EXHIBIT 1.2
$200,000,000
MGM GRAND, INC.
(a Delaware corporation)
6-7/8% Senior Collateralized Notes Due 2008
PURCHASE AGREEMENT
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February 3, 1998
Deutsche Xxxxxx Xxxxxxxx Inc.
BancAmerica Xxxxxxxxx Xxxxxxxx
c/o Deutsche Xxxxxx Xxxxxxxx Inc.
00 Xxxx 00xx xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
MGM Grand, Inc., a Delaware corporation (the "Company"), confirms its
agreement with Deutsche Xxxxxx Xxxxxxxx Inc. and BancAmerica Xxxxxxxxx Xxxxxxxx
(collectively, the "Underwriters", for whom Deutsche Xxxxxx Xxxxxxxx Inc. is
acting as representative (in such capacity, Deutsche Xxxxxx Xxxxxxxx Inc. shall
hereinafter be referred to as the "Representative"), with respect to the sale by
the Company and the purchase by the Underwriters, acting severally and not
jointly, of $200,000,000 aggregate principal amount of the Company's 6-7/8%
Senior Collateralized Notes Due 2008(the "Securities"). The Securities are to be
issued in the form set forth in and pursuant to an indenture (the "Indenture")
between the Company, certain subsidiaries of the Company (the "Subsidiary
Guarantors") who have guaranteed pursuant to guarantees included in the
Indenture (the "Subsidiary Guarantees"), the interest and other amounts payable
on the Securities and U.S. Trust Company of California, N.A., as trustee (the
"Trustee"). The Securities and the Subsidiary Guarantees will be secured by
certain property and assets of the Company and the Subsidiary Guarantors to the
extent provided in the Collateral Documents (as defined in the Indenture). As
used herein, the term "Transaction Agreements" shall mean collectively, the
Indenture and the Collateral Documents.
The Company and the Subsidiary Guarantors have filed with the Securities
and Exchange Commission (the "Commission") a registration statement (as amended
to the date of this Agreement, the "Registration Statement") on Form S-3 (No.
333-31845) including a prospectus relating to the registration of debt and
common stock of the Company, including the Securities and the Subsidiary
Guarantees (the "Registration Statement") pursuant to the Securities Act of
1933, as amended (the "1933 Act") and have filed with, mailed for filing to, or
shall promptly hereafter file with or transmit to the Commission a final
prospectus supplement specifically relating to the Securities and the Subsidiary
Guarantees pursuant to Rule 424 of the rules and regulations of the Commission
under the 1933 Act (the "1933 Act Regulations"). The term "Basic Prospectus"
means the prospectus (other than the prospectus supplement specifically relating
to the Securities and the Subsidiary Guarantees) included in the Registration
Statement. The term "Prospectus" means the Basic Prospectus together with the
final prospectus supplement specifically relating to the Securities and the
Subsidiary Guarantees. The term "preliminary prospectus" means a preliminary
prospectus supplement specifically relating to the Securities and the Subsidiary
Guarantees, together with the Basic Prospectus. All references in this Agreement
to financial statements and schedules and other information which is
"contained," "included" or "stated" in the Registration Statement, the Basic
Prospectus, the Prospectus or the preliminary prospectus (and all other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is or is deemed
to be incorporated by reference in the Registration Statement, the Basic
Prospectus, the Prospectus or the preliminary prospectus, as the case may be;
and all references in this Agreement to amendments or supplements to the
Registration Statement, the Basic Prospectus, the Prospectus or the preliminary
prospectus shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), or the rules
and regulations of the Commission under the 1934 Act (the "1934 Act
Regulations") which is or is deemed to be incorporated by reference in the
Registration Statement or the Prospectus, as the case may be.
SECTION 1. Representations and Warranties.
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(a) The Company and the Subsidiary Guarantors jointly and severally
represent and warrant to each Underwriter as of the
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date hereof as follows:
(i) At the time the Registration Statement became effective and as
of the date hereof, the Registration Statement and the Prospectus complied
in all material respects with the requirements of the 1933 Act and the 1933
Act Regulations and the 1939 Act and the rules and regulations of the
Commission under the 1939 Act (the "1939 Act Regulations"), and did not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading. The Prospectus, on the date hereof and at Closing
Time referred to in Section 2 hereof, will not include an untrue statement
of a material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the representations
and warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or Prospectus made in reliance
upon and in conformity with information furnished to the Company in writing
by any Underwriter through the Representative expressly for use in the
Registration Statement or Prospectus.
(ii) The accountants who certified the financial statements and
supporting schedules included in the Registration Statement are independent
public accountants as required by the 1933 Act and the 1933 Act
Regulations.
(iii) The financial statements included in the Registration Statement
and the Prospectus present fairly the financial position of the Company and
its consolidated subsidiaries as at the dates indicated and the results of
their operations for the periods specified; except as otherwise stated in
the Registration Statement, said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis; the supporting schedules included in the Registration
Statement present fairly the information required to be stated therein; and
the Company's ratios of earnings to fixed charges (actual and, if any, pro
forma) included in the Prospectus have been calculated in compliance with
Item 503(d) of Regulation S-K of the Commission.
(iv) Since the respective dates as of which
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information is given in the Registration Statement and the Prospectus,
except as otherwise stated therein, (A) there has been no material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course
of business, (B) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary course
of business, which are material with respect to the Company and its
subsidiaries considered as one enterprise, and (C) there has been no
dividend or distribution of any kind declared, paid or made by the Company
on any class of its capital stock.
(v) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware
with corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus and to enter
into and perform its obligations under this Agreement; and the Company is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not have a material
adverse effect on the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company and its Subsidiaries
considered as one enterprise.
(vi) Except in connection with the operation of MGM Grand Australia
Pty, Ltd. ("MGM Australia") and MGM South Africa Pty, Ltd., the Company
does not own, lease or license any asset or property or conduct any
business outside the United States of America. Each of MGM Grand Hotel,
Inc. ("MGM Hotel"), MGM Grand Hotel Finance Corp. ("MGM Finance"), Destron,
Inc., MGM Australia, MGM Grand Merchandising, Inc., MGMG Trading Co., MGM
Grand Movieworld, Inc. ("MGM Movieworld"), Grand Laundry, Inc. ("MGM
Laundry"), MGM Grand Diamond, Inc. ("MGM Diamond"), MGM Grand Monorail,
Inc. ("MGM Monorail"), MGM Dist., Inc., Destron Marketing, Inc., Diamond
Darwin Pty, Ltd., Diamond Leisure Pty, Ltd., Fernbank Pty, Ltd. and MGM
Grand Atlantic City, Inc. ("MGM Atlantic City"), MGM Grand Development,
Inc., MGM Grand South Africa, Inc., MGM Grand South Africa PTY LTD., MGM
Grand Detroit, Inc. and MGM
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Grand Detroit, LLC ("Detroit LLC") (collectively, the "Subsidiaries" and
individually a "Subsidiary"), has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its state or
other jurisdiction of incorporation. Each Subsidiary is duly qualified and
in good standing as a foreign corporation in each jurisdiction in which the
character or location of its assets or property (owned, leased or licensed)
or the nature of its business makes such qualification necessary, except
for such jurisdictions where the failure to qualify would not have a
material adverse effect on the assets or properties, business, results of
operations or financial condition of the Company and its Subsidiaries
considered as one enterprise. Except through the Company's interest in New
York-New York, LLC and The MGM Grand-Bally's Monorail Limited Liability
Company, the Company does not control, directly or indirectly, any
corporation, partnership, joint venture, association or other business
organization other than the Subsidiaries. All of the issued and outstanding
capital stock of each Subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable and is owned by the Company,
directly or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity (except for Liens
securing the Facility, the Securities and the Subsidiary Guarantees and
Permitted Liens under the Indenture).
