[METRO GOLDEN XXXXX LOGO]
EXHIBIT 10.18
October 30, 1998
Xxxxxx Xxxxxx Xxxxx, Xx.
c/o Metro-Xxxxxxx-Xxxxx Studios Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Dear Xx. Xxxxx:
Kindly refer to the Employment Agreement dated March 3, 1995 (the "Original
Agreement") as amended as of June 1, 1998 (the "June Amendment") between you
("Employee") and Metro-Xxxxxxx-Xxxxx Inc., now known as Metro-Xxxxxxx-Xxxxx
Studios Inc., ("MGM") collectively called the "Employment Agreement."
MGM and Employee mutually agree to amend the Employment Agreement effective
as of August 21, 1998 as follows:
1. Employee's title shall be changed to Executive Vice President and
General Counsel. Employee's duties shall be commensurate with his
title as assigned by the Chairman of the Board or the Vice Chairman
and shall include overseeing the legal affairs of MGM and its
subsidiaries with the exception of (i) entertainment legal affairs,
(ii) non-corporate litigation in respect of (A) the development,
production, and distribution of individual motion pictures (i.e.
intellectual property issues, breach of contract claims, audit and
accounting claims), and (B) financing/production/distribution
arrangements negotiated principally by the business affairs division,
and (iii) employment and labor matters including litigation arising
therefrom. Employee shall report directly to the Vice Chairman
(currently Xxx Xxxxxx) or to a comparable executive in the event of a
corporate reorganization.
2. Provided Employee shall fully perform all of his obligations under the
Employment Agreement, as amended hereby, MGM shall pay Employee a
salary in lieu of the salary set forth in Paragraph 3 of the June
Amendment as follows:
(a) at the rate of Four Hundred Twenty-five Thousand Dollars
($425,000) per annum during the period commencing August 21,
1998 and ending August 20, 1999.
(b) at such rate as may be determined pursuant to a review on or
about August 21, 1999 for the period commencing August 21, 1999
and ending August 20, 2000, but in no event less than the salary
then received.
(c) at such rate as may be determined pursuant to a review on or
about August 21, 2000 for the period commencing August 21, 2000
and ending May 31, 2001, but in no event less than the salary
then received.
Such salary shall be payable in installments in accordance with MGM's
standard payment practices.
3. Employee's car allowance set forth in paragraph 6 of the Original
Agreement shall be increased to $1,100 per month in accordance with
MGM's current policy for comparable executives.
4. Paragraph 4 of the June Amendment is hereby amended and restated to
read as follows:
"4 (a) Subject to subparagraph (c) below, in the event of a
Designated Change of Control or a Major Corporate Event,
Employee shall be entitled to receive a cash bonus equal to
the amount that would have been payable to Employee had he
been a participant in the Senior Management Bonus Plan who
had been granted as of October 10, 1996 an aggregate of
40,584 bonus interests pursuant to the Bonus Interest
Agreement.
(b) The date on which the amount of such bonus shall be
determined (the "Bonus Determination Date") shall be (i) in
the case of a Designated Change of Control at a price per
share of Metro-Xxxxxxx-Xxxxx Inc. common stock (the "Trading
Price") of greater than $14.90 per share, the date of such
Designated Change of Control; (ii) in the case of a
Designated Change of Control at a Trading Price of $14.90 or
less per share or in the case of a Major Corporate Event,
the next Determination Date (as such term is defined in the
Bonus Interest Agreement) which results in participants in
the Senior Management Bonus Plan as a group receiving
payments thereunder. Such bonus shall be payable in each
such case on the same date the corresponding payments are
made pursuant to the Bonus Interest Agreement.
(c) It is understood and agreed that such bonus shall be payable
only if Employee is either rendering services to MGM at the
time of the
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announcement of such Designated Change of Control or Major
Corporate Event or, if not rendering services to the Company
at such time, shall have been terminated without Cause or
resigned for Good Reason within six (6) months prior thereto
and that Employee shall be entitled to the benefits of any
relevant amendments or modifications to the Senior
Management Bonus Plan or benefits thereunder (including
modification of the threshold price for bonus payment) made
during the time that Employee is rendering services
hereunder."
5. Paragraph 5 of the June Amendment is hereby amended and restated to
read as follows:
"5 (a) Metro-Xxxxxxx-Xxxxx Inc. (the "Company") presently
maintains the Stock Incentive Plan pursuant to which
Employee has heretofore been granted an aggregate of 26,000
Employee Stock Options (the "Existing Options"). Upon the
execution hereof, management agrees to recommend to the
Compensation Committee of the Board of Directors of the
Company (the "Committee") that all the Existing Options be
converted to Executive Stock Options (Series A) and that
Employee be granted an additional 61,292 Executive Stock
Options (the "Additional Options"), allocated equally
between Series A and Series B.
