EXHIBIT 10.24
================================================================================
FORM OF
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
by and among
METRO-XXXXXXX-XXXXX INC.
SEVEN NETWORK LIMITED
TRACINDA CORPORATION
METRO-XXXXXXX-XXXXX STUDIOS INC.
XX. XXXXX X. XXXXXXX
and
THE OTHER PARTIES SPECIFIED ON THE
SIGNATURE PAGES HERETO
Dated as of August 4, 1997
================================================================================
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.............................................. 1
Section 1.1 Definitions.............................................. 1
ARTICLE II REPRESENTATIONS AND WARRANTIES........................... 4
Section 2.1 Representations and Warranties of the Company............ 4
Section 2.2 Representations and Warranties of Seven.................. 4
Section 2.3 Representations and Warranties of Tracinda............... 5
Section 2.4 Representations and Warranties of MGM Studios............ 5
Section 2.5 Representations and Warranties of the Executives......... 6
ARTICLE III LEGEND; TAG-ALONG RIGHTS................................. 6
Section 3.1 Legend................................................... 6
Section 3.2 "Tag-Along" Rights....................................... 7
ARTICLE IV REGISTRATION RIGHTS...................................... 10
Section 4.1 Demand Registrations..................................... 10
Section 4.2 Piggyback Registrations.................................. 11
Section 4.3 Holdback Agreements...................................... 11
Section 4.4 Registration Procedures.................................. 12
Section 4.5 Registration Expenses.................................... 15
Section 4.6 Indemnification.......................................... 15
Section 4.7 Participation in Underwritten Registrations.............. 17
Section 4.8 Current Public Information............................... 18
Section 4.9 Preparation; Reasonable Investigation.................... 18
Section 4.10 Certain Rights of Holders................................ 18
Section 4.11 Form S-8................................................. 19
ARTICLE V GENERAL PROVISIONS....................................... 19
Section 5.1 Notices.................................................. 19
Section 5.2 Assignment; Binding Effect; Benefit; Successors.......... 21
Section 5.3 Entire Agreement......................................... 21
Section 5.4 Amendment................................................ 21
Section 5.5 Governing Law; Effective Date............................ 22
Section 5.6 Counterparts............................................. 22
Section 5.7 Headings................................................. 22
Section 5.8 Interpretation........................................... 22
Section 5.9 Severability............................................. 23
Section 5.10 Enforcement of Agreement................................. 23
Section 5.11 Termination of Original Shareholders Agreement........... 23
Section 5.12 Antidilution Adjustment.................................. 23
i
FORM OF AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
---------------------------------------------------
THIS AMENDED AND RESTATED SHAREHOLDERS AGREEMENT, dated as of August
4, 1997 (this "Agreement"), by and among METRO-XXXXXXX-XXXXX INC., a corporation
---------
organized under the laws of the State of Delaware and formerly known as P&F
Acquisition Corp. (the "Company"), SEVEN NETWORK LIMITED, a corporation
-------
organized under the laws of the Commonwealth of Australia ("Seven"); TRACINDA
-----
CORPORATION, a corporation organized under the laws of the State of Nevada
("Tracinda"); METRO-XXXXXXX-XXXXX STUDIOS INC., a corporation organized under
----------
the laws of the State of Delaware ("MGM Studios") and formerly known as Metro-
-----------
Xxxxxxx-Xxxxx Inc.; Xx. Xxxxx X. Xxxxxxx ("Xx. Xxxxxxx"), and the Persons listed
-----------
on the signature pages hereto (Xx. Xxxxxxx and each such Person is herein
referred to as an "Executive" and together as the "Executives")/1/, amends and
--------- ----------
supersedes that certain Shareholders Agreement, dated as of October 10, 1996, by
and among MGM Studios, Seven, Tracinda, the Company, Xx. Xxxxxxx and the other
parties thereto (the "Original Shareholders Agreement").
-------------------------------
A. The Executives will be granted options ("Options") to acquire
-------
shares of capital stock of the Company pursuant to the Plan (as defined below).
B. Xx. Xxxxxxx executed an amended and restated employment agreement
with the Company and MGM Studios dated as of August 4, 1997 pursuant to which
Xx. Xxxxxxx may acquire from time to time shares of capital stock of the
Company.
C. The Company intends to commence with an Approved Initial Public
Offering (as defined below) of the Common Stock (as defined below) of the
Company and to enter into certain related transactions.
D. The parties hereto have agreed to enter into this Agreement for
the purpose of amending and restating in its entirety the provisions of the
Original Shareholders Agreement as provided herein.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS.
-----------
"Affiliate": of any Person, means (i) any other Person controlling,
---------
controlled by or under common control with such Person, (ii) any director or
executive officer of such Person or of any Affiliate of such Person and (iii)
any family member of any director or executive officer of such Person or any
director or executive officer of any Affiliate of such Person.
"Agreement": as defined in the preamble to this Agreement.
---------
---------------
/1/ At the execution of this Agreement, the signature pages hereto will indicate
the names of the Executives, who shall not execeed 18 in number.
"Antidilution Adjustment": as defined in Section 5.12.
-----------------------
"Approved Initial Public Offering": has the meaning set forth in the
--------------------------------
Investors Shareholder Agreement as the same may be amended from time to time in
accordance with the terms thereof.
"Commission": means the Securities and Exchange Commission or any other
----------
Federal agency at the time administering the Securities Act.
"Common Stock": means the common stock of the Company.
------------
"Company": as defined in the preamble to this Agreement.
-------
"Demand Registrations": as defined in Section 4.1(a).
--------------------
"Exchange Act": means the Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations of the Commission thereunder, all as the same shall be
in effect at the time.
"Executives": as defined in the preamble to this Agreement.
----------
"Investors Shareholder Agreement": the Amended and Restated Investors
-------------------------------
Shareholder Agreement dated as of August 4, 1997 by and among MGM Studios, the
Company, Tracinda, Seven and Xx. Xxxxxxx.
"IPO Closing": means the closing of an Approved Initial Public Offering at
-----------
which the Company first receives the funds described in the definition of
"Approved Initial Public Offering," whether or not the underwriters have at such
time exercised any over-allotment option.
"IPO Closing Date": means the date of the IPO Closing.
----------------
"MGM Studios": as defined in the preamble to this Agreement.
-----------
"Notice Date": as defined in Section 3.2.
-----------
"Options": as defined in the preamble to this Agreement.
-------
"Original Shareholders Agreement": as defined in the preamble to this
-------------------------------
Agreement.
"Other Securityholders": as defined in Section 3.2.
