EXHIBIT 99.3
METRO-XXXXXXX-XXXXX INC.
EMPLOYEE NON-QUALIFIED STOCK OPTION AGREEMENT
PURSUANT TO THE
AMENDED AND RESTATED 1996 STOCK INCENTIVE PLAN
This Employee Non-Qualified Stock Option Agreement (the "Agreement") is
entered into as of the Date of Grant set forth below by Metro-Xxxxxxx-Xxxxx
Inc., a Delaware corporation (the "Company"), and the person named below as
Employee.
Employee is an employee of the Company or one or more of its subsidiaries.
Pursuant to the Company's Amended and Restated 1996 Stock Incentive Plan (the
"Plan"), the Compensation Committee of the Board of Directors of the Company,
which administers the Plan (the "Committee"), has approved the grant to Employee
of an option to purchase shares of the Common Stock of the Company (the "Common
Stock"), on the terms and conditions set forth below and subject to the terms of
the Plan and to this Agreement being entered into by Employee with the Company.
The Company and Employee agree as set forth below.
1. GRANT OF OPTION; CERTAIN TERMS AND CONDITIONS. The Company hereby
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grants to Employee, and Employee hereby accepts, as of the Date of Grant, an
option to (the "Option") purchase the number of shares of Common Stock set forth
below (the "Option Shares"), at the Exercise Price per share set forth below,
which option will expire at 5:00 p.m., West Coast Time, on the Expiration Date
set forth below and will be subject to all of the terms and conditions set forth
in the Plan and this Agreement. On each anniversary of the Date of Xxxxx, the
Option will become exercisable to purchase ("vest with respect to") that number
of Option Shares (rounded to the nearest whole share) equal to the total number
of Option Shares multiplied by the Annual Vesting Rate set forth below.
Employee: _________________
Date of Grant: _________
Number of shares purchasable: _________
Exercise Price per share: ______
Expiration Date: ________
Annual Vesting Rate: 20%
If, after the first anniversary of the Date of Grant and before the
Option has become fully vested, the employment of Employee is terminated for any
reason other than a termination by the Company with "Cause", a resignation by
Employee without "Good Reason" or a termination pursuant to Section 2(a)(iii)
hereof, and such termination does not occur on a date which is an anniversary of
the Date of Grant, then, in addition to the portion of the Option which has
theretofore vested as of the then most recent prior anniversary date of the Date
of Grant (the "Prior Anniversary Date"), the Option shall immediately vest with
respect to an additional portion determined by multiplying the Annual Vesting
Rate (i.e., 20%) by a fraction, the numerator of which is the number of full
monthly periods which have elapsed since the Prior Anniversary Date
and the denominator of which is the number 12. By way of illustration, if the
anniversary of the Date of Grant is September 15 of a given year, and the date
of termination of Employee's employment is November 20 of such year, then the
two full monthly periods will have elapsed since the applicable Prior
Anniversary Date. The unvested portion of the Option will terminate as set forth
in Section 2(a) below.
The Option is not intended to qualify as an incentive stock option under
Section 422 of the Internal Revenue Code, as amended.
2. ACCELERATION OF VESTING AND TERMINATION OF OPTION.
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(a) Termination of Employment.
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(i) Retirement. If Employee ceases to be employed by reason of
Employee's retirement in accordance with the Company's then-current
retirement policy ("Retirement"), then (A) the portion of the Option that
has not vested on or prior to the date of such Retirement will terminate on
such date and (B) the remaining vested portion of the Option will terminate
upon the earlier of the Expiration Date and the first anniversary after the
date of Retirement.
(ii) Death or Permanent Disability. If Employee ceases to be
employed by reason of Employee's death or "Permanent Disability" (defined
below), then (A) the portion of the Option that has not vested on or prior
to the date of Employee's death or Permanent Disability will terminate on
that date and (B) the remaining vested portion of the Option will terminate
upon the earlier of the Expiration Date and the first anniversary of the
date of Employee's death or Permanent Disability.
