-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BVWDeWHTIEJ6aERJszcYce/d4Oo1dLGxDLpeD7FZ6yRGPKICjQ97FFcLOMhHxLrp 3W16iYN+kKON4+Pf9yCTgQ== 0000895345-04-000679.txt : 20040927 0000895345-04-000679.hdr.sgml : 20040927 20040924205027 ACCESSION NUMBER: 0000895345-04-000679 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20040927 DATE AS OF CHANGE: 20040924 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: METRO-GOLDWYN-MAYER INC CENTRAL INDEX KEY: 0001026816 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 954605850 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-51939 FILM NUMBER: 041045974 BUSINESS ADDRESS: STREET 1: 10250 CONSTELLATION BLVD CITY: LOS ANGELES STATE: CA ZIP: 90067 BUSINESS PHONE: 3104493000 MAIL ADDRESS: STREET 1: 10250 CONSTELLATION BLVD CITY: LOS ANGELES STATE: CA ZIP: 90067 FORMER COMPANY: FORMER CONFORMED NAME: P&F ACQUISITION CORP DATE OF NAME CHANGE: 19970507 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: TRACINDA CORP CENTRAL INDEX KEY: 0000319029 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: NV FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 150 RODEO DRIVE SUITE 250 CITY: BEVERLY HILLS STATE: CA ZIP: 90212 BUSINESS PHONE: 7027378060 MAIL ADDRESS: STREET 1: 150 RODEO DRIVE SUITE 250 CITY: BEVERLY HILLS STATE: CA ZIP: 90212 SC 13D/A 1 wd13da-metro_tracinda.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (Amendment No. 23) METRO-GOLDWYN-MAYER INC. - ------------------------------------------------------------------------------- (Name of Issuer) common stock, $.01 par value per share - ------------------------------------------------------------------------------- (Title of Class of Securities) 591610100 - ------------------------------------------------------------------------------- (CUSIP Number) Richard E. Sobelle, Esq. Tracinda Corporation 150 Rodeo Drive, Suite 250 Beverly Hills, California 90212 (310) 271-0638 - ------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) September 23, 2004 - ------------------------------------------------------------------------------- (Date of Event which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box: ... Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent. - ------------------------------------------------------------------------------- CUSIP NO. 591610100 13D PAGE 2 OF - ------------------------------------------------------------------------------- (1)NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) TRACINDA CORPORATION - ------------------------------------------------------------------------------- (2)CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [_] (B) [_] - ------------------------------------------------------------------------------- (3)SEC USE ONLY - ------------------------------------------------------------------------------- (4)SOURCE OF FUNDS N/A - ------------------------------------------------------------------------------- (5)CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] - ------------------------------------------------------------------------------- (6)CITIZENSHIP OR PLACE OF ORGANIZATION NEVADA - ------------------------------------------------------------------------------- (7) SOLE VOTING POWER 164,049,644 ---------------------------- NUMBER OF (8) SHARED VOTING POWER SHARES 0 BENEFICIALLY OWNED BY ---------------------------- EACH (9) SOLE DISPOSITIVE POWER REPORTING 164,049,644 PERSON WITH ---------------------------- (10)SHARED DISPOSITIVE POWER 0 ---------------------------------------- (11)AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 164,049,644 --------------------------------------------------------------------- (12)CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] --------------------------------------------------------------------- (13)PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 68.9% --------------------------------------------------------------------- (14)TYPE OF REPORTING PERSON CO - ------------------------------------------------------------------------------- CUSIP NO. 591610100 13D PAGE 3 OF - ------------------------------------------------------------------------------- (1)NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) KIRK KERKORIAN - ------------------------------------------------------------------------------- (2)CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [_] (B) [_] - ------------------------------------------------------------------------------- (3)SEC USE ONLY - ------------------------------------------------------------------------------- (4)SOURCE OF FUNDS N/A - ------------------------------------------------------------------------------- (5)CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] - ------------------------------------------------------------------------------- (6)CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A. - ------------------------------------------------------------------------------- (7) SOLE VOTING POWER 174,049,644 ---------------------------- NUMBER OF (8) SHARED VOTING POWER SHARES 0 BENEFICIALLY OWNED BY ---------------------------- EACH (9) SOLE DISPOSITIVE POWER REPORTING 174,049,644 PERSON WITH ---------------------------- (10)SHARED DISPOSITIVE POWER 0 ---------------------------------------- (11)AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 174,049,644 --------------------------------------------------------------------- (12)CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] --------------------------------------------------------------------- (13)PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 73.1% --------------------------------------------------------------------- (14)TYPE OF REPORTING PERSON IN - ------------------------------------------------------------------------------- CUSIP NO. 591610100 13D PAGE 4 OF - ------------------------------------------------------------------------------- (1)NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) 250 RODEO, INC. - ------------------------------------------------------------------------------- (2)CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [_] (B) [_] - ------------------------------------------------------------------------------- (3)SEC USE ONLY - ------------------------------------------------------------------------------- (4)SOURCE OF FUNDS N/A - ------------------------------------------------------------------------------- (5)CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] - ------------------------------------------------------------------------------- (6)CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE - ------------------------------------------------------------------------------- (7) SOLE VOTING POWER 19,758,648 ---------------------------- NUMBER OF (8) SHARED VOTING POWER SHARES 0 BENEFICIALLY OWNED BY ---------------------------- EACH (9) SOLE DISPOSITIVE POWER REPORTING 19,758,648 PERSON WITH ---------------------------- (10)SHARED DISPOSITIVE POWER 0 ---------------------------------------- (11)AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 19,758,648 --------------------------------------------------------------------- (12)CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] --------------------------------------------------------------------- (13)PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) [8.3%] --------------------------------------------------------------------- (14)TYPE OF REPORTING PERSON CO --------------------------------------------------------------------- This Amendment No. 23 amends and supplements the Statement on Schedule 13D filed on November 18, 1997, as amended on November 26, 1997, on July 27, 1998, on August 19, 1998, on September 2, 1998, on October 26, 1998, on November 20, 1998, on February 4, 1999, on May 4, 1999, on October 18, 1999, on November 19, 1999, on February 6, 2001, on May 2, 2001, on July 2, 2002, on January 21, 2003, on January 30, 2003, on February 4, 2003, and as amended by Tender Offer Statement on Schedule 14D-100 dated August 21, 2003 and subsequent amendments on August 21, 2003, on September 5, 2003, on September 25, 2003, on October 3, 2003, and on October 9, 2003 (as so amended, the "Schedule 13D"), relating to the common stock, $.01 par value per share (the "Common Stock"), of Metro-Goldwyn-Mayer Inc., a Delaware corporation (the "Company"), previously filed by Tracinda Corporation, a Nevada corporation ("Tracinda"), 250 Rodeo, Inc., a Delaware corporation ("250 Rodeo"), and Mr. Kirk Kerkorian (collectively with Tracinda and 250 Rodeo, the "Reporting Persons"). Capitalized terms used herein and not otherwise defined in this Amendment No. 23 shall have the meanings set forth in the Schedule 13D. 1. Item 4 of the Schedule 13D is hereby amended to add the following information: On September 23, 2004, LOC Acquisition Company ("Newco") and the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") providing for a merger of Newco with and into the Company (the "Merger"), pursuant to which all of the shares of Common Stock will be converted into the right to receive $12.00 per share. The consummation of the Merger is subject to the satisfaction or waiver at or prior to the effective time of the Merger of certain conditions, including, but not limited to, adoption of the Merger Agreement by the holders of shares of Common Stock and receipt of required regulatory approvals. Concurrently with the execution of the Merger Agreement, Tracinda and 250 Rodeo (together the "Principal Stockholders") entered into a Voting and Support Agreement (the "Voting Agreement") with Newco, pursuant to which the Principal Stockholders agreed to vote the shares of Common Stock beneficially owned by them and with respect to which they have the right to vote (the "Subject Shares") (i) in favor of the Merger, (ii) against any Takeover Proposal (as defined in the Merger Agreement), (iii) against any action, proposal, transaction or agreement which would reasonably be expected to result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or of any Principal Stockholder under the Voting Agreement; and (iv) except as otherwise agreed to in writing in advance by Newco or as contemplated by the Merger Agreement, against: (1)(A) any change in the board of directors of the Company; (B) any change in the capitalization of the Company or any amendment of the Company's certificate of incorporation or bylaws; or (C) any change in the Company's corporate structure or business; and (2) any other action, proposal, transaction or agreement that would reasonably be expected to compete with or adversely affect the timely consummation of the Transaction. Each Principal Stockholder also agreed not to enter into any agreement or understanding with any Person that would reasonably be expected to violate, conflict or interfere with the provisions of the Voting Agreement or adversely affect the timely consummation of the Merger. Each Principal Stockholder also executed and delivered to Newco an irrevocable proxy to vote the Subject Shares in a manner consistent with the Voting Agreement and the Merger Agreement. Pursuant to the Voting Agreement, the Principal Stockholders also agreed not to (a) directly or indirectly solicit, initiate, propose or take any other action to facilitate any Takeover Proposal, (b) enter into any agreement, arrangement or understanding with respect to any Takeover Proposal, (c) initiate or participate in any way in any negotiations or discussions regarding a Takeover Proposal, (d) furnish or disclose to any third party any information with respect to, or which would be reasonably expected to lead to, any Takeover Proposal, (e) solicit proxies or become a "participant" in or otherwise assist a "solicitation" (as such terms are defined in Regulation 14A under the Securities Exchange Act) that would reasonably be expected to compete with or adversely affect the timely consummation of the Merger or result in the termination of, or failure to consummate, the Merger, (f) otherwise encourage or assist any person in taking or planning any action which would reasonably be expected to compete with or adversely affect the timely consummation of the Merger or result in the abandonment or termination of, or failure to consummate, the Merger, (g) directly or indirectly encourage, initiate or cooperate in a stockholders' vote or action by written consent of the Company's stockholders that would reasonably be expected to compete with or adversely affect the timely consummation of the Merger or result in the termination of, or failure to consummate, the Merger or (h) become a member of a "group" (as such term is used in Section 13(d) of the Securities Exchange Act) with respect to any voting securities of the Company for any purpose that would reasonably be expected to compete with or adversely affect the timely consummation of the Merger or result in the termination of, or failure to consummate, the Merger. Each Principal Stockholder also agreed not to Transfer (as defined in the Voting Agreement), or enter into any agreement with respect to a Transfer of, any of the Subject Shares or any interest therein. Each Principal Stockholder agreed not to (i) grant any proxies, options or rights of first offer or refusal with respect to any of the Subject Shares, (ii) permit any such shares to become subject to any pledges, liens, preemptive rights, security interests, claims, charges or other encumbrances or arrangements (other than the pledge agreements currently in effect with Bank of America) or (iii) enter into any voting agreement, voting trust or other voting arrangement with respect to any of the Subject Shares. Notwithstanding the foregoing, (x) either Principal Stockholder may take any action described in the previous two sentences, so long as the other party (a "transferee") to