries to keep, proper books of record
and account in which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and activities; and will
permit, and will cause each of its Subsidiaries to permit, representatives of
the Agent, at the Agent's or the Lenders' expense, to visit and inspect any of
their respective properties, to examine and make abstracts from any of their
respective books and records and to discuss their respective affairs, finances
and accounts with their respective officers, employees and independent public
accountants, all at such reasonable times during normal business hours and upon
reasonable prior notice, and as often as may reasonably be desired.
Section 5.07. Mergers and Sales of Assets; Licensing Agreements. (a) Each
Borrower will not, and will not permit any of its Material Subsidiaries to,
consolidate or merge with or into any other Person; provided that (i) either
Borrower may merge with another Person if such Borrower is the corporation
surviving such merger and immediately after giving effect to such merger, no
Default shall have occurred and be continuing and (ii) any Material Subsidiary
may merge with any other Person if the corporation surviving the merger is a
Borrower or a Guarantor and immediately after giving effect to such merger, no
Default shall have occurred and be continuing.
(b) Each Borrower will not, and will not permit any of its Subsidiaries to,
make any Asset Sale unless (i) such Asset Sale is for fair market value, as
determined in good faith by the Borrowers taking into account current practices
in the entertainment industry, (ii) immediately after giving effect to such
Asset Sale, (x) the aggregate proceeds (including the fair market value of any
non-cash proceeds) received by the Borrowers and their respective Subsidiaries
from all Asset Sales consummated on and after the Effective Date does not exceed
15% of Combined Adjusted Net Worth determined on the basis of the most recent
financial statements delivered by the Borrowers pursuant to Section 4.04,
5.01(a) or 5.01(b), as the case may be, (y) the Borrowers shall be in Pro Forma
Compliance and (z) no Default shall have occurred and be continuing and (iii) if
after giving effect to such Asset Sale the aggregate fair market value of all
Film Value Assets that have been disposed of pursuant to Film Value Asset
Dispositions during the then current Fiscal Year (other than pursuant to
Ordinary Course Library Film Licensing Agreements) exceeds $100,000,000, the
Borrowers shall have provided to the Agent a certificate signed on its behalf by
its chief financial officer or chief accounting officer (1) certifying as to the
matter referred to in clause (ii)(y) above and (2) setting forth the calculation
of Pro Forma Compliance in reasonable detail after giving effect to such Film
Value
64
Asset Disposition, provided that for the purposes of the calculation to be made
pursuant to this clause (2) only, Ordinary Course Library Film Licensing
Agreements shall not be included.
(c) Without limitation of the foregoing, each Borrower will not, and will
not permit its Subsidiaries to, sell, lease or otherwise transfer, directly or
indirectly, all or substantially all of the assets of such Borrower and its
Subsidiaries, taken as a whole, to any other Person; provided that nothing in
this subsection (c) shall prohibit any Subsidiary from distributing,
contributing or otherwise transferring its assets to a Borrower or a Guarantor.
(d) Without limitation of the foregoing, each Borrower will not, and will
not permit its Subsidiaries to, enter into any Licensing Agreement or series of
related Licensing Agreements with respect to any Library Films unless (i)
immediately after entering into any such Licensing Agreement, (x) the Borrowers
shall be in Pro Forma Compliance and (y) no Default shall have occurred and be
continuing and (ii) if after giving effect to such Licensing Agreement the
aggregate fair market value of all Film Value Assets that have been disposed of
pursuant to Film Value Asset Dispositions during the then current Fiscal Year
(other than pursuant to Ordinary Course Library Film Licensing Agreements)
exceeds $100,000,000, the Borrowers shall have provided to the Agent a
certificate signed on its behalf by its chief financial officer or chief
accounting officer (1) certifying as to the matter referred to in clause (i)(x)
above and (2) setting forth the calculation of Pro Forma Compliance in
reasonable detail after giving effect to such Film Value Asset Disposition,
provided that for the purposes of the calculation to be made pursuant to this
clause (2) only, Ordinary Course Library Film Licensing Agreements shall not be
included.
(e) Without limitation of the foregoing, each Borrower will not, and will
not permit its Subsidiaries to, enter into any Licensing Agreement or series of
related Licensing Agreements with respect to any Films (other than Library
Films) or Film Related Assets if such Borrower or such Subsidiary conveys,
sells, assigns, transfers or otherwise disposes of, with or without recourse,
its rights to receive payments under any such Licensing Agreement or series of
related Licensing Agreements.
Section 5.08. Use of Proceeds. The Letters of Credit and the proceeds of
the Term Loans, the Revolving Loans and the Swing Loans made on and after the
Effective Date will be used by each Borrower for general corporate purposes.
None of such proceeds and none of the Letters of Credit will be used, directly
or indirectly, in violation of Regulation U or to finance, directly or
indirectly, the acquisition of part or all of a voting interest of 5% or more in
any Person if such acquisition is opposed by the board of directors or
management of such Person.
65
Section 5.09. Negative Pledge. Neither Borrower nor any Subsidiary will
create, assume or suffer to exist any Lien on any asset now owned or hereafter
acquired by it, except:
(a) any Lien existing on any asset of any Person at the time such Person
becomes a Subsidiary and not created in contemplation of such event;
(b) any Lien on any fixed or capital asset securing Debt incurred or
assumed for the purpose of financing all or any part of the cost of acquiring
such asset, and permitted pursuant to Section 5.10(g); provided that such Lien
attaches to such asset concurrently with or within 90 days after the acquisition
thereof;
(c) any Lien on any asset of any Person existing at the time such Person is
merged or consolidated with or into a Borrower or a Subsidiary and not created
in contemplation of such event;
(d) any Lien existing on any asset prior to the acquisition thereof by a
Borrower or a Subsidiary and not created in contemplation of such acquisition;
(e) any Lien on assets of a Foreign Subsidiary securing Debt permitted
under Section 5.10(f);
(f) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the clauses of
this Section, provided that such Debt is not increased and is not secured by any
additional assets;
(g) any Lien securing Profit Participations, Residuals and Deferred
Payments and other obligations that do not constitute Debt by operation of
clause (x) of the proviso in the definition of "Debt"; provided that such Lien
attaches solely to cash deposits and the Film or Films or Film Related Assets
that are the subject of such arrangements;
(h) Liens (other than Liens securing Debt) consisting of rights of
licensees under access agreements pursuant to which such licensees have access
to duplicating material for the purpose of making prints of Films licensed to
them, and rights of distributors, exhibitors, licensees and other Persons in
Films created in connection with the distribution and exploitation of such Films
in the ordinary course of business;
(i) Liens securing Debt permitted by Sections 5.10(h) or (i) or securing
obligations of any MGM/Orion Company incurred in connection with acquiring
rights to Films in the ordinary course of business, provided that the agreement
to grant such Liens shall be created substantially simultaneously with, or
within 90
66
days of, the acquisition, development, production or postproduction of such
Films;
(j) Liens (other than Liens securing Debt) incurred in the ordinary course
of business on any Film or any Film Related Asset constituting negotiation
rights with respect to such Film or Film Related Asset, options to develop such
Film or Film Related Asset or similar rights with respect to such Film or Film
Related Asset;
(k) Liens on cash and cash equivalents arising under the escrow
arrangements referred to in the proviso to the definition of Sale-Leaseback
Transactions and Liens consisting of the rights and interests of the lessor with
respect to Films subject to Sale-Leaseback Transactions permitted under Section
5.10(i) hereof;
(l) Liens arising out of Licensing Agreements or security agreements
entered into pursuant to such Licensing Agreements in respect of Films or Film
Related Assets permitted under Section 5.07(d) or Section 5.07(e) hereof,
consisting of such licensing rights and attaching solely to the Film or Films or
Film Related Assets so licensed;
(m) Liens in existence on the Effective Date and reflected in Schedule 5.09
hereto;
(n) Liens for taxes not yet due or which are being contested in good faith
by appropriate proceedings, provided that adequate reserves with respect thereto
are maintained on the books of any MGM/Orion Company, as the case may be, in
conformity with generally accepted accounting principles (or, in the case of
Foreign Subsidiaries, generally accepted accounting principles in effect from
time to time in their respective jurisdictions of incorporation);
(o) carriers', warehousemen's, mechanics', materialmen's, repairmen's or
other like Liens arising in the ordinary course of business which are not
overdue for a period of more than 60 days or which are being contested in good
faith by appropriate proceedings;
(p) pledges or deposits in connection with workers' compensation,
unemployment insurance or other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
(q) Liens on deposits to secure obligations to acquire Films or Film
Related Assets or the performance of bids, trade contracts (other than contracts
under which Debt may be incurred), leases, performance or completion bonds and
other obligations of a like nature incurred in the ordinary course of business;
67
provided that any such Liens securing the obligation of any MGM/Orion Company to
acquire Films or Film Related Assets shall encumber only cash;
(r) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case materially
detract from the value of the property subject thereto or materially interfere
with the ordinary conduct of the business of any MGM/Orion Company;
(s) Liens (other than Liens permitted by any of the foregoing clauses
of this Section) arising in the ordinary course of its business which (i) do not
secure Debt or Derivatives Obligations, (ii) do not secure any obligation in an
amount exceeding $5,000,000 and (iii) do not in the aggregate materially detract
from the value of its assets or materially impair the use thereof in the
operation of its business;
(t) Liens created by the Collateral Documents; and
(u) Liens on the Rainbow Interest securing any Rainbow Financing.
Section 5.10. Limitation on Debt. Each Borrower will not, and will not
permit any of its Subsidiaries to, incur or at any time be liable with respect
to any Debt except:
(a) Debt under this Agreement;
(b) Permitted Subordinated Debt; provided that any Reduction Amount
thereof is applied in accordance with the terms of Section 2.04(d);
(c) Debt in respect of foreign distribution arrangements, in an
aggregate principal amount not in excess of $20,000,000 at any one time;
(d) Debt secured by Liens permitted by Sections 5.09(a), 5.09(c),
5.09(d) or 5.09(f);
(e) Debt comprising the Rainbow Financing;
(f) (i) Debt of a Borrower owed to the other Borrower or to a
Guarantor, or Debt of a Guarantor (excluding the Rainbow Subsidiary) owed to a
Borrower or to another Guarantor, or Debt of a Foreign Subsidiary owed to
another Foreign Subsidiary or (ii) Debt of a Foreign Subsidiary owed to a
Borrower or to a Guarantor and incurred in the ordinary course of business to
finance operating expenditures of such Foreign Subsidiary and evidenced by a
note (which may be a grid note) constituting Collateral under any Collateral
Document;
68
(g) Debt of any MGM/Orion Company incurred to finance any acquisition
of fixed or capital assets permitted pursuant to Section 5.14 and any Debt of
the relevant obligor refinancing such Debt; provided that the aggregate
outstanding principal amount of all Debt permitted pursuant to this clause (g)
does not exceed $35,000,000;
(h) (i) Debt (other than (x) Debt of a Single Purpose Subsidiary and
(y) Clawback Obligations) incurred in connection with the financing or
refinancing of the development, production, acquisition, distribution,
exhibition or exploitation of a Film or Film Related Assets or a group or slate
of Films, but solely to the extent that under the terms of such Debt the
obligations of the Borrowers and their respective Subsidiaries with respect to
such Debt may be satisfied by recourse only to such Film or a group or slate of
Films and rights pertaining thereto and, in each case, to the proceeds thereof,
(ii) Debt of a Single Purpose Subsidiary, so long as such Debt complies with the
provisions of clause (ii) of the definition of Single Purpose Subsidiary and
(iii) Clawback Obligations;
(i) Debt in respect of Sale-Leaseback Transactions;
(j) Debt outstanding on the Effective Date and listed on Schedule 5.10;
and
(k) Debt not otherwise permitted by the foregoing clauses of this
Section in an aggregate principal or face amount not in excess of $50,000,000 at
any time.