"Permanent Disability" has the meaning given to that term in
Employee's employment agreement with the Company or any of its subsidiaries
or, if not so defined or if Employee does not have an employment agreement
with the Company or a subsidiary of the Company, "Permanent Disability"
means the inability of Employee to perform, after reasonable accommodations
by the Company or such subsidiary, the essential functions of his or her
duties and obligations as an employee of the Company or such subsidiary by
reason of any medically determinable physical or mental impairment that can
reasonably be expected to result in death within 12 months or which has
lasted or can be expected to last for a continuous period of not less than
12 months.
The determination of whether Employee has a Permanent Disability for
purposes of this Agreement will be made by the Committee (or its designee)
in its discretion. In making its determination, the Committee (or its
designee) may request that Employee submit to an examination by a licensed
physician selected by the Committee (or its designee), and the physician's
examination report or conclusion will be provided to the Committee (or its
designee) and Employee. The Committee (or designee) may rely solely on the
examination or report of the physician in making its determination;
provided that if Employee does not submit to an examination by that
physician within 20 days after a request that Employee do so, the Committee
(or its designee) may make its determination based on its assumption, made
in its discretion (which assumption will be conclusive), of what the
physician's report or examination would have shown if made.
(iii) Termination without Cause or Resignation for Good Reason after
a Designated Change in Control. If, within one year after a "Designated
Change in
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Control", the employment of Employee is terminated without "Cause" or
Employee resigns with "Good Reason", then (A) the portion of the Option
that has not become vested on or prior to the date of such termination or
resignation will become fully vested on the date of such termination or
resignation and (B) the Option will be exercisable in full on the date of
such termination or resignation, provided, however, that the Option will
terminate upon the earlier of the Expiration Date and the date that is 90
days after the date of such termination or resignation. The terms
"Designated Change in Control", "Cause" and "Good Reason", as used in the
preceding sentence, and the terms "Seven", "Studios" and "Tracinda" as used
in Schedule A to this Agreement, have the meanings given to them in
Schedule A to this Agreement.
(iv) Other Termination or Resignation of Employment. If Employee's
employment is terminated or Employee resigns from his or her employment
(regardless of the cause of or reason, if any, for the termination or
resignation and, without limitation, even if the termination is wrongful),
other than in a manner covered by Sections 2(a)(i), (ii) or (iii), then:
(A) the portion of the Option that has not become vested on or prior to the
date of such termination or resignation will terminate immediately, without
the payment of any consideration to Participant ; and (B) the remaining
vested portion of the Option will terminate upon the earlier of the
Expiration Date and the date that is 90 days after the date of resignation
or termination.
(b) Death Following Termination of Employment. Notwithstanding anything
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to the contrary in this Agreement, if Employee dies at any time after the
termination of his or her employment and prior to the date on which the Option
is terminated pursuant to Section 2(a) above, then the vested portion of the
Option will terminate on the earlier of the Expiration Date or the first
anniversary of the date of Optionee's death.
(c) Acceleration of Option by Committee. The Committee, in its sole
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discretion, may accelerate the exercisability of the Option at any time and for
any reason.
(d) Dissolution or Liquidation. Except as provided to the contrary in
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Section 3 hereof, the Option will become fully vested and exercisable
immediately prior to, and shall terminate upon, the consummation of the
dissolution or liquidation of the Company.
