<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 18, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
METRO-GOLDWYN-MAYER INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 95-4605850
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
2500 BROADWAY STREET
SANTA MONICA, CALIFORNIA 90404 90404
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
---------------
AMENDED AND RESTATED 1996 STOCK INCENTIVE PLAN
1998 NON-EMPLOYEE DIRECTOR STOCK PLAN
(FULL TITLE OF THE PLANS)
---------------
DAVID G. JOHNSON, ESQ.
SENIOR EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
METRO-GOLDWYN-MAYER INC.
2500 BROADWAY STREET
SANTA MONICA, CALIFORNIA 90404
(NAME AND ADDRESS OF AGENT FOR SERVICE)
(310) 449-3000
(TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
BRUCE D. MEYER, ESQ.
GIBSON, DUNN & CRUTCHER LLP
333 SOUTH GRAND AVENUE
LOS ANGELES, CALIFORNIA 90071
(213) 229-7000
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE FEE
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<S> <C> <C> <C> <C>
Common Stock, $0.01 par value per
share(3)............................ 5,205,702 $24.00 $124,936,848 $36,856
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Common Stock, $0.01 par value per
share(3)............................ 2,323,000 $20.00 $ 46,460,000 $13,706
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Common Stock, $0.01 par value per
share(3)............................ 13,000 $22.00 $ 286,000 $ 84
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Common Stock, $0.01 par value per
share(4)............................ 583,363 $25.41 $ 14,823,254(5) $ 4,373(5)
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Common Stock, $0.01 par value per
share(4)............................ 100,000 $25.41 $ 2,541,000(5) $ 750(5)
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Total................................ 8,225,065 $189,047,102 $55,770
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</TABLE>
(1) Pursuant to Rule 416(a), also covers additional securities that may be
offered as a result of stock splits, stock dividends or similar
transactions.
(2) Estimated solely for the purpose of determining the registration fee.
(3) The Amended and Restated 1996 Stock Incentive Plan ("1996 Incentive Plan")
of Metro-Goldwyn-Mayer Inc. (the "Company") authorizes the issuance of
8,125,065 shares of the Company's Common Stock, par value $0.01 per share
("Common Stock"). Of the 8,125,065 shares being registered hereunder for
issuance pursuant to the 1996 Incentive Plan, as of the date hereof,
approximately 5,205,702 are subject to presently outstanding options which
will become exercisable at $24.00 per share, approximately 2,323,000 are
subject to presently outstanding options which will become exercisable at
$20.00 per share, and approximately 13,000 are subject to presently
outstanding options which will become exercisable at $22.00 per share. The
remaining 583,363 shares are not subject to outstanding awards.
(4) The 1998 Non-Employee Director Stock Plan authorizes the issuance of
100,000 shares of the Company's Common Stock.
(5) Calculated pursuant to Rules 457(c) and 457(h)(1) based upon the average
of the high and low prices of the Common Stock on the New York Stock
Exchange on May 14, 1998, which was $25.41.
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<PAGE>
PART I
ITEM 1. PLAN INFORMATION.
Not filed as part of this Registration Statement pursuant to Note to Part I
of Form S-8.
ITEM 2. REGISTRATION INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
Not filed as part of this Registration Statement pursuant to Note to Part I
of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents of the Registrant heretofore filed with the
Securities and Exchange Commission (the "Commission") are hereby incorporated
in this Registration Statement by reference:
(1) the Registrant's annual report on Form 10-K for the year ended
December 31, 1997, filed on March 18, 1998;
(2) the Registrant's quarterly report on Form 10-Q for the quarter ended
March 31, 1998, filed on May 12, 1998;
(3) the Registrant's report on Form 8-K dated February 6, 1998; and
(4) the description of the Common Stock set forth under the caption
"Description of Capital Stock" in the Registrant's Registration Statement
on Form 8-A (File No. 1-13481), as filed with the Commission on October 14,
1997, together with any amendment or report filed with the Commission for
the purpose of updating such description.
All reports and other documents subsequently filed by the Registrant
pursuant to Sections 13(a) and (c), 14 and 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), prior to the filing of a post-
effective amendment which indicates that all securities offered hereunder have
been sold or which deregisters all such securities then remaining unsold,
shall be deemed to be incorporated by reference in this Registration Statement
and to be a part hereof from the date of filing of such reports and documents.
Any document, and any statement contained in a document, incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Registration Statement to the extent that a
statement contained herein, or in any other subsequently filed document that
also is incorporated or deemed to be incorporated by reference herein,
modifies or supersedes such document or statement. Any such document or
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Registration Statement. Subject to
the foregoing, all information appearing in this Registration Statement is
qualified in its entirety by the information appearing in the documents
incorporated by reference.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by applicable provisions of the Delaware General Corporation
Law (the "DGCL"), the Company's Certificate of Incorporation contains a
provision eliminating, to the fullest extent permitted by the DGCL as it
exists or may in the future be amended, the liability of a director to the
Company and its stockholders for monetary damages for breaches of fiduciary
duty as a director. However, in accordance with the DGCL, such provision does
not limit the liability of a director for (i) any breach of the director's
duty of loyalty to the Company or its stockholders, (ii) acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) payment of dividends, stock purchases or redemptions that
violate the DGCL or (iv) any transaction from which the director derived an
improper personal benefit. Such limitation of liability also does not affect
the availability of equitable remedies such as injunctive relief or
rescission.
The Certificate of Incorporation and Bylaws of the Company also provide
that, to the fullest extent permitted by the DGCL as it exists or may in the
future be amended, the Company will indemnify each of the officers and
directors of the Company (or their estates, if applicable), and may indemnify
any employee or agent of the Company (or their estates, if applicable), who is
or was a party to, or is threatened to be made a party to, any threatened,
pending or completed action, suit or proceeding, by reason of the fact that
such person is or was an officer, director, employee or agent of the Company
or is or was serving at the request of Company as an officer, director,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise. The Company will so indemnify such officer or director, and
may so indemnify such employee or agent (if indemnification is authorized by
the Board of Directors), in the case of such actions (whether or not by or in
the right of the Company) if such person acted in good faith and in a manner
such person reasonably believed to be in or not opposed to the best interests
of the Company, and with respect to any criminal action or proceeding other
than by or in the right of the Company, had no reasonable cause to believe
such person's conduct was unlawful. With respect to indemnification other than
by or in the right of the Company, the termination of any action, suit or
proceeding by judgment, order, settlement or conviction, or upon a plea of
nolo contendere or its equivalent, will not, of itself, create a presumption
that the person did not act in good faith and in a manner which such person
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, that such
person had reasonable cause to believe that such person's conduct was
unlawful. No indemnification will be made in connection with actions by or in
the right of the Company in respect of any claim, issue or matter as to which
such person has been adjudged to be liable for negligence or misconduct in the
performance of such person's duty to the Company unless and only to the extent
that the Court of Chancery or the court in which such action or suit was
brought determines upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court
of Chancery or such other court deems proper. In addition, to the fullest
extent permitted by the DGCL, expenses (including attorneys' fees), judgments,
fines incurred by and amount paid in settlement may be advanced by the Company
prior to the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on the behalf of such director, officer, employee or
agent to repay such amounts if it shall ultimately be determined that he or
she is not entitled to be indemnified as authorized in accordance with the
DGCL and the Company's Certificate of Incorporation. The Company's Certificate
of Incorporation and Bylaws also state that such indemnification is not
exclusive of any other rights of the indemnified party, including rights under
any indemnification agreements or otherwise.
