EXHIBIT 99
DESCRIPTION OF THE NOTES
You can find the definitions of certain terms used in this description
under the subheading "--Certain Definitions." In this description, the words
"MGM Grand" refer only to MGM Grand, Inc. and not to any of its Subsidiaries.
MGM Grand will issue the % senior subordinated notes due 2007 under an
indenture among itself, the Subsidiary Guarantors (as defined below) and The
Bank of New York, as trustee. The terms of the notes include those provisions
contained in the indenture and those made part of the indenture by reference
to the Trust Indenture Act of 1939. We refer to the % senior subordinated
notes due 2007 in this section as the "notes."
The notes constitute a series of Debt Securities (which are more fully
described in the accompanying Prospectus). The following description of the
particular terms of the notes supplements, and to the extent inconsistent
therewith replaces, the description of the general terms and provisions of the
Debt Securities set forth in the Prospectus, to which description reference is
hereby made.
The following description is a summary of the material provisions of the
indenture. This summary does not restate the indenture in its entirety. We
urge you to read the indenture because the indenture, and not this
description, defines your rights as holders of the notes. Copies of the
indenture may be obtained from MGM Grand.
Ranking
The notes will be:
. general unsecured obligations of MGM Grand;
. subordinated in right of payment to all existing and future Senior
Indebtedness of MGM Grand;
. equal in right of payment with all other existing and future
Indebtedness of MGM Grand (except for future Indebtedness that may be
subordinated to the notes); and
. guaranteed on a senior subordinated basis by each of the Subsidiaries of
MGM Grand other than Excluded Subsidiaries (see"--Subsidiary Guarantees"
below)
As of March 31, 2000, on a pro forma basis after giving effect to the
offering of the notes, the Mirage merger, the $1.23 billion private placement
of common stock of MGM Grand and borrowings under the Credit Facilities, MGM
Grand and the Subsidiary Guarantors would have had approximately $5.9 billion
of Senior Indebtedness, including approximately $4.5 billion of borrowings
under the Credit Facilities and $1.45 billion under the Senior Notes
(including the Mirage Notes). Upon consummation of the Mirage merger, MGM
Grand and its Subsidiaries (other than the Excluded Subsidiaries) will
guaranty the Mirage Notes and Mirage and its Subsidiaries will guaranty the
other Senior Notes, in each case on a basis senior to the notes and Subsidiary
Guarantees of the notes.
In addition, as of March 31, 2000 on such pro forma basis, the Subsidiaries
of MGM Grand that are not Subsidiary Guarantors would have had total
Indebtedness of approximately $179.3 million (excluding Indebtedness owed to
MGM Grand or any Subsidiary Guarantor).
The indenture does not contain any limitation on the amount of Indebtedness
of MGM Grand or its Subsidiaries, including Senior Indebtedness under the
Credit Facilities. In addition, the Credit Facilities and the Senior Notes
(including the Mirage Notes) will be equally and ratably secured by
substantially all assets of MGM Grand and its Subsidiaries (other than
Excluded Subsidiaries) in the event of certain downgradings by rating agencies
or possibly in other circumstances. See "Description of Our Long Term Debt" in
the accompanying Prospectus. The indenture does not limit liens on Senior
Indebtedness or, if such liens are created, require creation of any
corresponding liens securing the notes and guarantees. Except as described
under "Description
1
of Debt Securities--Merger, Consolidation or Sale of Assets" in the
accompanying Prospectus or "--Additional Covenants of MGM Grand" below, the
indenture does not contain any other provisions that would afford holders of
the notes protection in the event of (i) a highly leveraged or similar
transaction involving MGM Grand or any of its Subsidiaries, (ii) a change of
control, or (iii) a reorganization, restructuring, merger or similar
transaction involving MGM Grand or any of its Subsidiaries that may adversely
affect the holders of the notes. In addition, subject to the limitations set
forth under "Description of Debt Securities--Merger, Consolidation or Sale of
Assets" in the accompanying Prospectus and under "--Additional Covenants of
MGM Grand" below, MGM Grand or any of its Subsidiaries may, in the future,
enter into certain transactions such as the sale of all or substantially all
of its assets or the merger or consolidation of MGM Grand or any of its
Subsidiaries with another entity that would increase the amount of
Indebtedness of MGM Grand or its Subsidiaries or substantially reduce or
eliminate the assets of MGM Grand or its Subsidiaries, which may have an
adverse effect on MGM Grand's ability to service its Indebtedness, including
the notes.
Principal, Maturity and Interest
The indenture provides for the issuance by MGM Grand of notes with a
maximum aggregate principal amount of $500 million. MGM Grand will issue the
notes in denominations of $1,000 and integral multiples of $1,000. The notes
will mature on , 2007.
Interest on the notes will accrue at the rate of % per annum. Interest
will be payable semiannually in arrears on and , commencing on ,
2000. MGM Grand will make each interest payment to the holders of record of
the notes on the immediately preceding and .
Interest on the notes will accrue from the date of original issuance or, if
interest has already been paid, from the date it was most recently paid.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
Subsidiary Guarantees
MGM Grand's payment Obligations under the notes will be jointly and
severally guaranteed (the "Subsidiary Guarantees") by each of the Subsidiaries
of MGM Grand other than the Excluded Subsidiaries (the "Subsidiary
Guarantors"). The Excluded Subsidiaries will include all non-U.S. Subsidiaries
of MGM Grand and of Mirage, and such non-U.S. Subsidiaries' U.S. holding
companies. The Excluded Subsidiaries also include MGM Grand Detroit, LLC and
MGM Grand Detroit II, LLC; MGM Grand Detroit, LLC is a guarantor under the
Credit Facilities but such guarantee is limited to the amount of the proceeds
of borrowings under the Credit Facilities made available to MGM Grand Detroit,
LLC. Each Subsidiary Guarantee will be (i) subordinated to the prior payment
in full of all Senior Indebtedness of the Subsidiary Guarantor on the same
basis as the notes are subordinated to Senior Indebtedness of MGM Grand and
(ii) equal in right of payment with all other existing and future Indebtedness
of the Subsidiary Guarantor (except for future Indebtedness that may be
subordinated to the Subsidiary Guarantee). The obligations of each Subsidiary
Guarantor under its Subsidiary Guarantee will be limited so as not to
constitute a fraudulent conveyance under applicable law. On August 19, 1999,
the Nevada Commission granted MGM Grand prior approval to make public
offerings for a period of twenty-three months, subject to certain conditions
("Shelf Approval"). This offering is being made pursuant to the Shelf
Approval. However, while such Shelf Approval includes prior approvals by the
Nevada Commission of the Subsidiary Guarantees by Subsidiaries of MGM Grand,
it does not include approvals for the Nevada-licensed corporate Subsidiaries
of Mirage to guarantee the payment Obligations of MGM Grand under the notes.