3. ADJUSTMENTS; MERGER AND SIMILAR EFFECT TRANSACTIONS. If the
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outstanding securities of the class then subject to the Option are increased,
decreased or exchanged for or converted into cash, property or a different
number or kind of securities, or cash, property or securities are distributed in
respect of such outstanding securities, in either case as a result of a merger,
consolidation or other acquisition of all or substantially all of the stock or
assets of the Company (however structured) (each an "Acquisition"),
reorganization, recapitalization, restructuring, reclassification, dividend
(other than ordinary quarterly cash dividends) or other distribution, stock
split, reverse stock split or the like, or in the event that substantially all
of the property and assets of the Company are sold, then, the Committee will, in
accordance with the provisions of the Plan, make appropriate and proportionate
adjustments in the number and type of shares or other securities or cash or
other property that may thereafter be acquired upon the exercise of the Option;
provided, however, that any such adjustments in the Option will be made without
changing the aggregate Exercise Price of the then unexercised portion of the
Option; provided, further that in the case of an Acquisition in which the
consideration receivable by stockholders of the Company consists solely of cash
(or solely of cash and the assumption of liabilities), subject to an "Exemptive
Election" (defined below), the Option will continue to vest
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following the Acquisition as if Employee had continued to be employed by the
Company or a subsidiary of the Company through the time the Option is fully
vested, the Option will be exercisable as provided in Section 4 hereof and, upon
such exercise, Employee will receive, without interest, the amount of cash the
Employee would have received for the Option Shares acquired on exercise had he
or she owned such Option shares at the date of the Acquisition; and provided,
further, that in the case of any other Acquisition (other than an Acquisition,
the primary purpose of which is to change the domicile of the Company within the
United States (i.e., a so-called reincorporation transaction)), subject to an
Exemptive Election, the Company will ensure that the Plan and this Agreement
will be assumed by the acquiring entity, the Option will continue to vest as
provided in this Agreement and the Option will be an option to acquire the
securities and, without interest, the other consideration receivable by
stockholders of the Company in the Acquisition. The Committee may in its
discretion (but without any obligation to do so) make an election with respect
to any Acquisition (an "Exemptive Election") pursuant to which (i) the Option
will become fully vested and exercisable (to the extent not previously exercised
or terminated) immediately prior to the consummation of the Acquisition, (ii)
Employee shall be given the option to exercise the Option in full immediately
prior to consummation of the Acquisition (to the extent not previously exercised
or terminated) and (iii) the Option will terminate upon consummation of the
Acquisition. If the Company elects to invoke an Exemptive Election with respect
to any Acquisition, it or the Committee will give written notice of the election
to Employee not later than 20 days preceding the date of consummation of the
Acquisition and the last two provisos of the first sentence of this Section 3
will not be applicable with respect to the Acquisition.
4. EXERCISE.
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(a) Only the vested portion of the Option may be exercised and, subject to
the limitations in Section 2 and to this Section 4, the Option may be exercised
as to the portion that is then vested at any time and from time to time until
the Option expires or is terminated.
(b) The Option will be exercisable during Employee's lifetime only by
Employee or by Employee's guardian or legal representative, and after Employee's
death only by the person or entity entitled to do so under Employee's last will
and testament or applicable intestate law.
(c) The Option may only be exercised by the delivery to the Company of a
written notice of such exercise (the "Exercise Notice"), which notice must
specify the number of Option Shares to be purchased (the "Purchased Shares") and
the aggregate Exercise Price for such shares, together with payment in full of
such aggregate Exercise Price in cash or by check payable to the Company;
provided, however, that payment of such aggregate Exercise Price may instead be
made, in whole or in part, by one or more of the following means selected by
Employee in his or her sole discretion:
(i) the delivery to the Company of a certificate or certificates
representing shares of Common Stock that are "mature" shares (as that term
is used in Bulletin No. 84-18 of the Emerging Issues Task Force of the
Financial Accounting Standards Board), duly endorsed or accompanied by duly
executed stock powers, which delivery effectively transfers to the Company
good and valid title to those shares of Common Stock, free and clear of any
pledge, commitment, lien, claim or other encumbrance (such shares of Common
Stock to be valued on the basis of the aggregate "Fair Market Value"
(defined in the Plan) on the date Employee delivers his or her Exercise
Notice applicable to that exercise to the Company (the "Option
Determination Date")); or
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(ii) the delivery, concurrently with the exercise and in accordance
with Section 220.3(e)(4) of Regulation T promulgated under the Exchange Act
(or, if applicable, any successor Section), of a properly executed Exercise
Notice and irrevocable instructions to a broker promptly to deliver to the
Company a specified dollar amount of the proceeds of a sale or a loan
secured by the shares of Common Stock issuable upon any exercise of the
Option.