The Company currently maintains insurance on behalf of its officers and
directors against any liability which may be asserted against any such officer
or director in his or her capacity as such, subject to certain customary
exclusions. The amount of such insurance coverage is deemed by the Board of
Directors to be adequate to cover any such liability.
The Company has entered into indemnification agreements with its directors,
its executive officers and certain other officers providing for
indemnification by the Company, including in circumstances in which
indemnification is otherwise discretionary under Delaware law. These
agreements constitute binding agreements between the Company and each of the
other parties thereto, thus preventing the Company from modifying its
indemnification policy in a way that is adverse to any person who is a party
to such an agreement.
2
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act") may be permitted to directors,
officers or persons controlling the Registrant pursuant to the foregoing
provisions, the Registrant has been informed that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
<TABLE>
<C> <S>
5 Opinion of Gibson, Dunn & Crutcher LLP.
23.1 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5).
23.2 Consent of Arthur Andersen LLP Independent Auditors.
23.3 Consent of Price Waterhouse LLP Independent Auditors
24 Power of Attorney (included on the signature page hereof).
99.1 Amended and Restated 1996 Stock Incentive Plan (incorporated by
reference to Exhibit 10.5 to the Registrant's Registration Statement on
Form S-1 (File No. 333-35411) as filed with the Commission September
11, 1997, as amended (the "Form S-1 Registration Statement")).
99.2 Form of Stock Option Agreement (incorporated by reference to Exhibit
10.5 to the Registrant's Form S-1 Registration Statement).
99.3 Form of Employee Non-Qualified Stock Option Agreement.
99.4 1998 Non-Employee Director Stock Plan.
</TABLE>
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change
to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Santa Monica, California, on this 18th day of May, 1998.
METRO-GOLDWYN-MAYER INC.
/s/ David G. Johnson
By: _________________________________
David G. Johnson
Senior Executive Vice President
and General Counsel
Each person whose signature appears below constitutes and appoints David G.
Johnson and Michael G. Corrigan, and each of them, as his or her true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, or his or
her substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities indicated
on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Frank G. Mancuso Chairman of the Board of May 18, 1998
____________________________________ Directors and Chief Executive
Frank G. Mancuso Officer (Principal Executive
Officer)
/s/ A. Robert Pisano Vice Chairman and Director May 18, 1998
____________________________________
A. Robert Pisano
/s/ Michael G. Corrigan Chief Financial Officer May 18, 1998
____________________________________ (Principal Financial and
Michael G. Corrigan Accounting Officer)
/s/ James D. Aljian Director May 18, 1998
____________________________________
James D. Aljian
/s/ Francis Ford Coppola Director May 18, 1998
____________________________________
Francis Ford Coppola
/s/ Michael R. Gleason Director May 18, 1998
____________________________________
Michael R. Gleason
/s/ Kirk Kerkorian Director May 18, 1998
____________________________________
Kirk Kerkorian
/s/ Kerry M. Stokes Director May 18, 1998
____________________________________
Kerry M. Stokes
/s/ Alex Yemenidjian Director May 18, 1998
____________________________________
Alex Yemenidjian
/s/ Jerome B. York Director May 18, 1998
____________________________________
Jerome B. York
</TABLE>
4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<C> <S>
5 Opinion of Gibson, Dunn & Crutcher LLP.
23.1 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5).
23.2 Consent of Arthur Andersen LLP Independent Auditors.
23.3 Consent of Price Waterhouse LLP Independent Auditors.
24 Power of Attorney (included on the signature page hereof).
99.1 Amended and Restated 1996 Stock Incentive Plan (incorporated by
reference to Exhibit 10.5 to the Registrant's Registration Statement
on Form 5-1 (File No. 333-35411) as filed with the Commission
September 11, 1997, as amended (the "Form S-1 Registration
Statement")).
99.2 Form of Stock Option Agreement (incorporated by reference to Exhibit
10.5 to the Registrant's Form S-1 Registration Statement).
99.3 Form of Employee Non-Qualified Stock Option Agreement.
99.4 1998 Non-Employee Director Stock Plan.
</TABLE>
<PAGE>
Exhibit 5
OPINION OF GIBSON, DUNN & CRUTCHER LLP
May 18, 1998
(213) 229-7000 C 60385-00035
Metro-Goldwyn-Mayer Inc.
2500 Broadway Street
Santa Monica, California 90404
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel for Metro-Goldwyn-Mayer Inc., a Delaware
corporation (the "Company"), in connection with the registration of 8,225,065
shares of Common Stock, par value $0.01 per share (the "Common Stock"), of the
Company issuable under its 1996 Stock Incentive Plan and 1998 Non-Employee
Director Stock Plan (collectively, the "Plans"). In connection therewith, we
have examined, among other things, the Registration Statement on Form S-8 (the
"Registration Statement") proposed to be filed by the Company with the
Securities and Exchange Commission on or about May 18, 1998. We have also
examined the proceedings and other actions taken by the Company in connection
with the authorization of the shares of Common Stock issuable under the Plans
and such other matters as we deemed necessary for purposes of rendering this
opinion.
Based upon the foregoing, and in reliance thereon, we are of the opinion
that the shares of Common Stock issuable under the Plans, when issued, delivered
and paid for in accordance with the Plans and the agreements evidencing awards
thereunder and in the manner described in the Registration Statement, will be
validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not admit that we are
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the General Rules and Regulations of the
Securities and Exchange Commission.
Very truly yours,
GIBSON, DUNN & CRUTCHER LLP
<PAGE>
Exhibit 23.2
[LOGO OF ARTHUR ANDERSEN LLP]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Metro-Goldwyn-Mayer Inc.:
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated February 26, 1998
included in Metro-Goldwyn-Mayer Inc.'s Form 10-K for the year ended December 31,
1997 and to all references to our Firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Los Angeles, California
May 18, 1998
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated February 29, 1996, except for the
incentive bonus described in Note 12 as to which the date is July 31, 1996,
which appears on page 64 of Metro-Goldwyn-Mayer Inc.'s Annual Report on Form
10-K for the year ended December 31, 1997.