(vii) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under "Capitalization" (except
for subsequent issuances, if any, pursuant to this Agreement or pursuant to
reservations, agreements, employee benefit plans or the exercise of
convertible securities referred to in the Prospectus); and the shares of
issued and outstanding Common Stock have been duly authorized and validly
issued and are fully paid and non-assessable.
(viii) The Company and each of the Subsidiaries has all requisite
corporate power and authority, and all necessary authorizations, approvals,
consents, orders, licenses, certificates and permits of and from all
governmental or regulatory bodies or any other person or entity, including
any and all licenses, permits and approvals required under any foreign,
federal, state or local law (including the Nevada Gaming Control Act, the
New Jersey Casino Control Act, the Gaming Control Act of
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1933 of the Northern Territory and the rules and regulations thereunder and
any similar laws and regulations governing any aspect of legalized gaming
in any foreign, federal, state or local jurisdiction (collectively, the
"Gaming Laws")), to own, lease and license its assets and properties and to
conduct its business, but only to the extent the same are currently
conducted and operated as described in the Registration Statement and the
Prospectus. The Company and each of the Subsidiaries have fulfilled and
performed in all material respects all of their obligations with respect to
such authorizations, approvals, consents, orders, licenses, certificates
and permits, and neither the Company nor any Subsidiary is in violation of
any term or provision of any such authorizations, approvals, consents,
orders, licenses, certificates or permits, nor has any event occurred which
allows, or after notice or lapse of time would allow, revocation or
termination thereof or which could result in any material impairment of the
rights of the holder thereof. Neither the Company nor any of the
Subsidiaries has any reason to believe that any governmental or regulatory
body is considering modifying, limiting, conditioning, suspending, revoking
or not renewing any such authorizations, approvals, consents, orders,
licenses, certificates or permits of the Company or any of the Subsidiaries
or that such governmental or regulatory bodies are investigating the
Company or any of the Subsidiaries or related parties (other than normal
overseeing reviews by such bodies incident to the gaming activities and
casino management activities of the Company and the Subsidiaries).
(ix) Neither the Company nor any Subsidiary is in violation of its
charter or in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to
which the Company or any Subsidiary is a party or by which it or any of
them may be bound, or to which any of the property or assets of the Company
or any Subsidiary is subject except for any violation or default which,
individually or in the aggregate, would not have a material adverse effect
on the Company and its subsidiaries considered as one enterprise; and the
execution, delivery and performance of this Agreement, the Indenture, the
Collateral Documents and the Securities and the consummation of the
transactions contemplated herein
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and therein and compliance by the Company and the Subsidiary Guarantors
with their obligations hereunder and thereunder have been duly authorized
by all necessary corporate action and will not conflict with or constitute
a breach of, or default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company
or any Subsidiary pursuant to, any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Company or any
Subsidiary is a party or by which it or any of them may be bound, or to
which any of the property or assets of the Company or any Subsidiary is
subject (except for Liens securing the Securities or the collateral
Guarantees), nor will such action result in any violation of the provisions
of the charter or by-laws of the Company or any Subsidiary or any
applicable law, administrative regulation or administrative or court
decree.
(x) No labor dispute with the employees of the Company or any
Subsidiary exists or, to the knowledge of the Company, is imminent; and the
Company is not aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers, manufacturers or contractors
which might be expected to result in any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its Subsidiaries considered as one
enterprise.
(xi) There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or
any Subsidiary, which is required to be disclosed in the Registration
Statement or the Prospectus (other than as disclosed therein), or which
might result in any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of
the Company and its Subsidiaries considered as one enterprise, or which
might materially and adversely affect the properties or assets thereof or
which might materially and adversely affect the consummation of this
Agreement; all pending legal or governmental proceedings to which the
Company or any Subsidiary is a party or of which any of their respective
property or assets is the subject which are not described in the
Registration Statement, including ordinary routine litigation incidental to
the business,
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are, considered in the aggregate, not material; and there are no contracts
or documents of the Company or any Subsidiary which are required to be
filed as exhibits to the Registration Statement or otherwise included by
the 1933 Act or by the 1933 Act Regulations which have not been so filed or
included.
(xii) The Company and the Subsidiaries own, have incidental rights to
or possess, or can acquire on reasonable terms, the patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and trade
names (collectively, "patent and proprietary rights") presently employed by
them in connection with the business now operated by them, and neither the
Company nor any Subsidiary has received any notice or is otherwise aware of
any infringement of or conflict with asserted rights of others with respect
to any patent or proprietary rights, or of any facts which would render any
patent and proprietary rights invalid or inadequate to protect the interest
of the Company or any Subsidiary therein, and which failure, infringement
or conflict (if the subject of any unfavorable decision, ruling or finding)
or invalidity or inadequacy, singly or in the aggregate, would result in
any material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company and its
Subsidiaries considered as one enterprise.
(xiii) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the
offering, issuance or sale of the Securities hereunder, other than as
required under the Nevada Gaming Laws, as herein after defined, which have
been obtained and, except such as may be required under the 1933 Act or the
1933 Act Regulations or state securities laws or the qualification of the
Indenture under the 1939 Act.
(xiv) This Agreement has been duly executed and delivered by the
Company and the Subsidiary Guarantors.
(xv) The Indenture has been duly authorized by the Company and the
Subsidiary Guarantors and, at the Closing Time, will have been duly
qualified under the 1939 Act and duly executed and delivered by the Company
and the
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Subsidiary Guarantors and will constitute a valid and binding agreement of
the Company and the Subsidiary Guarantors, enforceable against them in
accordance with its terms, except as the enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general
equitable principles.
(xvi) The Securities have been duly authorized and, at the Closing
Time, will have been duly executed by the Company and, when authenticated
in the manner provided for in the Indenture and delivered against payment
of the Purchase Price therefor (as hereinafter defined in Section 2, will
constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles, and will be
in the form contemplated by, and entitled to the benefits of, the
Indenture.
(xvii) The Company and each Subsidiary Guarantor have all requisite
power and authority to enter into the respective Transaction Agreements to
which it is a party and to carry out the provisions and conditions thereof
including, without limitation, the power and authority to grant and perfect
the liens in the Collateral pursuant to the Collateral Documents.
(xviii) The Securities and the Indenture will conform in all material
respects to the respective statements relating thereto contained in the
Prospectus and will be in substantially the respective forms filed or
incorporated by reference, as the case may be, as exhibits to the
Registration Statement.
(xix) The Securities rank and will rank on a parity with (i) all
indebtedness of the Company outstanding under the Facility (as defined
under "Credit Facility" in the Basic Prospectus) that is outstanding on the
date hereof or that may be incurred hereafter (the "Facility Debt") and
(ii) all indebtedness of the Company outstanding under its 6.95% Senior
Collateralized Notes due 2005 that is outstanding on the date hereof or
that may be incurred hereafter (the "Prior Note Debt" and collectively with
the
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Facility Debt the "Other Senior Debt"), and are secured equally and ratably
with the Other Senior Debt, on a first priority basis (subject to Permitted
Liens), by a pledge of all of the assets securing the Other Senior Debt
except as set forth in the Prospectus. The description of the Collateral in
the Collateral Documents is identical to the Collateral securing the Other
Senior Debt except for the Conditional Collateral which secures only the
Facility Debt on the date hereof.
(xx) The documents incorporated or deemed to be incorporated by
reference in the Prospectus, at the time they were or hereafter are filed
with the Commission, complied and will comply in all material respects with
the requirements of the 1934 Act and the 1934 Act Regulations, and, when
read together with the other information in the Prospectus, at the time the
Registration Statement and any amendments thereto become effective and at
the Closing Time, will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) Any certificate signed by any officer of the Company and delivered to
the Representative or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby.
