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As filed with the Securities and Exchange Commission on July 13, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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METRO-GOLDWYN-MAYER INC.
(Exact name of Registrant as specified in its charter)
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DELAWARE 95-4605850
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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2500 Broadway Street
Santa Monica, California 90404
(310) 449-3000
(Address, including zip code, and telephone number, including area code, of
Registrant's Principal Executive Offices)
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ROBERT BRADA, ESQ.
Executive Vice President and General Counsel
METRO-GOLDWYN-MAYER INC.
2500 Broadway Street
Santa Monica, California 90404
(310) 449-3000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
GARY N. JACOBS, ESQ.
Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP
2121 Avenue of the Stars
Los Angeles, CA 90067
(310) 553-3000
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Approximate date of commencement of proposed sale to public: As soon as
practicable after this registration statement becomes effective.
If any of the securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
CALCULATION OF REGISTRATION FEE
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Proposed Maximum Amount of
Title of Each Class of Aggregate Offering Registration
Securities to be Registered Price (1) Fee
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Subscription rights(2)........................
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Common stock, par value $.01 per share(3)..... (4)
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Total......................................... $750,000,000(5) $208,500
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) based on an estimate of the maximum offering price.
(2) Evidencing the rights to subscribe for shares of the common stock described
below.
(3) Subject to note (5) below, such indeterminate number of shares of common
stock as may, from time to time, be issued at indeterminate prices,
including common stock issuable upon exercise of subscription rights.
(4) Not applicable pursuant to General Instruction II.D. of Form S-3.
(5) In no event will the aggregate initial offering price of all securities
issued pursuant to this Registration Statement, and not previously
registered under the Securities Act, exceed $750,000,000. The aggregate
amount of common stock registered hereunder is further limited to that
which is permissible under Rule 415(a)(4) under the Securities Act of 1933.
The securities registered hereunder may be sold separately or together.
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and we are not soliciting offers to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JULY 13, 1999
PROSPECTUS
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[LOGO OF METRO GOLDWYN MAYER TRADEMARK]
METRO-GOLDWYN-MAYER INC.
Common Stock
Subscription Rights
We may use this prospectus to offer and sell, separately or together, common
stock and subscription rights.
These securities will have an aggregate initial public offering price not to
exceed $750,000,000 and will be offered and sold at prices and on terms to be
determined at the time of sale. The specific terms of the securities for which
this prospectus is being delivered will be set forth in an accompanying
supplement to this prospectus. These terms may include, where applicable, the
initial public offering price, the net proceeds to the company and whether the
subscription rights, if any, will be listed on any securities exchange.
Our common stock trades on the NYSE under the symbol "MGM." On July 12, 1999,
the closing price of the common stock was $17 1/8 per share. Any subscription
rights which are issued will be transferable, and we anticipate that the rights
would be authorized for trading on the NYSE under the symbol "MGM rt."
As will be described in more detail in any prospectus supplement, the
securities may be offered through an underwriter or underwriting syndicates
represented by one or more managing underwriters or through dealers. The
securities may also be sold directly or through agents to investors. See "Plan
of Distribution."
This prospectus may not be used to consummate sales of offered securities
unless accompanied by a prospectus supplement.
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Investment in these securities involves a high degree of risk. See "Risk
Factors" beginning on page 3.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is
a criminal offense.
The date of this prospectus is , 1999.
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Table Of Contents
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About this Prospectus...................................................... 2
Forward-looking Statements................................................. 2
Risk Factors............................................................... 3
Use of Proceeds............................................................ 9
Price Range of Common Stock................................................ 10
Dividend Policy............................................................ 10
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The Company................................................................ 10
Plan of Distribution....................................................... 13
Description of Securities.................................................. 14
Legal Matters.............................................................. 15
Experts.................................................................... 15
Where You Can Find More Information........................................ 15
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ABOUT THIS PROSPECTUS
This prospectus is part of a Registration Statement that we filed with the
Securities and Exchange Commission using a "shelf" registration process. Under
this shelf process, we may from time to time over approximately the next two
years, sell any combination of the securities described in this prospectus in
one or more offerings up to a total dollar amount of $750,000,000. This
prospectus provides you with a general description of the securities we may
offer. Each time we sell securities, we will provide a prospectus supplement
that will contain specific information about the terms of that offering. The
prospectus supplement also may add, update or change information contained in
this prospectus. You should read both this prospectus and any prospectus
supplement together with additional information described under the heading
"Where You Can Find More Information" on page 15 below.
You should rely only on the information or representations incorporated by
reference or provided in this prospectus and in the accompanying prospectus
supplement. We have not authorized anyone to provide you with different
information. You may obtain copies of the Registration Statement, or any
document which we have filed as an exhibit to the Registration Statement or to
any other SEC filing, either from the SEC or from the Secretary of the company
as described below. We are not making an offer of these securities in any state
where the offer is not permitted. You should not assume that the information in
this prospectus or in the accompanying prospectus supplement is accurate as of
any date other than the dates printed on the front of each such document.
FORWARD-LOOKING STATEMENTS
This prospectus contains or incorporates by reference forward-looking
statements, within the meaning of Section 27A of the Securities Act and Section
21E of the Securities Exchange Act. Forward-looking statements typically can be
identified by the use of forward-looking words, such as "may," "will," "could,"
"project," "believe," "anticipate," "expect," "estimate," "continue,"
"potential," "plan," "intend," "forecast" and the like. These statements appear
in a number of places in this prospectus and the information incorporated by
reference and include statements regarding our current intentions, plans,
strategies, beliefs and expectations.
Forward-looking statements do not guarantee future performance and involve
risks and uncertainties that could cause actual results to differ materially
from those anticipated. The information contained in this prospectus, including
the information contained in "Risk Factors" beginning on p. 3, or incorporated
by reference, identifies important factors that could cause such differences.
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RISK FACTORS
Before you invest in our securities, you should be aware that there are
various risks, including those described below. We urge you to carefully
consider these risk factors, together with all of the other information
included in this prospectus and the information incorporated in this prospectus
by reference, before you decide to invest in our securities.
Financial Risks
We have had significant losses, and we expect future losses.
We have not reported an operating profit for any fiscal year since 1988, and
while controlled by a former management in 1991, our subsidiary MGM Studios was
the subject of an involuntary bankruptcy. We do not expect to be profitable for
at least several years, and we cannot assure you when we will become
profitable, if ever.
We are adversely affected by gaps in our motion picture production schedule.
Our revenues and operating results have been and may continue to be
adversely affected by the change in ownership of MGM Studios in 1996 and by
recent management changes. Such changes may result in a degree of uncertainty
among top artistic and creative talent about the viability of projects. During
the ten-month period beginning in January 1996, when MGM Studios was for sale,
MGM Studios did not begin producing any new motion pictures. As a result, we
released only nine motion pictures between August 1, 1996 and August 1, 1997,
most of which were produced by others.
We require outside financing to meet our anticipated cash requirements.
Our operations are capital intensive and our capacity to generate cash from
operations is presently insufficient to meet our anticipated cash requirements.
Accordingly, we must obtain substantial sources of outside financing. Such
financing may not be available in sufficient amounts for us to implement our
business plan or may be available only on terms which are disadvantageous to
our stockholders.
Our cash flow in the first half of 1999 was adversely affected by the
following factors, among others:
. Our slate of motion pictures released during this time has performed
below expectations;
. In January 1999, we paid PolyGram N.V. $235 million to acquire certain of
the PolyGram film libraries;
. In March 1999, we paid Warner Home Video $112.5 million under our new
agreement to terminate Warner Home Video's right to distribute our
product in home video; and
. In June 1999, we announced restructuring expenses of approximately $225
million, most of which had been incurred by June 30, 1999.
Under our current strategy and business plan, we will continue to require a
substantial amount of cash for the following reasons:
. We will continue to make substantial investments in the production of new
feature films and television programs;
. We may make additional investments to develop new distribution channels
to further exploit our motion picture library; however, we will evaluate
the level of our investments in light of our available capital and
changing market conditions;
. On September 1, 1999, we must pay Warner Home Video an additional $112.5
million, plus interest, under our agreement terminating Warner Home
Video's home video distribution rights;
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. We expect to incur approximately $11 million in costs in 1999 to
integrate the PolyGram library into our operations and transition to
domestic home video self-distribution; and
. We are contractually obligated to fund 50 percent of the expenses of MGM
Networks Latin America up to an additional $8.6 million, of which
approximately $3.0 million is still expected to be funded in 1999.
If we run short of cash, cash conserving measures may adversely affect our long
term prospects.
If necessary in order to manage our cash needs, we could delay or alter
production or release schedules or reduce our aggregate investment in new film
and television production costs. We cannot assure you that any of these steps
would be adequate or timely, or that acceptable arrangements could be reached
with third parties if necessary. In addition, although these steps would
improve our short-term cash flow and, in the case of partnering, reduce our
exposure should a motion picture perform below expectations, these steps could
reduce our long term cash flow and adversely affect our results of operations.
Our principal credit facility contains restrictions which limit our operating
flexibility.
Our principal credit facility contains various covenants, including
limitations on indebtedness, dividends and capital expenditures and maintenance
of certain financial tests. We cannot assure you that we will be able to comply
with these or other covenants or conditions in the future, or that we will
generate sufficient cash flow to repay our indebtedness. We further cannot
assure you that, in the event the need arises, we will be able to obtain
additional financing or to refinance our indebtedness on terms acceptable to
us, or at all.
Our substantial leverage could adversely affect our financial health.
We are highly leveraged. Our substantial indebtedness could have important
adverse consequences to you. For example, it could:
. Require us to increase the use of alternative methods to finance our
motion pictures, which could reduce the long term cash flow we would
otherwise receive;
. Require us to dedicate a substantial portion of our cash flow to the
repayment of our indebtedness, reducing the amount of cash flow available
to fund film and television production and other operating expenses;
. Limit our ability to obtain additional financing, if necessary, for
operating expenses;
. Place us at a disadvantage compared to competitors with less debt or
greater financial resources;
. Limit our flexibility in planning for, or reacting to, downturns in our
business, in our industry or in the economy in general; and
. Limit our ability to pursue strategic acquisitions and other business
opportunities that may be in our best interests.
The following chart shows important credit statistics and is presented
assuming we had completed a $750 million equity offering as of March 31, 1999
and applied the proceeds as intended (in millions):
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At March 31, 1999
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Total indebtedness...................................... $ 713.5
Stockholders' equity.................................... $2,338.7
Debt to equity ratio.................................... 0.31:1
Available capital, including cash on hand and amounts
available under our principal credit facility, assuming
completion of a $750 million equity offering........... $ 827.8
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Our operating results may fluctuate significantly.
Our revenues and results of operations are dependent significantly upon the
commercial success of the motion pictures and television programming that we
distribute, which cannot be predicted with certainty, as well as the timing of
our releases. Accordingly, our revenues and results of operations may fluctuate
significantly from period to period, and the results of any one period may not
be indicative of the results for any future periods.
In addition, entertainment industry accounting practices may accentuate
fluctuations in our operating results. In accordance with generally accepted
accounting principles and industry practice, we amortize film and television
programming costs using the "individual-film-forecast" method. Under this
accounting method, we amortize film and television programming costs for each
film or television program based on the following ratio:
Revenue earned by title in the current period
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Estimated total revenues by title
We regularly review, and revise when necessary, our total revenue estimates
on a title-by-title basis. This may result in a change in the rate of
amortization and/or a write-down of the film or television asset to net
realizable value. Results of operations in future years depend upon our
amortization of our film and television costs. Periodic adjustments in
amortization rates may significantly affect these results. The likelihood of
our reporting of losses is increased because the industry's accounting method
requires the immediate recognition of the entire loss where it is expected that
a motion picture or television program will not recover our investment. On the
other hand, the profit of a successful motion picture or television program
must be recognized over the entire revenue stream expected to be generated by
the individual picture or television program.
Risks involved in the motion picture and television production industry
Production and distribution of motion pictures and television programs is
highly speculative and inherently risky.
There is a substantial risk that some or all of our motion pictures and
television programs will not be commercially successful, resulting in
unrecouped costs or unrealized anticipated profits. There can be no assurance
of the economic success of any motion picture or television program since the
revenues derived from a motion picture or television program depend on a
variety of factors which cannot be predicted with any certainty, including:
. Public acceptance;
. The quality and acceptance of competing films or programs released into
the marketplace at or near the same time; and
. The availability of alternative forms of entertainment.
Further, the theatrical success of a motion picture is generally a key
factor in generating revenues from other distribution channels. Also,
prevailing advertising rates may affect the success of television production
and distribution.
The production and marketing of theatrical motion pictures and television
programs requires substantial capital, with risks of cost overruns.
The costs of producing and marketing motion pictures have generally
increased in recent years. According to the Motion Picture Association of
America, the average direct negative cost (which includes all costs
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associated with creating a motion picture, including pre-production, production
and post-production, but excluding capitalized overhead and interest, marketing
and distribution costs) of a motion picture produced by one of the major
studios has grown from $23.5 million in 1989 to $52.7 million in 1998, an
increase of 124 percent, and the average domestic marketing cost per picture
has grown from $9.2 million in 1989 to $25.3 million in 1998, an increase of
175 percent. Production and marketing costs of motion pictures are rising at a
faster rate than increases in domestic theatrical revenues. These production
and marketing costs increases leave us more dependent on other media, such as
home video, television and foreign markets. Also, we generally do not obtain
"completion bonds" from outside insurers to protect ourselves against budget
overruns and completion delays, other than with respect to our specialty motion
pictures. There can be no assurance that we will not incur cost overruns or
suffer delays in the production of our motion pictures.
We may have lower revenues as a result of our motion picture production
strategy.
Based on our current business plan, MGM's annual release slate may include
proportionately fewer large budget "event" motion pictures than the current
release slates of the other major studios. We also contemplate a stronger focus
on pictures which will appeal to the "Generation X" and "Generation Y" audience
than our prior strategy. We cannot assure you that our strategic approach will
enable us to produce commercially successful motion pictures. Additionally, our
current motion picture strategy involves co-producing or co-financing a
substantial portion of our motion pictures. Although such arrangements will
improve our short-term cash flow, reduce our exposure for any pictures which
perform below expectations and allow the company to produce a larger slate of
motion pictures with its available capital resources, such arrangements could
reduce our long-term cash flow from pictures which perform above expectations.
We may not be able to meet our production goals and schedule.
The production, completion and distribution of motion pictures are subject
to numerous uncertainties, including financing requirements, the availability
of desired talent and quality material and the release schedule of the motion
pictures of our competitors. We cannot assure you that any of the pictures
scheduled for release in the remainder of 1999 or future periods will be
completed or released on schedule or budget, or at all.
We are limited in our ability to exploit our film library.
Our rights to the titles in our library vary. In some cases we have only the
right to distribute titles in certain media and territories for a limited term.