5. PAYMENT OF WITHHOLDING TAXES. If the Company becomes obligated to
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withhold an amount on account of any tax imposed as a result of the exercise of
the Option, including, without limitation, any federal, state, local or other
income tax, or any F.I.C.A., state disability insurance tax or other employment
tax (the "Withholding Liability"), then Employee must, on the date of exercise
and as a condition to the issuance of the Purchased Shares, pay the Withholding
Liability to the Company in cash or by check payable to the Company, by the
tendering of shares of Common Stock with a Fair Market Value, as of the day
preceding the date of such exercise, equal to the amount of the Withholding
Liability or by a reduction in the number of shares of Common Stock or other
securities or property otherwise issuable pursuant to the exercise of the Option
with a Fair Market Value, as of the day preceding the date of such exercise,
equal to the amount of Withholding Liability as of the Option Determination Date
with respect to the exercise of the Option. Employee consents to the Company
withholding the full amount of the Withholding Liability from any compensation
or other amounts otherwise payable to Employee if Employee does not pay the
Withholding Liability to the Company on the date of exercise of the Option, and
Employee agrees that the withholding and payment of any such amount by the
Company to the relevant taxing authority will constitute full satisfaction of
the Company's obligation to pay such compensation or other amounts to Employee.
Employee will indemnify the Company and hold it harmless from and against any
federal, state or local withholding tax liability (including interest and
penalties) that results from any exercise of the Option, except to the extent
that (i) any such penalties result from the failure of the Company to make a
good faith determination of the amounts to withhold from Employee or (ii) any
such liabilities, interest or penalties result from the failure of the Company
to pay over to the relevant taxing authorities any sums withheld from, or paid
to the Company by, Employee to satisfy any Withholding Liability.
6. NOTICES. All notices and other communications required or permitted to
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be given pursuant to this Agreement must be in writing and will be deemed given
if delivered personally or five days after mailing by certified or registered
mail, postage prepaid, return receipt requested, to the Company at 0000 Xxxxxxxx
Xxxxxx, Xxxxx Xxxxxx, Xxxxxxxxxx 00000, Attention: Chief Executive and
Financial Officers, or to Employee at the address set forth beneath Employee's
signature on the signature page hereto, or at such other addresses as they may
designate by written notice in the manner aforesaid.
7. STOCK EXCHANGE OR NASDAQ REQUIREMENTS; APPLICABLE LAWS.
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Notwithstanding anything to the contrary in this Agreement, no shares of Common
Stock purchased upon exercise of the Option, and no certificate representing all
or any part of such shares, will be issued or delivered if (a) such shares have
not been listed, subject to notice of issuance, on each stock exchange upon
which shares of that class are then listed or (b) in the opinion of counsel to
the Company, such issuance or delivery would cause the Company to be in
violation of or to incur liability under any federal, state or other securities
law, or any requirement of any stock exchange listing agreement to which the
Company is a party, or any other requirement of law or of any administrative or
regulatory body having jurisdiction over the Company.
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8. NONTRANSFERABILITY. Neither the Option nor any interest therein may be
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sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred
in any manner other than by will or the laws of descent and distribution.
9. PLAN. The Option is granted pursuant to the Plan, as in effect on the
----
Date of Grant, and is subject to all the terms and conditions of the Plan, as it
may be amended from time to time; provided, however, that no amendment may
deprive Employee, without Employee's consent, of the Option or of any of
Employee's rights under this Agreement. The interpretation and construction by
the Committee of the Plan, this Agreement, the Option and such rules and
regulations as may be adopted by the Committee for the purpose of administering
the Plan will be final and binding upon Employee. Until the Option expires,
terminates or is exercised in full, the Company will, upon written request
therefor, send a copy of the Plan, in its then-current form, to Employee or any
other person or entity then entitled to exercise the Option.
10. STOCKHOLDER RIGHTS. The Option is not considered to be an equity
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security of the Company. No person or entity shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of any Option Shares prior to
the date on which Employee is recorded as the holder of such Option Shares on
the records of the Company.