Section 5.11. [Intentionally Deleted].
Section 5.12. Sources and Uses of Cash. As of the last day of each
Fiscal Quarter, the ratio of Projected Known Sources to Projected Known Uses for
the four consecutive Fiscal Quarters commencing immediately after such day shall
not be less than 1.0 to 1.0.
Section 5.13. Total Borrowed Funds/Library Cash Flow. At all times
during any Fiscal Quarter, the ratio of (i) Total Borrowed Funds at any date
during such period to (ii) Library Cash Flows for the period of four consecutive
Fiscal Quarters then most recently ended, will not be greater than 4.25:1.
Section 5.14. Maximum Capital Expenditures. Combined Capital
Expenditures (determined, for this purpose, exclusive of Combined Capital
Expenditures in Fiscal Years 2002 and 2003 for tenant improvements to build out
leased space for the corporate headquarters of MGM, but only to the extent that
the aggregate amount thereof for such two-year period does not exceed
69
$40,000,000) for any Fiscal Year will not exceed $35,000,000; provided that, if
and to the extent that the amount of Combined Capital Expenditures for any
Fiscal Year is less than $35,000,000, the maximum amount of Combined Capital
Expenditures in any subsequent Fiscal Year shall be increased by such excess
amount.
Section 5.15. Minimum Combined Adjusted Net Worth. Combined Adjusted
Net Worth will at no time be less than an amount equal to (i) $2,000,000,000
plus (ii) an amount equal to 50% of Combined Net Income for each Fiscal Year
ending after December 31, 2001 (but for the 2002 Fiscal Year, the Combined Net
Income in respect of the second, third and fourth Fiscal Quarters only) but
prior to the date of determination, in each case, for which such Combined Net
Income is positive (but with no deduction on account of negative Combined Net
Income for any Fiscal Year), plus (iii) 80% of the aggregate net proceeds,
including the fair market value of property other than cash (as determined in
good faith by the Board of Directors of MGM) received by either Borrower from
the issuance and sale after March 31, 2002 of any of its capital stock or in
connection with the conversion or exchange of any Debt of either Borrower into
its capital stock after March 31, 2002 (including without limitation any
contribution to capital by MGM), minus (iv) upon any write-down of an Investment
in MGM permitted solely pursuant to Section 5.18(j), and only with respect to
the portion thereof in excess of $100,000,000 (determined for this purpose at
the amount of each such Investment when made), 80% of the amount of such
write-down, and minus (v) on and after the Rainbow Release Date, the book value
of the Rainbow Interest as of the Effective Date plus 50% of the cumulative
increase, if any in the book value of the Rainbow Interest from the Effective
Date to the end of the Fiscal Year then most recently ended, to the extent
reflected in Combined Net Income for such period.
Section 5.16. Operating Lease Payments. Each Borrower will not, and
will not permit any of its Subsidiaries to, incur or assume (whether pursuant to
a Guarantee or otherwise) any liability for rental payments under a lease with a
lease term (as defined in Financial Accounting Standards Board Statement No. 13,
as in effect on the date hereof) of one year or more (other than in connection
with any Sale-Leaseback Transaction) if, after giving effect thereto, the
aggregate amount of minimum lease payments that the Combined Companies have so
incurred or assumed will exceed, on a Combined Basis, (x) $50,000,000 for any
Fiscal Year under all such leases (excluding any lease which is to be accounted
for as a capital lease on the balance sheet of either Borrower and its
respective Consolidated Subsidiaries) plus (y) a one-time basket in an aggregate
amount not in excess of $15,000,000 consisting solely of lease payments incurred
as a result of the Combined Companies changing the location of their chief
executive office (which one-time basket may be applied in one Fiscal Year or in
two consecutive Fiscal Years).
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Section 5.17. Restricted Payments. Neither Borrower nor any Subsidiary
will declare or make any Restricted Payment; provided that the foregoing shall
not restrict or prohibit dividends or distributions to MGM at such times and in
such amounts as are necessary to permit:
(a) (i) purchases of shares of (or options to purchase shares of)
capital stock of MGM from former or current employees of either Borrower or MGM,
or any spouse or lineal descendant of any such employee or any trust for the
benefit of any of the foregoing (A) upon their death, disability, termination or
retirement or (B) in accordance with the terms of the Management Stock Incentive
Plan and other plans or arrangements as set forth in MGM's filings with the
Securities and Exchange Commission from time to time (including without
limitation stock option agreements issued in substantially the forms attached to
the Management Stock Incentive Plan or the Stockholders Agreement dated as of
October 10, 1996 among MGM, MGM Studios, the Investors and certain other
stockholders party thereto from time to time, as the same may be amended or
replaced), so long as in each of cases (i)(A) and (i)(B), immediately before and
after giving effect to any such dividend or distribution for such purpose, no
Default shall have occurred and be continuing;
(b) payments in the ordinary course of business of MGM of legal fees,
tax preparation fees, franchise taxes and other overhead and general expenses
items, to the extent attributable and properly allocable to the MGM/Orion
Companies and their businesses; provided that the aggregate amount of
distributions made by the Borrowers pursuant to this clause (b) will not exceed
in the aggregate $1,000,000 in any Fiscal Year; and
(c) on or after the Rainbow Release Date, the distribution of all or
any part of the Rainbow Interest.
Section 5.18. Investments. Neither Borrower nor any Subsidiary will
hold, make or acquire any Investment in any Person other than:
(a) Investments by either Borrower in the form of equity interests of
Persons which are Guarantors or which, within 30 days after consummation of such
Investment, become Guarantors;
(b) Investments constituting intercompany loans permitted under Section
5.10(f);
(c) Investments made by either Borrower or any Subsidiary in the
ordinary course of business pursuant to arm's length transactions in Persons
(other than either Borrower or any Subsidiary) for the development, production,
acquisition, distribution, exhibition or exploitation of Films and Film Related
71
Assets (other than Library Films), copyrights or trademarks in connection with
co-production deals, split-xxxxxx xxxx, overhead deals or similar arrangements
(as such terms are generally understood in the movie industry on the date
hereof);
(d) Investments constituting loans and advances in cash by either
Borrower or any Subsidiary to directors, officers and employees of MGM, either
Borrower, or any Subsidiary, in the ordinary course of business aggregating not
in excess of $4,000,000 at any time outstanding;
(e) Investments (other than Investments otherwise permitted by this
Section 5.18) in existence on the Effective Date and listed on Schedule 5.18;
(f) Investments made after the Effective Date pursuant to a commitment
to make such Investments in existence on the Effective Date and listed on
Schedule 5.18;
(g) Investments (other than Investments otherwise permitted by this
Section 5.18) by either Borrower or any Subsidiary in the form of equity
interests of Persons which are not Guarantors;
(h) Investments by either Borrower or any Subsidiary in Single Purpose
Subsidiaries or any other Person (including a TV Distribution Venture or a Home
Video Distribution Venture, but excluding a Subsidiary of either Borrower), that
is principally engaged in the production, distribution, exhibition or
exploitation of Films, consisting of the contribution by such Borrower or
Subsidiary of Film Value Assets to such Person;
(i) Temporary Cash Investments;
(j) Investments by either Borrower constituting loans and advances to
MGM or purchases of capital stock of MGM, so long as the aggregate principal
amount of such loans and advances at any time outstanding plus the aggregate
amount of consideration for purchases of such capital stock does not exceed the
sum of (such sum at any time, the "MGM Investment Limit"):
(A) $500,000,000 minus
(B) if the Rainbow Release Date has theretofore (or is
simultaneously being) occurred, the excess (if any) of $200,000,000
over the aggregate amount of equity contributions (if any) made in
cash by MGM to the Borrowers after the Effective Date;
(k) Investments in TV Distribution Ventures not otherwise permitted by
the foregoing clauses of this Section;
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(l) Investments in Home Video Distribution Ventures not otherwise
permitted by the foregoing clauses of this Section;
(m) (i) Investments comprising the Rainbow Interest, and any pledge of
capital stock of the Rainbow Subsidiary permitted by the definition of Rainbow
Financing and (ii) Investments in the Rainbow Partnerships other than the
Rainbow Interest, and other than through or in the Rainbow Subsidiary; provided
that notwithstanding anything else in this Section 5.18, neither the Borrowers
nor any of their respective Subsidiaries (other than the Rainbow Subsidiary)
shall, directly or indirectly, make any additional Investments in the Rainbow
Subsidiary after the Effective Date, other than any pledge of capital stock
referred to in clause (m)(i) above; and
(n) any Investment (other than (i) Investments in Single Purpose
Subsidiaries or the Rainbow Subsidiary, and (ii) Investments consisting of the
contribution of Library Films) not otherwise permitted by the foregoing clauses
of this Section if, immediately after such Investment is made or acquired, the
aggregate net book value of all Investments permitted by this clause (n)
(determined, with respect to each such Investment, at the time such Investment
is made) does not exceed $25,000,000.
Notwithstanding the foregoing, any Investment otherwise permitted by the
foregoing provisions of this Section 5.18 that includes or constitutes a Film
Value Asset Disposition shall be permitted only if (A) immediately after giving
effect thereto (x) the Borrowers shall be in Pro Forma Compliance and (y) no
Default shall have occurred and be continuing and (B) if after giving effect to
such Investment the aggregate fair market value of all Film Value Assets that
have been disposed of pursuant to Film Value Asset Dispositions during the then
current Fiscal Year (other than pursuant to Ordinary Course Library Film
Licensing Agreements) exceeds $100,000,000, the Borrowers shall have provided to
the Agent a certificate signed on its behalf by its chief financial officer or
chief accounting officer (1) certifying as to the matter referred to in clause
(A)(x) above and (2) setting forth the calculation of Pro Forma Compliance in
reasonable detail after giving effect to such Film Value Asset Disposition,
provided that for the purposes of the calculation to be made pursuant to this
clause (2) only, Ordinary Course Library Film Licensing Agreements shall not be
included.