---------------------
"Permitted Transferee": means:
--------------------
(a) (i) the successors in interest to such Executive, in the case of a
Transfer upon the death of such Executive, provided that each such successor in
interest would be a Permitted Transferee under clauses (a)(ii) or (a)(iv) of
this definition, (ii) such Executive's spouse, parents, grandparents, siblings
and descendants (whether by blood or adoption, and including stepchildren) and
the spouses of such persons, (iii) such Executive, with respect to the
disposition of the community property interest of such Executive's spouse in all
or any part of the Common Stock upon the dissolution of the marriage of the
Executive and his or her spouse or upon the
2
death of such spouse, (iv) any transferee occasioned by the incompetence of such
Executive and (v) in the case of a Transfer during such Executive's lifetime,
any Person in which no Person has any interest (directly or indirectly) except
for any of such Executive, such Executive's spouse, parents, grandparents,
siblings and descendants (whether by blood or adoption, and including
stepchildren) and the spouses of such persons; and
(b) the beneficiaries or the grantor of any trust all the
beneficiaries of which are natural persons; provided, however, that each such
-------- -------
beneficiary or grantor of such trust is a Person who would be a Permitted
Transferee under clause (a) of this definition.
"Person": means any natural person, corporation, partnership, limited
------
liability company, firm, association, trust, government, governmental agency, or
other legal entity, whether acting in an individual, fiduciary or other
capacity.
"Piggyback Registration": as defined in Section 4.2(a).
----------------------
"Plan": means, collectively, the Stock Incentive Plan and the Stock Option
----
Agreement.
"Registrable Securities": means (i) any shares of Common Stock owned by,
----------------------
or otherwise hereafter acquired by, Tracinda, Seven or any Executive and (ii)
any securities issued as a dividend on or other distribution with respect to or
in exchange, replacement or in subdivision of, any such Common Stock. As to any
particular Registrable Securities, such securities shall cease to be Registrable
Securities when (i) a registration statement with respect to the sale of such
securities shall have been declared effective under the Securities Act and such
securities shall have been disposed of in accordance with such registration
statement, or (ii) such securities shall have been sold (other than in a
privately negotiated sale) pursuant to Rule 144 (or any successor provision)
under the Securities Act and in compliance with the requirements of paragraphs
(c), (e), (f)and (g)of Rule 144.
"Registration Expenses": as defined in Section 4.5(a).
---------------------
"Securities Act": means the Securities Act of 1933, as amended, and the
--------------
rules and regulations of the Commission thereunder, as the same shall be in
effect at the time.
"Series A Options": as defined in the Plan.
-----------------
"Series B Options": as defined in the Plan.
-----------------
"Seven": as defined in the preamble to this Agreement.
-----
"Short-Form Registrations": as defined in Section 4.1(a).
------------------------
"Stock Incentive Plan": means the Company's Amended and Restated 1996
--------------------
Stock Incentive Plan, in substantially the form attached hereto as Exhibit A.
"Stock Split": as defined in Section 5.12.
-----------
3
"Stock Option Agreement": means the Company's several Stock Option
----------------------
Agreements, in substantially the form attached hereto as Exhibit B, entered into
pursuant to the Stock Incentive Plan.
"Subsidiary": of any Person means any corporation or other legal entity of
----------
which such Person (either alone or through or together with any other direct or
indirect Subsidiary) owns, directly or indirectly, 50% or more of the stock or
other equity interests, the holders of which are generally entitled to vote for
the election of the board of directors or other governing body of such
corporation or other legal entity.
"Tag-Along Notice": as defined in Section 3.2.
----------------
"Tag-Along Sale": as defined in Section 3.2.
--------------
"Tracinda": as defined in the preamble to this Agreement.
--------
"Transfer": as defined in Section 3.2.
--------
"Transferring Party": as defined in Section 3.2.
------------------
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
---------------------------------------------
The Company hereby represents and warrants to the other parties hereto as
follows: (i) the Company has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby; (ii) the execution and delivery by the Company of this Agreement, and
the consummation by the Company of the transactions contemplated hereby, have
been duly authorized by all necessary corporate action on the part of the
Company; (iii) this Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as the
enforceability hereof may be limited by bankruptcy, insolvency or other similar
laws affecting creditors' rights generally or general principles of equity and
except to the extent that the indemnity provisions set forth in Article IV may
not be valid under applicable securities laws or by reason of public policy;
(iv) no consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, is
required by, or with respect to, the Company in connection with the execution
and delivery of this Agreement by the Company or the consummation by the Company
of the transactions contemplated hereby; and (v) the execution and delivery of
this Agreement by the Company and the consummation of the transactions
contemplated hereby by the Company does not conflict with, or result in a breach
of, any law or regulation of any governmental authority applicable to the
Company or any material agreement to which the Company is a party.
SECTION 2.2. REPRESENTATIONS AND WARRANTIES OF SEVEN.
---------------------------------------
Seven hereby represents and warrants to the other parties hereto as
follows: (i) Seven has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions
4
contemplated hereby; (ii) the execution and delivery by Seven of this Agreement,
and the consummation by Seven of the transactions contemplated hereby, have been
duly authorized by all necessary corporate action on the part of Seven; (iii)
this Agreement has been duly executed and delivered by Seven and constitutes a
valid and binding obligation of Seven enforceable against Seven in accordance
with its terms, except as the enforceability hereof may be limited by
bankruptcy, insolvency or other similar laws affecting creditors' rights
generally or general principles of equity and except to the extent that the
indemnity provisions set forth in Article IV may not be valid under applicable
securities laws or by reason of public policy; (iv) no consent, approval, order
or authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, is required by, or with respect to, Seven
in connection with the execution and delivery by Seven of this Agreement or the
consummation by Seven of the transactions contemplated hereby; and (v) the
execution and delivery by Seven of this Agreement and the consummation by Seven
of the transactions contemplated hereby does not conflict with, or result in a
breach of, any law or regulation of any governmental authority applicable to
Seven or any material agreement to which Seven is a party.
SECTION 2.3. REPRESENTATIONS AND WARRANTIES OF TRACINDA.
------------------------------------------
Tracinda hereby represents and warrants to the other parties hereto as
follows: (i) Tracinda has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby; (ii)
the execution and delivery by Tracinda of this Agreement, and the consummation
by Tracinda of the transactions contemplated hereby, have been duly authorized
by all necessary corporate action on the part of Tracinda; (iii) this Agreement
has been duly executed and delivered by Tracinda and constitutes a valid and
binding obligation of Tracinda enforceable against Tracinda in accordance with
its terms, except as the enforceability hereof may be limited by bankruptcy,
insolvency or other similar laws affecting creditors' rights generally or
general principles of equity and except to the extent that the indemnity
provisions set forth in Article IV may not be valid under applicable securities
laws or by reason of public policy; (iv) no consent, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, is required by, or with respect to,
Tracinda in connection with the execution and delivery of this Agreement by
Tracinda or the consummation by Tracinda of the transactions contemplated
hereby; and (v) the execution and delivery of this Agreement by Tracinda and the
consummation by Tracinda of the transactions contemplated hereby does not
conflict with, or result in a breach of, any law or regulation of any
governmental authority applicable to Tracinda or any material agreement to which
Tracinda is a party.