SECTION 2. Sale and Delivery to Underwriters: Closing.
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(a) On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Company agrees to
sell to each Underwriter, severally and not jointly, and each Underwriter,
severally and not jointly, agrees to purchase from the Company, at 98.533% of
the principal amount thereof plus accrued interest, if any, from February 6,
1998 (the "Purchase Price"), the aggregate principal amount of Securities set
forth in Schedule A opposite the name of such Underwriter, plus any additional
principal amount of Securities which such Underwriter may become obligated to
purchase pursuant to the provisions of Section 10 hereof.
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The underwriters propose to offer the Securities from time to time for sale
in one or more negotiated transactions, or otherwise, at market prices
prevailing at the time of sale, at prices relating to such prevailing market
prices or at negotiated prices. Such transactions may be effected to or through
dealers, and such dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the underwriters and/or the
purchasers of the Securities for whom they may act as agents.
(b) Payment of the Purchase Price for, and delivery of certificates
for, the Securities shall be made at the office of Xxxxxx, Xxxx & Xxxxxxxx, 000
Xxxxx Xxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx, or at such other place as shall be
agreed upon by the Representative and the Company, at 10:00 A.M. (New York Time)
on February 6, 1998 (unless postponed in accordance with the provisions of
Section 10), or such other time not later than five business days after such
date as shall be agreed upon by the Representative and the Company (such time
and date of payment and delivery being herein called "Closing Time"). Payment
shall be made to the Company by wire transfer of same day funds payable to the
order of the Company, against delivery to the Representative for the respective
accounts of the Underwriters of the Securities to be purchased by them. One or
more global certificates representing the Securities shall be delivered to The
Depository Trust Company ("DTC"). Interests in the Underwriters' Securities
will be represented by book entries on the records of DTC as the Representative
may request not less than two full business days in advance of the Closing Date.
The Company agrees to have the global certificate(s), if any, available for
inspection by the Representative in New York, New York, not later than 1:00 p.m.
on the business day prior to the Closing Date.
SECTION 3. Covenants of the Company. The Company covenants with each
------------------------
Underwriter as follows:
(a) The Company will notify the Representative immediately, and
confirm the notice in writing, (i) of the effectiveness of the Registration
Statement and any amendment thereto (including any post-effective
amendment), (ii) of the receipt of any comments from the Commission, (iii)
of any request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus or for
additional information, and (iv) of the issuance by the Commission of
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any stop order suspending the effectiveness of the Registration Statement
or the initiation of any proceedings for that purpose. The Company will
make every reasonable effort to prevent the issuance of any stop order and,
if any stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(b) The Company will give the Representative notice of its intention
to file or prepare any amendment to the Registration Statement (including
any post-effective amendment) or any amendment or supplement to the
Prospectus, whether pursuant to the 1933 Act, the 1934 Act or otherwise,
will furnish the Representative with copies of any such amendment or
supplement a reasonable amount of time prior to such proposed filing or
use, as the case may be, and will not file any such amendment or supplement
or use any such Prospectus to which the Representative or counsel for the
Underwriters shall object.
(c) The Company will deliver to the Representative as many signed
copies of the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be incorporated
by reference therein) as the Representative may reasonably request and will
also deliver to the Representative a conformed copy of the Registration
Statement as originally filed and of each amendment thereto (without
exhibits) for each of the Underwriters.
(d) The Company will furnish to each Underwriter, from time to time
during the period when the Prospectus is required to be delivered under the
1933 Act or the 1934 Act, such number of copies of the Prospectus (as
amended or supplemented) as such Underwriter may reasonably request for the
purposes contemplated by the 1933 Act or the 1934 Act or the respective
applicable rules and regulations of the Commission thereunder.
(e) If any event shall occur as a result of which it is necessary, in
the opinion of counsel for the Underwriters, to amend or supplement the
Prospectus in order to make the Prospectus not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, the
Company will forthwith amend or supplement the Prospectus (in form and
substance satisfactory to counsel for the Underwriters) so that, as
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so amended or supplemented, the Prospectus will not include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
existing at the time it is delivered to a purchaser, not misleading, and
the Company will furnish to the Underwriters a reasonable number of copies
of such amendment or supplement.
(f) The Company will endeavor, in cooperation with the Underwriters,
to qualify the Securities for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United States
as the Representative may designate; provided, however, that the Company
shall not be obligated to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified. In each jurisdiction in which
the Securities have been so qualified, the Company will file such
statements and reports as may be required by the laws of such jurisdiction
to continue such qualification in effect for a period of not less than one
year from the effective date of the Registration Statement.
(g) The Company will make generally available to its security holders
as soon as practicable, but not later than 50 days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 of the 1933 Act Regulations) covering a 12-month
period beginning not later than the first day of the Company's fiscal
quarter next following the "effective date" (as defined in said Rule 158)
of the Registration Statement.
(h) The Company will use the net proceeds received by it from the
sale of the Securities in the manner specified in the Prospectus under "Use
of Proceeds".
(i) The Company, during the period when the Prospectus is required to
be delivered under the 1933 Act or the 1934 Act, will file all documents
required to be filed with the Commission pursuant to Section 13, 14 or 15
of the 1934 Act within the time periods required by the 1934 Act and the
1934 Act Regulations.
(j) During a period of 90 days from the date of the Pricing
Agreement, the Company will not, without the Representative's prior written
consent, directly or
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indirectly, sell, offer to sell, grant any option for the sale of, or
otherwise dispose of, any Securities or securities similar to the
Securities, or any securities convertible into or exchangeable or
exercisable for any Securities or any such similar securities, except for
Securities sold to the Underwriters pursuant to this Agreement.
SECTION 4. Payment of Expenses. The Company will pay all expenses
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incident to the performance of its obligations under this Agreement, including
(i) the printing and filing of the Registration Statement as originally filed
and of each amendment thereto, (ii) the printing of this Agreement, the
Indenture and the Pricing Agreement, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters, (iv) the
fees and disbursements of the Company's counsel and accountants, (v) the
qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the fees and
disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of a Blue Sky Survey and a Legal Investment
Survey, if any, (vi) the printing and delivery to the Underwriters of copies of
the Registration Statement as originally filed and of each amendment thereto, of
each preliminary prospectus, and of the Prospectus and any amendments or
supplements thereto, (vii) the printing and delivery to the Underwriters of
copies of a Blue Sky Survey and any Legal Investment Survey, (viii) the fees and
expenses of the Trustee, including the fees and disbursements of counsel for the
Trustee in connection with the Indenture and the Securities; (ix) any fees
payable in connection with the rating of the Securities; and (x) the fee of the
National Association of Securities Dealers, Inc.
If this Agreement is terminated by the Representative in accordance with
the provisions of Section 5 or Section 9(a)(i) hereof, the Company shall
reimburse the Underwriters for all of their out-of-pocket expenses, including
the reasonable fees and disbursements of counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations
---------------------------------------
of the Underwriters hereunder are subject to the accuracy of the representations
and warranties of the Company and the Subsidiary Guarantors herein contained, to
the performance by the Company of its obligations hereunder, and to
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the following further conditions:
(a) No stop order suspending the effectiveness of the Registration Statement
shall have been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission.
(b) At Closing Time the Representative shall have received:
(1) The favorable opinion, dated as of Closing Time, of
Xxxxxxxxxxx, Xxxxxx, Xxxx, Xxxxxx, Xxxxxx, Xxxx & Xxxxxxx, LLP,
counsel for the Company, in form and substance satisfactory to counsel
for the Underwriters, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State Delaware.