/s/ Price Waterhouse LLP
Century City, California
May 18, 1998
<PAGE>
EXHIBIT 99.3
METRO-GOLDWYN-MAYER INC.
EMPLOYEE NON-QUALIFIED STOCK OPTION AGREEMENT
PURSUANT TO THE
AMENDED AND RESTATED 1996 STOCK INCENTIVE PLAN
This Employee Non-Qualified Stock Option Agreement (the "Agreement") is
entered into as of the Date of Grant set forth below by Metro-Goldwyn-Mayer
Inc., a Delaware corporation (the "Company"), and the person named below as
Employee.
Employee is an employee of the Company or one or more of its subsidiaries.
Pursuant to the Company's Amended and Restated 1996 Stock Incentive Plan (the
"Plan"), the Compensation Committee of the Board of Directors of the Company,
which administers the Plan (the "Committee"), has approved the grant to Employee
of an option to purchase shares of the Common Stock of the Company (the "Common
Stock"), on the terms and conditions set forth below and subject to the terms of
the Plan and to this Agreement being entered into by Employee with the Company.
The Company and Employee agree as set forth below.
1. GRANT OF OPTION; CERTAIN TERMS AND CONDITIONS. The Company hereby
---------------------------------------------
grants to Employee, and Employee hereby accepts, as of the Date of Grant, an
option to (the "Option") purchase the number of shares of Common Stock set forth
below (the "Option Shares"), at the Exercise Price per share set forth below,
which option will expire at 5:00 p.m., West Coast Time, on the Expiration Date
set forth below and will be subject to all of the terms and conditions set forth
in the Plan and this Agreement. On each anniversary of the Date of Grant, the
Option will become exercisable to purchase ("vest with respect to") that number
of Option Shares (rounded to the nearest whole share) equal to the total number
of Option Shares multiplied by the Annual Vesting Rate set forth below.
Employee: _________________
Date of Grant: _________
Number of shares purchasable: _________
Exercise Price per share: ______
Expiration Date: ________
Annual Vesting Rate: 20%
If, after the first anniversary of the Date of Grant and before the
Option has become fully vested, the employment of Employee is terminated for any
reason other than a termination by the Company with "Cause", a resignation by
Employee without "Good Reason" or a termination pursuant to Section 2(a)(iii)
hereof, and such termination does not occur on a date which is an anniversary of
the Date of Grant, then, in addition to the portion of the Option which has
theretofore vested as of the then most recent prior anniversary date of the Date
of Grant (the "Prior Anniversary Date"), the Option shall immediately vest with
respect to an additional portion determined by multiplying the Annual Vesting
Rate (i.e., 20%) by a fraction, the numerator of which is the number of full
monthly periods which have elapsed since the Prior Anniversary Date
<PAGE>
and the denominator of which is the number 12. By way of illustration, if the
anniversary of the Date of Grant is September 15 of a given year, and the date
of termination of Employee's employment is November 20 of such year, then the
two full monthly periods will have elapsed since the applicable Prior
Anniversary Date. The unvested portion of the Option will terminate as set forth
in Section 2(a) below.
The Option is not intended to qualify as an incentive stock option under
Section 422 of the Internal Revenue Code, as amended.
2. ACCELERATION OF VESTING AND TERMINATION OF OPTION.
-------------------------------------------------
(a) Termination of Employment.
-------------------------
(i) Retirement. If Employee ceases to be employed by reason of
Employee's retirement in accordance with the Company's then-current
retirement policy ("Retirement"), then (A) the portion of the Option that
has not vested on or prior to the date of such Retirement will terminate on
such date and (B) the remaining vested portion of the Option will terminate
upon the earlier of the Expiration Date and the first anniversary after the
date of Retirement.
(ii) Death or Permanent Disability. If Employee ceases to be
employed by reason of Employee's death or "Permanent Disability" (defined
below), then (A) the portion of the Option that has not vested on or prior
to the date of Employee's death or Permanent Disability will terminate on
that date and (B) the remaining vested portion of the Option will terminate
upon the earlier of the Expiration Date and the first anniversary of the
date of Employee's death or Permanent Disability.
"Permanent Disability" has the meaning given to that term in
Employee's employment agreement with the Company or any of its subsidiaries
or, if not so defined or if Employee does not have an employment agreement
with the Company or a subsidiary of the Company, "Permanent Disability"
means the inability of Employee to perform, after reasonable accommodations
by the Company or such subsidiary, the essential functions of his or her
duties and obligations as an employee of the Company or such subsidiary by
reason of any medically determinable physical or mental impairment that can
reasonably be expected to result in death within 12 months or which has
lasted or can be expected to last for a continuous period of not less than
12 months.
The determination of whether Employee has a Permanent Disability for
purposes of this Agreement will be made by the Committee (or its designee)
in its discretion. In making its determination, the Committee (or its
designee) may request that Employee submit to an examination by a licensed
physician selected by the Committee (or its designee), and the physician's
examination report or conclusion will be provided to the Committee (or its
designee) and Employee. The Committee (or designee) may rely solely on the
examination or report of the physician in making its determination;
provided that if Employee does not submit to an examination by that
physician within 20 days after a request that Employee do so, the Committee
(or its designee) may make its determination based on its assumption, made
in its discretion (which assumption will be conclusive), of what the
physician's report or examination would have shown if made.
(iii) Termination without Cause or Resignation for Good Reason after
a Designated Change in Control. If, within one year after a "Designated
Change in
2
<PAGE>
Control", the employment of Employee is terminated without "Cause" or
Employee resigns with "Good Reason", then (A) the portion of the Option
that has not become vested on or prior to the date of such termination or
resignation will become fully vested on the date of such termination or
resignation and (B) the Option will be exercisable in full on the date of
such termination or resignation, provided, however, that the Option will
terminate upon the earlier of the Expiration Date and the date that is 90
days after the date of such termination or resignation. The terms
"Designated Change in Control", "Cause" and "Good Reason", as used in the
preceding sentence, and the terms "Seven", "Studios" and "Tracinda" as used
in Schedule A to this Agreement, have the meanings given to them in
Schedule A to this Agreement.
(iv) Other Termination or Resignation of Employment. If Employee's
employment is terminated or Employee resigns from his or her employment
(regardless of the cause of or reason, if any, for the termination or
resignation and, without limitation, even if the termination is wrongful),
other than in a manner covered by Sections 2(a)(i), (ii) or (iii), then:
(A) the portion of the Option that has not become vested on or prior to the
date of such termination or resignation will terminate immediately, without
the payment of any consideration to Participant ; and (B) the remaining
vested portion of the Option will terminate upon the earlier of the
Expiration Date and the date that is 90 days after the date of resignation
or termination.