SECTION 2.4. REPRESENTATIONS AND WARRANTIES OF MGM STUDIOS.
---------------------------------------------
MGM Studios hereby represents and warrants to the other parties hereto as
follows: (i) MGM Studios has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby; (ii) the execution and delivery by MGM Studios of this Agreement, and
the consummation by MGM Studios of the transactions contemplated hereby, have
been duly authorized by all necessary corporate action on the part of MGM
Studios; (iii) this Agreement has been duly executed and delivered by MGM
Studios and constitutes a valid and binding obligation of MGM Studios
enforceable against MGM Studios in accordance with its terms, except as the
enforceability hereof may be limited by bankruptcy, insolvency or other
5
similar laws affecting creditors' rights generally or general principles of
equity and except to the extent that the indemnity provisions set forth in
Article IV may not be valid under applicable securities laws or by reason of
public policy; (iv) no consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, is required by, or with respect to, MGM Studios in connection with the
execution and delivery of this Agreement by MGM Studios or the consummation by
MGM Studios of the transactions contemplated hereby; and (v) the execution and
delivery of this Agreement by MGM Studios and the consummation by MGM Studios of
the transactions contemplated hereby does not conflict with, or result in a
breach of, any law or regulation of any governmental authority applicable to MGM
Studios or any material agreement to which MGM Studios is a party.
SECTION 2.5. REPRESENTATIONS AND WARRANTIES OF THE EXECUTIVES.
------------------------------------------------
Each of the Executives (as to himself only) hereby represents and warrants
to the other parties hereto, as of the date of the execution of this Agreement
by such Executive, as follows: (i) such Executive has all requisite power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby; (ii) this Agreement has been duly executed and delivered by
such Executive and constitutes a valid and binding obligation of such Executive
enforceable against such Executive in accordance with its terms, except as the
enforceability hereof may be limited by bankruptcy, insolvency or other similar
laws affecting creditors' rights generally or general principles of equity and
except to the extent that the indemnity provisions set forth in Article IV may
not be valid under applicable securities laws or by reason of public policy;
(iii) no consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, is
required by, or with respect to, such Executive in connection with the execution
and delivery of this Agreement by such Executive or the consummation by
Executive of the transactions contemplated hereby; and (iv) the execution and
delivery of this Agreement by such Executive and the consummation by such
Executive of the transactions contemplated hereby does not conflict with, or
result in a breach of, any law or regulation of any governmental authority
applicable to such Executive or any material agreement to which such Executive
is a party.
ARTICLE III
LEGEND; TAG-ALONG RIGHTS
SECTION 3.1. LEGEND. Tracinda and Seven hereby acknowledge and agree
------
that each of the certificates representing the shares of Common Stock
beneficially owned by each of them shall include the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY BE OFFERED OR SOLD ONLY IF REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR IF AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THESE
SHARES ARE SUBJECT TO CERTAIN LIMITATIONS ON TRANSFER AND CERTAIN OTHER MATTERS
SET FORTH IN AN AGREEMENT DATED AS OF AUGUST 4, 1997 BY AND AMONG SEVEN NETWORK
LIMITED, TRACINDA CORPORATION,
6
METRO-XXXXXXX-XXXXX STUDIOS INC., METRO-XXXXXXX-XXXXX INC., XX. XXXXX X.
XXXXXXX, AND CERTAIN OTHER PERSONS (THE "AGREEMENT"). A COPY OF THE AGREEMENT IS
ON FILE WITH THE SECRETARY OF METRO-XXXXXXX-XXXXX INC.
SECTION 3.2. "TAG-ALONG" RIGHTS.
-----------------
(a) If either of Seven or Tracinda (a "Transferring Party") desires to
------------------
sell, transfer, assign, pledge or otherwise dispose of ("Transfer") directly or
--------
indirectly, in whole or in part, any shares of Common Stock beneficially owned
by it (a "Tag-Along Sale"), the Transferring Party shall provide the Company and
--------------
each of the Executives and Tracinda or Seven, as the case may be (the "Other
-----
Securityholders"), with written notice (the "Tag Along Notice") setting forth:
--------------- ----------------
(i) the number of shares of Common Stock proposed to be
Transferred;
(ii) the name and address of the prospective purchaser;
(iii) all material terms and conditions of such proposed
transaction including the date of the proposed closing of such transaction
and the proposed amount and the form of consideration to be paid for such
Common Stock;
(iv) that the Transferring Party is offering each of the Other
Securityholders the right to participate in such Transfer on a pro rata
basis on the same terms and conditions as are applicable to the
Transferring Party;
(v) the aggregate number of shares of Common Stock beneficially
owned by such Transferring Party as of the date of the Tag Along Notice
(the "Notice Date") from the Transferring Party to the Company;
-----------
(vi) the Company's calculation of the maximum number of shares of
Common Stock that each such Other Securityholder is entitled to include in
the Tag-Along Sale (as computed in accordance with the equation set forth
in subsection (a) of this Section 3.2); and
(vii) a copy of the proposed agreements for the Tag-Along Sale.