such Transfer or other arrangement executes the Voting Agreement (or a joinder thereto in a form reasonably satisfactory to Newco) and agrees to be bound by its terms; provided, however, that notwithstanding such Transfer or arrangement, such Principal Stockholder shall continue to be liable for any breach by such transferee of its agreements and covenants under the Voting Agreement, and (y) the Principal Stockholders are permitted to (1) amend, extend or otherwise modify their existing credit documents with Bank of America and (2) enter into new credit arrangements replacing or supplementing those documents, provided that such amendment, extension or modification or new credit arrangement, in each case, does not contain provisions that adversely affect the ability of the Principal Stockholders to comply with their obligations under the Voting Agreement other than provisions that are substantially similar to the provisions in the existing credit documents. Nothing contained in the Voting Agreement shall limit or affect any actions taken by either Principal Stockholder or any person or entity controlling or under the control of either Principal Stockholder of the types described in clauses (i) and (ii) of the proviso to paragraph (a) of Section 6.2 of the Merger Agreement in response to a Takeover Proposal, to the extent that the Company is permitted to take such actions under the aforementioned proviso and provided that such Principal Stockholder acts in accordance with any requirement set forth in such proviso, nor shall anything contained in the Voting Agreement limit or affect any actions taken by any person in his capacity as a director of the Company in accordance with the provisions of the Merger Agreement, and none of such actions taken in accordance with the provisions of the Voting Agreement or in accordance with the provisions of the Merger Agreement shall be deemed to constitute a breach of the Voting Agreement. The Voting Agreement terminates upon the earlier of (a) the mutual agreement of Newco and each Principal Stockholder, (b) the effective time of the Merger, (c) the termination of the Merger Agreement pursuant to its terms, and (d) the execution by the Company of any amendment, supplement, waiver or modification to the Merger Agreement that has not previously been approved in writing by each Principal Stockholder. Concurrently with the execution of the Merger Agreement, as an inducement to Tracinda and 250 Rodeo to enter into, and to Mr. Kerkorian to cause Tracinda and 250 Rodeo to enter into, the Voting Agreement and thereby to facilitate the Merger, which the Board of Directors of the Company had unanimously determined is in the best interests of the stockholders of the Company, and in recognition of the substantial benefits which the Board of Directors of the Company believed will inure to the stockholders of the Company by reason of the Merger, the Board of Directors of the Company determined to enter into an indemnity agreement ("Indemnity Agreement") with the Reporting Persons. Pursuant to the Indemnity Agreement, the Company agreed to indemnify the Reporting Persons against certain liabilities in connection with any actual or threatened action, suit or proceeding arising from or relating to the execution, delivery and/or performance of the Merger Agreement and/or the Voting Agreement and the transactions contemplated by such agreements. Newco has agreed to honor the obligations of the Company under the Voting Agreement after the effective time of the Merger. The foregoing descriptions of the Voting Agreement and the Indemnity Agreement are qualified in their entirety by reference to the Voting Agreement and the Indemnity Agreement, copies of which have been filed as Exhibits 99.1 and 99.2 to this Statement and are incorporated herein by reference. Except as set forth in this Item 4 (including the matters described in Item 6, which are incorporated herein by reference), the Reporting Persons have no present plans or proposals which relate to, or would result in, any of the matters referred to in paragraphs (a) through (j) of Item 4 of Schedule 13D. 2. Item 5 of the Schedule 13D is hereby amended to incorporate by reference the information provided on the cover pages of this Statement. 3. Item 6 of the Schedule 13D is hereby amended to incorporate by reference the information set forth in Item 4 of this Statement and in the Voting Agreement and Indemnity Agreement, copies of which are attached as Exhibits 99.1 and 99.2 to this Statement. 4. Item 7 of the Schedule 13D is hereby amended to add the following exhibits. Exhibit No. Description - ----------- ----------- Exhibit 99.1 Voting and Support Agreement, dated as of September 23, 2004, among Tracinda Corporation, 250 Rodeo, Inc., and LOC Acquisition Company. Exhibit 99.2 Indemnity Agreement, dated as of September 23, 2004, among Metro-Goldwyn-Mayer Inc., Kirk Kerkorian, Tracinda Corporation and 250 Rodeo, Inc. 5. Except as specifically provided herein, this Amendment No. 23 does not modify any of the information previously reported on the Schedule 13D. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: September 24, 2004 TRACINDA CORPORATION, a Nevada corporation By: /s/ ANTHONY L. MANDEKIC -------------------------- Name: Anthony L. Mandekic Title: Secretary/Treasurer KIRK KERKORIAN By: /s/ ANTHONY L. MANDEKIC ------------------------ Name: Anthony L. Mandekic Title: Attorney-in-Fact* 250 RODEO, INC., a Delaware corporation By: /s/ ANTHONY L. MANDEKIC -------------------------- Name: Anthony L. Mandekic Title: Secretary/Treasurer *Power of Attorney previously filed as Exhibit 7.10 to the Schedule 13D. EX-99.1 2 exhibit99_1.txt Exhibit 99.1 EXECUTION COPY VOTING AND SUPPORT AGREEMENT VOTING AND SUPPORT AGREEMENT, dated as of September 23, 2004 (this "Agreement"), by and among Tracinda Corporation, a Nevada corporation ("Nevada"), 250 Rodeo, Inc., a Delaware corporation ("Delaware" and, together with Nevada, the "Principal Stockholders"), and LOC Acquisition Company, a Delaware corporation ("Newco"). WHEREAS, as of the date hereof, Nevada owns 144,290,996 shares of the Common Stock, par value $0.01 per share (the "Company Common Stock"), of Metro-Goldwyn-Mayer Inc., a Delaware corporation (the "Company"), and Delaware owns 19,758,648 shares of the Company Common Stock; WHEREAS, Newco proposes to enter into a transaction (such transaction, including the contemplated merger and the effects thereof, the "Transaction") with the Company, upon the terms and subject to the conditions set forth in the Agreement and Plan of Merger, dated September 23, 2004, by and between the Company and Newco (the "Merger Agreement"); and WHEREAS, as a condition to its willingness to enter into the Merger Agreement, Newco has required that the Principal Stockholders execute and deliver this Agreement. NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein, the parties hereto, intending to be legally bound hereby, agree as follows: 1. Definitions. For purposes of this Agreement, capitalized terms used and not defined herein shall have the respective meanings ascribed to them in the Merger Agreement. 