(b) Death Following Termination of Employment. Notwithstanding anything
-----------------------------------------
to the contrary in this Agreement, if Employee dies at any time after the
termination of his or her employment and prior to the date on which the Option
is terminated pursuant to Section 2(a) above, then the vested portion of the
Option will terminate on the earlier of the Expiration Date or the first
anniversary of the date of Optionee's death.
(c) Acceleration of Option by Committee. The Committee, in its sole
-----------------------------------
discretion, may accelerate the exercisability of the Option at any time and for
any reason.
(d) Dissolution or Liquidation. Except as provided to the contrary in
--------------------------
Section 3 hereof, the Option will become fully vested and exercisable
immediately prior to, and shall terminate upon, the consummation of the
dissolution or liquidation of the Company.
3. ADJUSTMENTS; MERGER AND SIMILAR EFFECT TRANSACTIONS. If the
---------------------------------------------------
outstanding securities of the class then subject to the Option are increased,
decreased or exchanged for or converted into cash, property or a different
number or kind of securities, or cash, property or securities are distributed in
respect of such outstanding securities, in either case as a result of a merger,
consolidation or other acquisition of all or substantially all of the stock or
assets of the Company (however structured) (each an "Acquisition"),
reorganization, recapitalization, restructuring, reclassification, dividend
(other than ordinary quarterly cash dividends) or other distribution, stock
split, reverse stock split or the like, or in the event that substantially all
of the property and assets of the Company are sold, then, the Committee will, in
accordance with the provisions of the Plan, make appropriate and proportionate
adjustments in the number and type of shares or other securities or cash or
other property that may thereafter be acquired upon the exercise of the Option;
provided, however, that any such adjustments in the Option will be made without
changing the aggregate Exercise Price of the then unexercised portion of the
Option; provided, further that in the case of an Acquisition in which the
consideration receivable by stockholders of the Company consists solely of cash
(or solely of cash and the assumption of liabilities), subject to an "Exemptive
Election" (defined below), the Option will continue to vest
3
<PAGE>
following the Acquisition as if Employee had continued to be employed by the
Company or a subsidiary of the Company through the time the Option is fully
vested, the Option will be exercisable as provided in Section 4 hereof and, upon
such exercise, Employee will receive, without interest, the amount of cash the
Employee would have received for the Option Shares acquired on exercise had he
or she owned such Option shares at the date of the Acquisition; and provided,
further, that in the case of any other Acquisition (other than an Acquisition,
the primary purpose of which is to change the domicile of the Company within the
United States (i.e., a so-called reincorporation transaction)), subject to an
Exemptive Election, the Company will ensure that the Plan and this Agreement
will be assumed by the acquiring entity, the Option will continue to vest as
provided in this Agreement and the Option will be an option to acquire the
securities and, without interest, the other consideration receivable by
stockholders of the Company in the Acquisition. The Committee may in its
discretion (but without any obligation to do so) make an election with respect
to any Acquisition (an "Exemptive Election") pursuant to which (i) the Option
will become fully vested and exercisable (to the extent not previously exercised
or terminated) immediately prior to the consummation of the Acquisition, (ii)
Employee shall be given the option to exercise the Option in full immediately
prior to consummation of the Acquisition (to the extent not previously exercised
or terminated) and (iii) the Option will terminate upon consummation of the
Acquisition. If the Company elects to invoke an Exemptive Election with respect
to any Acquisition, it or the Committee will give written notice of the election
to Employee not later than 20 days preceding the date of consummation of the
Acquisition and the last two provisos of the first sentence of this Section 3
will not be applicable with respect to the Acquisition.
4. EXERCISE.
--------
(a) Only the vested portion of the Option may be exercised and, subject to
the limitations in Section 2 and to this Section 4, the Option may be exercised
as to the portion that is then vested at any time and from time to time until
the Option expires or is terminated.
(b) The Option will be exercisable during Employee's lifetime only by
Employee or by Employee's guardian or legal representative, and after Employee's
death only by the person or entity entitled to do so under Employee's last will
and testament or applicable intestate law.
(c) The Option may only be exercised by the delivery to the Company of a
written notice of such exercise (the "Exercise Notice"), which notice must
specify the number of Option Shares to be purchased (the "Purchased Shares") and
the aggregate Exercise Price for such shares, together with payment in full of
such aggregate Exercise Price in cash or by check payable to the Company;
provided, however, that payment of such aggregate Exercise Price may instead be
made, in whole or in part, by one or more of the following means selected by
Employee in his or her sole discretion:
(i) the delivery to the Company of a certificate or certificates
representing shares of Common Stock that are "mature" shares (as that term
is used in Bulletin No. 84-18 of the Emerging Issues Task Force of the
Financial Accounting Standards Board), duly endorsed or accompanied by duly
executed stock powers, which delivery effectively transfers to the Company
good and valid title to those shares of Common Stock, free and clear of any
pledge, commitment, lien, claim or other encumbrance (such shares of Common
Stock to be valued on the basis of the aggregate "Fair Market Value"
(defined in the Plan) on the date Employee delivers his or her Exercise
Notice applicable to that exercise to the Company (the "Option
Determination Date")); or
4
<PAGE>
(ii) the delivery, concurrently with the exercise and in accordance
with Section 220.3(e)(4) of Regulation T promulgated under the Exchange Act
(or, if applicable, any successor Section), of a properly executed Exercise
Notice and irrevocable instructions to a broker promptly to deliver to the
Company a specified dollar amount of the proceeds of a sale or a loan
secured by the shares of Common Stock issuable upon any exercise of the
Option.
5. PAYMENT OF WITHHOLDING TAXES. If the Company becomes obligated to
----------------------------
withhold an amount on account of any tax imposed as a result of the exercise of
the Option, including, without limitation, any federal, state, local or other
income tax, or any F.I.C.A., state disability insurance tax or other employment
tax (the "Withholding Liability"), then Employee must, on the date of exercise
and as a condition to the issuance of the Purchased Shares, pay the Withholding
Liability to the Company in cash or by check payable to the Company, by the
tendering of shares of Common Stock with a Fair Market Value, as of the day
preceding the date of such exercise, equal to the amount of the Withholding
Liability or by a reduction in the number of shares of Common Stock or other
securities or property otherwise issuable pursuant to the exercise of the Option
with a Fair Market Value, as of the day preceding the date of such exercise,
equal to the amount of Withholding Liability as of the Option Determination Date
with respect to the exercise of the Option. Employee consents to the Company
withholding the full amount of the Withholding Liability from any compensation
or other amounts otherwise payable to Employee if Employee does not pay the
Withholding Liability to the Company on the date of exercise of the Option, and
Employee agrees that the withholding and payment of any such amount by the
Company to the relevant taxing authority will constitute full satisfaction of
the Company's obligation to pay such compensation or other amounts to Employee.