Section 5.19. Transactions with Affiliates. Each Borrower will not, and
will not permit any of its Subsidiaries to, directly or indirectly, pay any
funds to or for the account of, make any investment (whether by acquisition of
stock or indebtedness, by loan, advance, transfer of property, guarantee or
other agreement to pay, purchase or service, directly or indirectly, any Debt,
or otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or
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participate in, or effect, any transaction with, any Affiliate except on an
arms-length basis on terms at least as favorable to such Borrower or such
Subsidiary than could have been obtained from a third party who was not an
Affiliate; provided that the foregoing provisions of this Section shall not
prohibit (i) any such Person from declaring or paying any lawful dividend or
other payment ratably in respect of all of its capital stock of the relevant
class so long as, after giving effect thereto, no Default shall have occurred
and be continuing, (ii) the consummation of the transactions contemplated by the
agreements set forth on Schedule 5.19, as amended to the Effective Date, (iii)
customary indemnification arrangements between either Borrower and the directors
and officers of MGM, such Borrower, and any Subsidiary of such Borrower, (iv)
customary tax sharing arrangements between or among MGM, the Borrowers, and the
Subsidiaries, (v) dividends and distributions (including a distribution of the
Rainbow Interest) to MGM permitted under Section 5.17, (vi) maintenance of
"D&O", "keyman" and similar insurance by any of the Borrowers or MGM, including
with respect to directors and officers of MGM, the Borrowers, and the
Subsidiaries, (vii) any disposition of a "disposed asset" to a Single Purpose
Subsidiary as described in clause (xi) of the definition of "Asset Sale", to the
extent that such disposition complies with the requirements of such clause and
(viii) the execution, delivery and performance of distribution agreements with
any Single Purpose Subsidiary with respect to the distribution of Films held by
such Single Purpose Subsidiary.
Section 5.20. Limitation on Restrictions Affecting Subsidiaries.
Neither any Borrower nor any of its Subsidiaries (other than any Single Purpose
Subsidiary or the Rainbow Subsidiary) will enter into, or suffer to exist, any
agreement with any Person, other than this Agreement, which prohibits or limits
the ability of any Subsidiary to (a) pay dividends or make other distributions
or pay any Debt owed to either Borrower or any Subsidiary, (b) make loans or
advances to either Borrower or any Subsidiary, (c) transfer any of its
properties or assets to either Borrower or any Subsidiary or (d) create, incur,
assume or suffer to exist any Lien upon any of its property, assets or revenues,
whether now owned or hereafter acquired (other than with respect to assets
subject to consensual liens permitted under Section 5.09); provided that the
foregoing shall not apply to (i) provisions restricting assignment of any lease
or other contract, (ii) restrictions imposed by applicable law, (iii)
restrictions under any agreement relating to any property, asset or business
acquired by any MGM/Orion Company, which restrictions existed at the time of
acquisition, (iv) restrictions with respect solely to a Subsidiary or a Borrower
imposed pursuant to a binding agreement (subject only to customary closing
conditions and termination provisions) that has been entered into for the sale
or disposition of all or substantially all of the capital stock or assets to be
sold of such Subsidiary, provided that such sale is permitted under Section
5.07(b) hereof, (v) customary restrictions on transfer of Collateral imposed on
such Collateral in connection with Liens on such Collateral securing Debt, to
the extent such Liens are permitted under Section 5.09 hereof, (vi)
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customary restrictions contained in agreements governing Debt of Foreign
Subsidiaries and (vii) restrictions ("New Restrictions") set forth in
replacements of agreements or instruments ("Replaced Agreements") containing
restrictions described in clause (iii); provided that such New Restrictions are
no more restrictive in any material respect than the restrictions set forth in
the relevant Replaced Agreement and do not apply to any additional property or
assets.
Section 5.21. MGM Debt. Each Borrower will not, and will not permit any
of its Subsidiaries to, directly or indirectly, redeem, retire, purchase,
acquire, defease or otherwise make any payment in respect of the principal of
any MGM Debt, except by making Investments pursuant to Section 5.18(j), the
proceeds of which will be applied by MGM to do so.
Section 5.22. Further Assurances. (a) Each Borrower will, and will
cause each Guarantor to, at such Borrower's sole cost and expense, do, execute,
acknowledge and deliver all such further acts, deeds, conveyances, mortgages,
assignments, notices of assignment and transfers as the Agent shall from time to
time request, which may be necessary in the reasonable judgment of the Agent
from time to time to assure, perfect, convey, assign and transfer to the Agent
the property and rights conveyed or assigned pursuant to the Collateral
Documents.
(b) All costs and expenses in connection with the grant of any security
interests under the Collateral Documents, including without limitation
reasonable legal fees and other reasonable costs and expenses in connection with
the granting, perfecting and maintenance of any security interests under the
Collateral Documents or the preparation, execution, delivery, recordation or
filing of documents and any other acts as the Agent may reasonably request in
connection with the grant of such security interests shall be paid by the
Borrowers promptly upon demand.
(c) Each Borrower will not, and will not permit any of its Subsidiaries
to, enter into or become subject to any agreement which would impair their
ability to comply, or which would purport to prohibit them from complying, with
the provisions of this Section.
(d) Each Borrower will cause each of its Material Subsidiaries acquired
after the Effective Date and each of its Subsidiaries which becomes a Material
Subsidiary after the Effective Date (in each case, other than a Foreign
Subsidiary or a Single Purpose Subsidiary) (i) to become a party to the
Subsidiary Guaranty as guarantor by executing a supplement thereof in form and
substance satisfactory to the Agent and (ii) to enter into a Security Agreement
and any other agreements as may be necessary or desirable in order to grant
perfected first priority security interests upon all of its assets to secure its
obligations under the Subsidiary Guaranty. In addition, such Borrower will
pledge, or cause to be pledged, pursuant
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to a Pledge Agreement, all of the capital stock or other equity interests of
such Material Subsidiary owned directly or indirectly by such Borrower (or, if
such Material Subsidiary is a Foreign Subsidiary, 66% of the capital stock or
equity interests of such Material Subsidiary, and excluding any such capital
stock or other equity interests owned directly by a Foreign Subsidiary). Such
Borrower shall cause each such Material Subsidiary to take such actions as may
be necessary or desirable to effect the foregoing within 30 days after such
Material Subsidiary is acquired or becomes a Material Subsidiary, as the case
may be, including without limitation causing such Material Subsidiary to (x)
execute and deliver to the Agent such number of copies as the Agent may specify
of such supplements and Security Agreement and other documents creating security
interests and (y) deliver such certificates, evidences of corporate action or
other documents as the Agent may reasonably request, all in form and substance
satisfactory to the Agent, relating to the satisfaction of such Borrower's
obligations under this Section. Upon compliance by either Borrower with the
provisions of this subsection (d), Schedule 4.09 shall be deemed to have been
amended to reflect that such Material Subsidiary is a Guarantor.
(e) Each Borrower will, and will cause each of its Subsidiaries to,
take all action necessary in accordance with good business practices to (i)
maintain in full force and effect (x) all trademarks, service marks, trade names
and licenses and all material rights with respect to the foregoing, necessary
for the conduct of its business as now conducted (collectively, the
"Trademarks") and (y) all copyrights (including without limitation any
copyrights relating to Library Films) and all material rights with respect
thereto, necessary for the conduct of its business as now conducted
(collectively, the "Copyrights"), other than such Trademarks and Copyrights
which such Borrower reasonably determines are, in the aggregate, of
insignificant or non-material economic value, or where the failure to maintain
such Trademarks or Copyrights could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect, and (ii) protect all Trademarks and
all Copyrights against infringement by third parties, other than such Trademarks
and Copyrights which such Borrower reasonably determines are, in the aggregate,
of insignificant or non-material economic value or where the failure to maintain
such Trademarks or Copyrights could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(f) Each Borrower will, and will cause each of its Subsidiaries to,
submit to the United States Copyright Office or other applicable United States
governmental authority (with a copy to the Agent) as soon as reasonably
practicable but in any event, with respect to any Film, no later than 90
Domestic Business Days after the date of release of such Film and, with respect
to any screenplay, within 30 Domestic Business Days after commencement of
principal photography of the relevant Film (i) with respect to each screenplay
or Film which is unregistered and to which either Borrower or any Subsidiary
owns the
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copyright, a completed application for copyright registration and (ii) with
respect to each screenplay and Film which is registered in the name of a Person
other than any MGM/Orion Company, and in which any MGM/Orion Company acquires
the copyright or any rights in the copyright, an assignment to such Borrower or
such Subsidiary of the interest owned by it.
(g) Each Borrower will, and will cause each other Obligor party to a
Security Agreement to, provide a Laboratory Pledgeholder Agreement (as defined
in a Security Agreement) with each laboratory which holds any material film
and/or sound materials, cause such Laboratory Pledgeholder Agreements to remain
in full force and effect during all times when such laboratory is in possession
of such elements, and, pursuant to the Laboratory Pledgeholder Agreements, with
respect to each Film, deliver to the Agent a laboratory access letter,
substantially in the form of Exhibit B thereto, to each laboratory holding any
material film and/or sound materials.
Section 5.23. [Intentionally Deleted].
Section 5.24. Total Borrowed Funds to Film Value. As of the last day of
each Fiscal Quarter beginning with the first Fiscal Quarter of 2002, the ratio
of (i) Total Borrowed Funds on such date to (ii) the Film Value determined on or
most recently prior to such date shall not exceed 0.5:1.
Section 5.25. Library Cash Flows to Combined Cash Interest Expense. As
of the last day of each Fiscal Quarter beginning with the first Fiscal Quarter
of 2002, the ratio of (i) Library Cash Flows to (ii) Combined Cash Interest
Expense, in each case for the period of four consecutive Fiscal Quarters ended
on such day, shall not be less than 1.75:1.