2. Representations of the Principal Stockholders. (a) The Principal Stockholders hereby, jointly and severally, represent and warrant to Newco as follows: (i) Each Principal Stockholder is the beneficial owner (for purposes of this Agreement, such term shall have the meaning set forth in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated thereunder, but without regard to any conditions (including the passage of time) to the acquisition of such shares) of, and has good and valid and marketable title to, the number of shares of Company Common Stock set forth opposite such Principal Stockholder's name on Annex A attached hereto, subject to the First Amended and Restated Pledge Agreement, dated as of October 30, 1996, by and between Nevada and Bank of America National Trust and Savings Association, as amended, and the Pledge Agreement, dated as of August 28, 1998 by and between Delaware and Bank of America National Trust and Savings Association, as amended (including any successor or replacement agreements permitted by this Agreement, the "Pledge Agreements"). All of such shares are collectively referred to herein as the "Shares." (ii) As of the date hereof, each Principal Stockholder is not the beneficial owner of any shares of Company Common Stock or other voting securities or instruments of the Company, other than the Shares. (iii) Each Principal Stockholder is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of organization and has all requisite corporate power and authority necessary to execute and deliver this Agreement and to consummate the transactions contemplated hereby. Subject to the terms of the Pledge Agreements and other than as required or permitted by this Agreement, each Principal Stockholder has the power and authority (corporate or other) to vote the Shares beneficially owned by such Principal Stockholder. (iv) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of each Principal Stockholder and no other corporate proceedings on the part of either Principal Stockholder are necessary to authorize this Agreement or the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by each Principal Stockholder and this Agreement constitutes a valid and binding agreement of each Principal Stockholder, enforceable against each Principal Stockholder in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors' rights and to general equity principles (regardless of whether such enforcement is considered in a proceeding at law or in equity). (v) Subject to the terms of the Pledge Agreements and other than as required or permitted by this Agreement, the Shares are now and shall at all times during the term of this Agreement be owned of record by the Principal Stockholders as set forth in Annex A (or by a nominee or custodian for the account of the applicable Principal Stockholder), free and clear of all pledges, liens, proxies, claims, charges, security interests, preemptive rights, voting trusts, voting agreements, options, rights of first offer or refusal and any other encumbrances or arrangements whatsoever with respect to the ownership, transfer or voting of the Shares, and there are no outstanding options, warrants or rights to purchase or acquire, or agreements or arrangements relating to the voting of, any of the Shares other than this Agreement. (vi) The execution and delivery of this Agreement by each Principal Stockholder, the consummation by each Principal Stockholder of the transactions contemplated hereby and the performance by such Principal Stockholder of its obligations hereunder shall not (including with notice or lapse of time or both): (1) require any consent, approval, order, authorization or permit of, or registration or filing with or notification to, any Governmental Entity or other party, except for the filing with the Securities and Exchange Commission (the "Commission") of any Schedules 13D or 13G or amendments to Schedules 13D or 13G and filings under Section 16 of the Exchange Act, and filings under applicable gaming regulations, as may be required in connection with this Agreement and the transactions contemplated hereby; (2) contravene or conflict with the certificate of incorporation or bylaws of such Principal Stockholder; (3) result in any violation or the breach of, or constitute a default under, or give rise to any right of termination, cancellation or acceleration or any payments under, or result in a loss of a benefit or in the creation or imposition of a lien under, any of the terms, conditions or provisions of any note, lease, mortgage, indenture, license, agreement or other instrument or obligation to which such Principal Stockholder is a party or by which such Principal Stockholder or any of its assets is bound; or (4) violate the provisions of any order, writ, injunction, judgment, decree, statute, rule or regulation applicable to such Principal Stockholder in such a manner as would, individually or in the aggregate, reasonably be expected to materially impair the ability of such Principal Stockholder to perform its obligations under this Agreement or prevent or delay the consummation of any of the transactions contemplated by this Agreement, except, in the case of clause (1) above, with respect to the Pledge Agreements. (vii) Each Principal Stockholder acknowledges receipt and review of the Merger Agreement and understands the terms and conditions thereof. Each Principal Stockholder has had the opportunity to review this Agreement and the Merger Agreement with counsel of its own choosing. Each Principal Stockholder understands and acknowledges that Newco is entering into the Merger Agreement in reliance upon such Principal Stockholder's execution, delivery and performance of this Agreement. (b) Except where expressly stated to be given as of the date hereof only, the representations and warranties contained in this Agreement shall be made as of the date hereof and as of each date from the date hereof through and including the date of termination of this Agreement. 