(ii) The Company has all requisite corporate power and
authority to own, lease and operate its properties and to conduct
its business as described in the Registration Statement and
Prospectus, but only to the extent the same are currently
conducted and operated, and to enter into and perform its
obligations under this Agreement, the Indenture, the Securities
and the Collateral Documents to which it is a party.
(iii) To the best of their knowledge and information, the
Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which
such qualification is required, except where failure to be in
good standing would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Company and its Subsidiaries
considered as one enterprise.
(iv) Each Subsidiary has been duly incorporated and is
validly existing as a
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corporation in good standing under the laws of the jurisdiction
of its incorporation, has all requisite corporate power and
authority to own, lease and operate its properties, to conduct
its business as described in the Registration Statement and
Prospectus but only to the extent the same are currently
conducted and operated and to enter into and perform its
obligations under this Agreement, the Indenture, the Subsidiary
Guarantees and the Collateral Documents and, to the best of their
knowledge and information, is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, except
where failure to be in good standing would not have a material
adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company
and its Subsidiaries considered as one enterprise, assuming that
the Company acquired such shares in good faith and without
knowledge of any adverse claim, to the best of such counsel's
knowledge, all of the issued and outstanding capital stock of
each Subsidiary has been duly authorized and validly issued, is
fully paid and non-assessable and is owned by the Company,
directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity
(except for Liens securing the Facility, the Securities and the
Subsidiary Guarantees and Permitted Liens under the Indenture).
(v) This Agreement has been duly authorized, executed and
delivered by the Company and the Subsidiary Guarantors.
(vi) The Registration Statement is effective under the
1933 Act and, to the best of their knowledge and information, no
stop order suspending the effectiveness of the Registration
Statement has been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission.
(vii) At the time the Registration
16
Statement became effective and the date hereof, the Registration
Statement (other than the financial statements and supporting
schedules and other financial and statistical data included
therein, as to which no opinion need be rendered) complied as to
form in all material respects with the requirements of the 1933
Act and the 1933 Act Regulations.
(viii) To the best of their knowledge and information,
there are no legal or governmental proceedings pending or
threatened which are required to be disclosed in the Registration
Statement, other than those disclosed therein.
(ix) The information in the Prospectus under "Description
of Notes", to the extent that it constitutes matters of law,
summaries of legal matters, documents or proceedings, or legal
conclusions, has been reviewed by them and is correct in all
material respects.
(x) To the best of their knowledge and information, there
are no contracts, indentures, mortgages, loan agreements, notes,
leases or other instruments required to be described or referred
to in the Registration Statement or to be filed as exhibits
thereto other than those described or referred to therein or
filed or incorporated by reference as exhibits thereto, the
descriptions thereof or references thereto are correct in all
material respects, and no default exists in the due performance
or observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument so described, referred
to, filed or incorporated by reference, where the consequences of
such default would have a material adverse effect on the
condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Company and its Subsidiaries
considered as one enterprise.
(xi) No authorization, approval, consent or order of any
court or governmental authority
17
or agency is required in connection with the offering, issuance
or sale of the Securities and the Subsidiary Guarantees
contemplated herein and in the Prospectus, except (a) as
disclosed in the Registration Statement; (b) with respect to the
Conditional Collateral or (c) such as may be required under the
Nevada Gaming Laws, as herein after defined, which have been
obtained or the 1933 Act or the 1933 Act Regulations or state
securities law or the qualification of the Indenture under the
1939 Act; and, to the best of their knowledge and information,
the execution, delivery and performance of this Agreement, the
Indenture, the Collateral Documents, the Securities and the
Subsidiary Guarantees and the consummation of the transactions
contemplated herein and therein and compliance by the Company and
the Subsidiary Guarantors with its or their obligations hereunder
and thereunder will not conflict with or constitute a breach of,
or default under, or result in the creation or imposition of any
lien, charge or encumbrance (except for Liens securing the
Securities or the Collateral Guarantees or as otherwise
contemplated by the Indenture) upon any property or assets of the
Company or any of its Subsidiaries pursuant to, any contract,
indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company or any Subsidiary is a party or
by which it or any of them may be bound, or to which any of the
property or assets of the Company or any of its subsidiaries is
subject which would result in a material adverse effect on the
condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Company and its Subsidiaries
considered as one enterprise, nor will such action result in any
violation of the provisions of any applicable law, administrative
regulation or administrative or court decree which would result
in a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business
prospects of the Company and its Subsidiaries considered as one
enterprise or the charter or by-laws of the Company or any
Subsidiary.
18
(xii) To the best of their knowledge and information,
there are no persons with registration or other similar rights to
have any securities registered pursuant to the Registration
Statement or otherwise registered by the Company under the 1933
Act.
(xiii) The Indenture, the Securities and the Collateral
Documents have been duly authorized, and the Indenture and the
Collateral Documents have been duly executed and delivered by the
Company and (assuming the due authorization, execution and
delivery thereof by the Trustee) the Indenture and the Collateral
Documents constitute and the Securities, when executed by the
Company and authenticated by the Trustee in the manner provided
in the Indenture and delivered against payment therefor specified
in the Pricing Agreement, will constitute the valid and binding
agreements of the Company enforceable against the Company in
accordance with their terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar law relating to or affecting
creditors' rights generally or by general equitable principles,
and except that certain provisions of the above-referenced
documents may not be enforceable in whole or in part under the
laws of the State of Nevada, but the inclusion of such provisions
does not affect the validity of such documents and such documents
contain adequate provisions for enforcing payment of the monetary
obligations of the Company under the Securities and for the
practical realization of the rights and benefits afforded
thereby, provided such enforcement is conducted in accordance
with the procedures established by the laws of the State of
Nevada. We express no opinion with respect to enforceability of
the pledge of the Conditional Collateral.
(xiv) The Indenture, the Subsidiary Guarantees contained
within the Indenture and the Collateral Documents to which they
are a party have been duly authorized, executed and delivered by
the Subsidiary Guarantors and
19
(assuming the due authorization, execution and delivery thereof
by the Trustee) constitute valid and binding agreements of the
Subsidiary Guarantors enforceable against the Subsidiary
Guarantors in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar law relating to or
affecting creditors' rights generally or by general equitable
principles, and except that certain provisions of the above-
referenced documents may not be enforceable in whole or in part
under the laws of the State of Nevada, but the inclusion of such
provisions does not affect the validity of such documents and
such documents contain adequate provisions for enforcing payment
of the monetary obligations of the Company under the Securities
and for the practical realization of the rights and benefits
afforded thereby, provided such enforcement is conducted in
accordance with the procedures established by the laws of the
State of Nevada. Nevada law requires approval under the Nevada
Gaming Laws prior to the sale, disposition or distribution of
slot machines or other gaming devices or in order to operate or
conduct gaming activities at a gaming facility or to receive the
proceeds from either of the foregoing.
(xv) The Securities are in the form contemplated by the
Indenture.
(xvi) The Indenture has been duly qualified under the 1939
Act.
(xvii) The Securities, the Subsidiary Guarantees and the
Indenture conform in all material respects to the descriptions
thereof contained in the Prospectus.
(xviii) Each document filed pursuant to the 1934 Act (other
than the financial statements and supporting schedules included
therein, as to which no opinion need be rendered) and
incorporated or deemed to be incorporated by reference in the
Prospectus complied when so filed as to form in all
20
material respects with the 1934 Act and the 1934 Act Regulations.