ARTICLE 6
Defaults
Section 6.1. Events of Default. If one or more of the following events
("Events of Default") shall have occurred and be continuing:
(a) either Borrower (i) shall fail to pay when due any principal of any
Loan, (ii) shall fail to reimburse when due any drawing under any Letter of
Credit or (iii) shall fail to pay within 5 days after the due date thereof any
interest, any fees or any other amount payable hereunder;
(b) (i) either Borrower shall fail to observe or perform any covenant
contained in Article 5 (other than those contained in Sections 5.01 through
5.06,
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inclusive and Sections 5.22(a), (b), (c), (e), (f) and (g)) or (ii) any Obligor
shall fail to observe or perform any covenant contained in Sections 4(A), (E) or
(H) of the Security Agreement or (iii) either Borrower shall fail to observe or
perform any covenant contained in Section 3(B) of the Borrower Pledge Agreement
or any other Obligor shall fail to observe or perform any covenant contained in
the Pledge Agreement to which such Obligor is a party containing provisions
substantially similar to those set forth in Section 3(B) of the Borrower Pledge
Agreement;
(c) any Obligor shall fail to observe or perform any covenant or
agreement contained in the Loan Documents (other than those covered by clause
(a) or (b) above) for 30 days after notice thereof has been given to the
Borrowers by the Agent;
(d) any representation, warranty or certification made by any Obligor
in any Loan Document or in any certificate or other document delivered pursuant
to any Loan Document shall prove to have been incorrect in any material respect
when made (or deemed made);
(e) either Borrower or any Subsidiary shall fail to make any payment in
respect of any Debt and/or payment or collateralization obligations in respect
of Derivatives Obligations of either Borrower or any Subsidiary when due or
within any applicable grace period (other than any Single Purpose Subsidiary
with respect to Debt or Derivatives Obligations solely of such Single Purpose
Subsidiary, and excluding any Rainbow Financing), if the aggregate principal or
face amount of Debt and/or payment or collateralization obligations (regardless
of whether such Debt and/or payment or collateralization obligations arise in
one or more related or unrelated transactions) with respect to which such
failure or failures shall have occurred exceeds $5,000,000;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Debt (other than the Notes) of either
Borrower or any Subsidiary or enables the holder of such Debt or any Person
acting on such holder's behalf to accelerate the maturity thereof (other than
any Single Purpose Subsidiary with respect to Debt or Derivatives Obligations
solely of such Single Purpose Subsidiary, and excluding any Rainbow Financing),
if the aggregate principal amount of Debt (regardless of whether such Debt
arises in one or more related or unrelated transactions) with respect to which
such events or conditions shall have occurred exceeds $5,000,000;
(g) either Borrower or any Material Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any domestic or foreign
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the
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appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, or shall consent to any
such relief or to the appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall fail generally to pay
its debts as they become due, or shall take any corporate action to authorize
any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced against
either Borrower or any Material Subsidiary seeking liquidation, reorganization
or other relief with respect to it or its debts under any domestic or foreign
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed for a
period of 90 days; or an order for relief shall be entered against either
Borrower or any Material Subsidiary under any domestic or foreign bankruptcy
laws as now or hereafter in effect;
(i) (i) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan or any Lien in favor
of the PBGC or a Plan shall arise on the assets of MGM or any Commonly
Controlled Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee is,
in the reasonable opinion of the Required Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) notice of
intent to terminate a Single Employer Plan shall be filed under Title IV of
ERISA by MGM or a Commonly Controlled Entity, (v) MGM or any Commonly Controlled
Entity shall, or in the reasonable opinion of the Required Lenders is likely to,
incur any liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or condition
shall occur or exist with respect to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other such events
or conditions, if any, could reasonably be expected to have a Material Adverse
Effect;
(j) judgments or orders for the payment of money in excess of
$10,000,000 (net of any amount (x) covered by insurance or (y) covered by a
third-party indemnity from a solvent third party financially capable of making
such payments (as determined by the Required Lenders on the basis of information
provided by the Borrowers)) shall be rendered and properly entered
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against MGM, either Borrower or any Subsidiary and such judgments or orders
shall continue unsatisfied and unstayed for a period of 60 days;
(k) any Lien created by any of the Collateral Documents in respect of a
substantial portion of the Collateral shall at any time fail to constitute a
valid and (to the extent required by the Collateral Documents) perfected Lien
securing the obligations purported to be secured thereby, with the priority
required by the Loan Documents, or any Obligor shall so assert in writing;
(l) the Subsidiary Guaranty or the guaranty set forth in Article 9 shall at
any time fail to constitute a valid and binding agreement of each Obligor party
thereto, or any Obligor shall so assert in writing; or
(m) (i) MGM shall cease to legally and beneficially own 100% of the issued
and outstanding capital stock of either Borrower; or (ii) the Investors
(directly or through one or more Investment Vehicles) shall fail to legally and
beneficially own in the aggregate capital stock representing at least 35% of the
Voting Power of the stock of MGM; or (iii) any person or group of persons
(within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934,
as amended) (other than the Investors and their Investment Vehicles) shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by
the Securities and Exchange Commission under said Act) having greater Voting
Power of the capital stock of MGM than the Voting Power of the capital stock of
MGM legally and beneficially owned in the aggregate by the Investors and their
Investment Vehicles at such date; or (iv) during any period of 12 consecutive
calendar months, individuals who were (x) directors of MGM on the first day of
such period, (y) elected to fill vacancies caused by the ordinary course
resignation (including without limitation any such resignation effected by such
director declining to stand for reelection), retirement, death or disability of
any other director and whose nomination or election was approved by a vote of at
least a majority of the directors then still in office who were directors of MGM
on the first day of such period or (z) appointed or nominated for election by an
Investor or one of its Investment Vehicles or by a majority of the directors
described in clauses (x) and (y), shall cease to constitute a majority of the
board of directors of MGM; (as used herein, "Voting Power" means, with respect
to any outstanding capital stock of MGM, the power (expressed as a percentage)
represented by such capital stock of the aggregate voting power of all
outstanding shares of any class of capital stock of MGM having ordinary voting
power, including the power to vote for election of the members of the board of
directors of MGM (or, if any class thereof has power to designate members of the
board of directors of MGM or any special committee thereof, the power to so
designate); and "Investment Vehicles" shall mean, with respect to an Investor,
any Subsidiary of such Investor not less than 95% of each class of capital stock
(or, if such Subsidiary is not a
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corporation, the appropriate equity interests thereof) of which is owned by such
Investor, directly or through one or more other Investment Vehicles);
then, and in every such event, the Agent shall (i) if requested by Lenders
having more than 50% in aggregate amount of the Commitments, by notice to the
Borrowers terminate the Commitments and they shall thereupon terminate, and (ii)
if requested by Lenders holding more than 50% of the sum of (x) the aggregate
principal amount of the Loans then outstanding and (y) the Letter of Credit
Liabilities then outstanding, by notice to the Borrowers declare the Loans and
the Letter of Credit Liabilities (in each case together with accrued interest
thereon) to be, and the Loans and the Letter of Credit Liabilities shall
thereupon become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by each
Borrower; provided that in the case of any of the Events of Default specified in
clause (g) or (h) above with respect to either Borrower, without any notice to
either Borrower or any other act by the Agent or the Lenders, the Commitments
shall thereupon terminate and the Loans and the Letter of Credit Liabilities (in
each case together with accrued interest thereon) shall become immediately due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by each Borrower.
Section 6.02. Notice of Default. The Agent shall give notice to the
Borrowers under Section 6.01(c) promptly upon being requested to do so by the
Required Lenders and shall thereupon notify all the Lenders thereof.
Section 6.03. Cash Cover. Each Borrower agrees, in addition to the
provisions of Section 6.01 hereof, that upon the occurrence and during the
continuance of any Event of Default, it shall, if requested by the Agent upon
the instruction of the Lenders having more than 50% in aggregate amount of the
Revolving Exposure, pay to the Agent an amount in immediately available funds
(which funds shall be held as collateral and applied pursuant to the Security
Agreement) equal to the aggregate amount available for drawing under all Letters
of Credit then outstanding at such time, provided that, upon the occurrence of
any Event of Default specified in Section 6.01(g) or 6.01(h) with respect to
either Borrower, such Borrower shall pay such amount forthwith without any
notice or demand or any other act by the Agent or the Lenders.
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ARTICLE 7
The Agent
Section 7.01. Appointment and Authorization. Each Lender irrevocably
appoints and authorizes the Agent to enter into and act as its agent in
connection with the Collateral Documents and to take such action as agent on its
behalf and to exercise such powers under the Loan Documents as are delegated to
the Agent by the terms hereof or thereof, together with all such powers as are
reasonably incidental thereto.
Section 7.02. Agent and Affiliates. Bank of America, N.A. shall have the
same rights and powers under the Loan Documents as any other Lender and may
exercise or refrain from exercising the same as though it were not the Agent,
and Bank of America, N.A. and its affiliates may accept deposits from, lend
money to, and generally engage in any kind of business with either Borrower or
any Subsidiary or affiliate of either Borrower as if it were not the Agent.
Section 7.03. Action by Agent. The obligations of the Agent hereunder are
only those expressly set forth herein. Without limiting the generality of the
foregoing, the Agent shall not be required to take any action with respect to
any Default, except as expressly provided in Article 6.
Section 7.04. Consultation with Experts. The Agent may consult with legal
counsel (who may be counsel for any Obligor), independent public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts.
Section 7.05. Liability of Agent. Neither the Agent nor any of its
affiliates nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or not taken by it in connection herewith
(a) with the consent or at the request of the Required Lenders (or, when
expressly required hereby, such different number of Lenders required to consent
to or to request such action or inaction) or (b) in the absence of its own gross
negligence or willful misconduct. Neither the Agent nor any of its affiliates
nor any of their respective directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection with the Loan Documents
or any borrowing hereunder; (ii) the performance or observance of any of the
covenants or agreements of any Obligor; (iii) the satisfaction of any condition
specified in Article 3, except receipt of items required to be delivered to the
Agent; (iv) the validity, effectiveness or genuineness of the Loan Documents or
any other instrument or writing furnished in connection herewith or (v) the
existence or the value of any of the Collateral. The Agent shall not incur any
liability by acting in reliance upon any notice,
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consent, certificate, statement, or other writing (which may be a bank wire,
telex, facsimile transmission or similar writing) believed by it to be genuine
or to be signed by the proper party or parties. Without limiting the generality
of the foregoing, the use of the term "agent" in the Loan Documents with
reference to the Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine or any applicable law.
Instead, such term is used merely as a matter of market custom and is intended
to create or reflect only an administrative relationship between independent
contracting parties.
Section 7.06. Indemnification. Each Lender shall, ratably in accordance
with its Credit Exposure, indemnify the Agent, its affiliates and their
respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrowers) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from such indemnitees' gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with the Loan Documents or any
action taken or omitted by such indemnitees thereunder.
Section 7.07. Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under the Loan Documents.
Section 7.08. Successor Agent. The Agent may resign at any time by giving
notice thereof to the Lenders and the Borrowers. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Agent with, so long
as no Default has occurred and is continuing, the consent of the Borrowers
(which consent shall not be unreasonably withheld). If no successor Agent shall
have been so appointed by the Required Lenders, and shall have accepted such
appointment, within 30 days after the retiring Agent gives notice of
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be a commercial Lender organized or licensed under
the laws of the United States of America or of any State thereof and having a
combined capital and surplus of at least $100,000,000. Upon the acceptance of
its appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent's resignation
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hereunder as Agent, the provisions of this Article shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Agent.