Employee will indemnify the Company and hold it harmless from and against any
federal, state or local withholding tax liability (including interest and
penalties) that results from any exercise of the Option, except to the extent
that (i) any such penalties result from the failure of the Company to make a
good faith determination of the amounts to withhold from Employee or (ii) any
such liabilities, interest or penalties result from the failure of the Company
to pay over to the relevant taxing authorities any sums withheld from, or paid
to the Company by, Employee to satisfy any Withholding Liability.
6. NOTICES. All notices and other communications required or permitted to
-------
be given pursuant to this Agreement must be in writing and will be deemed given
if delivered personally or five days after mailing by certified or registered
mail, postage prepaid, return receipt requested, to the Company at 2500 Broadway
Street, Santa Monica, California 90404, Attention: Chief Executive and
Financial Officers, or to Employee at the address set forth beneath Employee's
signature on the signature page hereto, or at such other addresses as they may
designate by written notice in the manner aforesaid.
7. STOCK EXCHANGE OR NASDAQ REQUIREMENTS; APPLICABLE LAWS.
------------------------------------------------------
Notwithstanding anything to the contrary in this Agreement, no shares of Common
Stock purchased upon exercise of the Option, and no certificate representing all
or any part of such shares, will be issued or delivered if (a) such shares have
not been listed, subject to notice of issuance, on each stock exchange upon
which shares of that class are then listed or (b) in the opinion of counsel to
the Company, such issuance or delivery would cause the Company to be in
violation of or to incur liability under any federal, state or other securities
law, or any requirement of any stock exchange listing agreement to which the
Company is a party, or any other requirement of law or of any administrative or
regulatory body having jurisdiction over the Company.
5
<PAGE>
8. NONTRANSFERABILITY. Neither the Option nor any interest therein may be
------------------
sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred
in any manner other than by will or the laws of descent and distribution.
9. PLAN. The Option is granted pursuant to the Plan, as in effect on the
----
Date of Grant, and is subject to all the terms and conditions of the Plan, as it
may be amended from time to time; provided, however, that no amendment may
deprive Employee, without Employee's consent, of the Option or of any of
Employee's rights under this Agreement. The interpretation and construction by
the Committee of the Plan, this Agreement, the Option and such rules and
regulations as may be adopted by the Committee for the purpose of administering
the Plan will be final and binding upon Employee. Until the Option expires,
terminates or is exercised in full, the Company will, upon written request
therefor, send a copy of the Plan, in its then-current form, to Employee or any
other person or entity then entitled to exercise the Option.
10. STOCKHOLDER RIGHTS. The Option is not considered to be an equity
------------------
security of the Company. No person or entity shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of any Option Shares prior to
the date on which Employee is recorded as the holder of such Option Shares on
the records of the Company.
11. EMPLOYMENT RIGHTS. Subject to the provisions of any written
-----------------
employment agreement between Employee and the Company or a subsidiary of the
Company, neither any provision of the Plan or this Agreement nor the holding of
the Option (a) confers upon Employee any right to continue in the employ of the
Company or any of its subsidiaries, (b) affects the right of the Company and
each of its subsidiaries to terminate the employment of Employee, with or
without Cause and for any reason or without reason, or (c) confers on Employee
any right to participate in any employee welfare or benefit plan or other
program of the Company or any of its subsidiaries other than the Plan. EMPLOYEE
ACKNOWLEDGES AND AGREES THAT THE COMPANY AND EACH OF ITS SUBSIDIARIES MAY
TERMINATE THE EMPLOYMENT OF EMPLOYEE AT ANY TIME (X) WITH OR WITHOUT CAUSE AND
(Y) FOR ANY REASON OR FOR NO REASON, PROVIDED THAT NOTHING IN THIS SENTENCE
AFFECTS THE RIGHTS AND REMEDIES OF THE COMPANY OR ANY SUBSIDIARY OF THE COMPANY
UNDER ANY WRITTEN EMPLOYMENT AGREEMENT THAT MAY NOW OR IN THE FUTURE EXIST
BETWEEN EMPLOYEE AND THE COMPANY OR A SUBSIDIARY OF THE COMPANY.
12. ARBITRATION OF DISPUTES.
-----------------------
(a) All disputes between Employee and the Company, however significant,
arising out of, relating in any way to, or in connection with, this Agreement
(including the validity, scope and enforceability of this arbitration provision)
will be settled only by an arbitration (x) conducted in accordance with the then
rules of the American Arbitration Association or any similar successor body and
(y) held in Los Angeles, California.
(b) The arbitration will be held before a single arbitrator mutually
agreed to by the parties to the arbitration, except that, if the parties fail to
agree to an arbitrator within 20 days from the date on which the claimant's
request for arbitration is delivered to the other party to the arbitration, the
arbitration shall be held before an arbitrator appointed by the American
Arbitration Association.
(c) The award of the arbitrator will be made within 90 days from the date
on which the arbitrator is selected. The award of the arbitrator will be final
and, to the greatest extent allowed by law, the parties agree to waive their
right to any form of appeal. The arbitrator must award
6
<PAGE>
costs and fees, including the fees of the arbitrator, to the prevailing party.
Judgment on any award of the arbitrator may be entered in any court having
jurisdiction or application may be made to such court for the judicial
acceptance of the award and for one or more orders of enforcement.
13. GOVERNING LAW. This Agreement and the Option issued under this
-------------
Agreement are to be governed by and are to be construed and enforced in
accordance with the internal laws, and not the laws pertaining to choice or
conflict of laws, of the State of Delaware.
14. SEVERABILITY; SUCCESSORS. If any provision or portion of this
------------------------
Agreement is illegal or unenforceable, the other portions of this Agreement will
not be affected by the illegality or unenforceability. Subject to Sections 2(d)
and 3 hereof, this Agreement will be binding on the Company and Employee and
their respective successors and assigns, however such succession or assignment
is effected.
15. OPTIONS AND SHARES ISSUABLE UPON EXERCISE NOT REGISTERED.
--------------------------------------------------------
Employee, by accepting the Option granted hereby, acknowledges that the
Option is not, and the shares of Common Stock and other securities issuable upon
exercise of the Option may not be, registered under the Securities Act of 1933,
as amended (the "Securities Act"), and represents that he or she has acquired
the Option for his or her own account and not with a present view to, or in
connection with, any distribution thereof in violation of the Securities Act.
Unless and until covered by a registration statement under the Securities Act,
each stock certificate representing the shares of Common Stock and other
securities purchased upon exercise of the Option shall be stamped or otherwise
imprinted with the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR REGISTERED OR
QUALIFIED UNDER ANY STATE SECURITIES OR BLUE SKY LAW. THEY MAY BE OFFERED
OR SOLD ONLY IF REGISTERED UNDER THE ACT AND REGISTERED OR QUALIFIED UNDER
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS, OR IF AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND REGISTRATION OR QUALIFICATION UNDER
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS IS AVAILABLE."