The Company shall have the obligation to provide the calculation described
in clause (vi) above to the Transferring Party upon request by the Transferring
Party and shall take full and complete responsibility for the accuracy and
completeness of such calculation. Within 20 calendar days following the
delivery of the Tag Along Notice, each Other Securityholder, by notice in
writing to the Transferring Party, shall have (i) in the case of the Executives,
the right to exercise any Options held by such Executives to the extent required
to realize the rights of such Executives provided in this Section 3.2 and (ii)
the opportunity to sell to the prospective purchaser (upon the same terms and
conditions as the Transferring Party) on the proposed date of the closing of the
applicable transaction as specified in the applicable Tag Along Notice up to
that number of shares
7
of Common Stock specified in the Tag Along Notice owned by such Other
Securityholder (excluding any shares of Common Stock acquired pursuant to open
market purchases) as shall equal the product of (x) a fraction, the numerator of
which is the number of shares of Common Stock specified in the Tag Along Notice
beneficially owned by such Other Securityholder as of the date of such proposed
sale (excluding any shares of Common Stock acquired pursuant to open market
purchases), and the denominator of which is the aggregate number of shares of
Common Stock specified in the Tag Along Notice beneficially owned as of the date
of such proposed sale by the Transferring Party and all of the Other
Securityholders (excluding any shares of Common Stock acquired pursuant to open
market purchases), and (y) the number of shares of Common Stock proposed to be
sold; provided, however, that to the extent the prospective purchaser agrees to
-------- -------
purchase Common Stock in excess of the amount specified in the Tag Along Notice,
such excess amount shall be allocated among the Transferring Party and the Other
Securityholders on a pro-rata basis based on the allocation procedures specified
above; provided further, however, that to the extent that one or more Other
-------- ------- ------- ----
Securityholders elect not to participate in such sale, the amount of Common
Stock which such Other Securityholder(s) would otherwise have been entitled to
sell in such sale shall not be reallocated to the remaining Other
Securityholders who elect to participate in such sale; and provided further,
-------- -------
however, that in exercising these rights with respect to an Executive's Series
------- ----
A Option or Series B Option (1) the Series A Option must be exercised, to the
extent then vested, before the Series B Option, to the extent then vested, is
exercised, (2) thereafter, the Series B Option, to the extent then vested, must
be exercised before the Series A Option, to the extent not vested, is
exercised, (3) then, the balance of the Series A Option must be exercised
before the balance of the Series B Option is exercised and (4) thereafter, the
balance of the Series B Option will be exercisable. The amount of shares of
Common Stock to be sold by the Transferring Party shall be reduced if and to the
extent necessary to provide for such sale of shares of Common Stock by the Other
Securityholders. If an Other Securityholder does not elect to participate in
such sale within the 20 calendar day period referred to above, the Transferring
Party shall be entitled to consummate such sale not later than 90 days after the
end of such 20 calendar day period on terms no more favorable to the
Transferring Party than those stated in the Tag Along Notice without the
participation of such Other Securityholder and all rights of such Other
Securityholder to exercise Options in connection with such sale shall terminate.
An Other Securityholder shall not be deemed to have entered into a legally
binding agreement to sell shares unless and until such Other Securityholder
shall have entered into a definitive purchase agreement with the prospective
transferee which shall include customary conditions precedent to such Other
Securityholder's obligations thereunder, including, without limitation, the
obtaining of all necessary regulatory approvals, and which shall provide for the
same terms and conditions applicable to the Transferring Party, including
(without limitation) representations, warranties and indemnities; provided that
-------------
the maximum indemnity obligation of the Other Securityholder under any such
agreement (in its capacity as a selling shareholder) shall be limited to the
purchase price received by such Other Securityholder in the applicable
transaction and the indemnity obligations of the Other Securityholder under any
such agreement (in its capacity as a selling shareholder) shall be several, and
not joint, with the other parties selling shares pursuant to the agreement. The
provisions of this Section 3.2 shall not inure to the benefit of or be binding
upon any transferee of Common Stock from Tracinda or Seven (except in connection
with any transfer by either of them
8
to one or more of their Affiliates) or from any Executive (other than a
Permitted Transferee of an Executive).
(b) The provisions of this Section 3.2 shall not apply to:
(i) any transaction in which shares of Common Stock are proposed
to be sold publicly pursuant to a registration statement filed under the
Securities Act or pursuant to Rule 144 or Regulation S promulgated under
the Securities Act; or
(ii) any one transaction or series of related transactions
involving the transfer by the Transferring Party of less than 1% of the
then issued and outstanding shares of Common Stock; or
(iii) any bona fide pledge to a bank or other institutional
financial lender; or
(iv) any sale from one party to this Agreement to another party
to this Agreement.
(c) The obligations provided for in this Section 3.2 shall terminate
with respect to each Transferring Party at such time as such Transferring Party
beneficially owns less than 250,000 shares of Common Stock.
(d) If an Option held by an Executive has vested pursuant to the terms
of the Plan but is not exercisable pursuant to the terms of the Plan at the time
of a Tag-Along Sale pursuant to this Section 3.2, the Executive shall be
entitled to exercise such Option as described in subsection (a) of this Section
3.2.
(e) Notwithstanding anything contained herein to the contrary, the
provisions of this Section 3.2 shall not apply to, in the case of each of
Tracinda and Seven, (i) the transfer of, or the grant of options for the
acquisition of, up to 7,500 shares of Common Stock (such number to be
appropriately adjusted in the event that the Company should effect any stock
dividend, stock split, reverse stock split, or any similar transaction after the
date hereof) beneficially owned by it to officers, directors, employees,
consultants and affiliates so long as such transferee shall agree in writing to
be bound by all the terms of this Agreement applicable to its transferor as if
the transferee originally had been a party to this Agreement and (ii) the
transfer and assignment of all or any portion of the capital stock of the
Company beneficially owned by it to any direct or indirect wholly owned
subsidiary of such entity so long as (y) such transferee shall agree in writing
to be bound by all the terms of this Agreement applicable to its transferor as
if the transferee originally had been a party to this Agreement and (z) the
transferor agrees to cause such direct or indirect wholly owned subsidiary to
continue to be a direct or indirect wholly owned subsidiary of the transferor
for so long as such direct or indirect wholly owned subsidiary beneficially owns
any such capital stock of the Company.
9
ARTICLE IV
REGISTRATION RIGHTS
SECTION 4.1. DEMAND REGISTRATIONS.
---------------------
(a) Requests for Registration. Subject to Sections 4.1(c) and 4.3
-------------------------
hereof, each of Seven, Tracinda and each Executive shall have the right to make
up to three requests, in the case of each of Seven and Tracinda, and up to two
requests with respect to all of the Executives, for registration under the
Securities Act of all or part of their Registrable Securities on Form S-1 or any
similar long-form registration or on Form S-3 or any similar short-form
registration ("Short-Form Registrations"); provided that no request for a Demand
------------------------ -------- ----
Registration may be made at anytime prior to 180 days after the IPO Closing
Date; and provided, further, that any request for a Demand Registration shall
-------- ------- ----
not be otherwise deemed to be effective unless such request includes Registrable
Securities which have an estimated value of no less than $50,000,000. Each
request for a Demand Registration shall specify the approximate number of
Registrable Securities requested to be registered and the anticipated per share
price range for such offering. All registrations requested pursuant to this
Section 4.1(a) are referred to herein as "Demand Registrations."
--------------------
(b) Short-Form Registrations. Demand Registrations will be Short-Form
------------------------
Registrations whenever the Company is permitted to use any applicable short
form, unless the party requesting such Demand Registration is entitled to
request, and agrees to bear the incremental Registration Expenses for,
registration on Form S-1 at a time when use of Short-Form Registration is
available. The Company will use its best efforts to make Short-Form
Registrations available for the sale of Registrable Securities. Demand
Registration requests may be for shelf registrations if the Company is then
eligible to effect shelf registrations.