Consequently, applications have been filed with the Nevada Board and the
Nevada Commission seeking their approval for the Nevada-licensed corporate
Subsidiaries of Mirage to guarantee the payment Obligations of MGM Grand under
the notes at and after the Mirage merger. Such guarantees will not be
effective in respect of the corporate Subsidiaries of Mirage licensed in
Nevada at and after the Mirage merger unless and until they are approved by
the Nevada Board and the Nevada Commission. Similar approvals must be obtained
from the Mississippi Gaming Commission with respect to the guarantees by the
corporate Subsidiaries of Mirage licensed in Mississippi. There can be no
assurance that such approvals will be granted on a timely basis or at all. See
"Regulation and Licensing - Nevada Gaming Regulation" and "--Mississippi
Government Regulation."
2
In addition to the Subsidiary Guarantors named in the indenture on the
closing date, the indenture will provide that, except for Excluded
Subsidiaries, any existing or future Subsidiary of MGM Grand shall become a
Subsidiary Guarantor if such Subsidiary Incurs any Indebtedness or if and for
so long as such Subsidiary provides a guarantee in respect of Senior
Indebtedness of MGM Grand.
No Subsidiary Guarantor will be permitted to consolidate with or merge with
or into (whether or not such Subsidiary Guarantor is the surviving Person)
another corporation, Person or entity whether or not affiliated with such
Subsidiary Guarantor unless:
(i) subject to the provisions of the following paragraph, the Person
formed by or surviving any such consolidation or merger (if other than such
Subsidiary Guarantor) assumes all the obligations of such Subsidiary
Guarantor under the Subsidiary Guarantee and the indenture pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
trustee; and
(ii) immediately after giving effect to such transaction, no Default or
Event of Default exists.
The indenture will provide that in the event of (a) a sale or other
disposition of all of the assets of any Subsidiary Guarantor, by way of
merger, consolidation or otherwise or (b) a sale or other disposition of all
of the capital stock of any Subsidiary Guarantor, then the Subsidiary
Guarantor (in the event of a sale or other disposition, by way of such a
merger, consolidation or otherwise, of all of the capital stock of such
Subsidiary Guarantor) or the corporation acquiring the property (in the event
of a sale or other disposition of all of the assets of the Subsidiary
Guarantor) will be released and relieved of any obligations under its
Subsidiary Guarantee, except in the event of a sale or other disposition to
MGM Grand, any other Subsidiary Guarantor or any Affiliate thereof.
Optional Redemption
Upon not less than 30 nor more than 60 days' notice, MGM Grand may redeem
the notes in whole but not in part at any time at a redemption price equal to
100% of the principal amount thereof plus the Make-Whole Premium, together
with accrued and unpaid interest thereon, if any, to the applicable redemption
date.
Notices of redemption shall be mailed by first class mail at least 30 but
not more than 60 days before the redemption date to each holder of notes to be
redeemed at its registered address.
Notes called for redemption become due on the date fixed for redemption. On
and after the redemption date, interest ceases to accrue on notes called for
redemption unless MGM Grand defaults in payment of the redemption price.
Mandatory Redemption
MGM Grand will not be required to make any mandatory redemption or sinking
fund payments in respect of the notes.
Mandatory Disposition Pursuant to Gaming Laws
Each holder, by accepting a note, shall be deemed to have agreed that if
the gaming authority of any jurisdiction in which MGM Grand or any of its
Subsidiaries conducts or proposes to conduct gaming requires that a person who
is a holder or the beneficial owner of notes be licensed, qualified or found
suitable under applicable gaming laws, such holder or beneficial owner, as the
case may be, shall apply for a license, qualification or a finding of
suitability within the required time period. If such Person fails to apply or
become licensed or qualified or is found unsuitable, MGM Grand shall have the
right, at its option:
. to require such Person to dispose of its notes or beneficial interest
therein within 30 days of receipt of notice of MGM Grand's election or
such earlier date as may be requested or prescribed by such gaming
authority; or
3
. to redeem such notes, which redemption may be less than 30 days
following the notice of redemption if so requested or prescribed by the
applicable gaming authority, at a redemption price equal to:
(1)the lesser of:
(a) the Person's cost, plus accrued and unpaid interest, if any, to
the earlier of the redemption date or the date of the finding of
unsuitability or failure to comply; and
(b) 100% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the earlier of the redemption date or the
date of the finding of unsuitability or failure to comply; or
(2) such other amount as may be required by applicable law or order of
the applicable gaming authority.
MGM Grand shall notify the trustee in writing of any such redemption as
soon as practicable. MGM Grand shall not be responsible for any costs or
expenses any holder of MGM Grand notes may incur in connection with its
application for a license, qualification or a finding of suitability.
Subordination
The payment of principal, interest and premium, if any, on and all other
Obligations owing in respect of the notes and the Subsidiary Guarantees will
be subordinated in right of payment, as set forth in the indenture and the
Subsidiary Guarantees, to the prior payment in full in cash of all Senior
Indebtedness of MGM Grand and the Subsidiary Guarantors.
The holders of Senior Indebtedness will be entitled to receive payment in
full in cash of all Obligations due in respect of Senior Indebtedness
(including interest accruing after the commencement of any bankruptcy,
insolvency or similar proceeding at the rate specified in the applicable
Senior Indebtedness, whether or not such
interest is an allowed claim in any such proceeding) before the holders of
notes will be entitled to receive any payment of any kind or character with
respect to the notes (except that holders of notes may receive payments made
from the trust described under "Description of Debt Securities--Defeasance of
Debt Securities or Certain Covenants in Certain Circumstances" in the
accompanying Prospectus), in the event of any distribution to creditors of MGM
Grand or any Subsidiary Guarantor:
. in a total or partial liquidation or dissolution of MGM Grand or any
Subsidiary Guarantor;
. in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to MGM Grand or any Subsidiary Guarantor or its
respective property;
. in an assignment for the benefit of creditors; or
. in any marshalling of assets and liabilities of MGM Grand or any
Subsidiary Guarantor.
