EXHIBIT 10(3)(b)
AMENDMENT NO 2. TO AMENDED AND RESTATED LOAN AGREEMENT
This Amendment No. 2 to Amended and Restated Loan Agreement dated as
of January 30, 1998, ("Amendment") is entered into with reference to the Amended
and Restated Loan Agreement dated as of July 17, 1997, by and among MGM Grand,
Inc., a Delaware corporation ("Borrower"), MGM Grand Atlantic City, Inc., a New
Jersey corporation ("Atlantic City"), as initial Co-Borrower, the Banks named
therein, Societe Generale, The Bank of Nova Scotia, Bank of Scotland, Bankers
Trust Company, CIBC Inc., Commerzbank AG, Los Angeles Branch, The Long-Term
Credit Bank of Japan, Ltd., Los Angeles Agency, PNC Bank, National Association,
and ▇▇▇▇▇ Fargo Bank, N.A., as Managing Agents, Fleet Bank, N.A., as Co-Agent,
and Bank of America National Trust and Savings Association, as Administrative
Agent, as previously amended by an Amendment No. 1 thereto (the "Loan
Agreement"). Pursuant to an Amendment No. 1 to the Loan Agreement, Borrower has
among other things designated MGM Grand Detroit, LLC ("Detroit") as an
additional Co-Borrower thereunder.
The Administrative Agent, acting with the consent of the Requisite
Banks in accordance with the terms of the Loan Agreement, Borrower, Atlantic
City and Detroit hereby agree to amend the Loan Agreement as follows:
1. Definitions. Capitalized terms used herein are used with the meanings
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set forth for those terms in the Loan Agreement. Section 1.1 of the Loan
Agreement is hereby amended to add the following defined terms:
"Collateral Event" means the occurrence of (a) any reduction in
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the credit rating assigned by S&P to any Pari Passu Notes (or, if S&P does
not rate the Pari Passu Notes, its corporate rating of Borrower) to an
unsecured credit rating which is below BBB- or (b) any reduction in the
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credit rating assigned by ▇▇▇▇▇'▇ to any Pari Passu Notes (or, if ▇▇▇▇▇'▇
does not rate the Pari Passu Notes, its corporate rating of Borrower) to an
unsecured credit rating which is below Baa3.
"Pari Passu Notes" means (a) Borrower's $300,000,000 6.75% Senior
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Collateralized Notes due 2005 to be issued pursuant to the Indenture dated
as of February 2, 1998 between Borrower and PNC Bank, National Association,
as Trustee, and (b) any other Indebtedness of Borrower of the type
contemplated in Section 6.9(m).
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2. Section 2.14 - Collateral Release and Reattachment. Section 2.14 of
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the Loan Agreement is hereby amended to read in full as follows:
"Release of Collateral; Subsequent Reattachment of Collateral.
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(a) Provided that no Default or Event of Default has then occurred and
remains continuing, Borrower and the Co-Borrowers may in their sole
discretion request that the Administrative Agent release the Liens created
by the Collateral Documents in accordance with this Section if, as of the
date of their request, the credit facilities governed by this Agreement
have unsecured ratings of BBB- from S&P and Baa3 from ▇▇▇▇▇'▇ and Borrower
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concurrently delivers each of the documents described in this clause (a) to
the Administrative Agent. In the event that either S&P or ▇▇▇▇▇'▇ do not
rate the credit facilities governed hereby, the corporate rating of
Borrower issued by such rating agency shall be deemed the equivalent of a
rating of this credit facility. Borrower and the Co-Borrowers shall submit
any request under this Section in the form of a Certificate, in form and
substance acceptable to the Administrative Agent, signed by a Senior
Officer of Borrower and each Co-Borrower certifying that no Default or
Event of Default exists and setting forth the ratings granted by S&P and
▇▇▇▇▇'▇, together with (i) a written consent to the release of Collateral
executed by each Guarantor, (ii) letters addressed to the Administrative
Agent from both ▇▇▇▇▇'▇ and S&P indicating that, following the release of
the Collateral Documents, both the Pari Passu Notes and the credit
facilities governed by this Agreement will receive unsecured ratings of
BBB- from S&P and Baa3 from ▇▇▇▇▇'▇ and that such release will not result
in a reduction in the credit ratings issued by either ▇▇▇▇▇'▇ or S&P below
the respective ratings in effect on February 2, 1998, and (iii) and such
other supporting information as the Administrative Agent may request,
including evidence reasonably satisfactory to the Administrative Agent that
the creditors holding all Indebtedness of the type described in Section
6.9(m) shall concurrently release any Liens held by such creditors.