3. Agreement to Vote Shares. (a) Whereas the Board of Directors of the Company has approved and declared advisable the merger of Newco with and into the Company upon the terms and subject to the conditions of the Merger Agreement and in accordance with the DGCL, during the period commencing on the date hereof and continuing until the termination of this Agreement in accordance with its terms, subject to the terms of the Pledge Agreements, the Principal Stockholders agree to: (i) appear, or cause the record holder of any Shares on the applicable record date (each a "Record Holder") to appear (in person or by proxy), at any annual or special meeting of the stockholders of the Company for the purpose of obtaining a quorum, or, if stockholders of the Company are requested to vote their shares through the execution of an action by written consent in lieu of any such annual or special meeting of stockholders of the Company, the Principal Stockholders, jointly and severally, agree to execute or cause all Record Holders to execute such consent, and (ii) vote (or, if requested, execute consents or proxies with respect to), and cause each Record Holder to vote (or, if requested, execute consents or proxies with respect to), the Shares and any New Shares (as defined in Section 7 hereof): (w) in favor of adoption and approval of the Merger Agreement and the Transaction, including each other action, agreement and transaction contemplated by or in furtherance of the Merger Agreement, the Transaction and this Agreement, at every meeting (or in connection with any action by written consent) of the stockholders of the Company at which such matters are considered and at every adjournment or postponement thereof; (x) against any Takeover Proposal; (y) against any action, proposal, transaction or agreement which would reasonably be expected to result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or of any Principal Stockholder under this Agreement; and (z) except as otherwise agreed to in writing in advance by Newco, against the following actions or proposals: (1)(A) other than the transactions contemplated by Section 2.5 of the Merger Agreement, any change in the persons who constitute the board of directors of the Company; (B) except as permitted in the Merger Agreement, any change in the present capitalization of the Company or any amendment of the Company's amended and restated certificate of incorporation or amended and restated bylaws; or (C) except as permitted by the Merger Agreement, any change in the Company's corporate structure or business; and (2) any other action, proposal, transaction or agreement that would reasonably be expected to compete with or would reasonably be expected to interfere with, delay, discourage, adversely affect or inhibit the timely consummation of the Transaction. Each Principal Stockholder agrees not to enter into any agreement, letter of intent, agreement in principle or understanding whatsoever with any Person that would reasonably be expected to violate, conflict or interfere with the provisions of this Agreement or that would reasonably be expected to delay, discourage, adversely affect or inhibit the timely consummation of the Transaction. Notwithstanding the foregoing, the Principal Stockholders shall remain free to vote (or execute consents or proxies with respect to) the Shares with respect to any matter not covered by this Section 3 in any manner they deem appropriate, provided that such vote (or execution of consents or proxies with respect thereto) would not reasonably be expected to interfere with, delay, discourage, adversely affect or inhibit the timely consummation of the Transaction. Notwithstanding any reference in this paragraph to actions by written consent, the Principal Stockholders shall have no obligation to execute any written consent in lieu of a meeting with respect thereto for the purpose of approving and adopting the Merger Agreement and the Transaction unless the Company shall have requested that such approval and adoption be effected through the execution of any such written consent, in which case the Principal Stockholders shall, jointly and severally, execute such consent. (b) In furtherance of the covenants set forth in Sections 3(a) hereof, each Principal Stockholder agrees to deliver or cause each Record Holder of any Shares or New Shares of such Principal Stockholder to deliver to Newco upon request a proxy, substantially in the form of Annex B attached hereto, for any such stockholder meeting (or action by written consent), which proxy shall be coupled with an interest and irrevocable to the fullest extent permitted under Delaware law, except as otherwise required under the terms of the Pledge Agreements and except that such proxy shall terminate upon any termination of this Agreement pursuant to Section 13 hereof, with the total number of Shares and any New Shares beneficially owned by such Principal Stockholder correctly indicated thereon. 4. Representations of Newco. Newco hereby represents and warrants to the Principal Stockholders that: (a) Newco is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. (b) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all requisite corporate action and no other corporate proceedings on the part of Newco are necessary to authorize this Agreement or the consummation of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Newco and is a valid and binding agreement of Newco enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors' rights and to general equity principles (regardless of whether such enforcement is considered in a proceeding at law or in equity). (c) The execution, delivery and performance by Newco of this Agreement and the consummation by Newco of the transactions contemplated hereby do not and shall not (including with notice or lapse of time or both): (i) contravene or conflict with the certificate of incorporation or the bylaws of Newco; (ii) result in any violation or the breach of, or constitute a default under, or give rise to any right of termination, cancellation or acceleration or any payments under, or result in a loss of a benefit or in the creation or imposition of a lien under, any of the terms, conditions or provisions of any note, lease, mortgage, indenture, license, agreement or other instrument or obligation to which Newco is a party or by which Newco or any of its assets may be bound; (iii) violate the provisions of any order, writ, injunction, judgment, decree, statute, rule or regulation applicable to Newco in such a manner as would, individually or in the aggregate, reasonably be expected to materially impair the ability of Newco to perform its obligations under this Agreement or prevent or delay the consummation of any of the transactions contemplated by this Agreement; or (iv) require any consent, approval, order, authorization or permit of, or registration or filing with or notification to, any Governmental Entity or other party. 