MGM Grand and each Subsidiary Guarantor also may not make any payment in
respect of the notes (except from the trust described under "Description of
Debt Securities--Defeasance of Debt Securities or Certain Covenants in Certain
Circumstances" in the accompanying Prospectus) if:
. a payment default on Designated Senior Indebtedness occurs and is
continuing; or
. any other default occurs and is continuing on Designated Senior
Indebtedness that permits holders of the Designated Senior Indebtedness
to accelerate its maturity and the trustee receives a notice of such
default (a "Payment Blockage Notice") from the Representative of any
Designated Senior Indebtedness.
Payments on the notes may and shall be resumed:
. in the case of a payment default, upon the date on which such default is
cured or waived; and
. in case of a nonpayment default, the earlier of the date on which such
nonpayment default is cured or waived (so long as no other nonpayment
default exists) or 179 days after the date on which the applicable
Payment Blockage Notice is received, unless the maturity of any
Designated Senior Indebtedness has been accelerated.
4
No new Payment Blockage Notice may be delivered unless and until 360 days
have elapsed since the effectiveness of the immediately prior Payment Blockage
Notice.
No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the trustee shall be, or be made,
the basis for a subsequent Payment Blockage Notice unless such default shall
have been cured or waived for a period of not less than 180 days.
MGM Grand must promptly notify holders of Designated Senior Indebtedness or
their Representative if payment of the notes is accelerated because of an
Event of Default.
As a result of the subordination provisions described above, in the event
of a bankruptcy, liquidation or reorganization of MGM Grand or any Subsidiary
Guarantor, holders of these notes may recover less ratably than creditors of
MGM Grand and the Subsidiary Guarantors who are holders of Senior
Indebtedness. The indenture does not limit the ability of the Company or any
Subsidiary Guarantor to incur Senior Indebtedness or any other Indebtedness or
the ability of any Excluded Subsidiary to incur any Indebtedness. See "Risk
Factors."
Additional Covenants of MGM Grand
Limitation on Liens
Other than as provided below under "--Exempted Liens and Sale and Lease-
Back Transactions," neither MGM Grand nor any of the Subsidiary Guarantors may
issue, assume or guarantee any Indebtedness secured by a Lien upon any
Principal Property or on any evidences of Indebtedness or shares of capital
stock of, or other ownership interests in, any Subsidiaries (regardless of
whether the Principal Property, Indebtedness, capital stock or ownership
interests were acquired before or after the date of the indenture) without
effectively providing that the notes shall be secured equally and ratably with
(or prior to) such Indebtedness so long as such Indebtedness shall be so
secured, except that this restriction will not apply to:
(a) Liens existing on the date of original issuance of the notes;
(b) Liens affecting property of a corporation or other entity existing
at the time it becomes a Subsidiary Guarantor or at the time it is merged
into or consolidated with MGM Grand or a Subsidiary Guarantor (provided
that such Liens are not incurred in connection with, or in contemplation
of, such entity becoming a Subsidiary Guarantor or such merger or
consolidation and do not extend to or cover property of MGM Grand or any
Subsidiary Guarantor other then property of the entity so acquired or which
becomes a Subsidiary Guarantor);
(c) Liens (including purchase money Liens) on property existing at the
time of acquisition thereof or to secure Indebtedness Incurred prior to, at
the time of, or within 24 months after the acquisition for the purpose of
financing all or part of the purchase price thereof (provided that such
Liens do not extend to or cover any property of MGM Grand or any Subsidiary
Guarantor other than the property so acquired);
(d) Liens on any property to secure all or part of the cost of
improvements or construction thereon or Indebtedness Incurred to provide
funds for such purpose in a principal amount not exceeding the cost of such
improvements or construction;
(e) Liens which secure Indebtedness of a Subsidiary of MGM Grand to MGM
Grand or to a Subsidiary Guarantor or which secure Indebtedness of MGM
Grand to a Subsidiary Guarantor;
(f) Liens on the stock, partnership or other equity interest of MGM
Grand or Subsidiary Guarantor in any Joint Venture or any Subsidiary which
owns an equity interest in such Joint Venture to secure Indebtedness,
provided the amount of such Indebtedness is contributed and/or advanced
solely to such Joint Venture;
(g) Liens securing Senior Indebtedness;
5
(h) certain Liens to government entities, including pollution control or
industrial revenue bond financing;
(i) Liens required by any contract or statute in order to permit MGM
Grand or a Subsidiary of MGM Grand to perform any contract or subcontract
made by it with or at the request of a governmental entity;
(j) mechanic's, materialman's, carrier's or other like Liens, arising in
the ordinary course of business;
(k) certain Liens for taxes or assessments and similar charges;
(l) zoning restrictions, easements, licenses, covenants, reservations,
restrictions on the use of real property and certain other minor
irregularities of title; and
(m) any extension, renewal, replacement or refinancing of any
Indebtedness secured by a Lien permitted by any of the foregoing clauses
(a) through (g).
Notwithstanding the foregoing, at and after the time of the Mirage merger,
the foregoing covenant shall not apply to the extent it constitutes an
agreement not to encumber the equity securities of Mirage corporate
Subsidiaries licensed in Nevada, unless and until it is approved by the Nevada
Board and the Nevada Commission. Similar approvals must be obtained from the
Mississippi Gaming Commission with respect to these agreements not to encumber
the equity securities of the corporate Subsidiaries of Mirage licensed in
Mississippi. See "Regulation and Licensing--Nevada Gaming Regulation," "--
Mississippi Government Regulation" and "Description of Notes--Gaming
Approvals."
Limitation on Sale and Lease-Back Transactions
Other than as provided below under "--Exempted Liens and Sale and Lease-
Back Transactions," neither MGM Grand nor any Subsidiary Guarantor will enter
into any Sale and Lease-Back Transaction unless either:
(i) MGM Grand or such Subsidiary Guarantor would be entitled, pursuant
to the provisions described in clauses (a) through (m) under "--Limitation
on Liens" above, to create, assume or suffer to exist a Lien on the
property to be leased without equally and ratably securing the notes; or
(ii) an amount equal to the greater of the net cash proceeds of such
sale or the fair market value of such property (in the good faith opinion
of MGM Grand's board of directors) is applied within 120 days to the
retirement or other discharge of its Funded Debt.