Section 7.09. Agent's Fees. The Borrowers shall pay to the Agent for its
own account fees in the amounts and at the times previously agreed upon between
the Borrowers and the Agent.
Section 7.10. Arrangers, etc. The Lead Arrangers, each in its capacity as
such, Fleet Securities, Inc., in its capacity as Arranger, JPMorgan Chase Bank
and Fleet National Bank, each in its capacity as Co-Syndication Agent, Bank of
Scotland, Societe Generale and The Bank of Nova Scotia, each in its capacity as
Co-Documentation Agent and BNP Paribas, in its capacity as Managing Agent, shall
have no duties or obligations under the Loan Documents solely in such capacity
and shall have no fiduciary relationship with any Lender.
ARTICLE 8
Change in Circumstances
Section 8.01. Basis for Determining Interest Rate Inadequate or Unfair.
If on or prior to the first day of any Interest Period for any Euro-Dollar Loan:
(a) the Agent is advised by the Reference Lenders that deposits in
dollars (in the applicable amounts) are not being offered to the Reference
Lenders in the London interbank market for such Interest Period, or
(b) Lenders having 50% or more of the aggregate principal amount of the
affected Loans advise the Agent that the Adjusted London Interbank Offered Rate
as determined by the Agent will not adequately and fairly reflect the cost to
such Lenders of funding their Euro-Dollar Loans for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrowers and the
Lenders, whereupon until the Agent notifies the Borrowers that the circumstances
giving rise to such suspension no longer exist, (i) the obligations of the
Lenders to make Euro-Dollar Loans or to continue or convert outstanding Loans as
or into Euro-Dollar Loans shall be suspended and (ii) each outstanding
Euro-Dollar Loan shall be converted into a Base Rate Loan on the last day of the
then current Interest Period applicable thereto. Unless the Borrowers notify the
Agent at least two Domestic Business Days before the date of any Euro-Dollar
Borrowing for which a Notice of Borrowing has previously been given that it
elects not to borrow on such date, such Borrowing shall instead be made as a
Base Rate Borrowing.
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Section 8.02. Illegality. If, on or after the Effective Date, the
adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender (or its Euro-Dollar Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for any Lender (or its
Euro-Dollar Lending Office) to make, maintain or fund its Euro-Dollar Loans and
such Lender shall so notify the Agent, the Agent shall forthwith give notice
thereof to the other Lenders and the Borrowers, whereupon until such Lender
notifies the Borrowers and the Agent that the circumstances giving rise to such
suspension no longer exist, the obligation of such Lender to make Euro-Dollar
Loans, or to convert outstanding Loans into Euro-Dollar Loans, shall be
suspended. Before giving any notice to the Agent pursuant to this Section, such
Lender shall designate a different Euro-Dollar Lending Office if such
designation will avoid the need for giving such notice and will not, in the
judgment of such Lender, be otherwise disadvantageous to such Lender. If such
notice is given, each Euro-Dollar Loan of such Lender then outstanding shall be
converted to a Base Rate Loan either (a) on the last day of the then current
Interest Period applicable to such Euro-Dollar Loan if such Lender may lawfully
continue to maintain and fund such Loan to such day or (b) immediately if such
Lender shall determine that it may not lawfully continue to maintain and fund
such Loan to such day.
Section 8.03. Increased Cost and Reduced Return. (a) If on or after the
Effective Date, the adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its Applicable Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall impose, modify or deem
applicable any reserve (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System, but excluding
any such requirement included in an applicable Euro-Dollar Reserve Percentage),
special deposit, insurance assessment or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Lender (or its
Applicable Lending Office) or shall impose on any Lender (or its Applicable
Lending Office) or the London interbank market any other condition affecting its
Euro-Dollar Loans, its Notes or its obligation to make Euro-Dollar Loans or its
obligations hereunder with respect to Letters of Credit and the result of any of
the foregoing is to increase the cost to such Lender (or its Applicable Lending
Office) of making or maintaining any Euro-Dollar Loan or of issuing or
participating in any Letter of Credit, or to reduce the amount of any sum
received or receivable by such Lender
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(or its Applicable Lending Office) under this Agreement or under its Notes with
respect thereto, by an amount deemed by such Lender to be material, then, within
15 days after demand by such Lender (with a copy to the Agent), the Borrowers
shall pay to such Lender such additional amount or amounts as will compensate
such Lender for such increased cost or reduction.
(b) If any Lender shall have determined that, after the Effective Date, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change in any such law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on capital
of such Lender (or its Parent) as a consequence of such Lender's obligations
hereunder to a level below that which such Lender (or its Parent) could have
achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Lender to be material, then from time to time, within 15 days after
demand by such Lender (with a copy to the Agent), the Borrowers shall pay to
such Lender such additional amount or amounts as will compensate such Lender (or
its Parent) for such reduction.
(c) Each Lender will promptly notify the Borrowers and the Agent of any
event of which it has knowledge, occurring after the Effective Date, which will
entitle such Lender to compensation pursuant to this Section and will designate
a different Lending Office if such designation will avoid the need for, or
reduce the amount of, such compensation and will not, in the judgment of such
Lender, be otherwise disadvantageous to such Lender. A certificate of any Lender
claiming compensation under this Section and setting forth in reasonable detail
the additional amount or amounts to be paid to it hereunder and the method of
calculation thereof shall be conclusive in the absence of manifest error. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods.
Section 8.04. Taxes. (a) For the purposes of this Section 8.04, the
following terms have the following meanings:
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings with respect to any payment by
any Obligor pursuant to this Agreement or under any Note, and all
liabilities with respect thereto, excluding (i) in the case of each Lender
and the Agent, taxes imposed on its income, and franchise or similar taxes
imposed on it, by a jurisdiction under the laws of which such Lender or
such Agent (as the case may be) is organized or in which its principal
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executive office is located or, in the case of each Lender, in whic its
Applicable Lending Office is located and (ii) in the case of each Lender,
any United States withholding tax imposed on such payments but only to the
extent that such Lender is subject to United States withholding tax at the
time such Lender first becomes a party to this Agreement.
"Other Taxes" means any present or future stamp or documentary taxes
and any other excise or property taxes, or similar charges or levies, which
arise from any payment made pursuant to this Agreement or under any Note or
from the execution or delivery of, or otherwise with respect to, any Loan
Document.
(b) Any and all payments by any Obligor to or for the account of any Lender
or the Agent hereunder or under any Note shall be made without deduction for any
Taxes or Other Taxes; provided that, if any Obligor shall be required by law to
deduct any Taxes or Other Taxes from any such payments, (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
such Lender or such Agent (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (ii) such Obligor
shall make such deductions, (iii) such Obligor shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law and (iv) such Obligor shall furnish to the Agent, at its
address referred to in Section 10.01, the original or a certified copy of a
receipt evidencing payment thereof.
(c) Each Borrower agrees to indemnify each Lender and the Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section) paid by such Lender or such Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be paid within 15 days after such
Lender or such Agent (as the case may be) makes demand therefor.
(d) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Lender listed on the signature pages hereof and on
or prior to the date on which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by the
Borrowers (but only so long as such Lender remains lawfully able to do so),
shall provide the Borrowers and the Agent with either (i) Internal Revenue
Service Form W-8ECI or W-8BEN, as appropriate, or any successor form prescribed
by the Internal Revenue Service, certifying that such Lender is entitled to
benefits under an income tax treaty to which the United States is a party which
exempts the Lender
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from United States withholding tax or reduces the rate of withholding tax on
payments of interest for the account of such Lender or certifying that the
income receivable pursuant to this Agreement is effectively connected with the
conduct of a trade or business in the United States or (ii) if such Lender is
not a "bank" within the meaning of Section 881(c)(3)(A) of the Code and cannot
deliver either Internal Revenue Service Form W-8ECI or W-8BEN pursuant to clause
(i) above, (x) a certificate substantially in the form of Exhibit C and (y) two
accurate and complete original signed copies of Internal Revenue Service Form
W-8 (or any successor form prescribed by the Internal Revenue Service)
certifying to such Lender's entitlement to a complete exemption from United
States withholding tax with respect to payments of interest and fees (if
applicable) made under this Agreement and under any Note.
(e) For any period with respect to which a Lender has failed to provide the
Borrowers or the Agent with the appropriate form pursuant to Section 8.04(d)
(unless such failure is due to a change in treaty, law or regulation occurring
subsequent to the date on which such form originally was required to be
provided), such Lender shall not be entitled to indemnification under Section
8.04(b) or (c) with respect to Taxes imposed by the United States. In addition,
for any period with respect to which a Lender described in clause (ii) of
Section 8.04(d) has delivered Internal Revenue Service Form W-8 (or any
successor form prescribed by the Internal Revenue Service) pursuant to such
Section but such form does not establish a complete exemption from deduction of
withholding or similar taxes imposed by the United States, such Lender shall not
be entitled to indemnification under Section 8.04(b) or (c) with respect to
Taxes imposed by the United States with respect to payments made under this
Agreement or any Note (other than with respect to any such payments constituting
payments of interest). If a Lender which is otherwise exempt from or subject to
a reduced rate of withholding tax, becomes subject to Taxes because of its
failure to deliver a form required hereunder, the Borrowers shall take, at the
cost of such Lender, such steps as such Lender shall reasonably request to
assist such Lender to recover such Taxes.
(f) If any Obligor is required to pay additional amounts to or for the
account of any Lender pursuant to this Section, then such Lender will change the
jurisdiction of its Applicable Lending Office if, in the judgment of such
Lender, such change (i) will eliminate or reduce any such additional payment
which may thereafter accrue and (ii) is not otherwise disadvantageous to such
Lender.
Section 8.05. Base Rate Loans Substituted for Affected Euro-Dollar Loans.
If (a) the obligation of any Lender to make, or convert outstanding Loans to,
Euro-Dollar Loans has been suspended pursuant to Section 8.02 or (b) any Lender
has demanded compensation under Section 8.03 or 8.04 with respect to its
Euro-Dollar Loans and the Borrowers shall, by at least five Euro-Dollar Business
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Days' prior notice to such Lender through the Agent, have elected that the
provisions of this Section shall apply to such Lender, then, unless and until
such Lender notifies the Borrowers that the circumstances giving rise to such
suspension or demand for compensation no longer exist:
(i) all Loans which would otherwise be made by such Lender as (or
continued as or converted into) Euro-Dollar Loans shall instead be Base Rate
Loans (on which interest and principal shall be payable contemporaneously with
the related Euro-Dollar Loans of the other Lenders); and
(ii) after each of its Euro-Dollar Loans has been repaid (or converted
to a Base Rate Loan), all payments of principal which would otherwise be applied
to repay such Euro-Dollar Loans shall be applied to repay its Base Rate Loans
instead.