(c) Restrictions on Demand Registrations. The Company will not be
------------------------------------
obligated to effect any Demand Registration within six months after the
effective date of a previous Demand Registration. During any two-year period,
the Company may make a one-time election to postpone the filing or the
effectiveness of a registration statement for a Demand Registration for up to
six months if the board of directors of the Company determines, in its good
faith judgment, that (i) such Demand Registration would reasonably be expected
to have a material adverse effect on, interfere with or delay any proposal or
plan by the Company or any of its subsidiaries to engage in any acquisition of
assets (other than in the ordinary course of business) or any merger,
consolidation, tender offer or similar transaction, (ii) the filing of a
registration statement or a sale of Registrable Securities pursuant thereto
would require disclosure of material information that the Company has a bona
fide business purpose for preserving as confidential or (iii) the Company is
unable to comply with the registration requirements of the Commission; provided
--------
that, in such event, the holders of Registrable Securities initially requesting
----
such Demand Registration will be entitled to withdraw such request and, if such
request is withdrawn, such request for Demand Registration will not count as a
request for Demand Registration hereunder and the Company will pay all
Registration Expenses in connection with such withdrawn registration request.
10
(d) Selection of Underwriters. The party requesting a Demand
-------------------------
Registration will have the right to select the managing underwriters to
administer the offering, who shall be of national prominence and reasonably
acceptable to the Company.
SECTION 4.2. PIGGYBACK REGISTRATIONS.
-----------------------
(a) Right to Piggyback. Whenever at anytime after the IPO Closing
------------------
Date, the Company proposes to register any of its equity securities under the
Securities Act (other than a registration on Form S-4 or Form S-8 or any
successor or similar forms) and the registration form to be used may be used for
the registration of Registrable Securities (a "Piggyback Registration"), whether
----------------------
or not for sale for its own account, the Company will give prompt written notice
to each of Tracinda, Seven and the Executives of its intention to effect such a
registration and the class or classes of equity securities of the Company to be
registered and will include in such registration all Registrable Securities of
the same class or classes with respect to which the Company has received written
requests for inclusion therein within 20 days after the receipt of the notice
from the Company.
(b) Priority on Primary Registrations. If a Piggyback Registration is
---------------------------------
an underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering within a price range reasonably acceptable to
the Company, the Company will include in such registration (i) first, the
securities the Company proposes to sell and (ii) second, all other securities
(including the Registrable Securities) requested to be included in such
registration, pro rata among the respective holders thereof on the basis of the
number of securities owned by each such holder.
(c) Priority on Secondary Registrations. If a Piggyback Registration
-----------------------------------
is an underwritten secondary registration on behalf of holders of securities of
the Company, and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering within a
price range reasonably acceptable to such holders, the Company will include in
such registration the securities (including the Registrable Securities)
requested to be included in such registration, pro rata among the respective
holders thereof on the basis of the number of securities owned by each such
holder.
SECTION 4.3. HOLDBACK AGREEMENTS.
-------------------
(a) If requested in writing by the Company or the managing
underwriters, if any, of any registration effected pursuant to Section 4.1 or
4.2, each of Seven, Tracinda and the Executives agrees not to effect any public
sale or distribution (including sales pursuant to Rule 144) of equity securities
of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, during the time period reasonably requested by
the managing underwriters, not to exceed the period commencing with the date
seven days prior to and ending with the date 90 days, or such longer period, not
to exceed 180 days, as the applicable managing underwriter shall request, after
the effective date of any underwritten Demand Registration, any
11
underwritten Piggyback Registration or other underwritten registration by the
Company of its securities (except as part of such underwritten registration).
(b) If requested in writing by the managing underwriters of any
registration effected pursuant to Section 4.1 or 4.2, the Company agrees (i) not
to effect any public sale or distribution of its equity securities, or any
securities convertible into or exchangeable or exercisable for such securities,
during the time period reasonably requested by the managing underwriters, not to
exceed the period commencing with the date seven days prior to and ending with
the date 90 days, or such longer period, not to exceed 180 days, as the
applicable managing underwriter shall request, after the effective date of any
underwritten Demand Registration or any underwritten Piggyback Registration
(except as part of such underwritten registration or pursuant to registrations
on Form S-4 or Form S-8 or any successor forms), and (ii) to use its best
efforts to cause each holder of its capital stock, which such holder purchased
from the Company at any time after the date of this Agreement (other than in a
registered public offering), to so agree.
(c) If the Company has previously filed a registration statement with
respect to Registrable Securities pursuant to Section 4.1 or 4.2, and if such
previous registration has not been withdrawn or abandoned, the Company will not
file or cause to be effected any other registration of any of its equity
securities or securities convertible or exchangeable into or exercisable for its
equity securities under the Securities Act (except on Form S-4 or Form S-8 or
any successor forms), whether on its own behalf or at the request of any holder
or holders of such securities, until a period of at least 90 days, or such
longer period, not to exceed 180 days, as the applicable managing underwriter
shall request, has elapsed from the effective date of such previous
registration.