Exempted Liens and Sale and Lease-Back Transactions
Notwithstanding the restrictions set forth in "--Limitation on Liens" and
"--Limitation on Sale and Lease-Back Transactions" above, MGM Grand or any
Subsidiary Guarantor may create, assume or suffer to exist Liens or enter into
Sale and Lease-Back Transactions not otherwise permitted as described above,
provided that at the time of such event, and after giving effect thereto, the
sum of outstanding Indebtedness secured by such Liens (not including Liens
permitted under "--Limitation on Liens" above) plus all Attributable Debt in
respect of such Sale and Lease-Back Transactions entered into (not including
Sale and Lease-Back Transactions permitted under "--Limitation on Sale and
Lease-Back Transactions" above), measured, in each case, at the time any such
Lien is incurred or any such Sale and Lease-Back Transaction is entered into,
by MGM Grand and the Subsidiary Guarantors does not exceed 15% of Consolidated
Net Tangible Assets.
Limitation on Senior Subordinated Indebtedness
MGM Grand will not Incur any Indebtedness that is subordinate in right of
payment to any Senior Indebtedness unless such Indebtedness is pari passu
with, or subordinated in right of payment to, the notes. No Subsidiary
Guarantor will Incur any Indebtedness that is subordinate in right of payment
to any Senior Indebtedness unless such Indebtedness is pari passu with, or
subordinated in right of payment to, any Subsidiary Guarantee executed by the
Subsidiary Guarantor.
6
Subsidiary Guarantees
In addition to the Subsidiary Guarantors named in the indenture on the
closing date, the indenture will provide that any existing or future
Subsidiary of MGM Grand (other than an Excluded Subsidiary) shall become a
Subsidiary Guarantor, on a senior subordinated basis (pursuant to
subordination provisions substantially similar to those described above under
the subheading "Subordination" above) of MGM Grand's payment Obligations under
the notes and the indenture, if such Subsidiary Incurs any Indebtedness or if
and for so long as such Subsidiary provides a guarantee in respect of Senior
Indebtedness of MGM Grand.
Repurchase at the Option of Holders Upon a Change of Control
Upon the occurrence of a Change of Control, each holder of notes shall have
the right to require MGM Grand to repurchase all or any part of such holder's
notes pursuant to the offer described below (the "Change of Control Offer") at a
purchase price (the "Change of Control Purchase Price") equal to 101% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the
purchase date (subject to the right of holders of record on the relevant record
date to receive interest due on the relevant interest payment date).
Within 30 days following any Change of Control, MGM Grand or, at MGM
Grand's request, the Trustee will mail to each holder of notes a notice stating:
. that a Change of Control has occurred and a Change of Control Offer
is being made pursuant to the covenant entitled "Repurchase at the
Option of Holders Upon a Change of Control" and that all notes
timely tendered will be accepted for payment;
. the Change of Control Purchase Price and the purchase date, which
shall be, subject to any contrary requirements of applicable law, a
business day no earlier than 30 days nor later than 60 days from the
date such notice is mailed;
. the circumstances and relevant facts regarding the Change of
Control; and
. the procedures that holders of notes must follow in order to tender
their notes (or portions thereof) for payment, and the procedures
that holders of notes must follow in order to withdraw an election
to tender notes (or portions thereof) for payment.
MGM Grand will comply, to the extent applicable, with the requirements of
Section 14(e) of the Securities Exchange Act of 1934 and any other securities
laws or regulations in connection with the repurchase of notes pursuant to a
Change of Control Offer. To the extent that the provisions of any securities
laws or regulations conflict with the provisions of the covenant described
hereunder, MGM Grand will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under the
covenant described hereunder by virtue of such compliance.
The Change of Control repurchase feature is a result of negotiations
between MGM Grand and representatives of the underwriters. Management has no
present intention to engage in a transaction involving a Change of Control,
although it is possible that MGM Grand would decide to do so in the future.
The definition of Change of Control includes a phrase relating to the sale,
transfer, assignment, lease, conveyance or other disposition of "all or
substantially all" the assets of MGM Grand. Although there is a developing body
of case law interpreting the phrase "substantially all," there is no precise
established definition of the phrase under applicable law. Accordingly, if MGM
Grand disposes of less than all its assets by any of the means described above,
the ability of a holder of notes to require MGM Grand to repurchase its notes
may be uncertain. In such a case, holders of the notes may not be able to
resolve this uncertainty without resorting to legal action.
The Credit Facilities provide that the occurrence of certain of the events
that would constitute a Change of Control could lead to termination of
commitments and require the early repayment of loans under the Credit
Facilities. Other future debt of MGM Grand may contain prohibitions of certain
events which would constitute a Change of Control or require such debt to be
repurchased upon a Change of Control. Moreover, the exercise by holders of notes
of their right to require MGM Grand to repurchase such notes could cause a
default under existing or future debt of MGM Grand, even if the Change of
Control itself does not, due to the financial effect of such repurchase on MGM
Grand. If repurchase upon a Change of Control would constitute a default on
Designated Senior Indebtedness, a Payment Blockage Notice could result,
preventing such repurchase. Finally, MGM Grand's ability to pay cash to holders
of notes upon a repurchase may be limited by its then existing financial
resources. There can be no assurance that sufficient funds will be available
when necessary to make any required repurchases. MGM Grand's failure to make a
required Change of Control Offer or to purchase notes in connection with a
Change of Control Offer would result in a default under the indenture. Such a
default would, in turn, constitute a default under other existing debt of MGM
Grand, and may constitute a default under future debt as well. MGM Grand's
obligation to make an offer to repurchase the notes as a result of a Change of
Control may be waived or modified at any time prior to the occurrence of such
Change of Control with the written consent of the holders of a majority in
principal amount of the notes. See "Supplemental Modification and Waiver
Provisions."
MGM Grand will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by MGM Grand and
purchases all of the notes validly tendered and not withdrawn under such Change
of Control Offer.
Supplemental Events of Default
Reference is made to the section entitled "Description of Debt Securities"
in the accompanying Prospectus for a description of events of default
applicable to the notes under the indenture. In addition to such events of
default, the following events shall each constitute an event of default
applicable to the notes under the indenture:
(i) the acceleration of the maturity of any Indebtedness of MGM Grand or
any Subsidiary Guarantor (other than Non-recourse Indebtedness), at any one
time, in an amount in excess of the greater of (a) $25 million and (b) 5%
of Consolidated Net Tangible Assets, if such acceleration is not annulled
within 30 days after written notice as provided in the indenture; and
(ii) entry of final judgments against MGM Grand or any Subsidiary
Guarantor which remain undischarged for a period of 60 days, provided that
the aggregate of all such judgments exceeds $25 million and judgments
exceeding $25 million remain undischarged for 60 days after notice.