5. No Solicitations. Subject to Section 10 hereof, each Principal Stockholder, in such Principal Stockholder's capacity as a beneficial owner of Shares and New Shares (as defined in Section 7 hereof), agrees that such Principal Stockholder shall not, nor shall such Principal Stockholder permit any Person "controlling" it or under its "control" (as such term is used in the Exchange Act) to, (a) directly or indirectly solicit, initiate, propose or take any other action to facilitate any Takeover Proposal, (b) enter into any agreement, arrangement or understanding with respect to any Takeover Proposal (including any letter of intent or agreement in principle), (c) initiate or participate in any way in any negotiations or discussions regarding a Takeover Proposal, (d) furnish or disclose to any Third Party any information with respect to, or which would be reasonably expected to lead to, any Takeover Proposal, (e) solicit proxies or become a "participant" in or otherwise assist a "solicitation" (as such terms are defined in Regulation 14A under the Exchange Act) that would reasonably be expected to compete with, or would reasonably be expected to interfere with, delay, discourage, adversely affect or inhibit the timely consummation of, the Transaction or would reasonably be expected to result in the abandonment or termination of, or failure to consummate, the Transaction (including with respect to any Takeover Proposal or any action related thereto), (f) otherwise encourage or assist any Person in taking or planning any action (including any Takeover Proposal or any action related thereto) which would reasonably be expected to compete with or otherwise would reasonably be expected to interfere with, delay, discourage, adversely affect or inhibit the timely consummation of, the Transaction or would reasonably be expected to result in the abandonment or termination of, or failure to consummate, the Transaction, (g) directly or indirectly encourage, initiate or cooperate in a stockholders' vote or action by written consent of the Company's stockholders that would reasonably be expected to compete with or would reasonably be expected to interfere with, delay, discourage, adversely affect or inhibit the timely consummation of, the Transaction or would reasonably be expected to result in the abandonment or termination of, or failure to consummate, the Transaction (including with respect to any Takeover Proposal or any action related thereto) or (h) become a member of a "group" (as such term is used in Section 13(d) of the Exchange Act) with respect to any voting securities of the Company for any purpose that would reasonably be expected to compete with, or would reasonably be expected to interfere with, delay, discourage, adversely affect or inhibit the timely consummation of the Transaction or would reasonably be expected to result in the abandonment or termination of, or failure to consummate the Transaction (including with respect to any Takeover Proposal or any action related thereto). Each of the Principal Stockholders shall be liable for any breach of this Section 5 by any Person controlling it or under its control. 6. Transfer and Encumbrance. (a) Subject to the terms of the Pledge Agreements and this Agreement, during the term of this Agreement, each Principal Stockholder agrees not to, directly or indirectly, transfer, sell, offer, hypothecate, assign, pledge or otherwise dispose of or encumber ("Transfer"), or enter into any contract, option or other agreement with respect to, or consent to, a Transfer of, any of the Shares or New Shares or such Principal Stockholder's voting or economic interest therein. Subject to the terms of the Pledge Agreements and this Agreement, during the term of this Agreement, each Principal Stockholder agrees not to (i) grant any proxies, options or rights of first offer or refusal with respect to any of the Shares or New Shares, (ii) permit any such Shares or New Shares to be, or become subject to, any pledges, liens, preemptive rights, security interests, claims, charges or other encumbrances or arrangements or (iii) enter into any voting agreement, voting trust or other voting arrangement with respect to any of the Shares or New Shares. Notwithstanding the foregoing, (x) either Principal Stockholder may take any action described in the previous two sentences, so long as the other party (a "transferee") to such Transfer or other arrangement described in the second sentence of this Section 6 executes this Agreement (or a joinder thereto in a form reasonably satisfactory to Newco) and agrees to be bound by its terms; provided, however, that notwithstanding such Transfer or arrangement, such Principal Stockholder shall continue to be liable for any breach by such transferee of its agreements and covenants under this Agreement, and (y) the Principal Stockholders are permitted to (1) amend, extend or otherwise modify the Pledge Agreements and the Second Amended and Restated Credit Agreement, dated as of August 16, 2000, by and between Nevada, the several financial institutions from time to time parties thereto, and Bank of America N.A., as amended (such agreement, together with the Pledge Agreements, the "Credit Documents") and (2) enter into new credit arrangements replacing or supplementing the Credit Documents, provided that such amendment, extension or modification or new credit arrangement, in each case, does not contain provisions that adversely affect the ability of the Principal Stockholders to comply with their obligations under this Agreement other than provisions that are substantially similar to the provisions in the existing Credit Documents. 7. Additional Purchases. Each Principal Stockholder agrees that in the event (a) any shares of Company Common Stock or other voting securities of the Company are issued pursuant to any stock dividend, stock split, recapitalization, reclassification, combination or exchange of shares of capital stock of the Company on, of or affecting the Shares of such Principal Stockholder or otherwise; (b) such Principal Stockholder purchases or otherwise acquires beneficial ownership of any shares of Company Common Stock or other voting securities of the Company after the execution of this Agreement; or (c) such Principal Stockholder acquires the right to vote or share in the voting of any shares of Company Common Stock or other voting securities of the Company after the execution of this Agreement (such Company Common Stock and other voting securities of the Company, collectively, the "New Shares"), each Principal Stockholder agrees to vote such New Shares in the same manner as the Shares and to notify Newco and then deliver promptly to Newco upon request of Newco a proxy with respect to such New Shares, substantially in the form of Annex B attached hereto, which shall be irrevocable to the fullest extent permitted under Delaware law, except as otherwise required under the terms of the Pledge Agreements and except that such proxy shall terminate upon any termination of this Agreement pursuant to Section 13 hereof. Each Principal Stockholder also agrees that any New Shares acquired or purchased by such Principal Stockholder shall be subject to the terms of this Agreement to the same extent as if they constituted Shares. 