(xix) Subject to the limitations on enforceability
contained in paragraphs (xiii) and (xiv) above, the Company
Pledge Agreement (as confirmed by the Confirmation of Pledge
Agreement) and Subsidiary Pledge Agreements create valid security
interests in favor of the trustee for the benefit of the holders
of the Securities in the pledged collateral described therein
delivered on or before the Closing Time. Such security interests
are perfected so long as the Administrative Agent, as defined in
the Intercreditor Agreement (as amended, restated or supplemented
to the Closing Time), maintains physical possession of the
pledged collateral pursuant to the terms of the Company Pledge
Agreement, the Subsidiary Pledge Agreements and the Intercreditor
Agreement.
(2) The favorable opinion, dated as of the Closing Time, of
Xxxxxx, Xxxxxx & Xxxxxxx, Nevada counsel for the Company, in form and
substance satisfactory to counsel for the Underwriters, to the effect
that:
(i) Each of MGM Hotel, MGM Finance, Destron, Inc., MGM
Movieworld, MGM Laundry, MGM Diamond, MGM Monorail and MGM Grand
Merchandising, Inc. (the "Nevada Subsidiaries") has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the State of Nevada. All of the issued
and outstanding shares of capital stock of each of the Nevada
Subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable and are directly owned of record by
the Company. Assuming that the Company acquired such shares in
good faith and without knowledge of any adverse claim, to the
best of such counsel's knowledge, the Company holds such shares
free and clear of any security interest, lien, encumbrance or
other adverse claim (except for Liens securing the Other Senior
Debt, the Securities and the Subsidiary Guarantees and Permitted
Liens under the
21
Indenture). To such counsel's knowledge, except as disclosed in the
Registration Statement and the Prospectus, there is no outstanding
subscription, option, warrant or other right calling for the issuance of
any share of stock of any of the Nevada Subsidiaries or any security
convertible into, exercisable for, or exchangeable for stock of any Nevada
Subsidiary.
(ii) Each of the Nevada Subsidiaries has all requisite corporate
power and authority to own, lease and license their assets and properties,
to conduct their businesses as described and to the extent described in the
Registration Statement and Prospectus, but only to the extent the same are
currently conducted and operated and to enter into and perform its
obligations under this Agreement, the Pricing Agreement, the Indenture, the
Subsidiary Guarantees contained within the Indenture and the Collateral
Documents to which they are parties.
(iii) To the extent they are parties thereto, the Indenture, the
Subsidiary Guarantees contained within the Indenture and the Collateral
Documents have been duly and validly authorized, executed and delivered by
each Nevada Subsidiary which is a Subsidiary Guarantor.
(iv) The Construction and Permanent Deed of Trust With Assignment of
Rents and Security Agreement and Fixture Filing from MGM Hotel as grantor
to First American Title Company of Nevada, as trustee for the benefit of
Trustee (the "Nevada Mortgage") creates a valid deed of trust Lien (as
defined in the Indenture) on MGM Hotel's interest in that portion of the
Property (as defined in the Mortgage) which constitutes real property and,
assuming due recordation of the Mortgage in the Official Records of the
Recorder of Xxxxx County, Nevada, imparts constructive notice of such Lien
to third parties as provided in NRS 111.320 for the benefit of Trustee as
trustee for the holders of the Securities and which secures the Secured
22
Obligations (as defined in the Mortgage). Subject to the limitations on
enforceability set forth in opinion ix and (x) below, each of the
Collateral Documents other than the Intercreditor Agreement (as amended,
restated or supplemented to the Closing Time) and the New Jersey Mortgage
as defined below, creates a valid security interest in the Company's and
the Subsidiary Guarantors (as the case may be) interest in that portion of
the collateral (as defined in the appropriate Collateral Documents) which
constitutes personal property and in which a security interest may be
created under Article 9 of the Nevada Uniform Commercial Code (the "NUCC")
(collectively, the "UCC Collateral"). Upon filing of the {describe
Financing Statements} with the Nevada Secretary of State and recordation of
the Mortgage in the Official Records of the Xxxxx County, Nevada Recorder,
such security interest will be a perfected security interest in the UCC
Collateral to the extent a security interest can be perfected therein by
the filing of a financing statement under the NUCC. We express no opinion
with respect to the Conditional Collateral (as defined in the Prospectus).
(v) To such counsel's knowledge, none of the Nevada Subsidiaries is
in violation of any term or provision of its charter or bylaws. Except as
disclosed in the Registration Statement and the Prospectus, to such
counsel's knowledge, no default exists and no event has occurred which with
notice or lapse of time, or both, would constitute a default in the due
performance and observance of any express term, covenant or condition by
any of the Nevada Subsidiaries of any indenture, mortgage, deed of trust,
note or any other agreement or instrument to which any of the Nevada
Subsidiaries are parties or by which they or any of their assets or
properties or businesses may be bound or affected, where the consequences
of such default would have a material adverse effect on the assets,
properties, business, results of operations, prospects or financial
condition of the Company and its subsidiaries considered as
23
one enterprise.
(vi) Each of the Company and the Nevada Subsidiaries has all
authorizations, approvals, consents, orders, licenses, certificates and
permits required of or from any governmental or regulatory body under the
Nevada Gaming Control Act and the rules and regulations promulgated
thereunder (the "Nevada Gaming Laws")(each, a "Nevada Permit") to own,
lease and license its assets and properties and to conduct its business as
described in the Registration Statement and the Prospectus but only to the
extent the same are currently conducted and operated. To such counsel's
knowledge, the Company and each of the Nevada Subsidiaries have fulfilled
and performed in all material respects all of their obligations with
respect to Nevada Permits, and, to the best of such counsel's knowledge,
neither the Company nor any Nevada Subsidiary is in violation of any term
or provision of any such Nevada Permits, nor has any event occurred which
allows, or after notice or lapse of time would allow, revocation or
termination thereof or which could result in any material impairment of the
rights of the holder of any such Nevada Permits.
(vii) This Agreement, to the extent the Nevada Subsidiaries are
parties thereto has been duly authorized, executed and delivered by the
Nevada Subsidiaries. No Nevada Permits are required for the performance of
this Agreement or for the consummation of the transactions contemplated
hereby or any other transaction described in the Registration Statement to
be entered into prior to or contemporaneously with the sale of the
Securities and the Subsidiary Guarantees, except (i) as disclosed in the
Registration Statement (ii) with respect to the Conditional Collateral and
(iii) except for such Nevada Permits that have been obtained.
(viii) Assuming that (a) the execution, delivery and performance of
the Intercreditor Agreement (as amended, restated or supplemented to the
Closing Time) are within the power of the
24
parties thereto, (b) such document has been duly authorized, executed and
delivered and (c) such document will not violate or result in a breach of
any term or provision of any agreement, judgment, decree or administrative
order to which the parties thereto are subject, the Intercreditor Agreement
constitutes the valid, binding and enforceable obligation of the parties
thereto, enforceable in accordance with its terms including, without
limitation, the provisions thereof which make the Liens securing the
Securities and the Subsidiary Guarantees and the Liens securing the Other
Senior Indebtedness pari passu except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar law relating to or affecting creditors' rights generally with
respect to the parties to such agreement or by general equitable principles
with respect to the parties to such agreement.
(ix) Assuming (except as hereinafter provided with respect to the
Securities) the due authorization, execution and delivery of the Indenture
and the Collateral Documents to which it is a party by the Company, the
Indenture and such Collateral Documents constitute, and the Securities,
when executed by the Company and authenticated by the Trustee in the manner
provided in the Indenture (assuming the due authorization, execution and
delivery of the Indenture by the Trustee) and delivered against payment of
the Purchase Price therefor, will constitute, the valid and binding
agreements of the Company enforceable against the Company in accordance
with their terms and entitled to the benefits of the Indenture, except as
the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar law relating to or affecting
creditors' rights generally or by general equitable principles and except
that certain provisions of the above-referenced documents may not be
enforceable in whole or in part under the laws of the State of Nevada, but
the inclusion of such provisions does not affect the validity of such
documents and such
25
documents contain adequate provisions for enforcing payment of the monetary
obligations of the Company under the Securities and for the practical
realization of the rights and benefits afforded thereby, provided such
enforcement is conducted in accordance with the procedures established by
the laws of the State of Nevada.