(b) Promptly upon receipt of such a Certificate, the Administrative
Agent shall provide a copy thereof to the Banks and, unless the Requisite
Banks contest the accuracy thereof within five Banking Days, shall,
concurrently with the release of any Liens incurred under Section 6.8(g),
(i) execute and deliver to Borrower and its Subsidiaries reconveyances and
releases of the Collateral Documents, and (ii) return to the Persons
legally entitled thereto, all Collateral pledged thereunder, all at the
sole expense of Borrower and the Co-Borrowers (a "Collateral Release"),
provided that the Administrative Agent shall not be
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obligated to effectuate a Collateral Release at any time when a Collateral
Event exists.
(c) A Collateral Release shall not constitute or be construed as a
release (or to require the release) of the Subsidiary Guarantees or the
Borrower Guaranty.
(d) If following a Collateral Release, a Collateral Event occurs,
Borrower and the Co-Borrowers shall, and shall cause each of their
Restricted Subsidiaries to, promptly and in any event within thirty days
following the occurrence of such Collateral Event and in any event not
later than the granting of any Liens in such collateral to the Pari Passu
Notes (but only if the Collateral Event is continuing), grant perfected
Liens in substantially all of the Property of Borrower and its Restricted
Subsidiaries to secure the Obligations, provided that Borrower and its
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Restricted Subsidiaries shall not be obligated to provide Liens in any
Property to the extent that Gaming Laws prohibit the granting of Liens in
such Property to the Administrative Agent and the Pari Passu Notes unless
and until all required approvals of Gaming Boards thereto are obtained. In
such event, Borrower shall, and shall cause each Restricted Subsidiary to,
use its best efforts to obtain all necessary consents from the applicable
Gaming Boards to grant a perfected Lien on such Property securing the
Obligations and, upon receipt of all consents needed to grant such a
perfected Lien, shall promptly take all action (or cause the Restricted
Subsidiaries to take all action) reasonably necessary (including without
limitation execution and delivery of Collateral Documents) in order to
grant and perfect such a Lien. The Liens granted pursuant to this clause
(d) shall be (i) equal, ratable and pari passu with any Liens securing the
Pari Passu Notes, (ii) granted concurrently with the granting of any Liens
in favor of the Pari Passu Notes, and (iii) granted pursuant to
instruments, documents and agreements which are reasonably acceptable to
the Administrative Agent and no less favorable to the Administrative Agent
and the other Creditors than those granted to the Pari Passu Notes. In
connection with the granting of any such Liens, Borrower and its Restricted
Subsidiaries shall provide to the Administrative Agent (y) policies of
title insurance on customary terms and conditions, to the extent that
policies of title insurance on the corresponding Property are provided to
the holders of the Pari Passu Notes (and in an insured amount that bears
the same proportion to the principal amount of the Commitment as the
insured amount in the policies provided to the holders of the Pari Passu
Notes bears to the aggregate amount of the Pari Passu Notes), and (z) legal
opinions and other assurances as the Administrative Agent may reasonably
request."
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3. Section 6.8 - Negative Pledge. Section 6.8(g) of the Loan Agreement
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is hereby amended to read in full as follows:
"(g) Until a Collateral Release occurs, or if a Collateral Event
occurs, Liens securing pari passu Indebtedness described in Section 6.9(m)
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in an aggregate principal amount which does not exceed $500,000,000 at any
time (plus interest, fees, premium, indemnities, expenses and other amounts
which are not principal relating or payable with respect to such principal
amount), on collateral which is not, as of any date of determination, more
extensive than the collateral encumbered by the Collateral Documents, and
Negative Pledges which are not more extensive than the Negative Pledge
contained in this Section relating to such pari passu Indebtedness, and
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which in any event allow the Liens in favor of the Administrative Agent and
the other Creditors contemplated herein;"
4. Section 6.9 - Permitted Indebtedness. Section 6.9(m) of the Loan
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Agreement is hereby amended to read in full as follows:
"(m) Other senior Indebtedness of Borrower incurred when no Default
or Event of Default has occurred and remains continuing which is pari passu
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to the Obligations (and guarantees thereof issued by the Guarantors which
are not more extensive or favorable to the holders thereof than the
Subsidiary Guarantees) in priority of payment in any insolvency case
involving Borrower or the Guarantors, provided that Borrower and the Co-
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Borrowers shall not incur any Indebtedness which results in the aggregate
principal Indebtedness outstanding pursuant to this clause (m) being in
excess of $500,000,000 at any time when (i) Borrower and the Co-Borrowers
are not then entitled to request a Collateral Release pursuant to Section
2.14 or (ii) a Collateral Event has occurred and is continuing and no
Collateral Release has thereafter occurred. This clause (m) shall not be
construed to require Borrower to repay any Indebtedness incurred under this
clause (m) by reason of the later occurrence of any Collateral Event to the
extent such Indebtedness was permitted hereunder when incurred."