Our rights in approximately 40 percent of our MGM/UA and Orion titles are
limited in time. Our rights with respect to approximately half of such 40
percent of our MGM/UA and Orion titles will expire before the end of the year
2007. We are still verifying and integrating information relating to the
recently acquired PolyGram titles and, consequently, do not yet have complete
breakdowns for those titles. While in the past we have generally been able to
renew expiring rights on acceptable terms, we cannot assure you that we will
continue to be able to do so in the future. In accordance with industry
practice, for purposes of calculating the size of our library, we include any
title in which we have any distribution rights.
Additionally, a prior management granted long-term domestic and major
international television licenses covering a substantial portion of our
library, in exchange for pre-paid fees. A cross-section of our library is
subject to one or more of these licenses, including approximately 50 percent of
the MGM/UA titles produced prior to 1990, which have been licensed in the U.S.
and Europe, and approximately 25 percent of the Orion titles, which have been
licensed in Europe. Until these agreements expire and the rights revert to us,
we expect contributions to earnings and cash flow from these markets to
continue to be below those of our competitors for similar products. We cannot
assure you that our sales or profitability will increase after these agreements
expire.
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We have been involved in litigation regarding rights to make James Bond films.
If another party was able to effectively make and exploit James Bond films,
it could have a material adverse effect on the profitability of our James Bond
franchise. We jointly own the copyright to the James Bond films with Danjaq
LLC. The movies are produced by Danjaq and distributed by us pursuant to a
series of agreements with MGM dating back to 1962. In 1998, MGM and Danjaq sued
Sony Pictures Entertainment, Inc. and others following Sony's announcement that
it intended to produce a series of new James Bond feature motion pictures based
on rights it claimed it acquired from Kevin McClory. The lawsuit was recently
settled with Sony and its related parties, who agreed never to make any James
Bond films. Mr. McClory did not participate in the settlement and continues to
allege that he has certain rights in the James Bond films.. We contend that the
only rights Mr. McClory ever had were limited to remaking the movie Thunderball
and that even those rights have expired. We believe that a remake of
Thunderball by Mr. McClory would not have a material adverse effect on our
business or results of operations. In addition, although we do not believe that
the fact that we share the ownership and control of the James Bond franchise
with Danjaq will have any material adverse effect on us, no such assurance can
be given.
We may not be able to quickly or smoothly integrate or realize the anticipated
benefits of acquisitions or the early termination of the agreement with Warner
Home Video.
In January 1999, we acquired over 1,300 feature film titles in the PolyGram
film libraries. In addition, we may consider strategic acquisitions as
opportunities arise, subject to the obtaining of any necessary financing.
Acquisitions involve numerous risks, including diversion of our management's
attention away from our operating activities. We cannot assure you that we will
not encounter unanticipated problems or liabilities relating to the acquisition
of certain of the PolyGram film libraries or any other assets or company we may
acquire, or with the integration of an acquired company's operations, nor can
we assure you that we will realize the anticipated benefits of any past or
future acquisitions.
Additionally, although we have experienced video distribution management, we
cannot assure you that we will not encounter unanticipated problems related to
the early termination of the Warner Home Video agreement or the establishment
of our own distribution infrastructure, nor can we assure you that we will
realize the anticipated benefits of self-distribution in the domestic home
video marketplace or distribution through Fox Filmed Entertainment in the
international home video marketplace.
We face risks relating to the international distribution of our product.
Because we have historically derived approximately 40 percent of our
revenues from non-U.S.
sources, our business is subject to risks inherent in international trade, many
of which are beyond our control. These risks include:
. Changes in laws and policies affecting trade, investment and taxes,
including laws and policies relating to the repatriation of funds and to
withholding taxes;
. Differing degrees of protection for intellectual property;
. The instability of foreign economies and governments; and
. Fluctuating foreign exchange rates.
We currently distribute our motion pictures in theatrical markets outside
the U.S. and Canada through United International Pictures or "UIP," a
partnership among the company, Paramount Pictures Corporation and Universal
Studios, Inc. In June 1999 we announced that we will exercise our right to
withdraw from UIP effective November 1, 2000, at which time our international
distribution will be conducted through Fox Filmed Entertainment. Pursuant to
our agreement with UIP, we will incur some short-term costs related to our
withdrawal from the partnership.
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If we expand our television production, we will have to incur deficit
financing.
Although we do not intend to produce programs for network television, if we
expand our television production, we will have to incur deficit financing.
Generally, television programs, whether produced for the networks or otherwise,
are produced under contracts that provide for license fees which may cover only
a portion of the anticipated production costs. The "gap" or production deficit
between these fees and production costs can be particularly substantial for
series produced for the networks where typically production costs are higher
and the license fees for domestic first run programming cover a smaller
percentage of the program's costs. For any television program, the
recoverability of the production deficit and the realization of profits, if
any, are generally dependent upon the ability to distribute the programs in
subsequent domestic television syndication and through foreign television
licenses, additional licenses and other uses. There is also increasing
competition among sellers of, and a decreasing number of independent television
stations buying, off-network programs available for syndication. We can not
assure you that we would be able to recover the production deficit or realize
profits on any television series.
Advances in technology may create alternate forms of entertainment.
The entertainment industry in general, and the motion picture industry in
particular, continue to undergo significant changes, primarily due to
technological developments. Due to this rapid growth of technology, and
shifting consumer tastes, we cannot accurately predict the overall effect that
such changes may have on the potential revenue from and profitability of
feature-length motion pictures and television programming.
We face significant competition.
Motion picture and television production and distribution are highly
competitive businesses. We face competition from companies within the motion
picture and television industry, as well as from other leisure activities. We
compete with other film studios, independent production companies and others
for the acquisition of artistic properties, the services of creative and
technical personnel, exhibition outlets and the public's interest in our
products.
Many of our competitors, particularly the other major studios, have greater
financial and other resources than we do, while the independent production
companies may have less overhead. Most of the other major studios are part of
large diversified corporate groups with a variety of other operations,
including television networks and cable channels, that can provide both a means
of distributing their products and stable sources of earnings and cash flows
that offset fluctuations in the financial performance of their motion picture
and television operations. The number of films released by our competitors,
particularly the other major film studios, in any given period may create an
oversupply of product in the market, which may reduce our share of gross box
office admissions and make it more difficult for our films to succeed. In
addition, television networks are now producing more programs internally and
thus may reduce their demand for outside programming.
Other Risks
Tracinda and one of its affiliate own a majority of our common stock and may
influence our Board of Directors and affairs.
Tracinda and one of its affiliates, which we refer to as the Tracinda group,
beneficially own approximately 89 percent of our outstanding common stock. In
the aggregate, the Tracinda group and our directors and officers beneficially
own approximately 90 percent of our outstanding common stock. Our common stock
does not have cumulative voting rights. Since we anticipate that the Tracinda
group will continue to own greater than 50 percent of our outstanding common
stock for the forseeable future, it will have the ability to elect our entire
Board of Directors and determine the outcome of other matters submitted to our
stockholders, such as the approval of significant transactions.
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The company, Tracinda and Frank G. Mancuso, a director and the former
Chairman of the Board and Chief Executive Officer of the company, are parties
to and have proposed to terminate an investors shareholder agreement. Pursuant
to that agreement, the parties agree to vote their respective shares of our
common stock as a group with respect to certain matters, including certain
corporate governance matters and the election of our board of directors.
Our ability to issue preferred stock may affect holders of common stock.
Our board of directors is authorized, without any vote or further action by
our stockholders, to fix the rights and preferences of and issue up to 25
million shares of preferred stock. This could adversely affect the rights of
holders of our common stock and may make it more difficult for a third party to
acquire control of us.
We may experience disruptions of our business as a result of the "Year 2000"
Issue.
As we complete our Year 2000 conversion, we may identify microprocessor
systems which present a material risk of Year 2000 disruption. Such disruption
may include, among other things, the inability to process transactions or
information, record and access data relating to the licensing and distribution
availability of titles in our library, send invoices or engage in similar
normal business activities. Our failure to identify systems which require Year
2000 conversion that are critical to our operation or our failure or the
failure of others with which we do business to become Year 2000 ready in a
timely manner could have a material adverse effect on our financial condition
and results of operations.
Future sales of shares of the common stock could decrease its market price.
We have approximately 151,170,833 shares of our common stock outstanding, of
which approximately 135,826,483 are "restricted" securities under Rule 144 of
the Securities Act and/or held by directors, officers or holders of ten percent
or more of our outstanding common stock. We have also granted, as of June 30,
1999, options to purchase a total of 7,768,357 shares of our common stock.
Furthermore, we have granted to Tracinda, and certain other holders of our
common stock or outstanding options registration rights with respect to the
shares they own or that we may issue to them. Possible or actual sales of any
of these shares, particularly by our directors and officers, under Rule 144 or
otherwise, may in the future decrease the price of shares of our common stock.
USE OF PROCEEDS
Unless otherwise specified in a prospectus supplement, we plan to use
substantially all of the net proceeds from the sale of the offered securities
to repay any outstanding amounts under our letter of credit and loan agreement
and then to reduce amounts that we owe under the revolving portion of our $1.3
billion primary credit facility. We will use any remaining proceeds for general
corporate purposes. As of June 30, 1999, there were no outstanding amounts
under our letter of credit and loan agreement, and we owed approximately
$476 million under the revolving portion our primary credit facility, which
bears interest at the rate of 7.75% per annum and is due in October 2003,
subject to extension under certain conditions. Our business plan calls for
substantial continued borrowing under this facility, subject to our compliance
with its terms. For example, on September 1, 1999, we will draw upon funds from
the facility to make the second payment to Warner Home Video of $112.5 million,
plus interest, in connection with the termination of our home video
distribution arrangement.
9
<PAGE>
PRICE RANGE OF COMMON STOCK
The common stock is listed on the NYSE and trades under the symbol "MGM."
The following table sets forth for the quarters indicated the high and low
composite per share closing sales prices as reported by the NYSE.
<TABLE>
<CAPTION>
High Low
-------- ---------
<S> <C> <C>
1998
First Quarter.......................................... $24 3/16 $ 17 3/4
Second Quarter......................................... 26 1/2 21 15/16
Third Quarter.......................................... 22 1/8 13 7/8
Fourth Quarter......................................... 13 3/4 8
1999
First Quarter.......................................... $13 9/16 $ 10 3/8
Second Quarter......................................... 18 5/8 12 11/16
Third Quarter (through July 12)........................ 18 1/4 17
</TABLE>
The last reported sales price of the common stock on the NYSE on July 12,
1999 was $17 1/8 per share. As of June 30, 1999, there were more than 2,000
beneficial holders.
DIVIDEND POLICY
MGM Studios paid approximately $19.4 million in cash dividends to its prior
owner in 1995 and 1996 to service its parent's debt. We have not paid any
dividends since 1996. For the foreseeable future, we intend to retain any
earnings to fund the operation of our business and to service and repay our
debt rather than pay cash dividends to our stockholders. Furthermore, as a
holding company with no independent operations, our ability to pay dividends
will depend upon the receipt of dividends or other payments from our
subsidiaries. Finally, our primary credit facility contains financial covenants
that could restrict our ability to pay dividends. Subject to the foregoing, our
Board of Directors has the sole discretion to pay cash dividends.
THE COMPANY
Overview
We develop, produce and distribute worldwide theatrical motion pictures and
television programs. Our subsidiaries include Metro-Goldwyn-Mayer Studios Inc.,
United Artists Corporation and Orion Pictures Corporation. We are one of only
seven major film and television studios worldwide. Our library contains over
5,000 film titles and 8,900 television episodes, and is the largest collection
of feature films in the world. Films in our library have won over 215 Academy
Awards, including the Best Picture Award for Annie Hall, The Apartment, The
Best Years of Our Lives, Dances with Wolves, Hamlet, In the Heat of the Night,
Marty, Midnight Cowboy, Platoon, Rain Man, Rocky, Silence of the Lambs, Tom
Jones and West Side Story. We also have in our library 20 titles in the James
Bond film franchise, five titles in the Rocky film franchise and nine titles in
the Pink Panther film franchise.
As used in this prospectus, the terms "we," "our," "us," "MGM" and "the
company" refer to Metro-Goldwyn-Mayer Inc. and our subsidiaries unless the
context indicates otherwise.
10
<PAGE>
Business Strategy
We are a premier global entertainment content company and our goal is to
become a fully integrated global entertainment company and thereby maximize the
value of our assets, including our film library and our film and television
production units. To achieve this goal, we seek to:
Build and leverage our film library. We believe that our film library is our
most powerful asset and that it will continue to generate relatively stable
cash flows through the worldwide distribution of our titles. We seek to
maximize the value of our film library by:
. Producing new motion pictures and television programs that will not only
be successful on their own, but will also increase the depth and breadth
of the library;
. Aggressively marketing and repackaging the library's titles;
. Developing new distribution channels for delivering our branded
programming;
. Capitalizing on developments in technology;
. Further penetrating international markets as they grow; and
. Incentivizing our employees to drive growth in sales of our library's
titles.
Although we currently do not contemplate pursuing any major library
acquisitions, we may evaluate opportunities as they arise. Finally, we expect
to benefit from the early termination of Warner Home Video's right to
distribute our films in the home video market, as well as the reversion over
time of certain rights to our library that have been previously licensed to
others, and our agreements with Fox Filmed Entertainment for the distribution
of our films in the international theatrical and international home video
markets.
Develop branded channels of distribution. As opportunities arise, we may
acquire or form partnerships for new distribution channels for the library. We
intend to aggressively pursue the establishment of cable channels under the
framework of MGM Networks.
Develop and produce theatrical motion pictures. Through MGM Pictures, we
plan to produce or co-produce and distribute 10 to 15 motion pictures annually
across a variety of genres. We intend to:
. Tightly control development and production expenditures while maintaining
the artistic integrity required to develop and produce successful feature
films;
. Aggressively seek co-production agreements and /or co-financing partners
for our pictures, which will spread the financial risk inherent in motion
picture production and development and allow us to produce a larger slate
of motion pictures with our financial resources;
. Enter into co-production agreements and joint ventures with several key
producers of motion pictures, such as Miramax (see "The Company--Recent
Developments" at page 13) in order to foster greater creative diversity
for our film slate and gain greater access to creative talent than we
previously had;
. Increase our focus on the production of commercially successful motion
pictures which appeal to the younger demographics of "Generation X" and
"Generation Y"; and
. Use our film library as an inexpensive source for sequels and remakes and
the expansion of certain well-tested, familiar film franchises.
Additionally, we plan to produce or acquire approximately 10 to 15 specialty
motion pictures annually through United Artists, which we recently repositioned
as a specialty motion picture unit that will be involved in production, sales
and acquisitions and that will continue to support independent filmmakers.
These films will have substantially lower average costs and be produced mainly
by third parties.