11. EMPLOYMENT RIGHTS. Subject to the provisions of any written
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employment agreement between Employee and the Company or a subsidiary of the
Company, neither any provision of the Plan or this Agreement nor the holding of
the Option (a) confers upon Employee any right to continue in the employ of the
Company or any of its subsidiaries, (b) affects the right of the Company and
each of its subsidiaries to terminate the employment of Employee, with or
without Cause and for any reason or without reason, or (c) confers on Employee
any right to participate in any employee welfare or benefit plan or other
program of the Company or any of its subsidiaries other than the Plan. EMPLOYEE
ACKNOWLEDGES AND AGREES THAT THE COMPANY AND EACH OF ITS SUBSIDIARIES MAY
TERMINATE THE EMPLOYMENT OF EMPLOYEE AT ANY TIME (X) WITH OR WITHOUT CAUSE AND
(Y) FOR ANY REASON OR FOR NO REASON, PROVIDED THAT NOTHING IN THIS SENTENCE
AFFECTS THE RIGHTS AND REMEDIES OF THE COMPANY OR ANY SUBSIDIARY OF THE COMPANY
UNDER ANY WRITTEN EMPLOYMENT AGREEMENT THAT MAY NOW OR IN THE FUTURE EXIST
BETWEEN EMPLOYEE AND THE COMPANY OR A SUBSIDIARY OF THE COMPANY.
12. ARBITRATION OF DISPUTES.
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(a) All disputes between Employee and the Company, however significant,
arising out of, relating in any way to, or in connection with, this Agreement
(including the validity, scope and enforceability of this arbitration provision)
will be settled only by an arbitration (x) conducted in accordance with the then
rules of the American Arbitration Association or any similar successor body and
(y) held in Los Angeles, California.
(b) The arbitration will be held before a single arbitrator mutually
agreed to by the parties to the arbitration, except that, if the parties fail to
agree to an arbitrator within 20 days from the date on which the claimant's
request for arbitration is delivered to the other party to the arbitration, the
arbitration shall be held before an arbitrator appointed by the American
Arbitration Association.
(c) The award of the arbitrator will be made within 90 days from the date
on which the arbitrator is selected. The award of the arbitrator will be final
and, to the greatest extent allowed by law, the parties agree to waive their
right to any form of appeal. The arbitrator must award
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costs and fees, including the fees of the arbitrator, to the prevailing party.
Judgment on any award of the arbitrator may be entered in any court having
jurisdiction or application may be made to such court for the judicial
acceptance of the award and for one or more orders of enforcement.
13. GOVERNING LAW. This Agreement and the Option issued under this
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Agreement are to be governed by and are to be construed and enforced in
accordance with the internal laws, and not the laws pertaining to choice or
conflict of laws, of the State of Delaware.
14. SEVERABILITY; SUCCESSORS. If any provision or portion of this
------------------------
Agreement is illegal or unenforceable, the other portions of this Agreement will
not be affected by the illegality or unenforceability. Subject to Sections 2(d)
and 3 hereof, this Agreement will be binding on the Company and Employee and
their respective successors and assigns, however such succession or assignment
is effected.
15. OPTIONS AND SHARES ISSUABLE UPON EXERCISE NOT REGISTERED.
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Employee, by accepting the Option granted hereby, acknowledges that the
Option is not, and the shares of Common Stock and other securities issuable upon
exercise of the Option may not be, registered under the Securities Act of 1933,
as amended (the "Securities Act"), and represents that he or she has acquired
the Option for his or her own account and not with a present view to, or in
connection with, any distribution thereof in violation of the Securities Act.
Unless and until covered by a registration statement under the Securities Act,
each stock certificate representing the shares of Common Stock and other
securities purchased upon exercise of the Option shall be stamped or otherwise
imprinted with the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR REGISTERED OR
QUALIFIED UNDER ANY STATE SECURITIES OR BLUE SKY LAW. THEY MAY BE OFFERED
OR SOLD ONLY IF REGISTERED UNDER THE ACT AND REGISTERED OR QUALIFIED UNDER
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS, OR IF AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND REGISTRATION OR QUALIFICATION UNDER
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS IS AVAILABLE."