Supplemental Modification or Waiver Provisions
Reference is made to the section entitled "Description of Debt Securities--
Modification and Waiver" in the accompanying Prospectus for a description of
provisions pertaining to modifications or waivers of the indenture, provided
with respect to these notes and the indenture, references in such section to
MGM Grand shall also be deemed to include the Subsidiary Guarantors. In
addition to the other modifications or waivers specified therein that require
the consent of each affected holder of the notes, a release of any Subsidiary
Guarantor (except in accordance with the provisions of the indenture) requires
the consent of each affected holder of notes. In addition, no such modification
or waiver may, without the consent of the holder of each note, at any time after
a Change of Control has occurred, change the time at which the Change of Control
Offer related thereto must be made or change the time or price at which the
notes must be repurchased pursuant to such Change of Control Offer.
Gaming Approvals
Restrictions on the transfer of the equity securities of the corporate
Subsidiaries licensed in Nevada of MGM Grand, and at and after the Mirage
merger, of Mirage, and agreements not to encumber such equity securities, in
each case in respect of the notes, require the prior approval of the Nevada
Commission in order to be effective. On August 19, 1999, the Nevada Commission
granted MGM Grand prior approval to make public offerings for a period of
twenty-three months, subject to certain conditions ("Shelf Approval"). This
offering is being made pursuant to the Shelf Approval. However, while such
Shelf Approval includes prior approvals of restrictions on the transfer of the
equity securities of MGM Grand's Nevada-licensed corporate Subsidiaries and
agreements not to encumber such equity securities, in each case in respect of
the notes, it does not include approvals in respect of the equity securities
of Nevada-licensed Mirage corporate Subsidiaries.
Consequently, applications have been filed with the Nevada Board and the
Nevada Commission seeking their approval for the Nevada-licensed corporate
Subsidiaries of Mirage to allow restrictions on the transfer of the equity
securities of, and agreements not to encumber the equity securities of,
Mirage's Nevada-licensed corporate Subsidiaries, in each case in respect of
the notes, to be effective at and after the time of the Mirage merger. Such
restrictions on the transfer of equity securities and agreements not to
encumber equity securities will not be effective in respect of the Nevada-
licensed corporate Subsidiaries of Mirage at and after the Mirage merger
unless and until they are approved by the Nevada Board and the Nevada
Commission. There can be no assurance that such approvals will be granted on a
timely basis or at all. Similar approvals must be obtained from the
Mississippi Gaming Commission with respect to these restrictions and
agreements not to encumber the equity securities of corporate Subsidiaries of
Mirage licensed in Mississippi, whether securities are issued in a private
placement or a public offering. For more information, see "Regulation and
Licensing--Nevada Gaming Regulation" and "--Mississippi Government
Regulation."
7
Compliance with Gaming Laws
Each holder of a note, by accepting any note, agrees to be bound by the
requirements imposed on holders of debt securities of MGM Grand by the gaming
authority of any jurisdiction of which MGM Grand or any of its Subsidiaries
conducts or proposes to conduct gaming activities. For a description of the
regulatory requirements applicable to MGM Grand, see "Regulation and
Licensing" herein.
Reports
So long as any notes are outstanding, MGM Grand will file with the trustee
under the indenture the supplementary and periodic information, documents and
reports which may be required pursuant to Section 13 or Section 15(d) of the
Exchange Act with respect to securities listed and registered on a national
securities exchange as such rules and regulations may require.
Book-Entry; Delivery and Form
The notes sold within the United States will initially be issued in the
form of one or more global notes. The global notes will be deposited with, or
on behalf of, The Depository Trust Company ("DTC") and registered in the name
of DTC or its nominee, who will be the global notes holder. Except as set
forth below, the global notes may be transferred, in whole and not in part,
only to DTC or another nominee of DTC. Investors may hold their beneficial
interests in the global notes directly through DTC if they are participating
organizations or "participants" in such system or indirectly through
organizations that are participants in such system.
Depository Procedures
DTC has advised MGM Grand that DTC is a limited-purpose trust company that
was created to hold securities for its participants and to facilitate the
clearance and settlement of transactions in such securities between
participants through electronic book-entry changes in accounts of its
participants. The participants include securities brokers and dealers, banks
and trust companies, clearing corporations and certain other organizations.
Access to DTC's system is also available to other entities such as banks,
brokers, dealers and trust companies, which we refer to as "indirect
participants," that clear through or maintain a custodial relationship with a
participant, either directly or indirectly. Persons who are not participants
may beneficially own securities held by or on behalf of DTC only through the
participants or the indirect participants.
MGM Grand expects that pursuant to procedures established by DTC:
(i) upon deposit of the global notes, DTC will credit the accounts of
participants designated by Underwriters with portions of the principal
amount of the global notes; and
(ii) ownership of the notes evidenced by the global notes will be shown
on, and the transfer of ownership thereof will be effected only through,
records maintained by DTC (with respect to the interests of the
participants), the participants and the indirect participants.
Prospective purchasers are advised that the laws of some states require
that certain persons take physical delivery in definitive form of securities
that they own. Consequently, the ability to transfer notes evidenced by the
global notes will be limited to such extent.
So long as the global notes holder is the registered owner of any notes,
the global notes holder will be considered the sole holder under the indenture
of any notes evidenced by the global notes. Beneficial owners of
8
notes evidenced by the global notes will not be considered the owners or
holders thereof under the indenture for any purpose, including with respect to
the giving of any directions, instructions or approvals to the trustee
thereunder. Neither MGM Grand nor the applicable trustee will have any
responsibility or liability for any aspect of the records of DTC or for
maintaining, supervising or reviewing any records of DTC relating to the
notes.
Payments in respect of the principal of, premium, if any, and interest on
any notes registered in the name of the global notes holder on the applicable
record date will be payable by the applicable trustee to or at the direction
of the global notes holder in its capacity as the registered holder under the
indenture. Under the terms of the indenture, MGM Grand and the applicable
trustee may treat the persons in whose names notes, including the global
notes, are registered as the owners thereof for the purpose of receiving such
payments. Consequently, neither MGM Grand nor the applicable trustee has or
will have any responsibility or liability for the payment of such amounts to
beneficial owners of notes. MGM Grand believes, however, that it is currently
the policy of DTC to immediately credit the accounts of the relevant
participants with such payments, in amounts proportionate to their respective
holdings of beneficial interests in the relevant security as shown on the
records of DTC. Payments by the participants and the indirect participants to
the beneficial owners of notes will be governed by standing instructions and
customary practice and will be the responsibility of the participants or the
indirect participants.