Distribute theatrical motion pictures. We plan to distribute all of the
motion picture product produced by MGM Pictures and United Artists in the U.S.
and Canada. We generally distribute our motion pictures outside the U.S. and
Canada through United International Pictures, and will begin distributing this
theatrical product in
11
<PAGE>
the international marketplace through Fox Filmed Entertainment when our
withdrawal from UIP is complete. We will distribute films that we co-produce
with a third party in those territories where we have distribution rights.
Additionally, we may distribute motion pictures produced by others. We intend
to actively manage our production and release schedules, as well as tightly
control distribution expenses, in order to maximize the overall performance of
our motion pictures.
Develop, produce and distribute television programs. We intend to focus
primarily on the first-run syndication and off-network businesses and use our
extensive film library as a source of ideas. In considering ideas for new
television programming, we intend to focus on low financial risk formats, such
as pre-clearing a television series for distribution prior to committing to
development expenditures. We may also consider joint ventures, co-productions
and other partnering arrangements for certain of our series.
Leverage the MGM Brand Name. We believe that the MGM name and our lion logo
are among the most recognized in the world. We intend to capitalize on the
value inherent in our name and logo through the distribution of branded
programming and the selective development of consumer products.
We are incorporated under the laws of the State of Delaware. Our principal
executive offices are located at 2500 Broadway Street, Santa Monica, California
90404, and our telephone number is (310) 449-3000.
Recent Developments
On March 12, 1999, we entered into an agreement with Warner Home Video that,
on January 31, 2000, will return to us full control over the home video
exploitation of our films. For the return of these rights, we agreed to pay
Warner Home Video $225 million in two equal payments. The first payment was
made on March 12, 1999. We will make the second payment, plus accrued interest,
on September 1, 1999.
On April 26, 1999, Frank G. Mancuso resigned from his position as Chairman
of the Board of Directors and Chief Executive Officer of the company and A.
Robert Pisano resigned from his position as Vice Chairman of the Board of
Directors and as a director of the company. Mr. Mancuso will remain a director
of the company.
Also on April 26, 1999, Alex Yemenidjian was elected Chairman of the Board
of Directors and Chief Executive Officer of the company. Mr. Yemendjian has
been a director of the company since 1997 and has served as Chairman of the
Executive Committee of the Board of Directors since 1998. Mr. Yemenidjian,
age 43, has served as a director and senior executive at MGM Grand Inc. since
1990, most recently as President and Chief Operating Officer. After his
appointment as Chairman and Chief Executive Officer of MGM, Mr. Yemenidjian
resigned his position as Chief Operating Office of MGM Grand. He will remain
the President and on the Board of Directors of MGM Grand.
On April 28, 1999, Christopher McGurk was named Vice Chairman of the Board
of Directors and Chief Operating Officer of the company. Mr. McGurk, age 42,
had been with Universal Pictures, a division of Universal City Studios, Inc.
since 1996, where he had most recently served as President and Chief Operating
Officer. Prior to joining Universal, Mr. McGurk worked for eight years
beginning in 1988 at The Walt Disney Company, most recently as President,
Motion Pictures Group, Walt Disney Studios.
On June 7, 1999, we announced that the United Artists theatrical production
unit of the company would be repositioned as a specialty film unit involved in
production, sales and acquisitions. As part of this repositioning, United
Artists will continue to support independent filmmakers, handle international
sales and complement our existing international distribution operations.
On June 21, 1999 we announced agreements with Fox Filmed Entertainment that
call for Fox Filmed Entertainment to provide distribution services for our
films in the international theatrical and international home video markets. The
international theatrical agreement will take effect on or about November 1,
2000, when our withdrawal from our present international distributor, United
International Pictures is complete. The international home video agreement will
take effect on February 1, 2000 following the expiration of our existing
agreement with Warner Home Video. Although Fox Filmed Entertainment will be
servicing certain distribution activities on our behalf, we reserve broad
powers to direct and control the handling of our films.
12
<PAGE>
On June 22, 1999, we announced a company-wide restructuring consistent with
our strategic plan for a more streamlined operation, new initiatives regarding
film and television development and production and the expansion of domestic
home entertainment, cable, satellite and internet operations. We expect our
restructuring charges in the second quarter of 1999 to be approximately $225
million, of which an estimated $140 million is film-related. Primarily as a
result of these charges, we anticipate the net loss for the second quarter to
be approximately $250 million, or $1.66 per share.
On June 24, 1999, we announced that Jules Haimovitz is joining the company
as President of MGM Networks Inc. to focus on establishing cable, satellite and
other channels to distribute our film library. Mr. Haimovitz' entertainment
industry career spans 20 years with such companies as Viacom, Spelling
Entertainment, King World Productions and ITC Entertainment Group.
On July 6, 1999, we announced an agreement with Miramax Films pursuant to
which the company and Miramax will jointly produce and distribute up to eight
motion pictures, relying on our film library as a prominent source of material.
Initial titles to be produced include Cold Mountain, based on the best-selling
novel, contributed by MGM, and the remake of the comedy classic Harvey,
contributed by Miramax.
PLAN OF DISTRIBUTION
We may sell the securities being offered hereby:
. directly to one or more purchasers;
. through agents;
. to or through one or more dealers;
. to or through one or more underwriters;
. through one or more rights offerings to our stockholders; or
. through a combination of any such methods of sales.
The distribution of such securities pursuant to any prospectus supplement
may occur from time to time in one or more transactions either:
. at a fixed price or prices which may be changed;
. at market prices prevailing at the time of sale;
. at prices related to such prevailing market prices; or
. at negotiated prices.
We may enter into a standby arrangement with the Tracinda group pursuant to
which the Tracinda group would agree to buy securities being offered hereby
which are not purchased by the public.
Offers to purchase the securities being offered hereby may be solicited
directly by us or by agents designated by us from time to time. Any such agent,
who may be deemed to be our "underwriter" as that term is defined in the
Securities Act, involved in the offer or sale of such securities will be named,
and any commissions payable by us to such agent will be set forth, in the
applicable prospectus supplement.
If a dealer is utilized in the sale of such securities, we will sell such
securities to the dealer, as principal. The dealer, who may be deemed to be an
"underwriter" as that term is defined in the Securities Act, may then resell
such securities to the public at varying prices to be determined by such dealer
at the time of resale.
If an underwriter is, or underwriters are, utilized in the sale, we will
execute an underwriting agreement with such underwriters at the time of sale to
them and the names of the underwriters will be set forth in the
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<PAGE>
applicable prospectus supplement, which will be used by the underwriters to
make resales of such shares to the public. In connection with the sale of such
securities, such underwriters may be deemed to have received compensation from
us in the form of underwriting discounts or commissions and may also receive
commissions from purchasers of such securities for whom they may act as agents.
Underwriters may sell such shares to or though dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act
as agents. Any underwriting compensation paid by us to underwriters in
connection with the offering of such securities, and any discounts, concessions
or commissions allowed by underwriters to participating dealers, will be set
forth in the applicable prospectus supplement.
If we sell shares of common stock through one or more rights offerings, we
will distribute to its stockholders, as of a record date to be determined,
transferable rights to purchase common stock. The terms of such rights,
including the period during which rights may be exercised, the exercise price,
oversubscription privileges, if any, and subscription procedures, will be set
forth in the applicable prospectus supplement. If a dealer manager is, or
dealer managers are, utilized by us in connection with a rights offering, the
applicable prospectus supplement will identify the dealer manager or dealer
managers and describe the compensation arrangements with such dealer manager or
dealer managers.
Underwriters, dealers, agents, dealer managers, and other persons, including
the Tracinda group, may be entitled, under agreements that may be entered into
with us, to indemnification by us against certain civil liabilities, including
the liabilities under the Securities Act, or to contribution with respect to
payments which they may be required to make in respect thereof. Underwriters,
dealers, dealer managers and agents may engage in transactions with, or perform
services for us in the ordinary course of business.
If so indicated in the applicable prospectus supplement, we will authorize
underwriters, dealers, dealer managers, or other persons to solicit offers by
certain institutions to purchase from us securities offered hereby pursuant to
contracts providing for payment and delivery on a future date or dates set
forth in the applicable prospectus supplement. Institutions with which such
contacts may be made may include, but are not limited to, commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others. The obligations of any
purchaser under any such contract will not be subject to any conditions except
that (a) the purchase of such securities shall not at the time of delivery be
prohibited under the laws of the jurisdiction to which such purchaser is
subject and (b) if such securities are also being sold to underwriters, we
shall have sold to such underwriters the securities offered hereby which are
not sold for delayed delivery. The underwriters, dealers, dealer managers and
such other persons will not have any responsibility in respect to the validity
or performance of such contracts. The prospectus supplement relating to such
contracts will set forth the price to be paid for such securities pursuant to
such contracts, the commissions payable for solicitation of such contracts and
the date or dates in the future for delivery of such shares pursuant to such
contracts.
The anticipated date of delivery of securities offered hereby will be set
forth in the applicable prospectus supplement relating to each offer.
DESCRIPTION OF SECURITIES
Common Stock
Our authorized common stock consists of 250,000,000 shares of common stock.
On July 13, 1999, our stockholders approved an amendment to our amended and
restated certificate of incorporation to increase the authorized shares of
common stock to 500,000,000. All authorized shares of common stock have a par
value of $0.01 per share and are entitled to one vote per share on all matters
submitted to a vote of stockholders. In the event of a liquidation, dissolution
or winding up of the company, the holders of the common stock are entitled to
share ratably in all assets remaining after all liabilities and the liquidation
preference attributable to any outstanding preferred stock have been paid. The
holders of the common stock have no pre-emptive rights or cumulative voting
rights and no rights to convert their common stock into any other securities.
14
<PAGE>
As of June 30, 1999, there were outstanding 151,170,833 shares of the common
stock. As of June 30, 1999, there were reserved for issuance upon the exercise
of options 8,437,564 shares of the common stock, of which options for 7,768,357
shares are outstanding, 4,438,989 of which are vested and exercisable or will
become vested and exercisable within 60 days.
Subscription Rights
The following description sets forth the general terms and provisions of any
subscription rights which may be issued and to which any prospectus supplement
may relate. The particular terms of the subscription rights and extent, if any,
to which such general provisions may not apply will be described in the
prospectus supplement relating to such subscription rights.
The subscription rights will be issued in connection with one or more rights
offerings. The subscription rights will be issued without charge to our
stockholders and will be transferable. The number of rights to be issued for
each outstanding share of our common stock as well as the subscription price
will be determined at the time of the rights offering, if any, and described in
the related prospectus supplement. We anticipate that the subscription rights
will be traded on the New York Stock Exchange, the exchange where our common
stock is traded.
We anticipate there will be two types of subscription privileges associated
with the subscription rights. Under the basic subscription privilege, a rights
holder would be entitled to purchase one share of common stock for each right
held. Under the oversubscription privilege, any rights holder who exercises the
basic subscription privilege for all rights held would be entitled to subscribe
for additional shares of common stock at the time the basic subscription
privilege is exercised. Shares will be available for the oversubscription
privilege to the extent that other rights holders do not exercise their basic
subscription privilege in full and will be subject to proration if necessary.
In each case, the rights holder must specify the number of shares to be
purchased and submit the subscription price to the subscription agent.
LEGAL MATTERS
The validity of the issuance of the securities offered hereby will be passed
upon for us by, Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP,
Los Angeles, California.
EXPERTS
The company's financial statements and schedules for the years ended
December 31, 1998 and December 31, 1997 and for the period from October 11,
1996 to December 31, 1996 and for MGM Studios for the period from January 1,
1996 to October 10, 1996 incorporated by reference into this prospectus and
registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
giving said reports.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC, in accordance with the Securities Exchange Act of
1934. You may read and copy any document we file at the SEC's public reference
rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please
call the SEC at 1-800-SEC-0330 for further information on the public reference
rooms. Our SEC filings are also available to the public from the SEC's web site
at: http://www.sec.gov.
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with them, which means that we can disclose important
information to you by referring to our filed SEC documents. The
15
<PAGE>
information incorporated by reference is considered to be part of this
prospectus. Information we file with the SEC after the date of this document
will update and supersede the information in this prospectus. We incorporate by
reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of
1934 until this offering is completed:
(1) Our Annual Report on Form 10-K for the year ended December 31, 1998;
(2) Our Quarterly Report on Form 10-Q for the quarter ended March 31,
1999; and
(3) The description of capital stock contained in Item 1 of our
Registration Statement on Form 8-A, filed with the SEC on October 14,
1997, as amended.
We have also filed a Registration Statement on Form S-3 with the SEC under
the Securities Act for the securities offered by this prospectus. This
prospectus does not contain all of the information set forth in the
registration statement. You should read the registration statement for further
information about our common stock and us. The Registration Statement can be
found in the SEC's public reference room or on the SEC's website referred to
above, and you may request a copy of any of these filings, at no cost, by
writing or calling William A. Jones, Senior Executive Vice President and
Secretary of the company, at:
Metro-Goldwyn-Mayer Inc.
2500 Broadway Street
Santa Monica, California 90404
(310) 449-3000
You can find additional information by visiting our website at:
http://www.mgm.com.
16
<PAGE>
[FOUR COLOR LOGO]
5 1/8"x3"
<PAGE>
PART II
Information Not Required In Prospectus
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses in connection with the issuance and distribution of
the securities being registered hereby are as follows are as follows:
<TABLE>
<CAPTION>
Expenses Amount
-------- --------
<S> <C>
SEC Registration Fee............................................. $208,500
NYSE Fee.........................................................
Printing Expenses................................................
Legal Fees and Expenses..........................................
Transfer Agent and Registrar Fees................................
Accounting Fees and Expenses.....................................
Blue Sky Fees and Expenses.......................................
Miscellaneous Expenses...........................................
--------
TOTAL........................................................ *
========
</TABLE>
- --------
*Estimated
Item 15. Indemnification of Officers and Directors.
As permitted by applicable provisions of the Delaware General Corporation
Law (the "DGCL"), the Registrant's Amended and Restated Certificate of
Incorporation contains a provision whereunder the Registrant will indemnify
each of the officers and directors of the Registrant (or their estates, if
applicable), and may indemnify any employee or agent of the Registrant (or
their estates, if applicable), to the fullest extent permitted by the DGCL as
it exists or may in the future be amended.
In addition, the Registrant has entered into indemnification agreements with
its directors, its executive officers and certain other officers providing for
indemnification by the Registrant, including under circumstances in which
indemnification is otherwise discretionary under Delaware law. These agreements
constitute binding agreements between the Registrant and each of the other
parties thereto, thus preventing the Registrant from modifying its
indemnification policy in a way that is adverse to any person who is a party to
such an agreement.
The Registrant currently maintains insurance on behalf of its officers and
directors against certain liabilities that 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 is deemed by the Board of
Directors to be adequate to cover such liabilities.
Item 16. Exhibits.
See Exhibit Index attached hereto on page II-5 and incorporated herein by
reference.
Item 17. Undertakings.
Insofar as indemnification for liabilities arising out of 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
II-1
<PAGE>
a director, officer or controlling person of the registrant in the successful
defense in 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.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act will be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus will be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time will be deemed to be
the initial bona fide offering thereof.