SECTION 4.4. REGISTRATION PROCEDURES. Whenever Tracinda, Seven or an
-----------------------
Executive has requested that any Registrable Securities be registered pursuant
to this Agreement, the Company will use its best efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof, and pursuant thereto the Company will as
expeditiously as possible:
(a) prepare and file with the Commission a registration statement with
respect to such Registrable Securities and thereafter use its best efforts to
cause such registration statement to become effective (provided that, before
-------- ----
filing a registration statement or prospectus or any amendments or supplements
thereto, the Company will furnish to the counsel selected by the holders of a
majority of the Registrable Securities covered by such registration statement
copies of all such documents proposed to be filed, which documents will be
subject to review of such counsel);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
a period of either (i) not less than six months (subject to extension pursuant
to Section 4.7(b)) or, if such registration statement relates to an underwritten
offering, such longer period as in the opinion of counsel for the underwriters a
prospectus is required by law to be delivered in connection with sales of
Registrable Securities by an underwriter or dealer or (ii) such shorter period
as will terminate when all of the securities
12
covered by such registration statement have been disposed of in accordance with
the intended methods of disposition by the seller or sellers thereof set forth
in such registration statement (but in any event not before the expiration of
any longer period required under the Securities Act), and to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement until such time as all of such
securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement;
(c) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any seller reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of such Registrable Securities owned by such
seller (provided that the Company will not be required to (i) qualify generally
-------- ----
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction);
(e) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, upon discovery that, or upon the discovery of the happening of
any event as a result of which, the prospectus included in such registration
statement contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made, and the Company will prepare and file
with the Commission and, at the request of any such seller, furnish to such
seller a reasonable number of copies of, a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue statement of
a material fact or omit to state any fact necessary to make the statements
therein not misleading in the light of the circumstances under which they were
made;
(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed, to be listed on the Nasdaq National Market;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
a majority of the Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or
13
facilitate the disposition of such Registrable Securities (including, without
limitation, effecting a stock split or a combination of shares);
(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement, and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the officers,
directors, employees and independent accountants of the Company to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(j) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its security holders,
as soon as reasonably practicable, an earnings statement covering the period of
at least twelve months beginning with the first day of the first full calendar
quarter of the Company after the effective date of the registration statement,
which earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder;
(k) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any securities included in such registration statement for sale in any
jurisdiction, the Company will use its reasonable best efforts promptly to
obtain the withdrawal of such order;
(l) obtain a "cold comfort" letter, dated the effective date of such
registration statement (and, if such registration includes an underwritten
public offering, dated the date of the closing under the underwriting
agreement), signed by the independent public accountants of the Company in
customary form and covering such matters of the type customarily covered by
"cold comfort" letters as the holders of a majority of the Registrable
Securities being sold reasonably request (provided that such Registrable
Securities constitute at least 10% of the securities covered by such
registration statement); and
(m) provide a legal opinion of the outside counsel of the Company,
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, dated the date of the
closing under the underwriting agreement), with respect to the registration
statement, each amendment and supplement thereto, the prospectus included
therein (including the preliminary prospectus) and such other documents relating
thereto in customary form and covering such matters of the type customarily
covered by legal opinions of such nature. The Company may require each seller
of Registrable Securities as to which any registration is being effected to
furnish the Company such information regarding such seller and the distribution
of such securities as the Company may from time to time reasonably request in
writing.
14
SECTION 4.5. REGISTRATION EXPENSES.
---------------------
(a) Except as provided in Section 4.1(b), the Company shall pay all
Registration Expenses relating to any registration of Registrable Securities
hereunder. "Registration Expenses" shall mean any and all fees and expenses
---------------------
incident to the Company's performance of or compliance with this Article IV,
including, without limitation: (i) Commission, stock exchange or National
Association of Securities Dealers, Inc. registration and filing fees and all
listing fees and fees with respect to the inclusion of securities on the Nasdaq
National Market, (ii) fees and expenses of compliance with state securities or
"blue sky" laws and in connection with the preparation of a "blue sky" survey,
including, without limitation, reasonable fees and expenses of blue sky counsel,
(iii) printing expenses, (iv) messenger and delivery expenses, (v) fees and
disbursements of counsel for the Company, (vi) with respect to each
registration, reasonable fees and disbursements of one counsel for the selling
shareholders (other than the Company) (selected by the holders making the Demand
Registration request, in the case of a registration pursuant to Section 4.1, and
selected by the holders of a majority of the Registrable Securities included in
such registration, in the case of a registration pursuant to Section 4.2) as
well as of one local counsel, (vii) fees and disbursements of all independent
public accountants (including the expenses of any audit and/or "cold comfort"
letter) and fees and expenses of other persons, including special experts,
retained by the Company, and (viii) any other fees and disbursements of
underwriters, if any, customarily paid by issuers or sellers of securities.
(b) Notwithstanding the foregoing, (i) the provisions of this Section
4.5 shall be deemed amended to the extent necessary to cause these expense
provisions to comply with "blue sky" laws of each state in which the offering is
made and (ii) in connection with any registration hereunder, each holder of
Registrable Securities being registered shall pay all underwriting discounts and
commissions and transfer taxes, if any, attributable to the Registrable
Securities included in the offering by such holder.
SECTION 4.6. INDEMNIFICATION.
---------------
(a) The Company and MGM Studios jointly and severally agree to
indemnify and hold harmless, to the extent permitted by law, each holder of
Registrable Securities, its officers, directors, employees and agents and each
Person who controls such holder (within the meaning of the Securities Act)
against any losses, claims, damages or liabilities, joint or several, to which
such holder or any such director, officer, employee, agent or controlling person
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon (i)
any untrue or alleged untrue statement of a material fact contained (A) in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or (B) in any application or other document or
communication (in this Section 4.6 collectively called an "application")
executed by or on behalf of the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify any securities covered by such registration statement under the "blue
sky" or securities laws thereof, (ii) any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading or (iii) any violation by the Company of the Securities
Act or any state securities law, or any rule or regulation
15
promulgated under the Securities Act or any state securities law, or any other
law applicable to the Company relating to any such registration or
qualification, and the Company will reimburse such holder and each such
director, officer and controlling person for any legal or any other expenses
incurred by them in connection with investigating or defending any such loss,
claim, liability, action or proceeding; provided that the Company shall not be
-------------
liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out of
or is based upon an untrue statement or alleged untrue statement, or omission or
alleged omission, made in such registration statement, any such prospectus or
preliminary prospectus or any amendment or supplement thereto, or in any
application, in reliance upon and in conformity with written information
prepared and furnished to the Company by such holder expressly for use therein
or by such holder's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after the Company has
furnished such holder with a sufficient number of copies of the same. In
connection with an underwritten offering, the Company will indemnify such
underwriters, their officers and directors and each Person who controls such
underwriters (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the holders of Registrable
Securities.
(b) In connection with any registration statement in which a holder of
Registrable Securities is participating, each such holder will furnish to the
Company in writing such information and documents concerning such holder as the
Company reasonably requests for use in connection with any such registration
statement or prospectus and, to the extent permitted by law, will indemnify and
hold harmless the Company, MGM Studios, their respective directors and officers
and each other Person who controls or is controlled by the Company and the
directors and officers of each such controlling or controlled Person (within the
meaning of the Securities Act) against any losses, claims, damages, liabilities,
joint or several, to which the Company or any such director or officer or
controlling or controlled Person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon (i) any untrue or alleged untrue statement of a material fact
contained in the registration statement, prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or in any application or (ii) any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only to the extent
that such untrue statement or omission is made in such registration statement,
any such prospectus or preliminary prospectus or any amendment or supplement
thereto, or in any application, in reliance upon and in conformity with written
information concerning such holder prepared and furnished to the Company by such
holder in writing expressly for use therein, and such holder will reimburse the
Company and each such director, officer and controlling or controlled Person for
any legal or any other expenses incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided that the obligation to indemnify will be individual to each
-------- ----
holder and will be limited to the net amount of proceeds received by such holder
from the sale of Registrable Securities pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks
16
indemnification and (ii) unless in such indemnified party's reasonable judgment
a conflict of interest between such indemnified and indemnifying parties may
exist with respect to such claim, permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the indemnified
party. If such defense is assumed, the indemnified party will not be subject to
any liability for any settlement made by the indemnifying party without its
consent (but such consent will not be unreasonably withheld). An indemnifying
party who is not entitled to, or elects not to, assume the defense of a claim
will not be obligated to pay the fees and expenses of more than one counsel for
all parties indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim. If the indemnifying party
assumes the defense, the indemnified party may engage its own counsel at its own
sole cost and expense. All fees and expenses of counsel to any indemnified party
required to be paid by any indemnifying party shall be paid by such indemnifying
party as incurred by such indemnified party.