(b) Subject to the fulfillment of certain conditions (the
"Conditions") as set forth in the Executive Option Exchange
Agreement, the form of which is attached hereto as Exhibit
"A" (the Exchange Agreement"), the Existing Options and the
Additional Options (collectively, the "Old Options") will be
canceled in exchange for the Company granting Employee an
aggregate of 87,292 new options (the "New Options") under
the Plan (allocated between Series A and Series B as
provided in subparagraph 5(a) above) and on the terms and
conditions specified in the Executive Stock Option Agreement
and/or the Exchange Agreement, which terms and conditions
shall provide, among other things, that (i) Employee shall
be given credit for prior vesting in respect to the 26,000
New Options granted in exchange for the Existing Options;
(ii) the exercise price of all the New Options shall be
$14.90 per share; and (iii) none of the New Options shall be
deemed to be "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as
amended.
(c) If the Conditions are not satisfied, the cancellation of the
Old Options and grant of the New Options shall be null and
void, and the Old Options (allocated between Series A and
Series B as provided in subparagraph 5(a) above) shall be
subject to all the terms and conditions of the Executive
Stock Option Agreement in the form
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previously approved by the Committee, subject to the
following: (a) the respective exercise prices of the
Existing Options shall be as provided in the Employee Stock
Option Agreements previously executed by Employee, (b)
Employee shall be given credit for prior vesting in respect
to the Existing Options, and (c) all of the Additional
Options shall have an exercise price of $24.00 per share."
6. As used herein, certain terms shall have the meanings ascribed to them
below:
"Designated Change of Control" has the meaning set forth in Schedule 1
to the Metro-Xxxxxxx-Xxxxx Inc. Stock Option Agreement Pursuant to the
Amended and Restated 1996 Stock Incentive Plan.
"Major Corporate Event" means any merger, acquisition, consolidation,
joint venture or similar arrangement (not constituting a Designated
Change of Control) involving Metro-Xxxxxxx-Xxxxx Inc. or any of its
subsidiaries and having an equity or similar value in excess of $500
million or any other event designated as such by the Chairman or Vice
Chairman of MGM.
"Senior Management Bonus Plan" means the Metro-Xxxxxxx-Xxxxx Inc. and
Metro-Xxxxxxx-Xxxxx Studios Inc. Senior Management Bonus Plan as
adopted by the Board of Directors of such companies on November 7,
1997 and approved by the stockholders of Metro-Xxxxxxx-Xxxxx Inc. on
May 12, 1998.
"Bonus Interest Agreement" means the form of Metro-Xxxxxxx-Xxxxx Inc.
and Metro-Xxxxxxx-Xxxxx Studios Inc. Bonus Interest Agreement Pursuant
to the Senior Management Bonus Plan.
"Stock Incentive Plan" means the Amended and Restated 1996 Stock
Incentive Plan adopted by the Board of Directors and stockholders of
Metro-Xxxxxxx-Xxxxx Inc. on November 7, 1997.
"Executive Stock Options" means stock options granted pursuant to the
Executive Stock Option Agreement.
"Executive Stock Option Agreement" means the form of Metro-Xxxxxxx-
Xxxxx Inc. Stock Option Agreement Pursuant to the Amended and Restated
1996 Stock Incentive Plan.
"Employee Stock Options" means stock options granted pursuant to the
Employee Stock Option Agreement.
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"Employee Stock Option Agreement" means the form of Metro-Xxxxxxx-
Xxxxx Inc. Employee Non-Qualified Stock Option Agreement Pursuant to
the Amended and Restated 1996 Stock Incentive Plan.
"Series A" and "Series B" shall have the meanings set forth in the
Executive Stock Option Agreement.
"Cause" and "Good Reason" have the respective meanings set forth in
Schedule A to the Employee Stock Option Agreement.
7. In the event MGM terminates the Employment Agreement, as amended
hereby, and Employee's employment thereunder other than for Cause, or
if Employee terminates this agreement for Good Reason, MGM shall
continue to pay the salary as provided in Paragraph 2 hereof for the
remainder of the Term. Employee shall not be required to mitigate
damages nor shall any income received by Employee from sources other
than MGM reduce MGM's obligation with respect to such termination.
8. Except as herein specifically provided, the Employment Agreement shall
not be amended in any respect whatsoever and shall continue in full
force and effect.
If the foregoing is in accordance with your understanding and agreement,
please so indicate by signing in the place for your signature below.
Very truly yours,
METRO-XXXXXXX-XXXXX STUDIOS INC.
/s/ Xxxxxxx X. Xxxxx
By: _________________________________
Senior Executive Vice President
AGREED:
/s/ Xxxxxx Xxxxxx Xxxxx Xx.
____________________________
XXXXXX XXXXXX XXXXX, XX.
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