METRO-GOLDWYN-MAYER INC. EMPLOYEE
By:_____________________ __________________________________
Name:
__________________________________
Street Address
__________________________________
City, State and Zip Code
__________________________________
Social Security Number
7
<PAGE>
SCHEDULE A
CERTAIN DEFINITIONS
-------------------
CAUSE
- -----
"Cause" means (i) the failure of Employee to substantially perform his
or her duties with MGM or any subsidiary of MGM (other than any such failure
resulting from illness, temporary absence, authorized vacation, legal incapacity
or disability), which failure continues 30 days after a demand for substantial
performance is delivered in writing to Employee by the Board of Directors of the
employing entity or MGM (the "Board"), which specifically identifies the manner
in which Employee has not substantially performed his or her duties; (ii)
Employee's failure to follow reasonable and lawful directives (consistent with
the terms of Employee's written employment agreement with MGM (or, if
applicable, employing subsidiary of MGM), if any, and, if applicable, the
Amended and Restated Investors Shareholder Agreement dated as of August 4, 1997
among Seven, Tracinda, MGM, Studios and Frank G. Mancuso) of the Board (or, if
applicable, the Chief Executive Officer of the employing entity (the "CEO")),
which failure continues 30 days after a demand for Employee to follow those
directives is delivered in writing to Employee by the Board (or, if applicable,
the CEO) that specifically identifies the manner in which Employee has not
followed the directives; (iii) the engaging by Employee in willful, reckless or
grossly negligent misconduct, in connection with his or her employment, unless
Employee ceases the misconduct within ten days, and remedies the adverse effect
of the misconduct within 30 days, in each case after a demand to cease engaging
in the misconduct is delivered in writing to Employee by the Board (or, if
applicable, the CEO) that specifically identifies the misconduct; (iv)
Employee's conviction of an offense involving moral turpitude or a felony
(provided that the first conviction of Employee, after his or her Date of Grant,
for driving under the influence of alcohol will not constitute "Cause"); or (v)
material breach by Employee of Employee's written employment agreement, if any,
with MGM (or, if applicable, employing subsidiary of MGM) and failure to cure
the breach within 30 days of delivery of a written notice to Employee by the
Board (or, if applicable, the CEO) that specifically identifies the breach. If
Employee's failure under clause (i) or (ii) of the immediately preceding
sentence or Employee's failure to cease misconduct under clause (iii) of the
immediately preceding sentence would, if continued unabated for the period
specified in that sentence, be reasonably expected to cause MGM or Studios
severe and irreparable harm, and if the notice to Employee so specifies, the
Board (or, if applicable, the CEO) may shorten the period within which the
failure must cease to a reasonable period specified in the notice, but not less
than ten days in the case of clauses (i) and (ii) or five days in the case of
clause (iii). If the remedy, cure or cessation of an act or omission which is
the subject of a notice under this definition of "Cause" would reasonably
require more than 30 days to complete and Employee commences the remedy, cure or
cessation within 30 days after receipt of the notice and diligently pursues the
same to completion, the act or omission will not constitute "Cause", unless the
remedy, cure or cessation is not completed within 60 days from the date of
notice from the Board (or, if applicable, the CEO). If any event, action or
failure to act specified in clauses (i) through (v) in the first sentence of
this definition occurs, the right of MGM to terminate Employee for Cause as the
result of the occurrence will continue for a period of 90 days after the date of
the occurrence (or, if notice thereof is required and is given within such 90-
day period, 60 days after the expiration of the cure period specified therefor).
DESIGNATED CHANGE IN CONTROL
- ----------------------------
"Designated Change in Control" means occurrence or consummation of: (i)
any merger or consolidation of MGM with or into any other person, as the result
of which, immediately upon
Schedule A-1
<PAGE>
the completion of the transaction, Tracinda and Seven beneficially own, in the
aggregate, less than 50.1% of the combined voting power of the then outstanding
voting securities of the surviving person entitled to vote, and any other person
beneficially owns 30% or more of the combined voting power of the then
outstanding voting securities of the surviving person entitled to vote,
generally in the election of directors (or similar position persons) of the
surviving person; (ii) any sale, transfer or other conveyance, whether direct or
indirect, of all or substantially all of the property and assets of MGM, on a
consolidated basis, in one transaction or a series of related transactions,
provided that this clause (ii) will not apply to any sale, transfer or other
conveyance (x) to MGM or Studios by any wholly-owned direct or indirect
subsidiary of MGM or Studios, (y) by any wholly-owned direct or indirect
subsidiary of MGM or Studios to any other such wholly-owned direct or indirect
subsidiary of MGM or Studios or (z) by MGM or Studios to one or more wholly-
owned direct or indirect subsidiaries of MGM or Studios; or (iii) any
transaction or event that results in Tracinda and Seven ceasing, in the
aggregate, to beneficially own 50.1% or more of the combined voting power of the
then outstanding voting securities of MGM entitled to vote generally in the
election of directors and any other person beneficially owning 30% or more of
the combined voting power of the then outstanding voting securities of MGM
entitled to vote generally in the election of directors. As used in this
definition of "Designated Change in Control", (a) the term "person" has the
meaning given to that term under Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), whether or not the
Exchange Act is applicable to MGM, and (b) the terms "beneficial owner" and
"beneficially own" have the meanings given to them in Rule 13d-3 under the
Exchange Act, whether or not the Exchange Act is applicable to MGM.
Notwithstanding the foregoing provisions of this definition, a Designated Change
in Control will not occur under clauses (i) or (iii) of the first sentence of
this definition if the acquirer, purchaser or 50.1% owner is an employee benefit
plan (or related trust) sponsored or maintained by MGM or any person controlled
by MGM.
GOOD REASON
- -----------
"Good Reason" means: (i) a substantial and adverse change in Employee's
status or position with MGM and its subsidiaries as it existed on the Date of
Grant which is not cured within 30 days after written notice thereof to MGM from
Employee; (ii) a reduction (other than for Cause) by MGM of Employee's
compensation that was in effect on the Date of Grant or that was in effect
thereafter, if such compensation has been increased, unless the reduction is
eliminated retroactively not later than 30 days after written notice thereof to
MGM from Employee; (iii) if Employee does not have a written employment
agreement with MGM or any of its subsidiaries, a material reduction by MGM and
its subsidiaries in the overall benefits provided to Employee, that were
provided on the Date of Grant or were provided thereafter if the benefits have
been increased (as used in this definition, "benefits" includes all profit-
sharing, retirement, pension, health, medical, dental, disability insurance,
automobile and similar benefits), unless the reduction is eliminated
retroactively not later than 30 days after written notice thereof to MGM from
Employee; (iv) a relocation of the Employee's principal place of employment to
any place outside the greater Los Angeles area, except for reasonable amounts of
required travel by Employee on business on behalf of MGM or any of its
subsidiaries; or (v) any material breach by MGM of any provision of the Amended
and Restated Plan, the agreement with Employee under the Amended and Restated
Plan, the Bonus Plan, this Agreement or Employee's employment agreement, if any,
with MGM or a subsidiary of MGM which adversely affects Employee and which is
not cured within 30 days after written notice thereof to MGM from Employee. If
any event, action or failure to act specified in clauses (i) through (v) of the
immediately preceding sentence occurs, the right of Employee to terminate his or
her employment for "Good Reason" as the result of the occurrence will continue
for a period of 90 days after the date of the occurrence
Schedule A-2
<PAGE>
(or, if notice thereof is required and is given within such 90-day period, 60
days after the expiration of the cure period specified therefor).