(d) The indemnification provided for under this Agreement will remain
in full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director, employee, agent or controlling
or controlled Person of such indemnified party and will survive the transfer of
securities by any holder thereof. If the indemnification provided for herein is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of the indemnifying party or parties,
on the one hand, and the indemnified party or parties, on the other hand, in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations; provided, however, that in no event shall any contribution by
-------- ------- ----
any holder or any director, officer, employee, agent or controlling or
controlled Person thereof exceed the amount of the net proceeds received by such
holder from the sale of Registrable Securities pursuant to such registration
statement.
SECTION 4.7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
-------------------------------------------
(a) If requested by the underwriters for any underwritten offering
pursuant to a Demand Registration requested under Section 4.1, the Company shall
enter into a customary underwriting agreement with the underwriters. Such
underwriting agreement shall be satisfactory in form and substance to the Person
who requested such registration and shall contain such representations and
warranties by, and such other agreements on the part of, the Company and such
other terms as are generally prevailing in agreements of that type, including,
without limitation, indemnities and contribution agreements. Such underwriting
agreement shall also contain such representations, warranties, indemnities and
contributions by the participating holders as are customary in agreements of
that type. In the case of a registration pursuant to Section 4.2 hereof, if the
Company shall have determined to enter into any underwriting agreements in
connection therewith, all of the holders' Registrable Securities to be included
in such registration shall be subject to such underwriting agreement. Such
underwriting agreement
17
shall also contain such representations, warranties, indemnities and
contributions by the participating holders as are customary in agreements of
that type.
(b) Each Person that is participating in any registration hereunder
agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 4.4(e) above, such Person will forthwith
discontinue the disposition of its Registrable Securities pursuant to the
registration statement until such Person's receipt of the copies of a
supplemented or amended prospectus as contemplated by such Section 4.4(e). In
the event the Company shall give any such notice, the applicable time period
mentioned in Section 4.4(b) during which a registration statement is to remain
effective shall be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to this paragraph to
and including the date when each seller of a Registrable Security covered by
such registration statement shall have received the copies of the supplemented
or amended prospectus contemplated by Section 4.4(e).
SECTION 4.8. CURRENT PUBLIC INFORMATION. At all times, the Company will
--------------------------
file all reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the Commission thereunder,
and will take such further action as any holder or holders of Registrable
Securities may reasonably request, all to the extent required to enable such
holders to sell Registrable Securities pursuant to Rule 144.
SECTION 4.9. PREPARATION; REASONABLE INVESTIGATION. In connection with
-------------------------------------
the preparation and filing of each registration statement under the Securities
Act, the Company will give the holders of Registrable Securities registered
under such registration statement and their respective counsel, underwriters and
accountants, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
of them such access to its books and records and such opportunities to discuss
the business, finances and accounts of the Company and its Subsidiaries with its
officers, directors and the independent public accountants who have certified
its financial statements as shall be necessary, in the opinion of such holders'
and such underwriters' respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
SECTION 4.10. CERTAIN RIGHTS OF HOLDERS. The Company will not file any
-------------------------
registration statement under the Securities Act which refers to any holder of
Registrable Securities by name or otherwise as the holder of any securities of
the Company, unless it shall first have given such holder the right to require:
(a) the insertion therein of language, in form and substance
satisfactory to such holder, to the effect that, in the opinion of such holder,
the holding of such holder of such securities does not make such holder a
"controlling person" of the Company within the meaning of the Securities Act and
is not to be construed as a recommendation by such holder of the investment
quality of the Company's securities covered thereby and that such holding does
not imply that such holder will assist in meeting any future financial
requirements of the Company, or
18
(b) in the event that such reference to such holder by name or
otherwise is not required by the Securities Act or any rules and regulations
promulgated thereunder, the deletion of the reference to such holder.
SECTION 4.11. FORM S-8. The Company will, within 6 months following the
--------
IPO Closing Date, cause to become effective a registration statement on Form S-8
with the Commission with respect to shares of capital stock of the Company
subject to Options.
ARTICLE V
GENERAL PROVISIONS
SECTION 5.1. NOTICES. Any notice required to be given hereunder shall be
-------
sufficient if in writing, and sent by facsimile transmission and by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:
If to the Company or MGM Studios, to:
Metro-Xxxxxxx-Xxxxx Inc.
0000 Xxxxxxxx
Xxxxx Xxxxx
Xxxxx Xxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 X. Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Tracinda, to:
Tracinda Corporation
0000 Xxxxx Xxxx
Xxx Xxxxx, XX 00000
Attention: Secretary / Treasurer
Telecopy: (000) 000-0000
19
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx, P.C.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Seven, to:
Seven Network Limited
c/o Culmen Group, L.P.
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
and:
XXX0
Xxxxx Xxxx
Xxxxxx XXX 0000, Xxxxxxxxx
Attention: Xxxx Xxxx, Managing Director
Telephone: (000) 000-0000
Telecopy: (000) 000-00000
with a copy to:
Xxxxx, Xxxx & Xxxxxxx
000 Xxxx Xxxxxx
Xxxx Xxxxx, XX 00000
Attention: F. Xxxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
if to an Executive, to the address of such Executive set forth in the signature
pages hereof or to such other address as any party shall specify by written
notice so given, and such notice shall be deemed to have been delivered as of
the date so telecommunicated, personally delivered or mailed.
20
SECTION 5.2. ASSIGNMENT; BINDING EFFECT; BENEFIT; SUCCESSORS.