(x) The Indenture and the Collateral Documents have been duly
authorized, executed and delivered by the Nevada Subsidiaries to the extent
they are parties thereto. Assuming the due authorization, execution and
delivery of the Indenture and the Collateral Documents to which they are a
party by the Subsidiary Guarantors, other than the Nevada Subsidiaries
(assuming the due authorization, execution and delivery thereof by the
Trustee) the Indenture and the Collateral Documents to which they are a
party constitute valid and binding agreements of the Subsidiary Guarantors
enforceable against the Subsidiary Guarantors in accordance with their
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar law relating to or
affecting creditors' rights generally or by general equitable principles
and except that certain provisions of the above-referenced documents may
not be enforceable in whole or in part under the laws of the State of
Nevada, but the inclusion of such provisions does not affect the validity
of such documents and such documents contain adequate provisions for
enforcing payment of the monetary obligations of the Subsidiary Guarantors
under the Indenture and the Collateral Documents and for the practical
realization of the rights and benefits afforded thereby, provided such
enforcement is conducted in accordance with the procedures established by
the laws of the State of Nevada. Nevada law requires approval under the
Nevada Gaming Laws prior to the sale, disposition or distribution of slot
machines or other gaming devices or in order to operate or conduct gaming
activities at a gaming facility or to receive the proceeds from either of
the foregoing.
26
(xi) Assuming the due authorization, execution and
delivery thereof by the Company and the Subsidiary Guarantors,
other than the Nevada Subsidiaries, and subject to the
limitations on enforceability contained in opinions (ix) and (x)
above, the Company Pledge Agreement, as defined in the Indenture,
and the Subsidiary Pledge Agreements, as defined in the
Indenture, create valid security interests in favor of the
Trustee for the benefit of the holders of the Securities in the
pledged collateral described therein delivered on or before the
Closing Time. Such security interests are perfected so long as
the Administrative Agent, as defined in the Intercreditor
Agreement (as amended, restated or supplemented to the Closing
Time), maintains physical possession of the pledged collateral
pursuant to the terms of the Company Pledge Agreement, the
Subsidiary Pledge Agreements and the Intercreditor Agreement (as
amended, restated or supplemented to the Closing Time).
(xii) The statements in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1996 (the "Annual
Report") under the captions "Business - Hotels and Gaming -
Nevada Government Regulation" and - "Regulation and Taxes,"
incorporated by reference into the Prospectus, and the Statements
under the caption "Regulation and Licensing -- Nevada" included
in the Prospectus insofar as such statements constitute a summary
of matters of Nevada law in effect at the time such statements
were made, are correct in all material respects.
(3) The favorable opinion, dated as of the Closing Time, of
Xxxxxx & Xxxxxxxx, New Jersey Counsel for the Company in form and
substance satisfactory to counsel for the Underwriters to the effect
that:
(i) MGM Atlantic City has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of New Jersey. All of the issued and outstanding
27
shares of capital stock of MGM Atlantic City have been duly authorized and
validly issued, are fully paid and nonassessable and are directly owned of
record by the Company. Assuming the Company acquired such shares in good
faith and without knowledge of any adverse claim, to the best of such
counsel's knowledge, the Company holds such shares free and clear of any
security interest, lien, encumbrance or other adverse claim (except for
Liens securing the Other Senior Debt, the Securities and the Subsidiary
Guarantees to be executed by MGM Atlantic City). To such counsel's
knowledge, except as disclosed in the Registration Statement and the
Prospectus, there is no outstanding subscription, option, warrant or other
right calling for the issuance of any share of stock of MGM Atlantic City
or any security convertible into, exercisable for, or exchangeable for
stock of such Subsidiary.
(ii) MGM Atlantic City has all requisite corporate power and
authority to own, lease and license its assets and properties, to conduct
its businesses as described in the Registration Statement and Prospectus,
but only to the extent the same are currently conducted and operated, and
to enter into and perform its obligations under this Agreement, the
Indenture, its Subsidiary Guarantee and the Collateral Documents to which
it is a party.
(iii) MGM Atlantic City has taken all necessary corporate action to
authorize the execution and delivery of this Agreement, the Indenture, its
Subsidiary Guarantee and the Collateral Documents to which it is a party.
(iv) The Mortgage (as defined in the Indenture) to be executed and
delivered by MGM Atlantic City in accordance with the terms of this
Agreement, the Indenture and the Collateral Documents (the "New Jersey
Mortgage") creates a valid Lien (as defined in the Indenture) upon the real
property of MGM Atlantic City described therein and located in New Jersey,
and imparts constructive notice of such Lien to third
28
parties as provided in N.J.S.A. (S) 46:21-1, benefiting the Mortgagee
described therein, for the benefit of [the Trustee and the holders of the
Subsidiary Guarantee of MGM Atlantic City], on the "Property" (as such term
is defined in the New Jersey Mortgage), which Lien secures the performance
of the Secured Obligations (as defined in the New Jersey Mortgage) of MGM
Atlantic City, assuming that the New Jersey Mortgage is executed and
delivered by MGM Atlantic City and is properly recorded in the official
records of the Clerk of Atlantic County, New Jersey.
(v) Assuming that the Company Security Agreement and the Subsidiary
Security Agreement to be executed by MGM Atlantic City create valid
security interests in the personal property of the Company and MGM Atlantic
City described therein and located in New Jersey, upon proper filing with
the governmental offices described on an Exhibit to such opinion of the
financing statements attached thereto in copy, the Liens in the [Company
Personal Property Collateral] and the [Subsidiary Personal Property
Collateral] will be perfected security interests, to the extent a security
interest can be perfected therein by the filing of Form UCC-1 financing
statements under the Uniform Commercial Code of the State of New Jersey.
(vi) Assuming that the Intercreditor Agreement (as amended, restated
or supplemented to the Closing Time) is enforceable against the parties
thereto as a matter of Nevada law and has been duly authorized, executed
and delivered by the parties thereto, to the extent New Jersey law
applies,(x) with respect to Liens created by the New Jersey Mortgage such
counsel is not aware of any New Jersey law that would render ineffective
the agreements of such parties in the Intercreditor Agreement (as amended,
restated or supplemented to the Closing Time) to the effect that, as
between such parties only, the Liens securing the Securities and the
Subsidiary Guarantees and the Liens securing the Other Senior Debt shall be
pari passu, and (y)
29
with respect to Liens created by the Security Agreement executed by the
Company and MGM Atlantic City, such counsel is of the opinion that the
agreements of such parties in the Intercreditor Agreement (as amended,
restated or supplemented to the Closing Time) are effective such that, as
between such parties only, the Liens securing the Securities and the
Subsidiary Guarantees and the Liens securing the Other Senior Debt shall be
pari passu, in each instance as to only those assets of the Company and the
Subsidiary Guarantors in which a valid security interest has been created
under both the Other Senior Debt and the Securities and the Subsidiary
Guarantees, except as otherwise set forth in the Intercreditor Agreement
(as amended, restated or supplemented to the Closing Time) or the
Prospectus, and except as the enforcement of the Intercreditor Agreement
(as amended, restated or supplemented to the Closing Time) may be limited
by bankruptcy, fraudulent transfer and conveyance, insolvency, moratorium
and similar laws affecting the rights of creditors generally as applied to
the parties to the Intercreditor Agreement (as amended, restated or
supplemented to the Closing Time) or by general equitable principles as
applied to the parties to the Intercreditor Agreement (as amended, restated
or supplemented to the Closing Time).