METRO-XXXXXXX-XXXXX INC. EMPLOYEE
By:_____________________ __________________________________
Name:
__________________________________
Street Address
__________________________________
City, State and Zip Code
__________________________________
Social Security Number
7
SCHEDULE A
CERTAIN DEFINITIONS
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CAUSE
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"Cause" means (i) the failure of Employee to substantially perform his
or her duties with MGM or any subsidiary of MGM (other than any such failure
resulting from illness, temporary absence, authorized vacation, legal incapacity
or disability), which failure continues 30 days after a demand for substantial
performance is delivered in writing to Employee by the Board of Directors of the
employing entity or MGM (the "Board"), which specifically identifies the manner
in which Employee has not substantially performed his or her duties; (ii)
Employee's failure to follow reasonable and lawful directives (consistent with
the terms of Employee's written employment agreement with MGM (or, if
applicable, employing subsidiary of MGM), if any, and, if applicable, the
Amended and Restated Investors Shareholder Agreement dated as of August 4, 1997
among Seven, Tracinda, MGM, Studios and Xxxxx X. Xxxxxxx) of the Board (or, if
applicable, the Chief Executive Officer of the employing entity (the "CEO")),
which failure continues 30 days after a demand for Employee to follow those
directives is delivered in writing to Employee by the Board (or, if applicable,
the CEO) that specifically identifies the manner in which Employee has not
followed the directives; (iii) the engaging by Employee in willful, reckless or
grossly negligent misconduct, in connection with his or her employment, unless
Employee ceases the misconduct within ten days, and remedies the adverse effect
of the misconduct within 30 days, in each case after a demand to cease engaging
in the misconduct is delivered in writing to Employee by the Board (or, if
applicable, the CEO) that specifically identifies the misconduct; (iv)
Employee's conviction of an offense involving moral turpitude or a felony
(provided that the first conviction of Employee, after his or her Date of Grant,
for driving under the influence of alcohol will not constitute "Cause"); or (v)
material breach by Employee of Employee's written employment agreement, if any,
with MGM (or, if applicable, employing subsidiary of MGM) and failure to cure
the breach within 30 days of delivery of a written notice to Employee by the
Board (or, if applicable, the CEO) that specifically identifies the breach. If
Employee's failure under clause (i) or (ii) of the immediately preceding
sentence or Employee's failure to cease misconduct under clause (iii) of the
immediately preceding sentence would, if continued unabated for the period
specified in that sentence, be reasonably expected to cause MGM or Studios
severe and irreparable harm, and if the notice to Employee so specifies, the
Board (or, if applicable, the CEO) may shorten the period within which the
failure must cease to a reasonable period specified in the notice, but not less
than ten days in the case of clauses (i) and (ii) or five days in the case of
clause (iii). If the remedy, cure or cessation of an act or omission which is
the subject of a notice under this definition of "Cause" would reasonably
require more than 30 days to complete and Employee commences the remedy, cure or
cessation within 30 days after receipt of the notice and diligently pursues the
same to completion, the act or omission will not constitute "Cause", unless the
remedy, cure or cessation is not completed within 60 days from the date of
notice from the Board (or, if applicable, the CEO). If any event, action or
failure to act specified in clauses (i) through (v) in the first sentence of
this definition occurs, the right of MGM to terminate Employee for Cause as the
result of the occurrence will continue for a period of 90 days after the date of
the occurrence (or, if notice thereof is required and is given within such 90-
day period, 60 days after the expiration of the cure period specified therefor).