8. Covenants of the Principal Stockholders. (a) Each Principal Stockholder agrees that such Principal Stockholder shall not avoid or seek to avoid the observance or performance of any of the covenants, stipulations or conditions to be observed or performed hereunder by any of the Principal Stockholders. (b) Upon receipt by the Principal Stockholders of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of this Agreement, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Agreement, if mutilated, each Principal Stockholder shall execute and deliver a new Agreement of like tenor and date. Any such new Agreement executed and delivered shall constitute an additional contractual obligation on the part of the Principal Stockholders, whether or not the Agreement so lost, stolen, destroyed or mutilated shall at any time be enforceable by anyone. (c) Each Principal Stockholder will, in its capacity as a beneficial owner of Shares and New Shares, (1) use all reasonable efforts to cooperate with the Company and Newco in connection with the Transaction, (2) promptly take such further actions and execute and deliver such additional documents as may be necessary or appropriate to consummate the Transaction, and (3) provide any information reasonably requested by the Company or Newco for any regulatory application or filing made, or approval sought, for the Transaction. (d) Each Principal Stockholder will give prompt written notice to Newco of any development occurring after the date of this Agreement that causes, or that would reasonably be expected to cause, any breach of any of the representations and warranties set forth in Section 2 hereof. The Principal Stockholders will use their respective reasonable best efforts not to take any action, or omit to take any action, that would reasonably be expected to result in an Event of Default under the Pledge Agreements. "Event of Default" shall have the meaning ascribed to such term under the applicable Pledge Agreement. 9. Covenants of the Principal Stockholders and Newco. (a) Each of Newco and the Principal Stockholders shall use their respective best efforts to make all filings with, and to obtain consents of, all third parties and Governmental Entities necessary for the consummation of the transactions contemplated by this Agreement and the Merger Agreement. (b) Except as otherwise expressly provided herein, each of the parties hereto shall bear and pay all costs and expenses incurred by them or on their behalf in connection with the transactions contemplated hereunder, including fees and expenses of their own financial consultants, investment bankers, accountants and counsel. 10. Fiduciary Duties. Nothing contained herein shall limit or affect any actions taken by either Principal Stockholder or any person or entity controlling or under the control of either Principal Stockholder of the types described in clauses (i) and (ii) of the proviso to paragraph (a) of Section 6.2 of the Merger Agreement in response to a Takeover Proposal, to the extent that the Company is permitted to take such actions under the aforementioned proviso and provided that such Principal Stockholder acts in accordance with any requirement set forth in such proviso, nor shall anything contained herein limit or affect any actions taken by any person in his capacity as a director of the Company in accordance with the provisions of the Merger Agreement, and none of such actions taken in accordance with the provisions of this Section 10 or in accordance with the provisions of the Merger Agreement shall be deemed to constitute a breach of this Agreement. 11. Specific Performance. Each party hereto acknowledges that it will be impossible to measure in money the damages to the other parties if a party hereto fails to comply with any of the obligations imposed by this Agreement, that every such obligation is material and that, in the event of any such failure, the other parties will not have an adequate remedy at law or in damages. Accordingly, each party hereto agrees that injunctive relief or any other equitable remedy, in addition to remedies at law or in damages, is the appropriate remedy for any such failure and will not oppose the granting of such relief on the basis that the other party has an adequate remedy at law or in damages. Each party hereto agrees that it will not seek, and agrees to waive any requirement for, the securing or posting of a bond in connection with any other party's seeking or obtaining such equitable relief. 12. Successors and Assigns. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by the parties hereto and their respective successors, assigns, heirs and devises, as applicable; and, other than in respect of Section 10, nothing in this Agreement, express or implied, is intended to confer upon any other Person any rights or remedies of any nature whatsoever under or by reason of this Agreement. This Agreement shall not be assignable without the written consent of the other parties hereto, except that Newco may assign, in its sole discretion, all or any of its rights, interests and obligations hereunder to any of its Affiliates. 13. Termination. This Agreement will terminate on the earlier of (a) the mutual agreement of Newco and each Principal Stockholder, (b) the Effective Time, (c) the termination of the Merger Agreement pursuant to its terms, and (d) the execution by the Company of any amendment, supplement, waiver or modification to the Merger Agreement that has not previously been approved in writing by each Principal Stockholder. 14. Entire Agreement. This Agreement (including the documents and the instruments referred to herein) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. 15. Governing Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the Laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof. Any legal action, suit or proceeding arising out of or relating to this Agreement or the transactions provided for herein shall be brought solely in the Federal courts of the United States located in the State of Delaware; provided, that if (and only after) such courts determine that they lack subject matter jurisdiction over any such legal action, suit or proceeding, such legal action, suit or proceeding shall be brought in the United States District Court for the Southern District of New York; provided, further, that if (and only after) both the Federal courts of the United States located in the State of Delaware and the United States District Court for the Southern District of New York determine that they lack subject matter jurisdiction over any such legal action, suit or proceeding, such legal action, suit or proceeding shall be brought in the Chancery Court of the State of Delaware. Each party to this Agreement hereby irrevocably submits to the exclusive jurisdiction of such courts in respect of any legal action, suit or proceeding arising out of or relating to this Agreement or the transactions provided for herein, and hereby waives, and agrees not to assert, as a defense in any such action, suit or proceeding, any claim that it is not subject personally to the jurisdiction of such courts, that the action, suit or proceeding is brought in an inconvenient forum, that the venue of the action, suit or proceeding is improper or that this Agreement or the transactions provided for herein may not be enforced in or by such courts. Each party agrees that notice or the service of process in any action, suit or proceeding arising out of or relating to this Agreement or the transactions provided for herein shall be properly served or delivered if delivered in the manner contemplated by Section 16 hereof. In addition, each of the parties hereto waives any right to trial by jury with respect to any claim or proceeding related to or arising out of this Agreement or any transactions provided for herein. 