SEVEN
- -----
"Seven" means Seven Network Limited, a corporation organized under the laws
of the Commonwealth of Australia.
STUDIOS
- -------
"Studios" means Metro-Goldwyn-Mayer Studios Inc., a Delaware corporation.
TRACINDA
- --------
"Tracinda" means Tracinda Corporation, a Nevada corporation.
Schedule A-3
<PAGE>
EXHIIT 99.4
METRO-GOLDWYN-MAYER INC.
1998 NON-EMPLOYEE DIRECTOR STOCK PLAN
Metro-Goldwyn-Mayer Inc., a Delaware corporation (the "Company"), hereby
establishes a stock plan for non-employee directors of the Company, to be
known as the "Metro-Goldwyn-Mayer Inc. 1998 Non-Employee Director Stock Plan"
(the "Plan"), as set forth herein.
SECTION 1. PURPOSE OF PLAN
The purpose of this Plan is to promote the achievement of long-term
objectives of the Company by linking the personal interests of non-employee
directors (as defined below) to those of Company stockholders.
SECTION 2. PERSONS ELIGIBLE UNDER THE PLAN
Any member of the Board of Directors (the "Board") of the Company who is not
otherwise an officer or employee of the Company or any of its subsidiaries (a
"Non-Employee Director") is eligible to participate in the Plan.
Pursuant to this Plan, each Non-Employee Director shall be given the
opportunity to elect (the "Election") to receive all or a portion of his or
her Total Compensation (as defined below) in the form of shares of the Common
Stock, par value $.01 (the "Common Stock"), of the Company pursuant to the
terms and provisions set forth in Section 5 hereof. A Non-Employee Director
making an Election under this Plan shall be referred to as a "Participant."
As used herein, "Total Compensation" shall mean the amount payable as
compensation to the Non-Employee Director for service on the Board and for
service as a member of the Executive Committee, Audit Committee, Compensation
Committee or any other committee of the Board during the period commencing on
the day immediately following the date of an annual meeting of stockholders of
the Company in which directors of the Company are elected (an "Annual
Meeting") and ending on the date of the subsequent Annual Meeting (the "Plan
Year").
SECTION 3. DURATION OF PLAN
Upon approval by the stockholders of the Company, the Plan shall become
effective as of May 12, 1998 (the "Effective Date"), and shall remain in
effect, subject to the right of the Plan Committee (as defined below) to
terminate the Plan at any time pursuant to Section 6 or Section 8 hereof,
until all of the shares of Common Stock subject to the Plan pursuant to
Section 4 hereof shall have been issued according to the Plan's provisions. In
no event, however, may shares of Common Stock be issued under the Plan on or
after May 1, 2008. Without limiting the immediately preceding sentence, the
Plan and the issuance of Common Stock thereunder will be void ab initio, and
of no force and effect, if the Plan is not approved by the Company's
stockholders on or before May 12, 1998.
SECTION 4. STOCK SUBJECT TO PLAN
The aggregate number of shares of Common Stock that may be issued under this
Plan shall not exceed One Hundred Thousand (100,000), subject to adjustment as
provided in Section 7 of this Plan.
SECTION 5. ELECTION
(a) On or before the Annual Meeting of each year during the term of this
Plan (the "Election Date"), a Non-Employee Director shall have the ability to
make an Election (in accordance with subsection (c) below) and receive all or
any portion of his or her Total Compensation for the forthcoming Plan Year in
the form of shares of Common Stock; provided, however, that with respect to
the Plan Year in which the Effective Date occurs, such Election shall be made
on or within 10 days after the Effective Date.
1
<PAGE>
(b) Notwithstanding subsection (a) above, in the case of a newly appointed
Non-Employee Director who has his or her first opportunity to make an Election
(a "First Time Non-Employee Director"), the Election Date with respect of such
Non-Employee Director shall be at any time within ten (10) days of such Non-
Employee Director's appointment as a director of the Company, and shall relate
to his or her Total Compensation earned during the balance of the Plan Year in
respect of which he or she is making the Election.
(c) The Election shall be irrevocable, and shall be made by means of a
written notice (the "Election Notice") on a form acceptable to the Plan
Committee (as defined below), delivered to the Secretary of the Company on or
before the Election Date. The Election Notice shall state the percentage
and/or dollar amount of the Non-Employee Director's Total Compensation (the
"Election Amount") which is to be received in shares of Common Stock and the
name in which such common stock shall be registered. The Plan Committee
reserves the right to accept or reject, in its sole discretion, any Election
Notice.
(d) The aggregate number of shares of Common Stock to be received by a
Participant with respect to the Election Amount shall be derived according to
the following formula:
<TABLE>
<C> <C> <S>
Election Amount
Aggregate Number of Shares = ____________________________________________
Fair Market Value of the Common Stock on the
applicable Date of Issuance (as defined
below)
</TABLE>
(e) Only whole shares will be issued under this Plan. Any fractional shares
resulting from the above calculation will be settled in cash.
(f) Subject to the Plan Committee in its sole discretion determining
otherwise, Common Stock issued to a Participant under this Plan during a Plan
Year shall be issued in equal installments on January 31, April 30, July 31
and October 31 of each year (each a "Date of Issuance"); provided, however,
with respect to a First Time Non-Employee Director, Common Stock issued to
such First Time Non-Employee Director under this Plan during a Plan Year shall
be issued in such number of equal installments as there are Dates of Issuance
during the balance of the Plan Year.
SECTION 6. ADMINISTRATION OF PLAN
(a) This Plan will be administered by a committee designated by the Board
(the "Plan Committee"). Subject to the provisions of this Plan, the Plan
Committee is authorized and empowered in its sole discretion to do all things
necessary or desirable in connection with the administration of this Plan,
including, without limitation, the following:
(i) adopting, amending, altering, repealing and rescinding rules and
regulations relating to this Plan;
(ii) determining which persons are Non-Employee Directors and accepting
or rejecting Election Notices;
(iii) issuing shares of Common Stock to Participants and determining the
terms and conditions thereof;
(iv) determining whether and the extent to which adjustments are required
pursuant to Section 7 of this Plan;
(v) interpreting and construing this Plan and the terms and conditions of
any Common Stock issued under this Plan and otherwise supervising the
administration of the Plan; and
(vi) entering into any type of arrangement with a Participant that is not
inconsistent with the provisions of this Plan and that, by its terms,
involves the issuance of shares of Common Stock of the Company.