(3) 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 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to 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.
II-2
<PAGE>
Signatures and Power of Attorney
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Santa Monica, California, on July 13, 1999.
METRO-GOLDWYN-MAYER INC.
By: /s/ Alex Yemenidjian
-----------------------------------
Alex Yemenidjian
Chairman of the Board of Directors
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints William A. Jones, Daniel J. Taylor and
Robert Brada their true and lawful attorneys-in-fact and agents, each with full
power and substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments to this
Registration Statement, and any additional Registration Statements pursuant to
Rule 462(b) under the Securities Act of 1933, and to file the same, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents 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 might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitution or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Alex Yemenidjian Chairman of the Board of July 13, 1999
____________________________________ Directors and Chief
Alex Yemenidjian Executive Officer
(Principal Executive
Officer)
/s/ Christopher McGurk Vice Chairman, Chief July 13, 1999
____________________________________ Operating Officer and
Christopher McGurk Director
/s/ Daniel J. Taylor Chief Financial Officer July 13, 1999
____________________________________ (Principal Financial and
Daniel J. Taylor Accounting Officer)
/s/ James Aljian Director July 13, 1999
____________________________________
James Aljian
/s/ Francis Ford Coppola Director July 13, 1999
_________________________________
Francis Ford Coppola
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Willie D. Davis Director July 13, 1999
____________________________________
Willie D. Davis
/s/ Alexander M. Haig, Jr. Director July 13, 1999
____________________________________
Alexander M. Haig, Jr.
/s/ Kirk Kerkorian Director July 13, 1999
____________________________________
Kirk Kerkorian
/s/ Frank G. Mancuso Director July 13, 1999
____________________________________
Frank G. Mancuso
/s/ Jerome B. York Director July 13, 1999
____________________________________
Jerome B. York
</TABLE>
II-4
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
2.1/(2)/ Stock Purchase Agreement, dated as of July 16, 1996, by and among
the Company, Consortium de Realisation ("CDR"), MGM Holdings
Corporation, MGM Group Holdings Corporation and MGM Studios (f/k/a
Metro-Goldwyn-Mayer)*
2.2/(2)/ Stock Purchase Agreement, dated as of May 2, 1997, by and among the
Company, Orion and Metromedia International Group, Inc. ("MIG")*
2.3/(2)/ Agreement and Plan of Merger, dated as of January 31, 1996, by and
among MIG, SAC Merger Corp. and the Samuel Goldwyn Company (the
"Goldwyn Merger Agreement")*
2.4/(2)/ Amendment No. 1 to the Goldwyn Merger Agreement dated as of May 29,
1996
2.5/(2)/ Amended and Restated Plan of Merger, dated as of May 17, 1996,
between MIG, MPCA Merger Corp., Bradley Krevoy, Steven Stabler and
the Motion Picture Corporation of America*
3.1/(2)/ Amended and Restated Certificate of Incorporation of the Company
3.2/(2)/ Amended and Restated Bylaws of the Company
5.1 Opinion of Christensen, Miller, Fink, Jacobs, Glaser, Weil &
Shapiro, LLP**
10.1 Employment Agreement, dated as of April 28, 1999, between the
Company and Alex Yemenidjian.
10.2/(1)/ Employment Agreement, dated as of April 28, 1999, between the
Company and Christopher J. McGurk.
10.3/(1)/ Letter Agreement, dated April 28, 1999, between the Company and
Christopher J. McGurk.
10.4/(1)/ Indemnification Agreement, dated as of April 28, 1999, by and
between the Company and Christopher McGurk.
23.1/(1)/ Consent of Arthur Andersen LLP
23.2 Consent of Christensen, Miller, Fink, Jacobs, Glaser, Weil &
Shapiro, LLP (included in their opinion filed as Exhibit 5.1)
24/(1)/ Power of Attorney (included on the signature page hereto)
</TABLE>
- --------
* Filed without Schedules.
** To be filed by amendment.
(1) Filed herewith.
(2) Filed as an exhibit to the Company's Registration Statement on Form S-1, as
amended (File No. 333-35411) and incorporated herein by reference.
II-5
<PAGE>
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into as of April
28, 1999 between Metro-Goldwyn-Mayer Inc., a Delaware corporation (the
"Company"), and Alex Yemenidjian ("Executive").
The parties agree as follows:
1. Employment and Title. Effective as of April 26, 1999 (the "Effective
------------------------
Date"), the Company employs Executive as, and Executive accepts employment to
serve as, Chairman of the Board of Directors and Chief Executive Officer of the
Company (with such additional titles as may be designated by the Board of
Directors), all upon the terms and conditions set forth in this Agreement,
including the powers and authority set forth in Paragraph 2 below. The Company
shall use its best efforts to keep Executive as a member of the Board of
Directors throughout the Term (as defined in Paragraph 6 below), including
placing Executive on management's slate of nominees for election as director at
every shareholders' meeting at which his term would otherwise expire. During
the Term, Executive shall be a member of the Executive Committee of the Board of
Directors (or its equivalent).
2. Powers and Authority.
------------------------
(a) As Chairman and Chief Executive Officer of the Company, Executive
shall have such duties and responsibilities as are customarily associated with
such titles. If the Executive, in his discretion, establishes an Office of the
Chairman, Executive shall be a member of the Office of the Chairman. Except as
may be otherwise provided in employment agreements in effect as of the date
hereof (including the Employment Agreement dated as of April 28, 1999 between
the Company and Christopher J. McGurk (the "McGurk Agreement"), all employees of
the Company shall report to Executive. Executive shall have full access to all
employees of the Company (including such persons who report to Mr. McGurk
pursuant to the McGurk Agreement) and may deal with such persons directly.
(b) Except for the rendition of services to MGM Grand, Inc., Tracinda
Corporation, The Lincy Foundation, The United Armenian Fund and their respective
affiliates, Executive's services shall be exclusive to the Company and its
subsidiaries. Except as otherwise provided in this Paragraph 2(b), Executive
shall devote Executive's best efforts and Executive's full business time to the
services to be performed hereunder. In addition to the entities specified in
the first sentence of this Paragraph 2(b), with the permission of the Executive
Committee,
<PAGE>
Executive may serve on the boards of directors (and committees thereof) of (but
in no other capacity for) other companies and non-profit organizations.
Executive may also manage the investment of Executive's personal assets, and may
make new investments of Executive's personal assets in other companies so long
as such activities do not materially interfere with Executive's duties hereunder
and (other than investments not to exceed one percent (1%) of the total
outstanding in publicly traded securities) such companies do not directly
compete with the Company.
(c) Executive agrees to comply with the Company's policies and
procedures as in effect from time to time (and which are not inconsistent with
this Agreement) to the extent that such policies are furnished to Executive in
writing.
3. Location. The location of Executive's principal place of employment
------------
shall be in the Company's principal executive offices in the greater Los
Angeles, California area; provided, however, that Executive shall perform such
occasional services outside of Los Angeles as are, in the reasonable
determination of the Executive or the Company's Board of Directors, reasonably
required for the proper performance of Executive's duties under this Agreement.
4. Reporting. Executive shall report solely to the Company's Board of
-------------
Directors.
5. Availability. Each party represents and warrants to the other that he
----------------
or it has the full power and authority to enter into and perform his or its
obligations under this Agreement and that his or its execution of and
performance under this Agreement shall not constitute a default under or breach
of the terms of any other agreement or order of any court or governmental
authority to which he or it is a party or under which he or it is bound. Each
party shall defend and hold harmless the other for any and all claims, demands,
losses or damages (including reasonable attorneys' fees) arising from any action
against any such party due to a breach of any representation and warranty
contained in this Paragraph or based upon any allegations of interference with
contractual obligations or the like relating to the negotiation or execution of
this Agreement.
6. Term. Subject to the provisions for earlier termination set forth in
--------
Paragraph 11, the term of Executive's employment hereunder shall commence on the
Effective Date and continue through April 30, 2004 (the "Term"). Neither the
Company nor Executive will have any obligation to renew or extend this Agreement
beyond the Term.
7. Compensation.
----------------
(a) Salary and Bonus. In full consideration for the services to be
--------------------
rendered by Executive, and in full discharge of the Company's salary
obligations, Company shall pay to Executive and Executive shall accept:
(i) an annualized base salary of $2,500,000 for each year of the Term
(less tax
<PAGE>
withholdings required by law and other voluntary deductions authorized by
Executive), payable bi-weekly in arrears commencing on the first regular
bi-weekly payment date.
(ii) subject to clause (1) below, an annual discretionary bonus (or
such applicable prorated portion thereof for any partial Company fiscal
year during the Term), less tax withholdings required by law and other
voluntary deductions authorized by Executive; such bonus shall be
determined in the sole discretion of the Compensation Committee of the
Board of Directors and shall be payable on the tenth business day following
the Company's public disclosure of its financial results for the applicable
fiscal year ending during the Term (and within forty-five days following
the end of the Term with respect to the last partial Company fiscal year).
(1) As soon as practicable, the Company, with the input of Executive,
shall develop and adopt a performance-based bonus program for
senior executives, including Executive, pursuant to which bonus
awards are determined by the Compensation Committee of the Board
of Directors based on the Company's attainment of defined goals
of pre-tax income, EBITDA or other indicia of profitability or
cash flow as reflected in the Company's business plan from time
to time; Executive's bonus shall be determined in accordance with
such program.
(b) Other Benefits. Executive shall be entitled to vacation time in
--------------------
accordance with Company policy applicable to employees of Executive's seniority,
salary and title and first-class air travel (where available) when traveling on
Company business.
(c) Business Expenses. During the Term, the Company shall pay or
-----------------------
reimburse Executive promptly for all reasonable business expenses incurred by
Executive in the performance of Executive's duties under this Agreement if
properly substantiated and in accordance with the Company's policies and
procedures applicable to employees of Executive's seniority, salary and title.
(d) Insurance. During the Term, Executive shall be entitled to and
---------------
shall be accorded all rights and benefits under any life insurance, disability
insurance, health and major medical insurance policy or policies which the
Company provides for its senior officers or employees generally. Nothing in
this paragraph shall require the Company to retain any particular policy or
plan, but a reasonable insurance benefit package shall be maintained.
(e) Employee Benefit Plans. Executive shall be entitled to
----------------------------
participate in and/or receive all other employee benefits under any 401(k) plan,
savings plan, pension plan and other similar plan or program which the Company
provides for its senior officers or employees generally, all subject to the
terms and conditions of the various benefit plans; provided that Executive shall
not participate in the existing Senior Management Bonus Plan, and further
<PAGE>
provided that nothing herein shall require the Company to adopt or maintain, or
limit the ability of the Company to amend or modify, any particular employee
benefit plan, program or policy.
(f) Relocation Expenses. Executive shall be reimbursed for relocation
-----------------------
and other related expenses in accordance with Company policy applicable to
senior executives occasioned by the relocation of Executive and his family from
Las Vegas, Nevada to the Los Angeles area.
8. Compensation in the Event of Termination.
--------------------------------------------
(a) If the Agreement is terminated under Paragraph 11(a), Executive or
his estate shall receive the compensation provided in Paragraph 7(a)(i) and
7(a)(ii), if any, prorated to the date of termination, and all amounts accrued
under benefit plans in which Executive is a participant as of such termination
date.
(b) If the Agreement is terminated under Paragraph 11(b), Executive
shall receive the same compensation and benefits set forth in Paragraph 8(a),
except that the benefits provided in Paragraph 7(d) shall continue for what
would be the remainder of the Term but for such termination (the "Full Term") in
accordance with the terms of each respective policy or plan (provided, however,
that if prior to the expiration of the Full Term, Executive receives any of the
types of benefits specified in Paragraph 7(d) from a subsequent employer, the
Company shall immediately cease to provide such types of benefits received from
the subsequent employer).
(c) If the Agreement is terminated under Paragraph 11(c) or 11(e)
below, or expires pursuant to its terms, Executive shall receive: (i) the
compensation provided in Paragraph 7(a)(i) through the Full Term, payable as
provided in Paragraph 7(a)(i); and (ii) the benefits provided in Paragraph 7(d)
for the Full Term in accordance with the terms of each respective policy or plan
(provided, however, that if prior to the expiration of the Full Term, Executive
receives any of the types of benefits specified in Paragraph 7(d) from a
subsequent employer, the Company shall immediately cease to provide such types
of benefits received from the subsequent employer);
(d) If the Agreement is terminated under Paragraph 11(d), Executive
shall not be entitled to receive any payment or benefits following the date of
termination, except as may be accrued or vested to the date of termination.
9. Stock Options. Effective as of the date hereof (the "Date of Grant"),
-----------------
but subject to the approval of the Company's stockholders as provided below,
Executive shall receive non-qualified options to purchase all or any part of
10,000,000 shares of the Company's Common Stock, par value $.01 per share
("Common Stock") under the Company's Amended and Restated 1996 Stock Incentive
Plan (the "Plan") consisting of 5,000,000 options exercisable at $14.90 per
share ("$14.90 Options") and 5,000,000 options exercisable at $30.00 per share
("$30.00
<PAGE>
Options"), upon the terms and conditions set forth below and in the
Plan:
(a) $14.90 Options
(i) Number of Shares of
Common Stock
Subject to $14.90 Options: 5,000,000
(ii) Exercise Price: $14.90 per share
(iii) Vesting Schedule:
April 30, 2000: 20%
April 30, 2001: 20%
April 30, 2002: 20%
April 30, 2003: 20%
April 30, 2004: 20%
(b) $30.00 Options
-------------------
(i) Number of Shares of
Common Stock
Subject to $30.00 Options: 5,000,000
(ii) Exercise Price: $30.00 per share
(iii) Vesting Schedule:
April 30, 2000: 20%
April 30, 2001: 20%
April 30, 2002: 20%
April 30, 2003: 20%
April 30, 2004: 20%
(c) In the event the Company terminates this Agreement pursuant to
Paragraph 11(c), Executive terminates this Agreement pursuant to Paragraph
11(e), or a Designated Change of Control (as defined in Exhibit A) occurs: (i)
all of the unvested $14.90 Options and $30.00 Options shall vest, and (ii) all
of the $14.90 Options and $30.00 Options shall be exercisable for a one (1) year
period following the date of Executive's termination (but not later than July
29, 2004).
(d) The option grant will be more fully reflected in a stock option
substantially in the form of Exhibit A hereto, with such changes as are
necessary to implement Paragraph 9 of this Agreement.
<PAGE>
(e) Executive acknowledges that the Plan does not currently have
sufficient authorized shares to effectuate the stock options provided for
herein, and that accordingly, such stock options are subject to the approval of
the Company's stockholders. The Company agrees to submit to its stockholders
for approval at the next meeting of the Company's stockholders (or to seek the
written consent of the holders of a majority of the Company's Common Stock) of
an amendment to the Plan to increase the number of shares of Common Stock
subject to the Plan in order to effectuate the stock options provided for
herein.