(vii) To such counsel's knowledge, MGM Atlantic City is not in
violation of any term or provision of its charter or bylaws. Except as
disclosed in the Registration Statement and the Prospectus, to such
counsel's knowledge, no default exists and no event has occurred which with
notice or lapse of time, or both, would constitute a default in the due
performance and observance of any express term, covenant or condition by
such Subsidiary of any indenture, mortgage, deed of trust, note or any
other agreement or instrument to which such Subsidiary is a party or by
which it or any of its assets or properties or businesses may be bound or
effected, where the consequences of such default would have a material
adverse effect on the
30
assets, properties, business, results of operations, prospects or
financial condition of the Company.
(viii) No authorization, approval, consent, order, license,
certificate or permit required of or from any governmental or
regulatory body under the New Jersey Casino Control Act and the
rules and regulations promulgated thereunder (the "New Jersey
Gaming Laws")(each, "a New Jersey Permit") is required for the
performance of this Agreement or for the consummation of the
transactions contemplated hereby or any other transaction
described in the Registration Statement to be entered into in
connection therewith except as disclosed in the Registration
Statement and except for such New Jersey Permits that have been
obtained. This Agreement, the Registration Statement and the
Prospectus have been presented to any and all governmental
agencies or authorities to the extent required by any New Jersey
Gaming Laws, and such documents and the transactions contemplated
hereby or thereby have been approved by or on behalf of such
governmental agencies or authorities to the extent required by
any New Jersey Gaming Laws, and such approvals have not been
revoked, modified or rescinded.
(ix) The statements in the Prospectus under the caption
"Regulation and Licensing" insofar as such statements constitute
a summary of matters of New Jersey law, are correct in all
material respects.
(4) The favorable opinion of Xxxxxxxxx Xxxxxx PLLC, Michigan
counsel to the Company, in form and substance satisfactory to counsel
for the Underwriters, to the effect that:
(i) The statements in the Prospectus under the caption
"Regulation and Licensing" insofar as such statements constitute
a summary of matters of Michigan law, is correct in all material
respects.
31
(5) The favorable opinion, dated as of Closing Time, of Xxxxxx, Xxxx
& Xxxxxxxx, counsel for the Underwriters, with respect to the matters set
forth in (i), (v) to (vii), inclusive, and (xiii) to (xvii), inclusive of
subsection (b)(1) of this Section.
(6) In giving their opinions required by subsections (b)(1) and
(b)(5), respectively, of this Section, Xxxxxxxxxxx, Xxxxxx, Xxxx, Xxxxxx,
Xxxxxx, Xxxx & Xxxxxxx, LLP and Xxxxxx, Xxxx & Xxxxxxxx shall each
additionally state that nothing has come to their attention that would lead
them to believe that the Registration Statement (except for financial
statements and schedules and other financial or statistical data included
or incorporated by reference therein and that part of the Registration
Statement which constitutes the Trustee's Statement of Eligibility and
Qualification under the 1939 Act (Form T-1), as to which counsel need make
no statement), at the time it became effective or on the date hereof,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus (except for
financial statements and schedules and other financial or statistical data
included or incorporated by reference therein, as to which counsel need
make no statement), at the date hereof or at Closing Time, included or
includes an untrue statement of a material fact or omitted or omits to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(c) At Closing Time there shall not have been, since the date hereof or since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, and the
Representative shall have received a certificate of the president or a vice
president of the Company
32
and of the secretary of the Company, dated as of Closing Time, to the effect
that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1 hereof are true and correct with the
same force and effect as though expressly made at and as of Closing Time, (iii)
the Company has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied at or prior to Closing Time, and (iv) no stop
order suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been initiated or threatened by the
Commission.
(d) At the time of the execution of this Agreement, the
Representative shall have received from Xxxxxx Xxxxxxxx LLP, independent
public accountants a letter dated such date, in form and substance
satisfactory to the Representative, to the effect that (i) they are
independent public accountants with respect to the Company and its
subsidiaries within the meaning of the 1933 Act and the 1933 Act
Regulations; (ii) it is their opinion that the financial statements and
supporting schedules included in the Registration Statement and the
Prospectus and covered by their opinions therein comply as to form in all
material respects with the applicable accounting requirements of the 1933
Act and the 1933 Act Regulations; (iii) based upon limited procedures set
forth in detail in such letter, nothing has come to their attention which
causes them to believe that (A) the unaudited financial statements and
supporting schedules of the Company and its subsidiaries included in the
Registration Statement and the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the 1933
Act and the 1933 Act Regulations or are not presented in conformity with
generally accepted accounting principles applied on a basis consistent with
that of the audited financial statements included in the Registration
Statement, or (B) the unaudited amounts of revenues, net income and net
income per share set forth under "Selected Consolidated Financial
Information" in the Prospectus were not determined on a basis consistent
with that used in determining the corresponding amounts in the audited
financial statements included in the Registration Statement and the
Prospectus; and (iv) in addition to the examination referred to in their
opinions and the limited procedures referred to in clause (iii) above, they
have carried out certain specified procedures, not constituting an audit,
with respect to certain amounts, percentages and
33
financial information which are included in the Registration Statement and
Prospectus and which are specified by the Representative, and have found
such amounts, percentages and financial information to be in agreement with
the relevant accounting, financial and other records of the Company and its
subsidiaries identified in such letter.
(e) At Closing Time the Representative shall have received from
Xxxxxx Xxxxxxxx LLP, independent public accountants a letter, dated as of
Closing Time, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (d) of this Section, except that
the specified date referred to shall be a date not more than five days
prior to Closing Time.
(f) At Closing Time, the Securities shall be rated at least Baa3 by
Xxxxx'x Investors Service Inc. and BBB-by Standard & Poor's Corporation,
and the Company shall have delivered to the Representative a letter, dated
the Closing Time, from each such rating agency, or other evidence
satisfactory to the Representative, confirming that the Securities have
such ratings; and, since the date of this Agreement, there shall not have
occurred a downgrading in the rating assigned to the Securities or any of
the Company's other debt securities by any nationally recognized securities
rating agency, and no such securities rating agency shall have publicly
announced that it has under surveillance or review, with possible negative
implications, its rating of the Securities or any of the Company's other
debt securities.
(g) At Closing Time counsel for the Underwriters shall have been
furnished with such documents and opinions as they may require for the
purpose of enabling them to pass upon the issuance and sale of the
Securities as herein contemplated and related proceedings, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the
Securities as herein contemplated shall be satisfactory in form and
substance to the Representative and counsel for the Underwriters.
34
If any condition specified in this Section shall not have been fulfilled when
and as required to be fulfilled, this Agreement may be terminated by the
Representative by notice to the Company at any time at or prior to Closing Time,
and such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof.
SECTION 6. Indemnification.