DESIGNATED CHANGE IN CONTROL
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"Designated Change in Control" means occurrence or consummation of: (i)
any merger or consolidation of MGM with or into any other person, as the result
of which, immediately upon
Schedule A-1
the completion of the transaction, Tracinda and Seven beneficially own, in the
aggregate, less than 50.1% of the combined voting power of the then outstanding
voting securities of the surviving person entitled to vote, and any other person
beneficially owns 30% or more of the combined voting power of the then
outstanding voting securities of the surviving person entitled to vote,
generally in the election of directors (or similar position persons) of the
surviving person; (ii) any sale, transfer or other conveyance, whether direct or
indirect, of all or substantially all of the property and assets of MGM, on a
consolidated basis, in one transaction or a series of related transactions,
provided that this clause (ii) will not apply to any sale, transfer or other
conveyance (x) to MGM or Studios by any wholly-owned direct or indirect
subsidiary of MGM or Studios, (y) by any wholly-owned direct or indirect
subsidiary of MGM or Studios to any other such wholly-owned direct or indirect
subsidiary of MGM or Studios or (z) by MGM or Studios to one or more wholly-
owned direct or indirect subsidiaries of MGM or Studios; or (iii) any
transaction or event that results in Tracinda and Seven ceasing, in the
aggregate, to beneficially own 50.1% or more of the combined voting power of the
then outstanding voting securities of MGM entitled to vote generally in the
election of directors and any other person beneficially owning 30% or more of
the combined voting power of the then outstanding voting securities of MGM
entitled to vote generally in the election of directors. As used in this
definition of "Designated Change in Control", (a) the term "person" has the
meaning given to that term under Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), whether or not the
Exchange Act is applicable to MGM, and (b) the terms "beneficial owner" and
"beneficially own" have the meanings given to them in Rule 13d-3 under the
Exchange Act, whether or not the Exchange Act is applicable to MGM.
Notwithstanding the foregoing provisions of this definition, a Designated Change
in Control will not occur under clauses (i) or (iii) of the first sentence of
this definition if the acquirer, purchaser or 50.1% owner is an employee benefit
plan (or related trust) sponsored or maintained by MGM or any person controlled
by MGM.
GOOD REASON
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"Good Reason" means: (i) a substantial and adverse change in Employee's
status or position with MGM and its subsidiaries as it existed on the Date of
Grant which is not cured within 30 days after written notice thereof to MGM from
Employee; (ii) a reduction (other than for Cause) by MGM of Employee's
compensation that was in effect on the Date of Grant or that was in effect
thereafter, if such compensation has been increased, unless the reduction is
eliminated retroactively not later than 30 days after written notice thereof to
MGM from Employee; (iii) if Employee does not have a written employment
agreement with MGM or any of its subsidiaries, a material reduction by MGM and
its subsidiaries in the overall benefits provided to Employee, that were
provided on the Date of Grant or were provided thereafter if the benefits have
been increased (as used in this definition, "benefits" includes all profit-
sharing, retirement, pension, health, medical, dental, disability insurance,
automobile and similar benefits), unless the reduction is eliminated
retroactively not later than 30 days after written notice thereof to MGM from
Employee; (iv) a relocation of the Employee's principal place of employment to
any place outside the greater Los Angeles area, except for reasonable amounts of
required travel by Employee on business on behalf of MGM or any of its
subsidiaries; or (v) any material breach by MGM of any provision of the Amended
and Restated Plan, the agreement with Employee under the Amended and Restated
Plan, the Bonus Plan, this Agreement or Employee's employment agreement, if any,
with MGM or a subsidiary of MGM which adversely affects Employee and which is
not cured within 30 days after written notice thereof to MGM from Employee. If
any event, action or failure to act specified in clauses (i) through (v) of the
immediately preceding sentence occurs, the right of Employee to terminate his or
her employment for "Good Reason" as the result of the occurrence will continue
for a period of 90 days after the date of the occurrence
Schedule A-2
(or, if notice thereof is required and is given within such 90-day period, 60
days after the expiration of the cure period specified therefor).
SEVEN
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"Seven" means Seven Network Limited, a corporation organized under the laws
of the Commonwealth of Australia.
STUDIOS
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"Studios" means Metro-Xxxxxxx-Xxxxx Studios Inc., a Delaware corporation.
TRACINDA
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"Tracinda" means Tracinda Corporation, a Nevada corporation.
Schedule A-3