10. Property Rights.
-------------------
(a) Executive agrees that all results and proceeds of his services,
including any ideas, programs, formats, plans and arrangements, composed,
conceived or created by him during the period of this employment, solely or in
collaboration with others (collectively, the "Creations'), whether or not same
is made at the request or suggestion of the Company, or during or outside
regular hours of work, shall at all times be and remain the sole and exclusive
property of the Company. Executive further agrees that he will, at the request
of the Company, execute and deliver to the Company, in form satisfactory to the
Company, documents evidencing the Company's ownership to the foregoing; but
notwithstanding that no such documents are executed, the Company, as Executive's
employer, shall be deemed the owner thereof immediately upon creation. Anything
in this Agreement to the contrary notwithstanding, the provisions of this
paragraph shall survive the termination, for any reason, of this Agreement.
(b) Notwithstanding Paragraph 10(a) above, the Company shall not own
any Creations created by Executive prior to the Term or solely during
Executive's leisure hours during the Term, which Creation is not related in any
manner to, or derived in any manner from, any projects, concepts and/or
intellectual property of any nature of the Company or any of its affiliates.
Notwithstanding the foregoing, Executive agrees to submit to the Company any
such Creation which Executive desires to commercially exploit, and the Company
will notify Executive within ten (10) business days of receipt if the Company
desires to start negotiations for rights thereto. If no agreement is reached
within thirty (30) days after the start of negotiations, then Executive will
make an offer to the Company for such rights and if the Company does not accept,
Executive may negotiate elsewhere the rights so offered.
11. Termination. Executive's employment shall terminate:
---------------
(a) Upon the death of Executive.
(b) At the option of the Company, if Executive is disabled.
Disability shall mean Executive's inability to substantially perform his duties
hereunder due to a medically determinable physical or mental impairment that can
reasonably be expected to result in death within twelve (12) months or which has
lasted or can be expected to last for a continuous period of not less than
twelve (12) months.
<PAGE>
(c) After thirty (30) days' written notice by the Company to
Executive without "Cause".
(d) Upon written notice by the Company to Executive for "Cause"
which shall include only:
(i) the continued failure of Executive to substantially perform his
duties with the Company or any subsidiary of the Company (other than any
such failure resulting from illness, temporary absence, legal incapacity
due to mental or physical condition or disability) for thirty (30) days
after a demand for substantial performance is delivered in writing to
Executive by the Company which specifically identifies the manner in which
Executive has not substantially performed his duties;
(ii) Executive's continued failure to follow reasonable and lawful
directives (consistent with the terms of this Agreement) of the Board of
Directors or the Executive Committee of the Company after a demand for
Executive to follow such directives is delivered in writing to Executive by
the Company that specifically identifies the manner in which Executive has
not followed such directives;
(iii) the engaging by Executive in willful, reckless or grossly
negligent misconduct in connection with his employment;
(iv) Executive's conviction (including a plea of guilty or nolo
contendere) of an offense involving moral turpitude or a felony;
(v) breach by Executive of this Agreement and failure to cure such
breach within thirty (30) days of delivery of a written notice to Executive
by the Company that specifically identifies the breach; or
(vi) failure of Executive to materially operate within the expense
parameters of the business plan approved by the Executive Committee, unless
such deviation has been approved in writing by the Executive Committee.
If the remedy, cure or cessation of an act or omission which is the
subject of a notice under this Paragraph 11(d) would reasonably require more
than thirty (30) days to complete and Executive commences such remedy, cure or
cessation within thirty (30) days after receipt of such notice and diligently
pursues the same to completion, said act or omission shall not constitute
"Cause", provided that "Cause" under clauses (iii) or (iv) above shall not be
subject to cure.
(e) Upon thirty (30) days' written notice by Executive to the
Company for "Good Reason" which shall include only:
<PAGE>
(i) a substantial and adverse change in Executive's status or
position with the Company as the same existed on the commencement of the
Term hereof which is not cured within thirty (30) days after written notice
thereof to the Company from Executive;
(ii) a reduction (other than for Cause) by the Company of Executive's
aggregate compensation under Paragraph 7(a)(i) above, unless such reduction
is reinstated retroactively not later than thirty (30) days after written
notice thereof to the Company from Executive;
(iii) a relocation of Executive's principal place of employment to
any place outside the greater Los Angeles area, except for reasonable
amounts of required travel by the Executive on the Company's business; or
(iv) any material breach by the Company of any provision of this
Agreement which is not cured within thirty (30) days after written notice
thereof to the Company from Executive; or
(v) a Designated Change of Control (as defined in Exhibit A) occurs,
provided however if Executive does not terminate this Agreement pursuant to
this Paragraph 11(e) within six (6) months after the occurrence of the
Designated Change of Control, Executive may not terminate this Agreement
because of such Designated Change of Control.
(f) at the expiration of the Term.
12. No Mitigation; Consulting Services.
(a) Except as provided in Paragraphs 8(b) and 8(c) regarding
benefits provided by a subsequent employer, and without limiting any other
provision hereof, any income and any other employment benefits received by
Executive from any and all sources other than the Company before or after the
expiration or termination of this Agreement for any reason whatsoever shall in
no way reduce or otherwise affect the Company's obligation to make payments and
afford benefits hereunder. Executive shall have no duty to seek employment.
(b) For a one year period following termination for any reason
(other than pursuant to Paragraph 11(a) of this Agreement), Executive shall make
himself available to the Company on a non-exclusive basis consistent with his
other responsibilities to consult with the Company concerning transitional
matters. Executive shall be entitled to compensation at the rate of $500 per
hour for such services plus reimbursement of his reasonable and documented
expenses incurred in connection therewith.
<PAGE>
13. Confidential Material.
-------------------------
(a) Disclosure. Executive acknowledges that, in the performance of
-----------------
duties on behalf of the Company, Executive shall have access to, receive and be
entrusted with confidential information, Including but in no way limited to
development, marketing, organizational, financial, management, administrative,
production, distribution and sales information, data, specifications and
processes presently owned or at any time in the future developed by, the Company
or its agents or consultants, or used presently or at any time in the future in
the course of its business that is not otherwise part of the public domain
(collectively, the "Confidential Material"). All such Confidential Material is
considered secret and will be available to Executive in confidence. Except in
the performance of Executive's duties on behalf of the Company or as required by
law, Executive shall not, directly or indirectly for any reason whatsoever,
disclose or use any such Confidential Material, unless such Confidential
Material ceases (through no fault of Executive's) to be confidential because it
has become part of the public domain. All records, files, drawings, documents,
equipment and other tangible items, wherever located, relating in any way to the
Confidential Material or otherwise to the Company's business, which Executive
prepares, uses, or encounters, shall be and remain the Company's sole and
exclusive property and shall be included in the Confidential Material. Upon
termination of this Agreement by any means, or whenever requested by the
Company, Executive shall promptly deliver to the Company any and all of the
Confidential Material not previously delivered to the Company that may be or at
any previous time has been in Executive's possession or under Executive's
control; provided, however, Executive may keep Executive's rolodex or other
personal list of addresses and telephone numbers.
(b) Unfair Competition. Executive hereby acknowledges that the sale
-------------------------
or unauthorized use or disclosure of any of the Company's Confidential Material
by Executive by any means whatsoever at any time before, during or after
Executive's employment with the Company shall constitute "Unfair Competition".
Executive agrees that Executive shall not engage in Unfair Competition either
during the time Executive is employed by the Company or at any time thereafter.
(c) Other. In the event of the termination of Executive's
------------
employment for any reason, Executive shall not for the longer of the period
during which Executive is receiving payments pursuant to Paragraph 8 or one (1)
year following termination:
(i) directly or indirectly, either alone or jointly with or on
behalf of any corporation or entity of which Executive is a director,
employee or greater than five percent (5%) shareholder solicit for
employment any employee of the Company or, any of its affiliates or
subsidiaries other than Executive's secretary or personal assistant; or
(ii) make any derogatory public statement concerning the Company, any
of its affiliates or subsidiaries, or Executive's employment unless
previously approved by the
<PAGE>
Company, except as may be required by law.
14. Miscellaneous.
(a) Arbitration.
(i) Any and all disputes between Executive 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 clause) shall be solely settled by an arbitration to be held in
Los Angeles, California and conducted in accordance with such rules of the
American Arbitration Association or any similar successor body as are not
inconsistent with the provisions of this Paragraph 14(a).
(ii) Any arbitration hereunder shall be held before a single
arbitrator mutually agreed to by the parties thereto, except that, if the
parties shall fail to agree to such an arbitrator within twenty (20) days
from the date on which the claimant's request for arbitration is delivered
to the other party to the arbitration, such arbitration shall be held
before an arbitrator appointed by the American Arbitration Association.
(iii) Discovery may be taken in the arbitration proceedings pursuant
to the provisions of California Code of Civil Procedure Section 1283.05,
which are incorporated herein by reference and made applicable to any
arbitration held pursuant to this Paragraph.
(iv) The award of the arbitrator shall be made within ninety (90)
days from the date on which the arbitrator is selected. The award of the
arbitrator shall be final, and the parties agree to waive their right to
any form of appeal, to the greatest extent allowed by law. The arbitrator
shall award costs and fees, including the fees of the arbitrator and
reasonable attorneys' fees, to the prevailing party. Judgment upon 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 order of enforcement.
(b) Applicable Law and Venue. This Agreement and any disputes or
-------------------------------
claims arising hereunder shall be construed in accordance with, governed by and
enforced under the laws of the State of California without regard for any rules
of conflicts of law. The arbitrator appointed as described above located in Los
Angeles, California shall be the sole forum for any action for relief arising
out of or pursuant to, or to enforce or interpret, this Agreement. Each party
to this Agreement consents to the personal jurisdiction and arbitration in such
fora and courts and each party hereto covenants not to, and waives any right to,
seek a transfer of venue from such jurisdiction on any grounds.
(c) Interpretation. The provisions of this Agreement were
---------------------
negotiated by each of the parties hereto and this Agreement shall be deemed to
have been drafted by each party.
<PAGE>
(d) Representations of the Company. The Company represents and
-----------------------------------
warrants that this Agreement is validly binding on the Company and enforceable
in accordance with its terms and that the execution and performance hereof is
not in conflict with any agreement or understanding the Company has with any
third party; provided however, that notwithstanding the foregoing or any other
provision of this Agreement, to the extent the Company has any outstanding
obligations which may be inconsistent with its representations or obligations
contained in this Agreement, the Company shall not be in breach of this
Agreement if such inconsistencies are resolved not later than ninety (90) days
following the Effective Date.
(e) No Waivers. The failure of either party to enforce any provision
---------------
of this Agreement shall not be construed as a waiver of any such provision, nor
prevent such party thereafter from enforcing such provision or any other
provision of this Agreement. Rights granted the parties hereto herein are
cumulative and the election of one shall not constitute a waiver of such party's
right to assert all other legal remedies available under the circumstances.
(f) Notices. Any notice to be given under the terms of this Agreement
------------
shall be in writing and may be delivered personally, by telecopy, telex or other
form of written electronic transmission, by overnight courier or by registered
or certified mail, postage prepaid, and shall be addressed as follows:
(a)
TO THE COMPANY:
Board of Directors
Metro-Goldwyn-Mayer Inc.
2500 Broadway Street
Santa Monica, California 90404-3061
Attention: Mr. Jerome York
WITH A COPY TO:
Metro-Goldwyn-Mayer Inc.
2500 Broadway Street
Santa Monica, California 90404-3061
Attention: Legal Department
<PAGE>
TO THE EXECUTIVE:
Mr. Alex Yemenidjian
Metro-Goldwyn-Mayer Inc.
2500 Broadway Street
Santa Monica, California 90404-3061
Either party may hereafter notify the other in writing of any change in address.
Any notice hereunder shall be deemed duly given when received by the person to
whom it was sent.
(g) Severability. The provisions of this Agreement are severable and
----------------
if any provision of this Agreement shall be held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provisions, or
enforceable parts thereof, shall not be affected thereby unless as a result of
such severing the remaining provisions or enforceable parts do not substantially
reflect the intention of the parties in entering into this Agreement.
(h) Successors and Assigns. The rights and obligations of the parties
--------------------------
under this Agreement shall inure to the benefit of and be binding upon their
successors, heirs and assigns, including the survivor upon any merger,
consolidation or combination of the Company with any other entity.
(i) Entire Agreement. This Agreement supersedes all prior agreements
--------------------
and understandings between the parties hereto, oral or written, and may not be
modified or terminated orally. No modification, termination or attempted waiver
shall be valid unless in writing, signed by the party against whom such
modification, termination or waiver is sought to he enforced.
(j) Survival. The provisions of Paragraphs 8, 9, 10, 11, 12, 13 and
------------
14 of this Agreement shall survive the Term, it being understood that the
foregoing shall not limit Executive's rights with respect to amounts due him and
unpaid at the expiration of the Term.
(k) Confidentiality and Publicity. This Agreement shall remain
---------------------------------
confidential and the terms shall not be divulged to any person (other than
Executive's professional advisors and family) except to the extent required by
law or legal process. Any press release or announcement of or relating to this
Agreement and the timing of any such announcement shall only be made with the
agreement of Executive and the Company.
(l) Attorneys. Each party may be represented by counsel of its choice
-------------
even though such counsel may have represented the other party in matters related
to the business of the Company, and each party agrees to execute an appropriate
waiver to effectuate this clause.
(m) Non-Involvement of Tracinda. The parties acknowledge that neither
-------------------------------
Kirk
<PAGE>
Kerkorian nor Tracinda Corporation, individually or collectively, is a party to
this Agreement or any agreement provided for herein. Accordingly, the parties
hereby agree that in the event (i) there is any alleged breach or default by any
party under this Agreement or any agreement provided for herein, or (ii) any
party has any claim arising from or relating to any such agreement, no party,
nor any party claiming through such party shall commence any proceedings or
otherwise seek to impose any liability whatsoever against Kirk Kerkorian or
Tracinda Corporation by reason of such alleged breach, default or claim.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
METRO-GOLDWYN-MAYER INC.
BY: /s/ William A. Jones
----------------------------
ITS: Senior Executive Vice President and Secretary
----------------------------------------------
/s/ Alex Yemenidjian
- -------------------------------
ALEX YEMENIDJIAN
<PAGE>
EXHIBIT 10.2
PRIVILEGED AND
CONFIDENTIAL
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into as of April
28, 1999 between Metro-Goldwyn-Mayer Inc., a Delaware corporation (the
"Company"), and Christopher J. McGurk ("Executive").