Certificated Securities
Subject to certain conditions, any person having a beneficial interest in a
global note may, upon request to the trustee, exchange such beneficial
interest for notes in the form of certificated securities. Upon any such
issuance, the trustee is required to register such certificated securities in
the name of, and cause the same to be delivered to, such person or persons (or
the nominee of any thereof). In addition, if:
(i) MGM Grand notifies the trustee in writing that DTC is no longer
willing or able to act as a depositary and MGM Grand is unable to locate a
qualified successor within 90 days; or
(ii) MGM Grand, at its option, notifies the trustee in writing that it
elects to cause the issuance of notes in the form of certificated
securities under the indenture, then, upon surrender by the global notes
holder of its global notes, notes in such form will be issued to each
person that the global notes holder and DTC identify as being the
beneficial owner of the related notes.
Neither MGM Grand nor the trustee will be liable for any delay by the
global notes holder or DTC in identifying the beneficial owners of notes and
MGM Grand and the trustee may conclusively rely on, and will be protected in
relying on, instructions from the global notes holder or DTC for all purposes.
Same-Day Settlement and Payment
The indenture will require that payments in respect of the notes
represented by the global notes (including principal, premium, if any, and
interest) be made by wire transfer of immediately available funds to the
accounts specified by the global notes holder. With respect to certificated
securities, MGM Grand will make all payments of principal, premium, if any,
and interest by wire transfer of immediately available funds to the accounts
specified by the holders thereof or, if no such account is specified, by
mailing a check to each such holder's registered address.
Paying Agent and Registrar for the Notes
The trustee will initially act as paying agent and registrar for the notes.
MGM Grand may change the paying agent or registrar without prior notice to the
holders of the notes, and MGM Grand or any of its Subsidiaries may act as
paying agent or registrar.
9
Transfer and Exchange
A holder may transfer or exchange notes in accordance with the indenture.
The registrar and the trustee may require a holder, among other things, to
furnish appropriate endorsements and transfer documents and MGM Grand may
require a holder to pay any taxes and fees required by law or permitted by the
indenture. MGM Grand is not required to transfer or exchange any note selected
for redemption. Also, MGM Grand is not required to transfer or exchange any
note for a period of 15 days before a selection of notes to be redeemed.
The registered holder of a note will be treated as the owner of it for all
purposes.
Concerning the Trustee
If the trustee becomes a creditor of MGM Grand, the indenture limits its
right to obtain payment of claims in certain cases, or to realize on certain
property received in respect of any such claim as security or otherwise. The
trustee will be permitted to engage in other transactions; however, if it
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the Commission for permission to continue or resign.
The holders of a majority in aggregate principal amount of the then
outstanding notes will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the trustee,
subject to certain exceptions. The indenture provides that in case an Event of
Default shall occur and be continuing, the trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the trustee will be
under no obligation to exercise any of its rights or powers under the
indenture at the request of any holder of notes, unless such holder shall have
offered to the trustee security and indemnity satisfactory to it against any
loss, liability or expense.
Certain Definitions
Set forth below are certain defined terms used in the indenture. Reference
is made to the indenture for a full disclosure of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with") as used with respect to any
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
agreement or otherwise.
"Attributable Debt" with respect to any Sale and Lease-Back Transaction
that is subject to the restrictions described under "--Additional Covenants of
MGM Grand--Limitation on Sale and Lease-Back Transactions" means the present
value of the minimum rental payments called for during the terms of the lease
(including any period for which such lease has been extended), determined in
accordance with generally accepted accounting principles, discounted at a rate
that, at the inception of the lease, the lessee would have incurred to borrow
over a similar term the funds necessary to purchase the leased assets.
"Change of Control" means the occurrence of any of the following events:
(a) if any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934 or any successor provisions to
either of the foregoing), other than any Permitted Holders, becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act, except that
a person will be deemed to have "beneficial ownership" of all shares that any
such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 50% of the total voting power of the Voting Stock of MGM Grand (for
purposes of this clause (a), such person or group shall be deemed to
beneficially own any Voting Stock of a corporation held by any other corporation
(the "parent corporation") so long as such person or group beneficially owns,
directly or indirectly, in the aggregate a majority of the total voting power of
the Voting Stock of such parent corporation); or
(b) the sale, transfer, assignment, lease, conveyance or other disposition,
directly or indirectly, of all or substantially all the assets of MGM Grand and
its Subsidiaries, considered as a whole, to another person (other than a
disposition of such assets as an entirety or virtually as an entirety to one or
more Wholly Owned Subsidiary Guarantors) shall have occurred, or MGM Grand
merges, consolidates or amalgamates with or into any other Person or any other
Person merges, consolidates or amalgamates with or into MGM Grand, in any event
pursuant to a transaction in which the outstanding Voting Stock of MGM Grand is
reclassified into or exchanged for cash, securities or other property, other
than any such transaction where:
(1) the outstanding Voting Stock of MGM Grand is reclassified into or
exchanged for other Voting Stock of MGM Grand or for Voting Stock of the
surviving corporation, and
(2) the holders of the Voting Stock of MGM Grand immediately prior to
such transaction own, directly or indirectly, not less than a majority of
the Voting Stock of MGM Grand or the surviving corporation immediately
after such transaction; or
(c) the first day on which a majority of the members of the Board of
Directors of MGM Grand are not Continuing Directors.
"Consolidated Net Tangible Assets" means the total amount of assets
(including investments in Joint Ventures) of MGM Grand and its Subsidiaries
(less applicable depreciation, amortization and other valuation reserves)
after deducting therefrom (a) all current liabilities of MGM Grand and its
Subsidiaries (excluding (i) the current portion of long-term Indebtedness,
(ii) intercompany liabilities and (iii) any liabilities which are by their
terms renewable or extendible at the option of the obligor thereon to a time
more than 12 months from the time as of which the amount thereof is being
computed) and (b) all goodwill, trade names, trademarks, patents, unamortized
debt discount and any other like intangibles, all as set forth on the
consolidated balance sheet of MGM Grand for the most recently completed fiscal
quarter for which financial statements are available and computed in
accordance with generally accepted accounting principles.
10
"Continuing Director" means, as of any date of determination, any member of
the Board of Directors of MGM Grand who (i) was a member of that Board of
Directors on the date of the indenture, (ii) had been a member of that Board of
Directors for the two years immediately preceding such date of determination or
(iii) was nominated for election or elected to that Board of Directors with the
affirmative vote of the greater of (x) a majority of Continuing Directors who
were members of that Board at the time of such nomination or election or (y) at
least three Continuing Directors.