If such Lender notifies the Borrowers that the circumstances giving rise to
such notice no longer apply, the principal amount of each such Base Rate Loan
shall be converted into a Euro-Dollar Loan on the first day of the next
succeeding Interest Period applicable to the related Euro-Dollar Loans of the
other Lenders.
Section 8.06. Substitution of Lender. If (a) the obligation of any Lender
to make or convert Euro-Dollar Loans has been suspended pursuant to Section 8.02
or (b) any Lender has demanded compensation under Section 8.03 or 8.04, the
Borrowers shall have the right, with the assistance of the Agent, to seek a
mutually satisfactory substitute lender or lenders (which may be one or more of
the Lenders) to purchase the Notes and assume the outstanding Loans, the
Commitment (if any) and the Letter of Credit Liabilities (if any) of such
Lender. Each such Lender agrees to assign all of its outstanding Loans, its
Commitment (if any), its Notes and its Letter of Credit Liabilities (if any) to
any such substitute lender, without recourse or warranty other than title and
outstanding amount; provided that such substitute lender shall have paid to such
Lender in immediately available funds the principal of and accrued interest to
the date of such payment on its outstanding Loans and Letter of Credit
Liabilities (if any) and all fees owed to it hereunder.
ARTICLE 9
Guaranty
Section 9.01. The Guaranty. Each Borrower hereby unconditionally guarantees
the full and punctual payment (whether at stated maturity, upon acceleration or
otherwise) of all amounts payable by the other Borrower under this Agreement and
any other Loan Document and all Hedging Obligations. Upon
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failure by such other Borrower to pay punctually any such amount, each Borrower
agrees that it shall forthwith on demand pay the amount not so paid at the place
and in the manner specified in this Agreement, the other relevant Loan Document
or the document with respect to any Hedging Obligations (which shall be included
in the definition of "Loan Documents" for purposes of Section 9.02 hereof), as
the case may be.
Section 9.02. Guaranty Unconditional. The obligations of each Borrower
under this Article shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(a) any extension, renewal, settlement, compromise, waiver or release in
respect of any obligation of the other Borrower, any other Obligor or any other
Person under any Loan Document, by operation of law or otherwise;
(b) any modification or amendment of or supplement to this Agreement, any
Note or any other Loan Document;
(c) any release, impairment, non-perfection or invalidity of any direct or
indirect security for any obligation of the other Borrower, any other Obligor or
any other Person under any Loan Document;
(d) any change in the corporate existence, structure or ownership of the
other Borrower, any other Obligor or any other Person or any of their respective
Subsidiaries, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting the other Borrower, any other Obligor or any other Person
or any of their assets or any resulting release or discharge of any obligation
of the other Borrower, any other Obligor or any other Person contained in any
Loan Document;
(e) the existence of any claim, set-off or other rights which such Borrower
may have at any time against the other Borrower, any other Obligor, the Agent,
any Lender or any other Person, whether in connection herewith or any unrelated
transactions, provided that nothing herein shall prevent the assertion of any
such claim by separate suit or compulsory counterclaim;
(f) any invalidity or unenforceability relating to or against the other
Borrower, any other Obligor or any other Person for any reason of this
Agreement, any Note or any other Loan Document, or any provision of applicable
law or regulation purporting to prohibit the payment by the other Borrower, any
other Obligor or any other Person of the principal of or interest on any Note or
any other amount payable by the other Borrower under any Loan Document; or
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(g) any other act or omission to act or delay of any kind by the other
Borrower, any other Obligor, the Agent, any other party to any Loan Document,
any Lender or any other Person or any other circumstance whatsoever which might,
but for the provisions of this paragraph, constitute a legal or equitable
discharge of or defense to either Borrower's obligations under this Article.
Section 9.03. Discharge Only upon Payment in Full; Reinstatement In Certain
Circumstances. Each Borrower's obligations under this Article shall remain in
full force and effect so long as any Lender shall have any Commitment or any
outstanding Letter of Credit under this Agreement or any principal of or
interest on any Loan or any Note or any reimbursement obligation with respect to
any Letter of Credit issued pursuant to this Agreement or any other amount
payable under this Agreement or any other Loan Document or any Hedging
Obligations shall remain unpaid. If at any time any payment of any amount
payable by the other Borrower under this Agreement, any other Loan Document or
any document in respect of Hedging Obligations is rescinded or must be otherwise
restored or returned upon the insolvency or receivership of the other Borrower
or otherwise, each Borrower's obligations under this Article with respect to
such payment shall be reinstated as though such payment had been due but not
made at such time.
Section 9.04. Waiver by the Borrowers. Each Borrower irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
corporation or person against the other Borrower or any other Person.
Section 9.05. Subrogation. Upon making any payment with respect to the
other Borrower under this Article, each Borrower shall be subrogated to the
rights of the payee against such other Borrower with respect to such payment;
provided that the Borrower making such payment pursuant to this Article shall
not enforce any payment by way of subrogation, or by reason of contribution
against any other guarantor of such other Borrower's obligations guaranteed
under this Article, until (x) all amounts of principal of and interest on the
Loans, (y) all reimbursement obligations with respect to any Letter of Credit
and all interest thereon and (y) all other amounts payable by such other
Borrower under this Agreement and any other Loan Documents and (z) all Hedging
Obligations have been paid in full, all outstanding Letters of Credit have been
canceled or expired and the Commitments of each Lender have been terminated.
Section 9.06. Stay of Acceleration. If acceleration of the time for payment
of any amount payable by either Borrower under this Agreement or any other Loan
Document or of any Hedging Obligation is stayed by reason of the insolvency or
receivership of such Borrower or otherwise, all such amounts
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otherwise subject to acceleration under the terms of this Agreement, any other
Loan Document or document in respect of Hedging Obligations shall nonetheless be
payable by the other Borrower under this Article forthwith on demand by the
Agent made at the request of the Required Lenders.
Section 9.07. Limitation on the Obligations. The obligations of each
Borrower solely as a "guarantor" of the obligations of the other Borrower under
this Article shall be limited to an aggregate amount that is equal to the
largest amount that would not render such obligations of such Borrower under
this Article subject to avoidance under Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx
Bankruptcy Code or any comparable provisions of applicable law.
ARTICLE 10
Miscellaneous
Section 10.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, telex, facsimile
transmission (with a copy by Unites States mail) or similar writing) and shall
be given to such party: (a) in the case of either Borrower or the Agent, at its
address, facsimile number or telex number set forth on the signature pages
hereof, (b) in the case of any Guarantor, in care of MGM Studios, (c) in the
case of any Lender, at its address, facsimile number or telex number set forth
in its Administrative Questionnaire or (d) in the case of any party, such other
address, facsimile number or telex number as such party may hereafter specify
for the purpose by notice to the Agent and the Borrowers. Each such notice,
request or other communication shall be effective (i) if given by telex, when
such telex is transmitted to the telex number specified in this Section and the
appropriate answerback is received, (ii) if given by facsimile transmission,
when transmitted to the facsimile number specified in this Section and
confirmation of receipt is received, (iii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iv) if given by any other means, when delivered at
the address specified in this Section; provided that notices to the Agent under
Article 2 or Article 8 shall not be effective until received.
Section 10.02. No Waivers. No failure or delay by the Agent or any Lender
in exercising any right, power or privilege hereunder or under any other Loan
Document shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
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Section 10.03. Expenses; Indemnification. (a) The Borrowers shall pay (i)
all out-of-pocket expenses of the Agent and the Arrangers, including reasonable
fees and disbursements of each special counsel for the Agent, in connection with
the preparation and administration of the Loan Documents, any waiver or consent
thereunder, any Additional Loan Request with respect thereto or any amendment
thereof or any Default or alleged Default thereunder, (ii) the reasonable fees
and expenses of consultants and other experts retained by the Agent or the
Required Lenders with the consent of the Borrowers (which consent shall not be
unreasonably withheld); provided that, if such consultants or other experts
shall have been retained in connection with any Default under the Loan
Documents, no such consent shall be required and (iii) if an Event of Default
occurs, all out-of-pocket expenses incurred by the Agent and each Lender,
including (without duplication) the reasonable fees and disbursements of outside
counsel and the allocated cost of inside counsel, in connection with such Event
of Default and collection, bankruptcy, insolvency and other enforcement
proceedings resulting therefrom.
(b) Each Borrower agrees to indemnify the Agent and each Lender, their
respective affiliates and the respective directors, officers, trustees, agents
and employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel and settlement costs, which may be incurred by such
Indemnitee in connection with any investigative, administrative or judicial
proceeding (whether or not such Indemnitee shall be designated a party thereto)
brought or threatened relating to or arising out of the Loan Documents or any
actual or proposed use of proceeds of Loans hereunder; provided that no
Indemnitee shall have the right to be indemnified hereunder for such
Indemnitee's own gross negligence or willful misconduct as determined by a court
of competent jurisdiction.
Section 10.04. Sharing of Set-offs. Each Lender agrees that if it shall, by
exercising any right of set-off or counterclaim or otherwise, receive payment of
a proportion of the aggregate amount of principal and interest then due with
respect to any Note and any Letter of Credit Liabilities held by it which is
greater than the proportion received by any other Lender in respect of the
aggregate amount of principal and interest then due with respect to any Note and
Letter of Credit Liabilities held by such other Lender, the Lender receiving
such proportionately greater payment shall purchase such participations in the
Notes held by the other Lenders, and such other adjustments shall be made, as
may be required so that all such payments of principal and interest then due
with respect to the Notes and Letter of Credit Liabilities held by the Lenders
shall be shared by the Lenders pro rata; provided that nothing in this Section
shall impair the right of any Lender to exercise any right of set-off or
counterclaim it may have and to apply the amount
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subject to such exercise to the payment of indebtedness of any Obligor other
than its indebtedness hereunder. Each Obligor agrees, to the fullest extent it
may effectively do so under applicable law, that any holder of a participation
in a Note or Letter of Credit Liabilities, whether or not acquired pursuant to
the foregoing arrangements, may exercise rights of set-off or counterclaim and
other rights with respect to such participation as fully as if such holder of a
participation were a direct creditor of such Obligor in the amount of such
participation.