---------------
(a) The Company and the Subsidiary Guarantors, jointly and severally agree
to indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act as
follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), or the Prospectus or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus or the Prospectus (or any amendment
or supplement thereto) or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred (including,
subject to Section 6(c) hereof, the fees and disbursements of counsel
chosen by BancAmerica Xxxxxxxxx Xxxxxxxx), reasonably incurred in
investigating, preparing or defending against any litigation, or any
35
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue statement
or omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
-------- -------
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company
by any Underwriter through the Representative expressly for use in the
Registration Statement (or any amendment thereto) or any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto) or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such Underwriter through the
Representative expressly for use in the Registration Statement (or any amendment
thereto) or such preliminary prospectus or the Prospectus (or any amendment or
supplement thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of any such
action. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to any local counsel) separate
from their own counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances. No indemnifying
36
party shall, without the prior consent of the indemnified parties (which consent
shall not be unreasonably withheld), settle or compromise or consent to the
entry of any judgment with respect to any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever in respect of which indemnification or contribution could be
sought under this Section 6 or Section 7 hereof (whether or not the indemnified
parties are actual or potential parties thereto), unless such settlement,
compromise or consent (i) includes an unconditional release of each indemnified
party from all liability arising out of such litigation, investigation,
proceeding or claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act by or on behalf of any indemnified
party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for the reasonable fees
and expenses of counsel, such indemnifying party agrees that it shall be liable
for any settlement of the nature contemplated by Section 6(a)(ii) effected
without its written consent if (i) such settlement is entered into more than 45
days after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.
SECTION 7. Contribution. In order to provide for just and equitable
------------
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company and the
Underwriters shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity agreement
incurred by the Company and one or more of the Underwriters, as incurred, in
such proportions that the Underwriters are responsible for that portion
represented by the percentage that the underwriting discount appearing on the
cover page of the Prospectus bears to the initial public offering price
appearing thereon and the Company is responsible for the balance; provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to
37
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the 1933 Act shall
have the same rights to contribution as such Underwriter, and each director of
the Company, each officer of the Company who signed the Registration Statement,
and each person, if any, who controls the Company within the meaning of Section
15 of the 1933 Act shall have the same rights to contribution as the Company.
SECTION 8. Representations, Warranties and Agreements to Survive
-----------------------------------------------------
Delivery. All representations, warranties and agreements contained in this
--------
Agreement and the Pricing Agreement, or contained in certificates of officers of
the Company submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
------------------------
(a) The Representative may terminate this Agreement, by notice to the
Company, at any time at or prior to Closing Time (i) if there has been, since
the date of this Agreement or since the respective dates as of which information
is given in the Registration Statement, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or elsewhere or any outbreak of hostilities or escalation
thereof or other calamity or crisis the effect of which is such as to make it,
in the judgment of the Representative, impracticable to market the Securities or
to enforce contracts for the sale of the Securities, or (iii) if trading in the
Common Stock of the Company has been suspended by the Commission, or if trading
generally on either the American Stock Exchange or the New York Stock Exchange
has been suspended, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required, by either of said
Exchanges or by order of the Commission or any other governmental authority, or
if a banking moratorium has been declared by either Federal, New York or
38
Nevada authorities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof. Notwithstanding any such termination, the
provisions of Sections 6 and 7 shall remain in effect.
SECTION 10. Default by One or More of the Underwriters. If one or
------------------------------------------
more of the Underwriters shall fail at Closing Time to purchase the Securities
which it or they are obligated to purchase under this Agreement and the Pricing
Agreement (the "Defaulted Securities"), the Representative shall have the right,
within 24 hours thereafter, to make arrangements for one or more of the non-
defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted Securities in such amounts as may be agreed upon
and upon the terms herein set forth; if, however, the Representative shall not
have completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
Securities, each of the non-defaulting Underwriters shall be obligated,
severally and not jointly, to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder bear
to the underwriting obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
Securities, this Agreement shall terminate without liability on the part of
any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Representative or the Company shall have the right to
postpone Closing Time for a period not exceeding seven days in order to effect
any required changes in the Registration Statement or Prospectus or in any other
documents or arrangements.
39
SECTION 11. Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representative at Deutsche Xxxxxx Xxxxxxxx
Inc., 00 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000, attention of
Syndicate Manager, notices to the Company shall be directed to it at 0000 Xxx
Xxxxx Xxxxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000, attention of Xxxxx Xxxxxxxx,
Secretary, Treasurer.
SECTION 12. Parties. This Agreement and the Pricing Agreement shall
-------
each inure to the benefit of and be binding upon the Underwriters and the
Company and their respective successors. Nothing expressed or mentioned in this
Agreement or the Pricing Agreement is intended or shall be construed to give any
person, firm or corporation, other than the Underwriters and the Company and
their respective successors and the controlling persons, officers and directors
referred to in Sections 6 and 7 and their heirs and legal representatives, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or the Pricing Agreement or any provision herein or therein contained. This
Agreement and the Pricing Agreement and all conditions and provisions hereof and
thereof are intended to be for the sole and exclusive benefit of the
Underwriters and the Company and their respective successors, and said
controlling persons, officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Securities from any Underwriter shall be deemed to be a successor
by reason merely of such purchase.
SECTION 13. Governing Law and Time. This Agreement and the Pricing
----------------------
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be performed in said
State. Specified times of day refer to New York City time.
40
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriters and the Company in accordance with its terms.
Very truly yours,
MGM Grand, Inc.
By /s/ Xxxxx Xxxxxxxx
---------------------------
Name: Xxxxx Xxxxxxxx
Title: Secretary/Treasurer
Joined in and agreed to and
accepted by the following
Subsidiary Guarantors as
of the date first above
written:
MGM Grand Hotel Inc.
By /s/ Xxxxx Xxxxxxxx
---------------------------
Name: Xxxxx Xxxxxxxx
Title: Secretary
MGM Grand Movieworld, Inc.
By /s/ Xxxxx Xxxxxxxx
---------------------------
Name: Xxxxx Xxxxxxxx
Title: Secretary
41
Grand Laundry, Inc.
By /s/ Xxxxx Xxxxxxxx
---------------------------
Name: Xxxxx Xxxxxxxx
Title: Secretary
MGM Grand Monorail, Inc.
By /s/ Xxxxx Xxxxxxxx
---------------------------
Name: Xxxxx Xxxxxxxx
Title: Secretary
MGM Dist., Inc.
By /s/ Xxxxx Xxxxxxxx
---------------------------
Name: Xxxxx Xxxxxxxx
Title: Secretary
Destron, Inc.
By /s/ Xxxxx Xxxxxxxx
---------------------------
Name: Xxxxx Xxxxxxxx
Title: Secretary
Destron Marketing, Inc.
By /s/ Xxxxx Xxxxxxxx
---------------------------
Name: Xxxxx Xxxxxxxx
Title: Secretary
42
MGM Grand Merchandising, Inc.
By /s/ Xxxxx Xxxxxxxx
---------------------------
Name: Xxxxx Xxxxxxxx
Title: Secretary
MGMG Trading Co.
By /s/ Xxxxx Xxxxxxxx
---------------------------
Name: Xxxxx Xxxxxxxx
Title: Secretary
MGM Grand Atlantic City, Inc.
By /s/ Xxxxx Xxxxxxxx
---------------------------
Name: Xxxxx Xxxxxxxx
Title: Secretary
MGM Grand Development, Inc.
By /s/ Xxxxx Xxxxxxxx
---------------------------
Name: Xxxxx Xxxxxxxx
Title: Secretary
43
MGM Grand Detroit, Inc.
By /s/ Xxxxx Xxxxxxxx
---------------------------
Name: Xxxxx Xxxxxxxx
Title: Secretary
CONFIRMED AND ACCEPTED,
as of the date first above written:
Deutsche Xxxxxx Xxxxxxxx Inc.
By /s/ Xxxxx Xxxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxxx
Title: Managing Director
By /s/ Xxxxxx Xxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President
For itself and as Representative of the other Underwriter named in Schedule A
hereto.
44
SCHEDULE A
Aggregate
Principal
Amount
Name of Underwriter of
---- -- ----------- --
Securities
----------
Deutsche Xxxxxx Xxxxxxxx, Inc....................... $100,000,000
BancAmerica Xxxxxxxxx Xxxxxxxx...................... $100,000,000
Total............................................... $200,000.000
============
45