"Credit Facilities" means, collectively: (i) the Second Amended and
Restated Loan Agreement, dated as of April 10, 2000, among MGM Grand, as
Borrower, MGM Grand Atlantic City, Inc. and MGM Grand Detroit, LLC, as Co-
Borrowers, the Banks, Syndication Agent, Documentation Agents and Co-
Documentation Agents therein named, and Bank of America, N.A., as
Administrative Agent (and their successors and assigns from time to time party
thereto), including any, related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, in each case as
amended, modified, renewed, extended, refunded, replaced or refinanced from
time to time; (ii) the 364-Day Loan Agreement, dated as of April 10, 2000,
among MGM Grand, as Borrower, MGM Grand Atlantic City, Inc. and MGM Grand
Detroit, LLC, as Co-Borrowers, the Banks, Syndication Agent, Documentation
Agents and Co-Documentation Agents therein named, and Bank of America, N.A.,
as Administrative Agent (and their successors and assigns from time to time
party thereto), including any, related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, in
each case as amended, modified, renewed, extended, refunded, replaced or
refinanced from time to time; (iii) the Term Loan Agreement, dated as of April
7, 2000, among MGM Grand, as Borrower, MGM Grand Atlantic City, Inc. and MGM
Grand Detroit, LLC, as Co-Borrowers, the Banks, Syndication Agent,
Documentation Agents and Co-Documentation Agents therein named, and Bank of
America, N.A., as Administrative Agent (and their successors and assigns from
time to time party thereto), including any, related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, in each case as amended, modified, renewed, extended, refunded,
replaced or refinanced from time to time and (iv) the $300 million 364-day
senior revolving credit facility contemplated by the May 9, 2000 commitment,
including any, related notes, guarantees, collateral documents, instruments
and agreements executed in connection therewith, in each case as amended,
modified, renewed, extended, refunded, replaced or refinanced from time to
time.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Designated Senior Indebtedness" means (i) Indebtedness under the Credit
Facilities (ii) Indebtedness under the Senior Notes and (iii) any other Senior
Indebtedness the principal amount of which is $100.0 million or more and that
has been designated by MGM Grand as "Designated Senior Indebtedness" in the
documentation with respect thereto.
"Excluded Subsidiary" means The MGM Grand Bally's Monorail, LLC, MGM Grand
Detroit, LLC, MGM Grand Detroit II, LLC, MGM Grand Diamond, Inc. and MGM
Grand's non-U.S. Subsidiaries whose only tangible assets are located in
foreign nations and their U.S. holding companies, provided such holding
companies have no other assets or operations and provided that except for MGM
Grand Detroit, LLC to the extent it guarantees any amounts of proceeds of
borrowings under the Credit Facilities made available to MGM Grand Detroit,
LLC, if any Excluded Subsidiary becomes subject to the covenants in the Credit
Facilities applicable to the Subsidiary Guarantors or grants any Liens to
secure the Credit Facilities, such Excluded Subsidiary will thereafter not be
an Excluded Subsidiary.
"Funded Debt" means all Indebtedness of MGM Grand or any Subsidiary
Guarantor which (i) matures by its terms on, or is renewable at the option of
any obligor thereon to, a date more than one year after the date of original
issuance of such Indebtedness and (ii) ranks at least pari passu with the
notes or the applicable Subsidiary Guarantee.
"Incur" means, with respect to any Indebtedness, to incur, create, issue,
assume, guarantee or otherwise become liable for or with respect to, or become
responsible for, the payment of, contingently or otherwise, such Indebtedness;
provided that the accrual of interest shall not be considered an Incurrence of
Indebtedness.
"Indebtedness" of any person means (i) any indebtedness of such Person,
contingent or otherwise, in respect of borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to
a portion thereof), or evidenced by notes, bonds, debentures or similar
instruments or letters of credit, or representing the balance deferred and
unpaid of the purchase price of any property, including any such indebtedness
Incurred in connection with the acquisition by such Person or any of its
Subsidiaries of any other business or entity, if and to the extent such
indebtedness would appear as a liability upon a balance sheet of such person
prepared in accordance with generally accepted accounting principles,
including for such purpose
11
Obligations under capitalized leases, and (ii) any guarantee, endorsement
(other than for collection or deposit in the ordinary course of business),
discount with recourse, or any agreement (contingent or otherwise) to
purchase, repurchase or otherwise acquire or to supply or advance funds with
respect to, or to become liable with respect to (directly or indirectly) any
indebtedness, obligation, liability or dividend of any Person, but shall not
include indebtedness or amounts owed for compensation to employees, or for
goods or materials purchased, or services utilized, in the ordinary course of
business of such Person. For purposes of this definition of Indebtedness, a
"capitalized lease" shall be deemed to mean a lease of real or personal
property which, in accordance with generally accepted accounting principles,
is required to be capitalized.
"Interest Rate Agreement" means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement, option or future contract or other similar
agreement or arrangement.
"Joint Venture" means any partnership, corporation or other entity, in
which up to and including 50% of the partnership interests, outstanding voting
stock or other equity interests is owned, directly or indirectly, by MGM Grand
and/or one or more of its Subsidiaries.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit,
arrangement, encumbrance, security interest, lien (statutory or otherwise), or
preference, priority or other security or similar agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation,
any conditional sale or other title retention agreement having substantially
the same economic effect as any of the foregoing).
"Make-Whole Premium" means, with respect to any note at any redemption
date, the excess, if any, of (i) the present value of the sum of the principal
amount and premium, if any, that would be payable on such note on its maturity
date and all remaining interest payments (not including any portion of such
payments of interest accrued as of the redemption date) to and including such
maturity date, discounted on a semi-annual bond equivalent basis from such
maturity date to the redemption date at a per annum interest rate equal to the
sum of the Treasury Yield (determined on the business day immediately
preceding the date of such redemption), plus 50 basis points, over (ii) the
principal amount of the note being redeemed.
"Mirage Notes" means (i) Mirage Resorts, Incorporated's 6 5/8% notes due
2005 in the original aggregate principal amount of $200 million, (ii) Mirage
Resorts, Incorporated's 7 1/4% notes due 2006 in the original aggregate
principal amount of $250 million, (iii) Mirage Resorts, Incorporated's 6 3/4%
notes due 2007 in the original principal amount of $200 million, (iv) Mirage
Resorts, Incorporated's 6 3/4% notes due 2008 in the original principal amount
of $200 million and (v) Mirage Resorts, Incorporated's 7 1/4% debentures due
2017 in the original principal amount of $100 million.