The parties agree as follows:
1. Employment and Title. Effective as of April 28, 1999 or as soon as
--------------------
practicable thereafter, but not later than April 30, 1999 (the "Effective
Date"), the Company employs Executive as, and Executive accepts employment to
serve as, Vice Chairman of the Board of Directors of the Company (with such
additional titles as may be designated by the Board of Directors), all upon the
terms and conditions set forth in this Agreement, including the powers and
authority set forth in Paragraph 2 below. Executive shall be appointed as a
member of the Company's Board of Directors. The Company shall use its best
efforts to keep Executive as a member of the Board of Directors throughout the
Term (as defined in Paragraph 6 below), including placing Executive on
management's slate of nominees for election as director at every shareholders'
meeting at which his term would otherwise expire. During the Term, Executive
shall be a member of the Executive Committee of the Board of Directors (or its
equivalent).
2. Powers and Authority.
--------------------
(a) As Vice Chairman of the Company, Executive shall have such
duties and responsibilities as are customarily associated with such titles. If
the Chairman and Chief Executive Officer ("CEO"), in his discretion, establishes
an Office of the Chairman, Executive shall be a member of the Office of the
Chairman. Except as may be otherwise provided in employment agreements in effect
as of the date hereof, all employees of the Company (other than (i) the CEO, and
(ii) those persons designated from time to time by the CEO to be members of the
Office of the Chairman, who shall report to the CEO), shall report to Executive.
Notwithstanding the foregoing, the CEO shall have full access to all employees
of the Company and may deal with such persons directly.
(b) Executive's services shall be exclusive to the Company and its
subsidiaries. Executive shall devote Executive's best efforts and Executive's
full business time (except as provided in the following sentence) to the
services to be performed hereunder. With the permission of the Executive
Committee, Executive may serve on the boards of directors (and committees
thereof) of (but in no other capacity for) other
<PAGE>
companies and non-profit organizations, may manage the investment of Executive's
personal assets, and may make new investments of Executive's personal assets in
other companies so long as such activities do not materially interfere with
Executive's duties hereunder and (other than investments not to exceed one
percent (1%) of the total outstanding in publicly traded securities) such
companies do not directly compete with the Company.
(c) Executive agrees to comply with the Company's policies and
procedures as in effect from time to time (and which are not inconsistent with
this Agreement) to the extent that such policies are furnished to Executive in
writing.
3. Location. The location of Executive's principal place of employment
--------
shall be in the Company's principal executive offices in the greater Los
Angeles, California area; provided, however, that Executive shall perform such
occasional services outside of Los Angeles as are, in the reasonable
determination of the Executive or the Company's Chairman and Chief Executive
Officer (the "CEO"), reasonably required for the proper performance of
Executive's duties under this Agreement.
4. Reporting. Executive shall report solely to the CEO.
---------
5. Availability. Each party represents and warrants to the other that he
------------
or it has the full power and authority to enter into and perform his or its
obligations under this Agreement and that his or its execution of and
performance under this Agreement shall not constitute a default under or breach
of the terms of any other agreement or order of any court or governmental
authority to which he or it is a party or under which he or it is bound. Each
party shall defend and hold harmless the other for any and all claims, demands,
losses or damages (including reasonable attorneys' fees) arising from any action
against any such party due to a breach of any representation and warranty
contained in this Paragraph or based upon any allegations of interference with
contractual obligations or the like relating to the negotiation or execution of
this Agreement.
6. Term. Subject to the provisions for earlier termination set forth in
----
Paragraph 11, the term of Executive's employment hereunder shall commence on the
Effective Date and continue through April 30, 2004 (the "Term"). Neither the
Company nor Executive will have any obligation to renew or extend this Agreement
beyond the Term.
7. Compensation.
------------
(a) Salary and Bonus. In full consideration for the services to be
----------------
rendered by Executive, and in full discharge of the Company's salary
obligations, Company shall pay to Executive and Executive shall accept:
<PAGE>
(i) an annualized base salary (less tax withholdings required by law
and other voluntary deductions authorized by Executive), payable bi-weekly
in arrears commencing on the first regular bi-weekly payment date, as
follows:
<TABLE>
<CAPTION>
<S> <C>
First Year of the Term $2,000,000
Second Year of the Term $2,075,000
Third Year of the Term $2,150,000
Fourth Year of the Term $2,225,000
Fifth year of the Term $2,300,000
</TABLE>
(ii) subject to clause (1) below, an annual discretionary bonus (or
such applicable prorated portion thereof for any partial Company fiscal
year during the Term), less tax withholdings required by law and other
voluntary deductions authorized by Executive; such bonus shall be
determined in the sole discretion of the Compensation Committee of the
Board of Directors and shall be payable on the tenth business day following
the Company's public disclosure of its financial results for the applicable
fiscal year ending during the Term (and within forty-five days following
the end of the Term with respect to the last partial Company fiscal year).
(1) As soon as practicable, the Company, with the input of
Executive, shall develop and adopt a performance-based bonus
program for senior executives, including Executive and the CEO,
pursuant to which bonus awards are determined by the
Compensation Committee of the Board of Directors based on the
Company's attainment of defined goals of pre-tax income, EBITDA
or other indicia of profitability or cash flow as reflected in
the Company's business plan from time to time; Executive's bonus
shall be determined in accordance with such program.
(b) Other Benefits. Executive shall be entitled to vacation time in
--------------
accordance with Company policy applicable to employees of Executive's seniority,
salary and title and first-class air travel (where available) when traveling on
Company business.
(c) Business Expenses. During the Term, the Company shall pay or
-----------------
reimburse Executive promptly for all reasonable business expenses incurred by
Executive in the performance of Executive's duties under this Agreement if
properly substantiated and in accordance with the Company's policies and
procedures applicable to employees of Executive's seniority, salary and title.
(d) Insurance. During the Term, Executive shall be entitled to and
---------
shall be accorded all rights and benefits under any life insurance, disability
insurance, health and major medical insurance policy or policies which the
Company provides for its senior officers or employees generally. Nothing in
this paragraph shall require the
<PAGE>
Company to retain any particular policy or plan, but a reasonable insurance
benefit package shall be maintained.
(e) Employee Benefit Plans. Executive shall be entitled to
----------------------
participate in and/or receive all other employee benefits under any 401(k) plan,
savings plan, pension plan and other similar plan or program which the Company
provides for its senior officers or employees generally, all subject to the
terms and conditions of the various benefit plans; provided that Executive shall
not participate in the existing Senior Management Bonus Plan, and further
provided that nothing herein shall require the Company to adopt or maintain, or
limit the ability of the Company to amend or modify, any particular employee
benefit plan, program or policy.
(f) As an inducement to Executive entering into the Agreement, the
Company will pay Executive on the Effective Date a lump sum of $1,700,000 (less
tax withholdings required by law).
8. Compensation in the Event of Termination.
----------------------------------------
(a) If the Agreement is terminated under Paragraph 11(a),
Executive or his estate shall receive the compensation provided in Paragraph
7(a)(i) and 7(a)(ii), if any, prorated to the date of termination, and all
amounts accrued under benefit plans in which Executive is a participant as of
such termination date.
(b) If the Agreement is terminated under Paragraph 11(b), Executive
shall receive the same compensation and benefits set forth in Paragraph 8(a),
except that the benefits provided in Paragraph 7(d) shall continue for what
would be the remainder of the Term but for such termination (the "Full Term") in
accordance with the terms of each respective policy or plan (provided, however,
that if prior to the expiration of the Full Term, Executive receives any of the
types of benefits specified in Paragraph 7(d) from a subsequent employer, the
Company shall immediately cease to provide such types of benefits received from
the subsequent employer).
(c) If the Agreement is terminated under Paragraph 11(c) or 11(e)
below, or expires pursuant to its terms, Executive shall receive: (i) the
compensation provided in Paragraph 7(a)(i) through the Full Term, payable as
provided in Paragraph 7(a)(i); and (ii) the benefits provided in Paragraph 7(d)
for the Full Term in accordance with the terms of each respective policy or plan
(provided, however, that if prior to the expiration of the Full Term, Executive
receives any of the types of benefits specified in Paragraph 7(d) from a
subsequent employer, the Company shall immediately cease to provide such types
of benefits received from the subsequent employer);
(d) If the Agreement is terminated under Paragraph 11(d), Executive
shall not be entitled to receive any payment or benefits following the date of
termination, except as may be accrued or vested to the date of termination.
<PAGE>
9. Stock Options. Effective as of the date hereof (the "Date of Grant"),
-------------
but subject to the approval of the Company's stockholders as provided below,
Executive shall receive non-qualified options to purchase all or any part of
3,000,000 shares of the Company's Common Stock, par value $.01 per share
("Common Stock") under the Company's Amended and Restated 1996 Stock Incentive
Plan (the "Plan") consisting of 1,500,000 options exercisable at $14.90 per
share ("$14.90 Options") and 1,500,000 options exercisable at $30.00 per share
("$30.00 Options"), upon the terms and conditions set forth below and in the
Plan:
(a) $14.90 Options
--------------
(i) Number of Shares of
Common Stock
Subject to $14.90 Options: 1,500,000
(ii) Exercise Price: $14.90 per share
(iii) Vesting Schedule:
April 30, 2000: 20%
April 30, 2001: 20%
April 30, 2002: 20%
April 30, 2003: 20%
April 30, 2004: 20%
(b) $30.00 Options
--------------
(i) Number of Shares of
Common Stock
Subject to $30.00 Options: 1,500,000
(ii) Exercise Price: $30.00 per share
(iii) Vesting Schedule:
April 30, 2000: 20%
April 30, 2001: 20%
April 30, 2002: 20%
April 30, 2003: 20%
April 30, 2004: 20%
(c) In the event the Company terminates this Agreement pursuant to
Section 11(c), Executive terminates this Agreement pursuant to Section 11(e), or
a Designated Change of Control (as defined in Exhibit A) occurs: (i) all of the
unvested $14.90 Options and $30.00 Options shall vest, and (ii) all of the
$14.90 Options and $30.00 Options shall be exercisable for a one (1) year period
following the date of Executive's termination (but not later than July 29,
2004).
<PAGE>
(d) The option grant will be more fully reflected in a stock option
substantially in the form of Exhibit A hereto, with such changes as are
necessary to implement Paragraph 9 of this Agreement.
(e) Executive acknowledges that the Plan does not currently have
sufficient authorized shares to effectuate the stock options provided for
herein, and that accordingly, such stock options are subject to the approval of
the Company's stockholders. The Company agrees to submit to its stockholders
for approval at the next meeting of the Company's stockholders following the
meeting scheduled for May 11, 1999 (or to seek the written consent of the
holders of a majority of the Company's Common Stock) of an amendment to the Plan
to increase the number of shares of Common Stock subject to the Plan in order to
effectuate the stock options provided for herein.
10. Property Rights.
---------------
(a) Executive agrees that all results and proceeds of his services,
including any ideas, programs, formats, plans and arrangements, composed,
conceived or created by him during the period of this employment, solely or in
collaboration with others (collectively, the "Creations'), whether or not same
is made at the request or suggestion of the Company, or during or outside
regular hours of work, shall at all times be and remain the sole and exclusive
property of the Company. Executive further agrees that he will, at the request
of the Company, execute and deliver to the Company, in form satisfactory to the
Company, documents evidencing the Company's ownership to the foregoing; but
notwithstanding that no such documents are executed, the Company, as Executive's
employer, shall be deemed the owner thereof immediately upon creation. Anything
in this Agreement to the contrary notwithstanding, the provisions of this
paragraph shall survive the termination, for any reason, of this Agreement.
(b) Notwithstanding Paragraph 10(a) above, the Company shall not own
any Creations created by Executive prior to the Term or solely during
Executive's leisure hours during the Term, which Creation is not related in any
manner to, or derived in any manner from, any projects, concepts and/or
intellectual property of any nature of the Company or any of its affiliates.
Notwithstanding the foregoing, Executive agrees to submit to the Company any
such Creation which Executive desires to commercially exploit, and the Company
will notify Executive within ten (10) business days of receipt if the Company
desires to start negotiations for rights thereto. If no agreement is reached
within thirty (30) days after the start of negotiations, then Executive will
make an offer to the Company for such rights and if the Company does not accept,
Executive may negotiate elsewhere the rights so offered.
11. Termination. Executive's employment shall terminate:
-----------
(a) Upon the death of Executive.
<PAGE>
(b) At the option of the Company, if Executive is disabled.
Disability shall mean Executive's inability to substantially perform his duties
hereunder due to a medically determinable physical or mental impairment that can
reasonably be expected to result in death within twelve (12) months or which has
lasted or can be expected to last for a continuous period of not less than
twelve (12) months.
(c) After thirty (30) days' written notice by the Company to
Executive without "Cause".
(d) Upon written notice by the Company to Executive for "Cause"
which shall include only:
(i) the continued failure of Executive to substantially perform his
duties with the Company or any subsidiary of the Company (other than any
such failure resulting from illness, temporary absence, legal incapacity
due to mental or physical condition or disability) for thirty (30) days
after a demand for substantial performance is delivered in writing to
Executive by the Company which specifically identifies the manner in which
Executive has not substantially performed his duties;
(ii) Executive's continued failure to follow reasonable and lawful
directives (consistent with the terms of this Agreement) of the CEO, the
Board of Directors or the Executive Committee of the Company after a demand
for Executive to follow such directives is delivered in writing to
Executive by the Company that specifically identifies the manner in which
Executive has not followed such directives;
(iii) the engaging by Executive in willful, reckless or grossly
negligent misconduct in connection with his employment;
(iv) Executive's conviction (including a plea of guilty or nolo
contendere) of an offense involving moral turpitude or a felony;
(v) breach by Executive of this Agreement and failure to cure such
breach within thirty (30) days of delivery of a written notice to Executive
by the Company that specifically identifies the breach; or
(vi) failure of Executive to materially operate within the expense
parameters of the business plan approved by the Executive Committee, unless
such deviation has been approved in writing by the Executive Committee.
If the remedy, cure or cessation of an act or omission which is the
subject of a notice under this Paragraph 11(d) would reasonably require more
than thirty (30) days to complete and Executive commences such remedy, cure or
cessation within thirty (30) days after receipt of such notice and diligently
pursues the same to completion, said
<PAGE>
act or omission shall not constitute "Cause", provided that "Cause" under
clauses (iii) or (iv) above shall not be subject to cure.
(e) Upon thirty (30) days' written notice by Executive to the
Company for "Good Reason" which shall include only:
(i) a substantial and adverse change in Executive's status or
position with the Company as the same existed on the commencement of the
Term hereof which is not cured within thirty (30) days after written notice
thereof to the Company from Executive;
(ii) a reduction (other than for Cause) by the Company of Executive's
aggregate compensation under Paragraph 7(a)(i) above, unless such reduction
is reinstated retroactively not later than thirty (30) days after written
notice thereof to the Company from Executive;
(iii) a relocation of Executive's principal place of employment to
any place outside the greater Los Angeles area, except for reasonable
amounts of required travel by the Executive on the Company's business; or
(iv) any material breach by the Company of any provision of this
Agreement which is not cured within thirty (30) days after written notice
thereof to the Company from Executive;
(v) the CEO not being Alex Yemenidjian, Executive or such other
person who has been approved by Executive, provided however if Executive
does not terminate this Agreement pursuant to this Paragraph 11(e) within
thirty (30) days after the Company notifies Executive in writing of the
identity of the CEO (if other than Mr. Yemenidjian or Executive), Executive
shall conclusively be deemed to have approved such new CEO; or
(vi) a Designated Change of Control (as defined in Exhibit A) occurs,
provided however if Executive does not terminate this Agreement pursuant to
this Paragraph 11(e) within six (6) months after the occurrence of the
Designated Change of Control, Executive may not terminate this Agreement
because of such Designated Change of Control.