Section 10.05. Amendments and Waivers; Release of Guarantors or Collateral;
Release of Rainbow Interest. (a) Any provision of this Agreement or the Notes
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed by each Borrower and the Required Lenders (and, if the rights or
duties of the Agent or any L/C Issuer are affected thereby, by such Agent or
such L/C Issuer, as relevant); provided that no such amendment or waiver shall:
(i) unless signed by all the Lenders with a Commitment of any Class,
increase or decrease the Commitments of such Class (except for a ratable
decrease in all the Commitments of such Class), subject any such Lender to any
additional obligation, or postpone the date fixed for the scheduled termination
of any Commitment of such Class;
(ii) unless signed by all Lenders holding Loans of any Class, reduce the
principal of or rate of interest on any Loans of, or fees with respect to, such
Class, postpone the date fixed for any scheduled payment of such fees or the
principal of or interest on any such Loans, or decrease the aggregate amount by
which such Loans are required to be repaid on any date scheduled pursuant to
Section 2.04 or postpone any date for such repayment;
(iii) unless signed by all Revolving Lenders, reduce the amount to be
reimbursed in respect of any Letter of Credit or of any interest with respect to
any Letter of Credit Liabilities or any fees payable by reference to the Letters
of Credit hereunder, postpone the date fixed for any payment of the amount to be
reimbursed in respect of any Letter of Credit or any interest thereon or any
fees payable by reference to the Letters of Credit hereunder or (except as
expressly provided in Section 2.14) expiry date of any Letter of Credit;
(iv) unless signed by the Swing Lender and each other Lender affected
thereby, increase the Swing Loan Commitment, postpone the date fixed for the
termination of the Swing Loan Commitment or otherwise affect any of its rights
or obligations hereunder;
(v) unless signed by all the Lenders, (i) add any new tranche or class of
commitments or loans under this Agreement (other than pursuant to an Additional
Loan Amendment) or (ii) change the percentage of the Commitments or of the
94
aggregate unpaid principal amount of the Notes or the Letter of Credit
Liabilities or the number of Lenders, which shall be required for the Lenders or
any of them to take any action under this Section or any other provision of this
Agreement.
(b) Any provision of the Loan Documents (other than this Agreement and the
Notes) may be amended or waived if, but only if, such amendment or waiver is in
writing and is signed by the relevant Obligor and the Agent with the consent of
the Required Lenders; provided that no such amendment or waiver shall, unless
signed by all the Lenders, effect or permit (i) a release of all or
substantially all of the Collateral or, except as provided in Section 2.15
hereof, provide for the sharing of such Collateral with additional obligations
or (ii) a release of all or substantially all of the Guarantors from their
obligations under the Subsidiary Guaranty. Notwithstanding the foregoing,
Collateral shall be released from the Lien of the Collateral Documents from time
to time as necessary to effect any sale, distribution or pledge of assets
permitted by the Loan Documents, and, in each case, the Agent shall execute and
deliver all release documents reasonably requested to evidence any such release.
(c) Notwithstanding the foregoing provisions of this Section 10.05, any
Additional Loan Amendment shall be effected with the consent of the Agent, the
Borrowers and the Lenders providing the Additional Loans and/or Additional Loan
Commitments with respect thereto.
(d) Upon written notice from either Borrower requesting the release of the
Rainbow Interest from the Lien of the Collateral Documents on a specified date
(the proposed "Rainbow Release Date"), which date shall be not less than 10
days, but not more than 30 days, after the date such notice is given, the
Rainbow Interest shall be released on the Rainbow Release Date from the Lien of
the Collateral Documents and the Rainbow Subsidiary shall be released from the
obligations of the Subsidiary Guaranty and the other Loan Documents, provided
that (i) immediately before and after giving effect to such proposed release, no
Default shall have occurred and be continuing, (ii) on a pro forma basis, the
Borrowers would be in compliance with Sections 5.12, 5.13, 5.15, 5.24 and 5.25
as of such date or, if applicable, as of the last day of the Fiscal Quarter then
most recently ended and (iii) immediately after giving effect thereto, the
aggregate amount of all Investments made pursuant to Section 5.18(j) would not
exceed the MGM Investment Limit, as adjusted after giving effect to the proposed
occurrence of the Rainbow Release Date.
Section 10.06. Successors and Assigns. (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that the Borrowers
may not assign or otherwise transfer any of their respective rights or
obligations hereunder without the prior written consent of each Lender and no
95
Lender may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an Eligible Assignee in accordance with the provisions
of subsection (b) of this Section, (ii) by way of participation in accordance
with the provisions of subsection (d) of this Section, (iii) by way of pledge or
assignment of a security interest subject to the restrictions of subsection (e)
or (h) of this Section or (iv) to an SPC in accordance with the provisions of
subsection (g) of this Section (and any other attempted assignment or transfer
by any party hereto shall be null and void). Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby
and, to the extent expressly contemplated hereby, the Indemnitees) any legal or
equitable right, remedy or claim under or by reason of this Agreement.
(b) Any Lender may at any time assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Revolving Commitment and the Loans (including
for purposes of this subsection (b), Letter of Credit Liabilities and
participations in Swing Loans) at the time owing to it); provided that (i)
except in the case of an assignment of the entire remaining amount of the
assigning Lender's Revolving Commitment and the Loans at the time owing to it or
in the case of an assignment to a Lender or a Lender Affiliate or an Approved
Fund with respect to a Lender, the aggregate amount of the Revolving Commitment
(which for this purpose includes any Loans or Letter of Credit Liabilities
outstanding thereunder) and the Loans subject to each such assignment,
determined as of the date the Assignment and Assumption with respect to such
assignment is delivered to the Agent or, if "Trade Date" is specified in the
Assignment and Assumption, as of the Trade Date, shall not be less than
$5,000,000 (provided that (x) multiple assignments that are made simultaneously
to or from Approved Funds that are administered or managed by the same Lender,
Lender Affiliate or other entity ("Family of Funds") shall be deemed to be a
single assignment for purposes of this calculation and (y) assignments among
Approved Funds belonging to a single Family of Funds shall not be subject to
such requirement) unless each of the Agent and, so long as no Event of Default
has occurred and is continuing, each Borrower otherwise consents (each such
consent not to be unreasonably withheld or delayed); (ii) each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender's rights and obligations under this Agreement with respect to
the Loans or the Revolving Commitment assigned; (iii) any assignment of a
Revolving Commitment must be approved by the Agent, the L/C Issuer and the Swing
Lender unless the Person that is the proposed assignee is itself a Lender or an
Approved Fund (whether or not the proposed assignee would otherwise qualify as
an Eligible Assignee); and (iv) the parties to each assignment shall execute and
deliver to the Agent either an Assignment and Assumption in substantially the
form of Exhibit D hereto or a Master Assignment and Assumption Agreement in
substantially the form of Exhibit E hereto (each, an
96
"Assignment and Assumption"), together with a processing and recordation fee of
$3,500 for each assignment; provided, however, that multiple assignments that
are made simultaneously to Approved Funds that are administered or managed by
the same Lender, Lender Affiliate or other entity, shall be subject to only one
such fee. Subject to acceptance and recording thereof by the Agent pursuant to
subsection (c) of this Section, from and after the effective date specified in
each Assignment and Assumption, the Eligible Assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.12, 8.03, 8.04 and 10.03 with
respect to facts and circumstances occurring prior to the effective date of such
assignment). Upon request, each Borrower (at its expense) shall execute and
deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
subsection shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
subsection (d) of this Section.
(c) The Agent, acting solely for this purpose as an agent of the
Borrowers, shall maintain a copy of each Assignment and Assumption delivered to
it and a register for the recordation of the names and addresses of the Lenders,
and the Revolving Commitments of, and principal amounts of the Loans and Letter
of Credit Liabilities owing to, each Lender pursuant to the terms hereof from
time to time (the "Register"). The entries in the Register shall be conclusive,
and the Borrowers, the Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrowers and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
(d) Any Lender may at any time, without the consent of, or notice to,
either Borrower or the Agent, sell participations to any Person (other than a
natural person, a Competitor, either Borrower or any of either Borrower's
Affiliates or Subsidiaries) (each, a "Participant") in all or a portion of such
Lender's rights and/or obligations under this Agreement (including all or a
portion of its Revolving Commitment and/or the Loans (including such Lender's
Letter of Credit Liabilities and/or participations in Swing Loans) owing to it);
provided that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the
97
performance of such obligations and (iii) each Borrower, the Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, waiver or other modification described in the provisos to each of
Section 10.05(a) and (b) that directly affects such Participant.
(e) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement (including under its Note,
if any) to secure obligations of such Lender, including any pledge or assignment
to secure obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.
(f) As used herein, the following terms have the following meanings:
"Eligible Assignee" means (a) a Lender, (b) a Lender Affiliate, (c) an
Approved Fund or (d) any other Person (other than a natural person) approved by
(i) the Agent, and in the case of any assignment of the Revolving Commitments,
Revolving Loans, Swing Loan participations or the Letter of Credit Liabilities,
the L/C Issuer and the Swing Lender, and (ii) unless an Event of Default has
occurred and is continuing, each Borrower (each such approval not to be
unreasonably withheld or delayed); provided that notwithstanding the foregoing,
"Eligible Assignee" shall not include a Competitor, either Borrower or any of
either Borrower's Affiliates or Subsidiaries.
"Lender Affiliate" means, with respect to any Lender, any Person that,
directly or indirectly through one or more intermediaries, controls such Lender,
is controlled by such Lender or is under common control with such Lender.
"Fund" means any Person (other than a natural person) that is (or will
be) engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.
"Approved Fund" means any Fund that is administered or managed by (a) a
Lender, (b) a Lender Affiliate or (c) an entity or an affiliate of an entity
that administers or manages a Lender.
"Competitor" means any Person whose primary line of business is the
entertainment industry (any such Person, an "Entertainment Person"), or any
98
Person controlled by, or under common control with, any Entertainment Person,
unless each of the Borrowers in its sole and absolute discretion has expressly
agreed in writing, prior to any proposed assignment or participation to such
Person, that such Person shall not be deemed to be a "Competitor".