(b) All interpretations, determinations and decisions made by the Plan
Committee pursuant to the provisions of the Plan, and all related orders or
resolutions of the Plan Committee, shall be final, conclusive, and binding on
all persons, including the Company, its stockholders, Participants, and their
estates and beneficiaries.
2
<PAGE>
(c) All expenses of the Plan Committee will be paid by the Company and the
Company will furnish the Plan Committee with such clerical and other
assistance as is necessary in the performance of its duties. No member of the
Plan Committee will be liable for any act or omission hereunder of any other
member of the Committee nor for any act or omission on his or her own part
hereunder, excepting only his or her own willful misconduct or gross
negligence. To the extent permitted by law, the Company will indemnify and
hold harmless each member of the Plan Committee against any and all expenses
and liabilities arising out of his or her membership on the Plan Committee,
excepting only expenses and liabilities arising out of his or her own willful
misconduct or gross negligence, as determined by the Board of Directors.
SECTION 7. ADJUSTMENTS
If the outstanding number of shares of Common Stock are increased, decreased
or exchanged for or converted into cash, property or a different number or
kind of securities, or if cash, property or securities are distributed in
respect of those outstanding securities, in any case as a result of a
reorganization, merger, consolidation, recapitalization, restructuring,
reclassification, dividend (other than a regular quarterly cash dividend) or
other distribution, stock split, reverse stock split or the like, or if
substantially all of the property and assets of the Company are sold, then,
unless the terms of the transaction provide otherwise, the Plan Committee will
make appropriate and proportionate adjustments in the maximum number and type
of shares or other securities that may be issued pursuant to this Plan.
SECTION 8. AMENDMENT AND TERMINATION OF THE PLAN
Notwithstanding Section 6 of this Plan, the Plan Committee may amend, modify
or terminate this Plan at any time and in any manner, subject to the following
limitations:
(a) No amendment, modification or termination may deprive a Participant
of any shares of Common Stock previously issued under this Plan or of any
rights thereunder or with respect thereto, without the consent of such
Participant; provided, however, the Board may make any amendment or
modification to this Plan to the extent such amendment or modification is
required in order for the Plan to comply with any applicable laws; and
(b) Any amendment to or modification of this Plan will require approval
by the Company's stockholders but only to the extent such approval is
required in order for the Plan to continue to comply with Rule 16b-3 (if
applicable) of the Securities Exchange Act of 1934 as amended (the
"Exchange Act") and Sections 422 and 162(m) and other applicable provisions
of or rules under the Internal Revenue Code of 1986, as amended from time
to time (the "Code"), and only if the amendment or modification would:
(i) change the class of persons eligible to be a Participant under
this Plan;
(ii) extend the duration of the Plan;
(iii) increase the number of shares of Common Stock issuable under
this Plan (other than pursuant to Section 7 hereof);
(iv) otherwise materially increase the benefits under this Plan
accruing to Participants who are subject to Section 16 of the Exchange
Act in a manner not specifically contemplated by this Plan; or
(v) adversely affect compliance of this Plan with Rule 16b-3 (if
applicable) or applicable provisions of the Code.
SECTION 9. TRANSFERABILITY
No Participant may assign the right to receive any payment of Common Stock
or any other right or interest under the Plan, contingent or otherwise, or to
cause or permit any encumbrance, pledge or charge of any nature to be imposed
on any such Stock Payment (prior to the issuance of stock certificates
evidencing such Stock Payment) or any such right or interest.
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SECTION 10. STOCKHOLDER RIGHTS
Participants shall not be deemed for any purpose to be or have rights as
stockholders of the Company with respect to any shares of Common Stock issued
hereunder except as and when such shares are issued and then only from the
Date of Issuance. No adjustment shall be made for dividends or distributions
or other rights for which the record date precedes the Date of Issuance
(except pursuant to Section 7 hereof).
SECTION 11. CONTINUATION OF DIRECTORS IN SAME STATUS
Nothing in the Plan or in any instrument executed pursuant to the Plan or
any action taken pursuant to the Plan shall be construed as creating or
constituting evidence of any agreement or understanding, express or implied,
that a Participant will have any right to continue as a director or in any
other capacity for any period of time or at a particular retainer or other
rate of compensation.
SECTION 12. COMPLIANCE WITH GOVERNMENT REGULATIONS
Neither the Plan nor the Company shall be obligated to issue any shares of
Common Stock pursuant to the Plan at any time unless and until all applicable
requirements imposed by any federal or state securities or other laws, rules
and regulations, by any regulatory agencies or by any stock exchanges upon
which the Common Stock may be listed have been fully met. As a condition
precedent to any issuance of shares of Common Stock and delivery of
certificates evidencing such shares pursuant to the Plan, the Plan Committee
may require a Participant to take any such action and to make any such
covenants, agreements and representations as the Plan Committee in its
discretion deems necessary or advisable to ensure compliance with such
requirements. The Company shall in no event be obligated to register the
shares of Common Stock deliverable under the Plan pursuant to the Securities
Act of 1933, as amended (the "Securities Act"), or to qualify or register such
shares under any securities laws of any state upon their issuance under the
Plan or at any time thereafter, or to take any other action in order to cause
the issuance and delivery of such shares under the Plan or any subsequent
offer, sale or other transfer of such shares to comply with any such law,
regulation or requirement. Participants are responsible for complying with all
applicable federal and state securities and other laws, rules and regulations
in connection with any offer, sale or other transfer of the shares of Common
Stock issued under the Plan or any interest therein including, without
limitation, compliance with the registration requirements of the Securities
Act (unless an exemption therefrom is available), or with the provisions of
Rule 144 promulgated thereunder, if available, or any successor provisions.
SECTION 13. DEFINITION OF "FAIR MARKET VALUE"
For purposes of this Plan, "Fair Market Value" means the fair market value
of a share of Common Stock. The fair market value will be the closing sale
price per share of the Common Stock on the New York Stock Exchange on the
trading day nearest preceding the day in question (or, if no sales of Common
Stock were made on such day, on the nearest preceding trading day on which
sales of Common Stock were made), as reported in The Wall Street Journal,
Western Edition.
SECTION 14. GOVERNING LAW
The validity of this Plan or any of its provisions will be construed,
administered and governed in all respects under and by the laws of the State
of Delaware. If any provisions of this instrument is held by a court of
competent jurisdiction to be invalid or unenforceable, the remaining
provisions hereof will continue to be fully effective.
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