(f) at the expiration of the Term.
12. No Mitigation; Consulting Services.
----------------------------------
(a) Except as provided in Paragraphs 8(b) and 8(c) regarding
benefits provided by a subsequent employer, and without limiting any other
provision hereof, any income and any other employment benefits received by
Executive from any and all sources other than the Company before or after the
expiration or termination of this
<PAGE>
Agreement for any reason whatsoever shall in no way reduce or otherwise affect
the Company's obligation to make payments and afford benefits hereunder.
Executive shall have no duty to seek employment.
(b) For a one year period following termination for any reason (other than
pursuant to Paragraph 11(a) of this Agreement), Executive shall make himself
available to the Company on a non-exclusive basis consistent with his other
responsibilities to consult with the Company concerning transitional matters.
Executive shall be entitled to compensation at the rate of $500 per hour for
such services plus reimbursement of his reasonable and documented expenses
incurred in connection therewith.
13. Confidential Material.
---------------------
(a) Disclosure. Executive acknowledges that, in the performance of
----------
duties on behalf of the Company, Executive shall have access to, receive and be
entrusted with confidential information, Including but in no way limited to
development, marketing, organizational, financial, management, administrative,
production, distribution and sales information, data, specifications and
processes presently owned or at any time in the future developed by, the Company
or its agents or consultants, or used presently or at any time in the future in
the course of its business that is not otherwise part of the public domain
(collectively, the "Confidential Material"). All such Confidential Material is
considered secret and will be available to Executive in confidence. Except in
the performance of Executive's duties on behalf of the Company or as required by
law, Executive shall not, directly or indirectly for any reason whatsoever,
disclose or use any such Confidential Material, unless such Confidential
Material ceases (through no fault of Executive's) to be confidential because it
has become part of the public domain. All records, files, drawings, documents,
equipment and other tangible items, wherever located, relating in any way to the
Confidential Material or otherwise to the Company's business, which Executive
prepares, uses, or encounters, shall be and remain the Company's sole and
exclusive property and shall be included in the Confidential Material. Upon
termination of this Agreement by any means, or whenever requested by the
Company, Executive shall promptly deliver to the Company any and all of the
Confidential Material not previously delivered to the Company that may be or at
any previous time has been in Executive's possession or under Executive's
control; provided, however, Executive may keep Executive's rolodex or other
personal list of addresses and telephone numbers.
(b) Unfair Competition. Executive hereby acknowledges that the sale
------------------
or unauthorized use or disclosure of any of the Company's Confidential Material
by Executive by any means whatsoever at any time before, during or after
Executive's employment with the Company shall constitute "Unfair Competition".
Executive agrees that Executive shall not engage in Unfair Competition either
during the time Executive is employed by the Company or at any time thereafter.
<PAGE>
(c) Other. In the event of the termination of Executive's
-----
employment for any reason, Executive shall not for the longer of the period
during which Executive is receiving payments pursuant to Paragraph 8 or one (1)
year following termination:
(i) directly or indirectly, either alone or jointly with or on
behalf of any corporation or entity of which Executive is a director,
employee or greater than five percent (5%) shareholder solicit for
employment any employee of the Company or, any of its affiliates or
subsidiaries other than Executive's secretary or personal assistant; or
(ii) make any derogatory public statement concerning the Company, any
of its affiliates or subsidiaries, or Executive's employment unless
previously approved by the Company, except as may be required by law.
14. Miscellaneous.
-------------
(a) Arbitration.
-----------
(i) Any and all disputes between Executive 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 clause) shall be solely settled by an arbitration to be held in
Los Angeles, California and conducted in accordance with such rules of the
American Arbitration Association or any similar successor body as are not
inconsistent with the provisions of this Paragraph 14(a).
(ii) Any arbitration hereunder shall be held before a single
arbitrator mutually agreed to by the parties thereto, except that, if the
parties shall fail to agree to such an arbitrator within twenty (20) days
from the date on which the claimant's request for arbitration is delivered
to the other party to the arbitration, such arbitration shall be held
before an arbitrator appointed by the American Arbitration Association.
(iii) Discovery may be taken in the arbitration proceedings pursuant
to the provisions of California Code of Civil Procedure Section 1283.05,
which are incorporated herein by reference and made applicable to any
arbitration held pursuant to this Paragraph.
(iv) The award of the arbitrator shall be made within ninety (90)
days from the date on which the arbitrator is selected. The award of the
arbitrator shall be final, and the parties agree to waive their right to
any form of appeal, to the greatest extent allowed by law. The arbitrator
shall award costs and fees, including the fees of the arbitrator and
reasonable attorneys' fees, to the prevailing party. Judgment upon any
award of the arbitrator may be entered in any court
<PAGE>
having jurisdiction or application may be made to such court for the
judicial acceptance of the award and for order of enforcement.
(b) Applicable Law and Venue. This Agreement and any disputes or
------------------------
claims arising hereunder shall be construed in accordance with, governed by and
enforced under the laws of the State of California without regard for any rules
of conflicts of law. The arbitrator appointed as described above located in Los
Angeles, California shall be the sole forum for any action for relief arising
out of or pursuant to, or to enforce or interpret, this Agreement. Each party
to this Agreement consents to the personal jurisdiction and arbitration in such
fora and courts and each party hereto covenants not to, and waives any right to,
seek a transfer of venue from such jurisdiction on any grounds.
(c) Interpretation. The provisions of this Agreement were
--------------
negotiated by each of the parties hereto and this Agreement shall be deemed to
have been drafted by each party.
(d) Representations of the Company. The Company represents and
------------------------------
warrants that this Agreement is validly binding on the Company and enforceable
in accordance with its terms and that the execution and performance hereof is
not in conflict with any agreement or understanding the Company has with any
third party; provided however, that notwithstanding the foregoing or any other
provision of this Agreement, to the extent the Company has any outstanding
obligations which may be inconsistent with its representations or obligations
contained in this Agreement, the Company shall not be in breach of this
Agreement if such inconsistencies are resolved not later than ninety (90) days
following the Effective Date.
(e) No Waivers. The failure of either party to enforce any
----------
provision of this Agreement shall not be construed as a waiver of any such
provision, nor prevent such party thereafter from enforcing such provision or
any other provision of this Agreement. Rights granted the parties hereto herein
are cumulative and the election of one shall not constitute a waiver of such
party's right to assert all other legal remedies available under the
circumstances.
(f) Notices. Any notice to be given under the terms of this
-------
Agreement shall be in writing and may be delivered personally, by telecopy,
telex or other form of written electronic transmission, by overnight courier or
by registered or certified mail, postage prepaid, and shall be addressed as
follows:
TO THE COMPANY:
Metro-Goldwyn-Mayer Inc.
2500 Broadway Street
Santa Monica, California 90404-3061
Attention: Chief Executive Officer
<PAGE>
WITH A COPY TO:
Metro-Goldwyn-Mayer Inc.
2500 Broadway Street
Santa Monica, California 90404-3061
Attention: Legal Department
TO THE EXECUTIVE:
Mr. Christopher J. McGurk
Metro-Goldwyn-Mayer Inc.
2500 Broadway Street
Santa Monica, California 90404-3061
Either party may hereafter notify the other in writing of any change in address.
Any notice hereunder shall be deemed duly given when received by the person to
whom it was sent.
(g) Severability. The provisions of this Agreement are severable
------------
and if any provision of this Agreement shall be held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provisions, or
enforceable parts thereof, shall not be affected thereby unless as a result of
such severing the remaining provisions or enforceable parts do not substantially
reflect the intention of the parties in entering into this Agreement.
(h) Successors and Assigns. The rights and obligations of the
----------------------
parties under this Agreement shall inure to the benefit of and be binding upon
their successors, heirs and assigns, including the survivor upon any merger,
consolidation or combination of the Company with any other entity.
(i) Entire Agreement. This Agreement supersedes all prior
----------------
agreements and understandings between the parties hereto, oral or written, and
may not be modified or terminated orally. No modification, termination or
attempted waiver shall be valid unless in writing, signed by the party against
whom such modification, termination or waiver is sought to he enforced.
(j) Survival. The provisions of Paragraphs 8, 9, 10, 11, 12, 13 and
--------
14 of this Agreement shall survive the Term, it being understood that the
foregoing shall not limit Executive's rights with respect to amounts due him and
unpaid at the expiration of the Term.
(k) Confidentiality and Publicity. This Agreement shall remain
-----------------------------
confidential and the terms shall not be divulged to any person (other than
Executive's professional advisors and family) except to the extent required by
law or legal process. Any press release or announcement of or relating to this
Agreement and the timing of any
<PAGE>
such announcement shall only be made with the agreement of Executive and the
Company.
(l) Attorneys. Each party may be represented by counsel of its
---------
choice even though such counsel may have represented the other party in matters
related to the business of the Company, and each party agrees to execute an
appropriate waiver to effectuate this clause.
(m) Non-Involvement of Tracinda. The parties acknowledge that
---------------------------
neither Kirk Kerkorian nor Tracinda Corporation, individually or collectively,
is a party to this Agreement or any agreement provided for herein. Accordingly,
the parties hereby agree that in the event (i) there is any alleged breach or
default by any party under this Agreement or any agreement provided for herein,
or (ii) any party has any claim arising from or relating to any such agreement,
no party, nor any party claiming through such party shall commence any
proceedings or otherwise seek to impose any liability whatsoever against Kirk
Kerkorian or Tracinda Corporation by reason of such alleged breach, default or
claim.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
METRO-GOLDWYN-MAYER INC.
BY: /s/ Alex Yemenidjian
---------------------
ITS: Chairman of the Board and Chief Executive Officer
--------------------------------------------------
/s/ Christopher J. McGurk
- -------------------------
Christopher J. McGurk
<PAGE>
EXHIBIT 10.3
April 28, 1999
Mr. Christopher J. McGurk
c/o Harry M. Brittenham, Esq.
Ziffren, Brittenham, Branca & Fischer
1801 Century Park West
Los Angeles, CA 90067-6406
Dear Mr. McGurk:
On behalf of Metro-Goldwyn-Mayer, Inc. ("MGM"), we want to express our
gratification that you and MGM have entered into the Employment Agreement of
even date herewith.
In order to give tangible expression to MGM's confidence that the
relationship between you and MGM will be beneficial to both parties, MGM, acting
through its Compensation Committee, has determined to award you 500,000 shares
of MGM Common Stock (the "Shares").
MGM will issue and deliver the Shares to you within ten (10) business days
after the Effective Date of the Employment Agreement. The Shares shall not be
registered under the Securities Act of 1933, as amended (the "Act"), and the
certificate or certificates representing such Shares shall be legended to the
foregoing effect. MGM shall file an appropriate application to the New York
Stock Exchange to list the Shares for trading on such exchange.
By your signing and returning this letter, you represent and warrant that
you are an accredited investor under the Act, are acquiring the Shares for
investment purposes and not with a view to sell or otherwise dispose of such
Shares in violation of the Act, have had full access to the information
concerning MGM which you requested, and are aware that the Shares may not be
sold or otherwise disposed of except in compliance with the registration
requirements of the Act or pursuant to an exemption from registration. You
further acknowledge that the issuance of the Shares may result in your receipt
of taxable income, and agree that you will be solely responsible for the payment
of all taxes resulting from your receipt of the Shares and hereby indemnify and
hold MGM harmless from and against all such taxes (including, without
limitation, any interest and penalties which may arise from your failure to
timely pay such taxes or MGM's not making tax withholdings with respect to such
Shares).
Very truly yours,
Metro-Goldwyn-Mayer, Inc.
April 28, 1999
Accepted and Agreed By: /s/ Christopher J. McGurk
-----------------------------
<PAGE>
EXHIBIT 10.4
JOINT AND SEVERAL INDEMNITY AGREEMENT
AGREEMENT dated as of April 28, 1999 by and between Metro-Goldwyn-
Mayer Inc., a Delaware corporation (the "Corporation") and Metro-Goldwyn-Mayer
-----------
Studios, a Delaware corporation ("MGM Studios" and together with the
-----------
Corporation, the "Indemnitors") on the one hand, and Christopher McGurk (the
-----------
"Indemnitee"), on the other.
----------
RECITALS
The Indemnitee is a director and/or officer of the Corporation, MGM
Studios and/or an Affiliate Indemnitee (as hereinafter defined). Each of the
Indemnitors and the Indemnitee recognize the increased risk of litigation and
other claims being asserted against directors and officers in today's
environment.
The Bylaws of the Corporation requires the Corporation and the Bylaws
of MGM Studios requires MGM Studios to indemnify their respective directors and
officers as currently provided therein, and the Indemnitee has been serving and
continues to serve as a director and/or officer of the Corporation and/or MGM
Studios in part in reliance on such provisions. The Bylaws of each of the
Indemnitors permit such Indemnitor to purchase and maintain insurance or to
furnish similar protection or make other arrangements (any such insurance,
protection or arrangement, an "Indemnification Arrangement") on behalf of the
---------------------------
Indemnitee against personal liability (including, but not limited to, providing
for Advanced Amounts as hereinafter defined) asserted against him or incurred by
or on behalf of him in such capacity as a director or officer of such Indemnitor
or as an Affiliate Indemnitee, or
<PAGE>
arising out of his status as such, whether or not such Indemnitor would have the
power to indemnify him against such liability under the provisions of this
Agreement or under the Delaware General Corporation Law (the "DGCL"), as it may
----
then be in effect.
In part to provide the Indemnitee with specific contractual assurance
of substantial protection against personal liability (regardless of, among other
things, any amendment to or revocation of the aforementioned provisions of any
of the Indemnitor's Bylaws or any change in the composition of such Indemnitor's
Board of Directors or control of such Indemnitor), each of the Indemnitors
desires to enter into this Agreement. DGCL Section 145(f) expressly recognizes
that the indemnification provisions of the DGCL are not exclusive of any other
rights to which a person seeking indemnification may be entitled under the
Certificate of Incorporation or Bylaws of any of the Indemnitors, or an
agreement providing for indemnification, or a resolution of stockholders or
directors, or otherwise, and the Bylaws of each of the Indemnitors expressly
recognizes that the indemnification provisions of the Bylaws of such Indemnitor
shall not be deemed exclusive of, and shall not affect, any other rights to
which a person seeking indemnification may be entitled under any agreement, and
this Agreement is being entered into pursuant to the Bylaws of each of the
Indemnitors, as permitted by the DGCL, and has been authorized by the
stockholders of the Indemnitors.