(g) Notwithstanding anything to the contrary contained herein, any Lender
(a "Granting Lender") may grant to a special purpose funding vehicle identified
as such in writing from time to time by the Granting Lender to the Agent and
each Borrower (an "SPC") the option to provide all or any part of any Revolving
Loan that such Granting Lender would otherwise be obligated to make pursuant to
this Agreement or may assign to such SPC all or any part of any Tranche A Loan
or Tranche B Loan; provided that (i) nothing herein shall constitute a
commitment by any SPC to fund any Revolving Loan and (ii) if an SPC elects not
to exercise the option to fund any Revolving Loan or otherwise fails to make all
or any part of such Revolving Loan, the Granting Lender shall be obligated to
make such Revolving Loan pursuant to the terms hereof. Each party hereto hereby
agrees that (i) neither the grant to any SPC of the option to fund a Revolving
Loan nor the exercise by any SPC of such option nor the assignment to any SPC of
all or any part of any Tranche A Loan or Tranche B Loan shall increase the costs
or expenses or otherwise increase or change the obligations of either Borrower
under this Agreement (including its obligations under Section 8.03), (ii) no SPC
shall be liable for any indemnity or similar payment obligation under this
Agreement for which a Lender would be liable and (iii) the Granting Lender shall
for all purposes, including the approval of any amendment, waiver or other
modification of any provision of any Loan Document, remain the lender of record
hereunder. The making of a Revolving Loan by an SPC hereunder shall utilize the
Revolving Commitment of the Granting Lender to the same extent, and as if, such
Revolving Loan were made by such Granting Lender. In furtherance of the
foregoing, each party hereto hereby agrees (which agreement shall survive the
termination of this Agreement) that, prior to the date that is one year and one
day after the payment in full of all outstanding commercial paper or other
senior debt of any SPC, it will not institute against, or join any other Person
in instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency, or liquidation proceeding under the laws of the United States or any
state thereof. Notwithstanding anything to the contrary contained herein, any
SPC may (i) with notice to, but without prior consent of either Borrower and the
Agent and with the payment of a processing fee of $3,500, assign all or any
portion of its right to receive payment with respect to any Loan to the Granting
Lender and (ii) disclose on a confidential basis any non-public information
relating to (A) its funding of Revolving Loans or (B) any Tranche A Loan or
Tranche B Loan assigned to such SPC, in each case to any rating agency,
commercial paper dealer or provider of any surety or Guarantee or credit or
liquidity enhancement to such SPC.
99
(h) Notwithstanding anything to the contrary contained herein, any
Lender that is a Fund may create a security interest in all or any portion of
the Loans owing to it and the Note, if any, held by it to the trustee for
holders of obligations owed, or securities issued, by such Fund as security for
such obligations or securities; provided that unless and until such trustee
actually becomes a Lender in compliance with the other provisions of this
Section 10.06, (i) no such pledge shall release the pledging Lender from any of
its obligations under the Loan Documents and (ii) such trustee shall not be
entitled to exercise any of the rights of a Lender under the Loan Documents even
though such trustee may have acquired ownership rights with respect to the
pledged interest through foreclosure or otherwise.
Section 10.07. Collateral. Each of the Lenders represents to the Agent
and each of the other Lenders that it in good faith is not relying upon any
"margin stock" (as defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
Section 10.08. Governing Law; Submission to Jurisdiction. This Agreement
and each Note shall be governed by and construed in accordance with the laws of
the State of New York. Each Obligor hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York State court sitting in New York City for purposes
of all legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. Each Obligor irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum.
Section 10.09. Counterparts; Integration. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement constitutes the entire agreement and understanding among the
parties hereto and supersedes any and all prior agreements and understandings,
oral or written, relating to the subject matter hereof.
Section 10.10. Waiver of Jury Trial. EACH OF THE BORROWERS, THE AGENT
AND THE LENDERS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
Section 10.11. Confidentiality. The Agent and each Lender agrees to
keep any information delivered or made available by any Obligor pursuant to the
100
Loan Documents confidential from anyone other than persons employed or retained
by such Lender who are engaged in evaluating, approving, structuring or
administering the credit facility contemplated hereby; provided that nothing
herein shall prevent the Agent or any Lender from disclosing such information
(a) to any other Lender or to any other Agent, (b) to any other Person if
reasonably incidental to the administration of the credit facility contemplated
hereby, (c) upon the order of any court or administrative agency, (d) upon the
request or demand of any regulatory agency or authority, (e) which had been
publicly disclosed other than as a result of a disclosure by the Agent or any
Lender prohibited by this Agreement, (f) in connection with any litigation to
which the Agent, any Lender or its subsidiaries or Parent may be a party, (g) to
the extent necessary in connection with the exercise of any remedy hereunder,
(h) to such Lender's or such Agent's legal counsel and independent auditors and
(i) subject to provisions substantially similar to those contained in this
Section, to either (A) any actual or proposed Participant or Eligible Assignee
or (B) any direct or indirect contractual counterparties in swap agreements or
to the professional advisors of such swap counterparties.
Section 10.12. Non-reliance on Tracinda. It is understood by the
parties that neither Xxxx Xxxxxxxxx nor Tracinda nor any other Investor
individually or collectively, is a party to this Agreement or any other
agreement contemplated hereby. Accordingly, in the event (a) there is any
alleged breach or default by any party under this Agreement or any other
agreement contemplated herein, or (b) any party has any claim arising from or
relating to any such agreement, no party, nor any third party claiming through
such party, shall claim, commence any proceeding or otherwise seek to impose any
liability whatsoever against Xxxx Xxxxxxxxx or Tracinda or any other Investor by
reason of such alleged breach, default or claim.
101
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
METRO-XXXXXXX-XXXXX STUDIOS INC.
By: /s/ Xxx Xxxxx
-----------------------------------------
Name: Xxx Xxxxx
Title: Senior Executive Vice President
Address: 0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Telex: 000-000-0000
Facsimile: 310-449-3090
ORION PICTURES CORPORATION
By: /s/ Xxx Xxxxx
-----------------------------------------
Name: Xxx Xxxxx
Title: Senior Executive Vice President
Address: 0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Telex: 000-000-0000
Facsimile: 310-449-3090
BANK OF AMERICA, N.A.
By: /s/ Xxxxxxx Xxxxxx
--------------------------------
Name: Xxxxxxx Xxxxxx
Title: Managing Director
BANK OF SCOTLAND
By: /s/ Xxxxxx Xxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxx
Title: 1/st/ Vice President
BOS (U.S.A.) INC.
By: /s/ Xxxxxx Xxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxx
Title: 1/st/ Vice President
BANK OF SCOTLAND
as Administrative Agent
for BoS (USA) Inc.
SOCIETE GENERALE - NEW YORK BRANCH
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
THE BANK OF NOVA SCOTIA
By: /s/ Xxxx X. Xxxxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Managing Director
FLEET NATIONAL BANK
By: /s/ Xxxxxx Xxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxx
Title: Director
THE BANK OF NEW YORK
By: /s/ Xxxx X. Xxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxx
Title: Senior Vice President
CITY NATIONAL BANK,
a national banking association
By: /s/ Xxxxxxx X. XxXxxx
------------------------------------
Name: Xxxxxxx X. XxXxxx
Title: Senior Vice President
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Xxxxx X. Xxxxx
------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ W. Xxxxxx XxXxxxxxx
--------------------------------
Name: W. Xxxxxx XxXxxxxxx
Title: Duly Authorized Signatory
UNITED CALIFORNIA BANK
By: /s/ Xxxxxxx Xxxxx
------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President
BNP PARIBAS
By: /s/ Xxxxxxxxxx Xxxxxxx
--------------------------
Name: Xxxxxxxxxx Xxxxxxx
Title: Director
By: /s/ Xxxxxxxx Xxxxxxxx
--------------------------
Name: Xxxxxxxx Xxxxxxxx
Title: Director
COMERICA BANK-CALIFORNIA
By: /s/ Xxxx X. Tu
------------------------
Name: Xxxx X. Tu
Title: Vice President
ARAB BANKING
CORPORATION (B.S.C.)
By: /s/ Xxxxxxx Xxxxxxxxx
-------------------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: AGM - Credit Department
By: /s/ Xxxxxxx Xxxxxx
-------------------------------------------
Name: Xxxxxxx Xxxxxx
Title: VP - Corporate Banking
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Xxxxx Xxxxx
------------------------------
Name: Xxxxx Xxxxx
Title: Vice President
VEREINS- UND WESTBANK AG
By: /s/ A. Druskelt
-------------------------------
Name: A. Druskelt
Title: Assistant Vice President
By: /s/ Xxxxx
-------------------------------
Name: Xxxxx
Title: Vice President
NATEXIS BANQUES POPULAIRES
By: /s/ Xxxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President & Group Manager
JPMORGAN CHASE BANK
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
THE ROYAL BANK OF SCOTLAND
By: /s/ Xxxxx Xxxxx
--------------------------------------------
Name: Xxxxx Xxxxx
Title: Senior Vice President
BANK OF AMERICA, N.A., as Agent
By: /s/ Xxxx Xxxxxx
--------------------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
PRICING SCHEDULE
As used herein:
"Base Rate Margin" means, for any Loan and for any day, the rate per
annum set forth in the grid below in the applicable row corresponding to the
Type of such Loan and under the column corresponding to the APLR as of such
date.
"Euro-Dollar Margin" means, for any Loan and for any day, the rate per
annum set forth in the grid below in the applicable row corresponding to the
Type of such Loan and under the column corresponding to the APLR as of such
date.
"Commitment Fee Rate" means, for any day, the rate per annum set forth
in the grid below in the applicable row corresponding to the Utilization as of
such date and under the column corresponding to the APLR as of such date.
"Utilization" means for any day a fraction (expressed as a percentage)
the numerator of which is the aggregate amount of Revolving Exposures and the
denominator of which is the aggregate amount of Revolving Commitments, each
determined as of such date.
"Letter of Credit Fee Rate" means, for any day, the rate per annum set
forth in the grid below in the applicable row under the column corresponding to
the APLR as of such date.
"Applicable Pricing Leverage Ratio" or "APLR" means, at any date, the
ratio of Total Borrowed Funds to Film Value on the last day of the Fiscal
Quarter ended most recently prior to such date and for which Fiscal Quarter the
Borrowers have delivered the financial statements required pursuant to 5.01(a)
or (b), as the case may be; provided that if either Borrower fails to timely
deliver any financial statements required to be delivered pursuant to 5.01(a) or
(b), as the case may be, with respect to any Fiscal Quarter, the Applicable
Pricing Leverage Ratio for each day from and including the day on which such
Borrower is required to deliver such financial statements to but excluding the
day on which such Borrower delivers such financial statement shall be deemed to
be greater than 0.125 to 1.
================================================================================
APLR **** 0.125 APLR * 0.125
(basis points) (basis points)
================================================================================
Base Rate Margin
Revolving Loans .......... 175 150
Tranche A Loans .......... 175 000
Xxxxxxx X Loans .......... 200 200
--------------------------------------------------------------------------------
* means less than
**** means greater than or equal to
================================================================================
APLR **** 0.125 APLR * 0.125
(basis points) (basis points)
--------------------------------------------------------------------------------
Euro-Dollar Margin
Revolving Loans ............. 275 250
Tranche A Loans ............. 275 000
Xxxxxxx X Loans ............. 300 300
--------------------------------------------------------------------------------
Commitment Fee Rate
Utilization **** 50% ........ 50 50
Utilization * 50% ........... 62.5 62.5
--------------------------------------------------------------------------------
Letter of Credit Fee Rate ..... 275 250
================================================================================
* means less than
**** means greater than or equal to