5. Conditions Precedent. The effectiveness of this Amendment shall be
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conditioned upon the receipt by the Administrative Agent of the following:
(a) Counterparts of this Amendment executed by Borrower, Atlantic
City, Detroit, and the Administrative Agent, acting on behalf of the Banks;
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(b) Written consents to the execution, delivery and performance hereof
from the Requisite Banks; and
(c) Written consents to the execution, delivery and performance hereof
from each of the Guarantors.
6. Representation and Warranty. Borrower and each Co-Borrower represent
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and warrant to the Administrative Agent and the Banks that no Default or Event
of Default has occurred and remains continuing.
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7. Confirmation. In all other respects, the terms of the Loan Agreement
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and the other Loan Documents are hereby confirmed.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.
MGM GRAND, INC., a Delaware corporation
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By: ______________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Secretary and Treasurer
MGM GRAND ATLANTIC CITY, INC., a New Jersey corporation
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By: ______________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Secretary and Treasurer
MGM GRAND DETROIT, LLC, a Delaware limited liability company
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By: ______________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Secretary and Treasurer
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
Administrative Agent
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
By: _______________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President
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CONSENT OF BANK
This Consent of Bank is delivered with reference to the Amended and
Restated Loan Agreement dated as of July 17, 1997, among MGM Grand, Inc., a
Delaware corporation ("Borrower"), MGM Grand Atlantic City, Inc., a New Jersey
corporation ("Atlantic City"), as initial Co-Borrower, the Banks named therein,
Societe Generale, The Bank of Nova Scotia, Bank of Scotland, Bankers Trust
Company, CIBC Inc., Commerzbank AG, Los Angeles Branch, The Long-Term Credit
Bank of Japan, Ltd., Los Angeles Agency, PNC Bank, National Association, and
▇▇▇▇▇ Fargo Bank, N.A., as Managing Agents, Fleet Bank, N.A., as Co-Agent, and
Bank of America National Trust and Savings Association, as Administrative Agent.
Capitalized terms used but not defined herein are used with the meanings set
forth for those terms in the Loan Agreement.
The undersigned Bank hereby consents to the execution, delivery and
performance of the proposed Amendment No. 2 to Loan Agreement by the
Administrative Agent on behalf of the Banks, substantially in the form presented
to the undersigned as a draft.
______________________________
[Typed/Printed Name of Bank]
By: __________________________
Title: _________________________
Date: _________________________
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CONSENT OF GUARANTORS
This Consent of Guarantors is delivered with reference to the Amended
and Restated Loan Agreement dated as of July 17, 1997, among MGM Grand, Inc., a
Delaware corporation ("Borrower"), MGM Grand Atlantic City, Inc., a New Jersey
corporation ("Atlantic City"), as initial Co-Borrower, the Banks named therein,
Societe Generale, The Bank of Nova Scotia, Bank of Scotland, Bankers Trust
Company, CIBC Inc., Commerzbank AG, Los Angeles Branch, The Long-Term Credit
Bank of Japan, Ltd., Los Angeles Agency, PNC Bank, National Association, and
▇▇▇▇▇ Fargo Bank, N.A., as Managing Agents, Fleet Bank, N.A., as Co-Agent, and
Bank of America National Trust and Savings Association, as Administrative Agent.
Capitalized terms used but not defined herein are used with the meanings set
forth for those terms in the Loan Agreement.
The undersigned hereby consents to the execution delivery and
performance of the foregoing Amendment No. 2 to Loan Agreement, and agree to
take any and all actions necessary or reasonably requested to cause the Borrower
and the Co-Borrowers to remain in compliance with the terms thereof.
MGM GRAND HOTEL, INC.
MGM GRAND MOVIEWORLD, INC.
GRAND LAUNDRY, INC.
MGM GRAND MONORAIL, INC.
MGM DIST., INC.
DESTRON, INC.
DESTRON MARKETING, INC.
MGM GRAND MERCHANDISING, INC.
MGMG TRADING CO.
MGM GRAND DEVELOPMENT, INC.
MGM GRAND DETROIT, INC.
By: ________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Authorized Signatory
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