In order to induce the Indemnitee to serve as a director and/or
officer of the Corporation and/or MGM Studios and in consideration of the
Indemnitee's so serving, each of the Indemnitors desires jointly and severally
to hold harmless and indemnify the
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Indemnitee and to make arrangements pursuant to which the Indemnitee may be
advanced or reimbursed expenses incurred by the Indemnitee in certain
proceedings, in every case to the fullest extent authorized or permitted by the
DGCL, or any other applicable law, or by any amendment thereof or other
statutory provisions authorizing or permitting such indemnification which are
adopted after the date hereof (but, in the case of any such amendment, only to
the extent that such amendment permits the Indemnitor to provide broader
indemnification rights than the DGCL, or other applicable law, permitted such
Indemnitor to provide prior to such amendment).
NOW, THEREFORE, in consideration of the foregoing recitals and of the
Indemnitee's continuing to serve the Corporation and/or MGM Studios as a
director and/or officer, the parties agree as follows:
1. Indemnification. To the fullest extent allowed by law, each of
---------------
the Indemnitors, jointly and severally, shall hold harmless and indemnify the
Indemnitee, his executors, administrators or assigns against any and all
expenses, liabilities and losses (including, without limitation, investigation
expenses, expert witnesses' and attorneys' fees and expenses, judgments,
penalties, fines, amounts paid or to be paid in settlement any interest,
assessments, or other charges imposed thereon and any federal, state, local or
foreign taxes imposed as a result of actual or deemed receipt of any payment
hereunder) actually incurred by the Indemnitee (net of any related insurance
proceeds or other amounts received by the Indemnitee or paid by or on behalf of
an Indemnitor on the Indemnitee's behalf in compensation of such expenses,
liabilities or losses) in connection with any actual or
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threatened action, suit or proceeding, whether civil, criminal, administrative
or investigative or in arbitration, to which the Indemnitee is a party or
participant or is threatened to be made a party or participant (a "Proceeding"),
----------
as a plaintiff, defendant, respondent, witness or otherwise, based upon, arising
from, relating to or by reason of the fact that the Indemnitee: (a) is, was,
shall be or shall have been a director and/or officer of the Corporation or (b)
is or was serving, shall serve, or shall have served at the request of the
Corporation as a director, officer, partner, trustee, fiduciary, employee or
agent ("Affiliate Indemnitee") of another foreign or domestic corporation or
--------------------
non-profit corporation, cooperative, partnership, joint venture, trust, employee
benefit plan, or other incorporated or unincorporated enterprise (each, a
"Company Affiliate"); or arising from or relating to any action or omission to
-----------------
act taken by the Indemnitee in any of the foregoing capacities; provided,
however, that, except as provided in Section 9(b) hereof, an Indemnitor shall
indemnify the Indemnitee in connection with a Proceeding initiated by the
Indemnitee only if such proceeding (or part thereof) was authorized by a two-
thirds vote of the Board of Directors of such Indemnitor.
The Indemnitee shall be presumed to be entitled to such
indemnification under this Agreement upon submission of a written claim pursuant
to Section 4 hereof. Thereafter, the Indemnitors shall have the burden of proof
to overcome the presumption that the Indemnitee is so entitled. Such presumption
shall only be overcome by a judgment or other final adjudication, after all
appeals and all time for appeals has expired ("Final Determination"), which is
-------------------
adverse to the Indemnitee and which establishes (i) that his acts were committed
in bad faith, or were the result of active and deliberate dishonesty, and were
material to the cause of action so adjudicated and (ii) that the Indemnitee in
fact personally
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gained a financial profit or other advantage to which he was not legally
entitled. If the Indemnitee is not wholly successful in any Proceeding but is
successful on the merits or otherwise, as to one or more but less than all
claims, issues or matters in such Proceeding the Indemnitors agree, jointly and
severally, to indemnify the Indemnitee to the maximum extent permitted by law
against all losses and expenses incurred by the Indemnitee in connection with
each successfully resolved claim, issue or matter. Neither the failure of any
of the Indemnitors (including their respective Boards of Directors, legal
counsel or stockholders) to have made a determination prior to the commencement
of such Proceeding that indemnification of the Indemnitee is proper in the
circumstances because such person has met the applicable standard of conduct set
forth in the DGCL, nor an actual determination by such Indemnitor (including its
Board of Directors, its legal counsel or its stockholders) that the Indemnitee
has not met the applicable standard of conduct, shall be a defense to the action
or create a presumption that the Indemnitee has not met the applicable standard
of conduct. The purchase, establishment or maintenance of any Indemnification
Arrangement shall not in any way diminish, restrict, limit or adversely affect
the rights and obligations of any of the Indemnitors or of the Indemnitee under
this Agreement, except as expressly provided herein, and the execution and
delivery of this Agreement by the Indemnitors and the Indemnitee shall not in
any way diminish, restrict, limit or adversely affect the Indemnitee's right to
indemnification from the Indemnitors or any other party or parties under any
other Indemnification Arrangement, the Certificate of Incorporation or Bylaws of
any of the Indemnitors, or the DGCL.
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2. Period of Limitations. No legal action shall be brought and no
---------------------
cause of action shall be asserted by or on behalf of an Indemnitor or any
affiliate of an Indemnitor against the Indemnitee, Indemnitee's spouse, heirs,
executors, or personal or legal representatives after the expiration of two
years from the date of accrual of such cause of action, or such longer period as
may be required by applicable law under the circumstances. Any claim or cause of
action of the Indemnitor or its affiliate shall be extinguished and deemed
released unless asserted by the timely filing of a legal action within such
period; provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action the shorter period shall
govern.
3. Insurance. Subject only to the provisions of this Section 3, as
---------
long as the Indemnitee shall continue to serve as a director and/or officer of
an Indemnitor (or shall continue at the request of an Indemnitor to serve as an
Affiliate Indemnitee) and, thereafter, as long as the Indemnitee shall be
subject to any possible Proceeding by reason of the fact that the Indemnitee was
a director and/or officer of the Corporation and/or MGM Studios (or served in
any of said other capacities), the Indemnitors shall, unless no such policies
are available in any market, purchase and maintain in effect for the benefit of
the Indemnitee one or more valid, binding and enforceable policies (the
"Insurance Policies") of directors' and officers' liability insurance ("D&O
------------------ ---
Insurance") providing adequate liability coverage for the Indemnitee's acts as a
- ---------
director and/or officer of the Indemnitors or as an Affiliate Indemnitee. Each
Indemnitor shall promptly notify the Indemnitee of any lapse, amendment or
failure to renew said policy or policies or any provision thereof relating to
the extent or nature of coverage provided thereunder. In the event any
Indemnitor does not purchase and maintain
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in effect said policy or policies of D&O Insurance pursuant to the provisions of
this Section 3, such Indemnitor shall, in addition to and not in limitation of
the other rights granted the Indemnitee under this Agreement, hold harmless and
indemnify the Indemnitee to the full extent of coverage which would otherwise
have been provided for the benefit of the Indemnitee pursuant to the Insurance
Policies.
4. Claims for Payments. The Indemnitee shall have the right to
-------------------
receive from the Indemnitors on demand or, at his option, to have any of the
Indemnitors pay promptly on his behalf, in advance of a Final Determination of a
Proceeding, all amounts payable by the Indemnitors pursuant to the terms of this
Agreement as corresponding amounts are expended or incurred by the Indemnitee in
connection with any Proceeding or otherwise (such amounts so expended or
incurred being referred to as "Advanced Amounts"). In making any claim for
----------------
payment by the Indemnitors of any amount, including any Advanced Amount,
pursuant to this Agreement, the Indemnitee shall submit to the Indemnitors a
written request for payment (a "Claim") which includes a schedule setting forth
-----
in reasonable detail the dollar amount expended (or incurred or expected to be
expended or incurred). Each item on such schedule shall be supported by the
bill, agreement, or other documentation relating thereto, a copy of which shall
be appended to the schedule as an exhibit.
Where the Indemnitee is requesting Advanced Amounts, the Indemnitee
must also provide an undertaking to repay such Advanced Amounts if a Final
Determination is made that the Indemnitee is not entitled to indemnification
hereunder.
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5. Section 16(b) Liability. No Indemnitor shall be liable under
-----------------------
this Agreement to make any payment in connection with any claim made against the
Indemnitee for an accounting of profits made from the purchase or sale by the
Indemnitee of securities of an Indemnitor within the meaning of Section 16(b) of
the Securities Exchange Act of 1934, and amendments thereto, or similar
provisions of any state statutory law or common law.
6. Continuation of Indemnity. All agreements and obligations of the
-------------------------
Indemnitors contained herein shall continue during the period the Indemnitee is
a director and/or officer of such Indemnitor (or is serving at the request of an
Indemnitor as an Affiliate Indemnitee) and shall continue thereafter so long as
the Indemnitee shall be subject to any possible Proceeding by reason of the fact
that the Indemnitee was a director or officer of such Indemnitor or served as
such an Affiliate Indemnitee.
7. Successors: Binding Agreement. This Agreement shall be binding
------------------------------
on, and shall inure to the benefit of and be enforceable by, each of the
Indemnitor's successors and assigns and by the Indemnitee's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
divisees and legatees. Each Indemnitor shall require any successor or assignee
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of such Indemnitor, by
written agreement in form and substance reasonably satisfactory to such
Indemnitor and to the Indemnitee, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that such Indemnitor would
be required to perform if no such succession or assignment had taken place.
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8. Notification and Defense of Claim. Promptly after receipt by
---------------------------------
the Indemnitee of notice of the commencement of any Proceeding, the Indemnitee
shall, if a claim in respect thereof is to be made against an Indemnitor under
this Agreement, notify such Indemnitor of the commencement thereof, but the
failure to so notify such Indemnitor will not relieve the Indemnitors from any
liability which it may have to the Indemnitee. With respect to any such
Proceeding:
(i) Each Indemnitor shall be entitled to participate therein at its
own expense;
(ii) Except with prior written consent of the Indemnitee, the
Indemnitors shall not be entitled to assume the defense of any Proceeding;
and
(iii) No Indemnitor shall settle any Proceeding in any manner which
would impose any penalty or limitation on the Indemnitee without the
Indemnitee's prior written consent.
The Indemnitee shall not settle any Proceeding with respect to which the
Indemnitee has received indemnified amounts or Advanced Amounts without the
Indemnitors' prior written consent, nor will the Indemnitee unreasonably
withhold consent to any proposed settlement.
9. Enforcement. (a) Each Indemnitor has entered into this
-----------
Agreement and assumed the obligations imposed on such Indemnitor hereby in order
to induce the Indemnitee to act as a director and/or officer of the Corporation
and/or MGM Studios or as
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an Affiliate Indemnitee and acknowledges that the Indemnitee is relying upon
this Agreement in continuing in such capacity.
(b) All expenses incurred by the Indemnitee in connection with the
preparation and submission of the Indemnitee's request for indemnification
hereunder shall be borne, jointly and severally, by the Indemnitors. In the
event the Indemnitee has requested payment of any amount under this Agreement
and has not received payment thereof within thirty (30) days of such request,
the Indemnitee may bring any action to enforce rights or collect moneys due
under this Agreement, and, if the Indemnitee is successful in such action, the
Indemnitors shall reimburse the Indemnitee for all of the Indemnitee's fees and
expenses in bringing and pursuing such action. If it is determined that the
Indemnitee is entitled to indemnification for part (but not all) of the
indemnification so requested, expenses incurred in seeking enforcement of such
partial indemnification shall be reasonably prorated among the claims, issues or
matters for which the Indemnitee is entitled to indemnification for claims,
issues or matter for which the Indemnitee is not so entitled. The Indemnitee
shall be entitled to the advancement of such amounts to the full extent
contemplated by Section 4 hereof in connection with such Proceeding.
10. Separability. If any provision or provisions of this Agreement
------------
shall be held to be invalid, illegal or unenforceable for any reason whatsoever,
(i) the validity, legality and enforceability of the remaining provisions of
this Agreement (including, without limitation, all portions of any sections or
subsections of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that are not by themselves invalid,
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illegal or unenforceable) shall not in any way be affected or impaired thereby,
and (ii) to the fullest extent possible, the provisions of any section or
subsections of this Agreement containing any such provisions held to be invalid,
illegal or unenforceable shall be construed so as to give effect to the intent
of the parties that the Indemnitors (or any of them) provide protection to the
Indemnitee to the fullest extent enforceable.
11. Miscellaneous. No provision of this Agreement may be modified,
-------------
waived or discharged unless such modification, waiver or discharge is agreed to
in writing signed by the Indemnitee and an officer of each of the Indemnitors
designated by the Board of Directors of such Indemnitor. No waiver by either
party at any time of any breach by the other party of, or of compliance with,
any condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same time or at any prior or subsequent time. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Delaware, without giving effect to the principles of conflicts of
laws thereof. The Indemnitee may bring an action seeking resolution of disputes
or controversies arising under, or in any way related to, this Agreement in the
state or federal court jurisdiction in which the Indemnitee resides or in which
his place of business is located and in any related appellate courts, and each
of the Indemnitors hereby consents to the jurisdiction of such courts and to
such venue.
12. Notices. For the purposes of this Agreement, notices and all
-------
other communications provided for in the Agreement shall be in writing and shall
be deemed to
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have been duly given when delivered or mailed by United States registered mail,
return receipt requested, postage prepaid, as follows:
If to the Indemnitee: Christopher McGurk
Fifth Floor
2500 Broadway Street
Santa Monica, CA 90404
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If to the Corporation: Metro-Goldwyn-Mayer Inc.
Fifth Floor
2500 Broadway Street
Santa Monica, CA 90404
Attn: General Counsel
If to MGM Studios: Metro-Goldwyn-Mayer Studios
Fifth Floor
2500 Broadway Street
Santa Monica, CA 90404
Attn: General Counsel
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
13. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
13. Effectiveness. This Agreement shall be effective as of the day
-------------
and year first above written.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the day and year first above written.
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METRO-GOLDWYN-MAYER INC.
By: /s/ William A. Jones
-----------------------------
Name: William A. Jones
Title: Senior Executive Vice President and
Secretary
METRO-GOLDWYN-MAYER STUDIOS
By: /s/ William A. Jones
-----------------------------
Name: /s/ William A. Jones
Title: Senior Executive Vice President and
Secretary
INDEMNITEE
/s/ Christopher McGurk
--------------------------------
Christopher McGurk
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EXHIBIT 23.1
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 23, 1999
(except with respect to the matter discussed in Note 15, as to which the date
is March 12, 1999) in Metro-Goldwyn-Mayer Inc.'s Form 10-K for the year ended
December 31, 1998 and to all references to our Firm included in this
registration statement.
Arthur Andersen LLP
Los Angeles, California
July 13, 1999