"Non-recourse Indebtedness" means Indebtedness the terms of which provide
that the lender's claim for repayment of such Indebtedness is limited solely
to a claim against the property which secures such Indebtedness.
"Obligations" means any principal, interest, premium, if any, penalties,
fees, indemnifications, reimbursements, expenses, damages or other liabilities
or amounts payable under the documentation governing or otherwise in respect
of any Indebtedness.
"Permitted Holders" means (i) an employee stock ownership plan or other
employee benefit plan covering employees of MGM Grand and its Subsidiaries and
(ii) Tracinda Corporation, its Affiliates and, with respect to any natural
Person that is an Affiliate, any Related Persons or such Person.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust, estate,
unincorporated organization or government or any agency or political
subdivision thereof or any other entity.
"Principal Property" means any real estate or other physical facility or
depreciable asset or securities the net book value of which on the date of
determination exceeds the greater of $25 million or 2% of Consolidated Net
Tangible Assets.
12
"Related Persons" means, with respect to any natural Person, (i) such
Person's spouse, former spouses, parents and descendants (whether by blood or
adoption, and including stepchildren) and the spouses of any such natural
Persons, (ii) the estate of such natural Person and (iii) any corporation,
partnership, trust or other Person controlled by, and in which at least 50% of
the interests therein are owned by, one or more of) any of such natural Person,
such spouse, former spouses, parents and descendants (whether by blood or
adoption, and including stepchildren) and the spouses of any such natural
Persons.
"Representative" means the indenture trustee or other trustee, agent or
representative in respect of any Designated Senior Indebtedness; provided that
if, and for so long as, any Designated Senior Indebtedness lacks such a
representative, then the Representative for such Designated Senior
Indebtedness shall at all times be the holders of a majority in outstanding
principal amount of such Designated Senior Indebtedness in respect of any
Designated Senior Indebtedness.
"Sale and Lease-Back Transaction" means any arrangement with a person
(other than MGM Grand or any of its Subsidiaries), or to which any such person
is a party, providing for the leasing to MGM Grand or any of its Subsidiaries
for a period of more than three years of any Principal Property which has been
or is to be sold or transferred by MGM Grand or any of its Subsidiaries to
such person or to any other person (other than MGM Grand of any of its
Subsidiaries), to which funds have been or are to be advanced by such person
on the security of the leased property.
"Senior Indebtedness" means the following Obligations of MGM Grand or any
Subsidiary Guarantor, as the case may be, whether outstanding on the date of
the offering or thereafter Incurred, unless such Obligation is Indebtedness
that is expressly made equal or subordinate in right of payment to the notes
or the Subsidiary Guarantees, by its terms or the terms of any issuing
agreement or instrument:
(i) all Indebtedness and all other Obligations of MGM Grand or any
Subsidiary Guarantor, as the case may be, under (or in respect of) the
Credit Facilities and all Interest Rate Agreements and Currency Agreements
with respect thereto;
(ii) all Indebtedness and all other obligations of MGM Grand or any
Subsidiary Guarantor, as the case may be, under (or in respect of) the
Senior Notes;
(iii) all interest accruing subsequent to events of bankruptcy of MGM
Grand or any Subsidiary Guarantor at the rate provided for in the document
governing any Senior Indebtedness, whether or not such interest is an
allowed claim enforceable against the debtor in a bankruptcy case under
bankruptcy law; and
(iv) all other Indebtedness and all other Obligations of MGM Grand or
any Subsidiary Guarantor, unless it is expressly stated in the governing
terms or in the assumption thereof that such Indebtedness is not "Senior
Indebtedness."
Notwithstanding the foregoing, the term "Senior Indebtedness" shall not
include:
. any Indebtedness of MGM Grand to any of its Subsidiaries, or to a
joint venture in which MGM Grand or any of its Subsidiaries has an
interest;
. any Indebtedness of any Subsidiary of MGM Grand to MGM Grand or any
other Subsidiary of MGM Grand, or to a joint venture in which MGM
Grand or any of its Subsidiaries has an interest;
. any Indebtedness that was Non-recourse Indebtedness when Incurred by
either MGM Grand or any Subsidiary Guarantor;
. any Indebtedness of MGM Grand or any Subsidiary Guarantor, as the
case may be, to the extent not permitted by the "Limitation on
Senior Subordinated Indebtedness" covenant described above;
. any Indebtedness to any employee of either MGM Grand or any of its
Subsidiaries;
. any liability for taxes owed or owing by either MGM Grand or any of
its Subsidiaries; or
. any trade payables.
"Senior Notes" means (i) MGM Grand's 6.95% senior collateralized notes due
2005 in the original aggregate principal amount of $300 million, (ii) MGM
Grand's 6.875% senior collateralized notes due 2008 in the original aggregate
principal amount of $200 million and (iii) the Mirage notes.
13
"Subsidiary" of any specified person means any corporation, partnership or
limited liability companies of which at least a majority of the outstanding
stock having by the terms thereof ordinary voting power for the election of
directors of such corporation (irrespective of whether or not at the time
stock of any other class or classes of such corporation shall have or might
have voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned by such person, or by one or more other
Subsidiaries, or by such person and one or more other Subsidiaries.
"Treasury Securities" mean any investment in obligations issued or
guaranteed by the United States government or any agency thereof.
"Treasury Yield" means the yield to maturity at the time of computation of
Treasury Securities with a constant maturity (as compiled by and published in
the most recent Federal Reserve Statistical Release H.15 (519) which has
become publicly available at least two business days prior to the date fixed
for redemption (or, if such Statistical Release is no longer published, any
publicly available source of similar data)) most nearly equal to the then
remaining average life of the notes, provided that if the average life of the
notes is not equal to the constant maturity of a Treasury Security for which a
weekly average yield is given, the Treasury Yield shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the
weekly average yields of Treasury Securities for which such yields are given,
except that if the average life of the notes is less than one year, the weekly
average yield on actually traded Treasury Securities adjusted to a constant
maturity of one year shall be used.
"Voting Stock" of any Person means all classes of capital stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary Guarantor" means, at any time, a Subsidiary
Guarantor all the Voting Stock of which (except directors' qualifying shares) is
at such time owned, directly or indirectly, by MGM Grand and its other Wholly
Owned Subsidiary Guarantors.
14