-----------------------------------------------
(a) Except as otherwise expressly provided in this Agreement, neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of law or
otherwise); provided, however, that the registration and related rights
-------- ------- ----
specified in Article IV shall inure to the benefit of any transferee of
Registrable Securities pursuant to a Transfer permitted under the terms of this
Agreement; provided, further, however, that each of Tracinda and Seven may
-------- ------- ------- ----
assign its rights under this Agreement to any of their respective direct or
indirect wholly owned Subsidiaries so long as (i) such assignee agrees to be
bound by the terms of this Agreement to the same extent as the applicable
assignor, (ii) the applicable assignor continues to be bound by, and is not
released from, any of its obligations under this Agreement, and (iii) the
applicable assignor will cause the applicable direct or indirect wholly owned
Subsidiary to continue to be a direct or indirect wholly owned Subsidiary of the
applicable assignor for so long as such assignee shall have rights under this
Agreement. For the purpose of this Agreement, all capital stock of the Company
owned by any direct or indirect wholly owned Subsidiary of Tracinda or Seven, as
applicable, shall be deemed owned by Tracinda or Seven, as applicable. Subject
to the first sentence of this Section 5.2, this Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Except as expressly provided in this Agreement,
notwithstanding anything contained in this Agreement to the contrary, nothing in
this Agreement, express or implied, is intended to confer on any person other
than the parties hereto any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
(b) In the event that the Company shall enter into a merger,
consolidation or other similar type transaction, all of the terms of this
Agreement relating to the Company, as applicable, shall apply to the surviving
corporation.
SECTION 5.3. ENTIRE AGREEMENT. Upon the effectiveness hereof, this
----------------
Agreement and any certificate delivered by the parties in connection herewith
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings (oral and
written) among the parties with respect thereto.
SECTION 5.4. AMENDMENT.
---------
(a) Subject to Section 5.4(b), this Agreement may not be amended or
modified except by an instrument in writing signed by or on behalf of each of
the parties hereto which, with respect to the Executives, shall refer to the
holders of a majority of shares of capital stock of the Company owned by the
Executives and subject to the terms of this Agreement.
(b) The provisions of Article IV of this Agreement which are solely
for the benefit of Tracinda, Seven and/or the Company may be amended without the
consent of the Executives. Any other provision of Article IV may be amended
without the consent of the Executives provided that, in the case of this
sentence, such amendment does not materially and adversely affect the rights of
the Executives under this Agreement.
21
SECTION 5.5. GOVERNING LAW; EFFECTIVE DATE. This Agreement shall be
-----------------------------
governed by, and construed in accordance with, the internal laws of the State of
Delaware (without regard to conflict of laws principles which would require the
application of the laws of any other State). Each of the parties hereto agrees
that any legal action or proceeding with respect to this Agreement may be
brought in the Courts of the State of Delaware or the United States District
Court located in the State of Delaware and, by execution and delivery of this
Agreement, each party hereto hereby irrevocably submits itself in respect of its
property, generally and unconditionally to the non-exclusive jurisdiction of the
aforesaid courts in any legal action or proceeding arising out of this
Agreement. Each of the parties hereto hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Agreement brought in the courts referred to in the preceding sentence. Each
party hereto hereby consents to process being served in any such action or
proceeding by the mailing of a copy thereof to the address set forth in Section
5.1 hereof and agrees that such service upon receipt shall constitute good and
sufficient service of process or notice thereof. Nothing in this Section 5.5
shall affect or eliminate any right to serve process in any other manner
permitted by law. This Agreement shall become effective at the time of the IPO
Closing. Prior to the issuance of any Options or shares of capital stock of the
Company to any Executive of the Company, MGM Studios or any of their respective
Subsidiaries, the Company shall cause such Executive to become a party to this
Agreement.
SECTION 5.6. COUNTERPARTS. This Agreement may be executed by the parties
------------
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies of
this Agreement, each of which may be signed by less than all of the parties
hereto, but together all such copies are signed by all of the parties hereto.
SECTION 5.7. HEADINGS. Headings of the Articles and Sections of this
--------
Agreement are for the convenience of the parties only and shall be given no
substantive or interpretive effect whatsoever.
SECTION 5.8. INTERPRETATION. In this Agreement, unless the context
--------------
otherwise requires, words describing the singular number shall include the
plural and vice versa, "including" shall mean including, without limitation, and
words denoting any gender shall include all genders and words denoting natural
persons shall include corporations and partnerships and vice versa.
SECTION 5.9. SEVERABILITY. Any term or provision of this Agreement
------------
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or otherwise affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
SECTION 5.10. ENFORCEMENT OF AGREEMENT. The parties hereto agree that
------------------------
irreparable damage would occur in the event that any of the provisions of this
Agreement were
22
not performed in accordance with its specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any Delaware court, this being in addition to
any other remedy to which they may be entitled at law or in equity.
SECTION 5.11. TERMINATION OF ORIGINAL SHAREHOLDERS AGREEMENT. Seven,
----------------------------------------------
Tracinda, the Company, MGM Studios, and Executives hereby mutually agree that,
effective as of the IPO Closing Date, the Original Shareholders Agreement shall
terminate and be of no further force or effect and none of them shall have any
further rights, duties or obligations thereunder from and after the effective
date of such termination. Until such time as the IPO Closing Date shall occur,
the Original Shareholders Agreement shall remain in full force and effect and
shall be unaffected hereby, except that no party hereto shall be entitled to
effect a Piggyback Registration pursuant to the Approved Initial Public
Offering.
SECTION 5.12. ANTIDILUTION ADJUSTMENT. Prior to or concurrent with the
-----------------------
consummation of the IPO Closing, the Company will effect, in one or more
transactions, a net stock split of the Common Stock (the "Stock Split"). As a
-----------
result of the Stock Split, before this Agreement becomes effective, the number
of shares of Common Stock in Section 3.2(c) will be multiplied by the Stock
Split (the "Antidilution Adjustment"). By way of illustration, if the Stock
-----------------------
Split is 50 for 1 by virtue of the Antidilution Adjustment, the 250,000 number
in Section 3.2(c) of this Agreement will become 12,500,000.
23
IN WITNESS WHEREOF, the parties have executed this Agreement and caused the
same to be duly delivered on their behalf as of the day and year first written
above.
SEVEN NETWORK LIMITED
By:
-----------------------------------------------------
Name:
Title:
TRACINDA CORPORATION
By:
-----------------------------------------------------
Name:
Title:
METRO-XXXXXXX-XXXXX STUDIOS INC.
By:
-----------------------------------------------------
Name:
Title:
METRO-XXXXXXX-XXXXX INC.
By:
-----------------------------------------------------
Name:
Title:
-----------------------------------------------------
Xxxxx X. Xxxxxxx
-----------------------------------------------------
[Executive]
-----------------------------------------------------
[Executive]
-----------------------------------------------------
[Executive]
-----------------------------------------------------
[Executive]
The undersigned, an indirect wholly owned subsidiary of Seven Network Limited,
hereby agrees to be bound by the terms of this Agreement to the same extent as
Seven Network Limited.
MILTONSTAR PTY LIMITED
By:
-----------------------------
Name:
Title:
EXHIBIT A
SEE EXHIBIT 10.5
EXHIBIT B
SEE EXHIBIT 10.5