16. Notices. All notices and other communications hereunder shall be in writing and shall be deemed given upon receipt by the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (i) if to Newco to: LOC Acquisition Company c/o Sony Corporation of America 550 Madison Avenue, 34th Floor New York, New York 10022 Attention: Robert S. Wiesenthal Telecopy: (212) 833-7752 with a copy (which shall not constitute notice) to: Dewey Ballantine LLP 1301 Avenue of the Americas New York, New York 10019 Attention: Morton A. Pierce, Esq. Michael J. Aiello, Esq. Telecopy: (212) 259-6333 and Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue Los Angeles, California 90071 Attention: Nicholas P. Saggese, Esq. Telecopy: (213) 687-5600 and Davis Polk & Wardwell 450 Lexington Avenue New York, New York 10017 Attention:Dennis S. Hersch Telecopy: (212) 450-3800 (ii) if to either of the Principal Stockholders, to: Tracinda Corporation 150 South Rodeo Drive, Suite 250 Beverly Hills, CA 90212 Attention: General Counsel, Telecopy: 310 271-3416 with a copy (which shall not constitute notice) to: Fried, Frank, Harris, Shriver & Jacobson LLP One New York Plaza New York, New York 10004 Attention: Warren S. de Wied, Esq. Telecopy: 212 859-4000 17. Severability. This Agreement shall be deemed severable; the invalidity or unenforceability of any term or provision of this Agreement shall not affect the validity or enforceability of the balance of this Agreement or of any other term hereof, which shall remain in full force and effect. If any of the provisions hereof are determined to be invalid or unenforceable, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible. 18. Waiver. The parties hereto may, to the extent permitted by applicable Law, subject to Section 19 hereof, (a) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto or (b) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of a party hereto to any such waiver shall be valid only if set forth in a written instrument signed on behalf of such party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of those rights. 19. Modification. No supplement, modification or amendment of this Agreement will be binding unless made in a written instrument that is signed by all of the parties hereto and that specifically refers to this Agreement. 20. Counterparts. This Agreement may be executed in two (2) or more counterparts, all of which shall be considered one and the same agreement and shall become effective when such counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. 21. Headings. All Section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. [Signature Page Follows] IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first written above. TRACINDA CORPORATION By: /s/ Anthony L. Mandekic ----------------------------- Name: Anthony L. Mandekic Title: Secretary/Treasurer 250 RODEO, INC. By: /s/ Anthony L. Mandekic ----------------------------- Name: Anthony L. Mandekic Title: Secretary/Treasurer LOC Acquisition Company By: /s/ Michael Dominguez ----------------------------- Name: Michael Dominguez Title: Chairman of the Board ANNEX A ------- Shares of Company Principal Stockholders Common Stock Owned - ---------------------- ------------------ Tracinda Corporation 144,290,996 250 Rodeo, Inc. 19,758,648 ANNEX B ------- FORM OF IRREVOCABLE PROXY The undersigned hereby revokes any previous proxies and appoints LOC Acquisition Company, a Delaware corporation ("Newco"), and any individual who shall be designated by Newco, with full power of substitution and resubstitution as attorney-in-fact and proxy of the undersigned to attend any and all meetings of stockholders (and any adjournments or postponements thereof) of Metro-Goldwyn-Mayer Inc., a Delaware corporation (the "Company"), to vote all shares of Common Stock, par value $0.01 per share, of the Company that the undersigned is then entitled to vote, and to represent and otherwise to act for the undersigned in the same manner and with the same effect as if the undersigned were present, with respect to all matters specified in the Voting and Support Agreement, dated as of September 23, 2004 (the "Voting Agreement"), by and among Newco, the undersigned and the other parties signatory thereto. Capitalized terms used and not defined herein have the respective meanings ascribed to them in the Voting Agreement. This proxy has been granted pursuant to Section 3 of the Voting Agreement. This proxy shall be deemed to be a proxy coupled with an interest and is irrevocable during the term of the Voting Agreement to the fullest extent permitted under Delaware law, except as otherwise required under the terms of the Pledge Agreements and except that such proxy shall terminate upon any termination of the Merger Agreement pursuant to its terms. The undersigned authorizes such attorney and proxy to substitute any other person to act hereunder, to revoke any substitution and to file this proxy and any substitution or revocation with the Secretary of the Company. Dated: ______, 2004 [NAME] By: -------------------------------- Name: Title: EX-99.2 3 exhibit99_2.txt Exhibit 99.2 EXECUTION COPY INDEMNITY AGREEMENT AGREEMENT dated as of September 23, 2004 (this "Agreement"), by and between Metro-Goldwyn-Mayer Inc., a Delaware corporation (the "Company"), on the one hand, and each of Kirk Kerkorian ("Kerkorian"), Tracinda Corporation, a Nevada corporation wholly owned by Kerkorian ("Tracinda"), and 250 Rodeo, Inc., a Delaware corporation wholly owned by Tracinda and Kerkorian ("Rodeo"), on the other. RECITALS In connection with the Agreement and Plan of Merger, dated as of September 23, 2004 (the "Merger Agreement"), by and between LOC Acquisition Company, a Delaware corporation ("Newco"), and the Company, Newco has requested that each of Tracinda and Rodeo enter into a Voting and Support Agreement (the "Voting Agreement") pursuant to which, subject to the terms of the Voting Agreement, among other things, each of Tracinda and Rodeo agrees to vote all shares of common stock of the Company beneficially owned by it in favor of the merger (the "Merger") contemplated by the Merger Agreement. As an inducement to Tracinda and Rodeo to enter into, and to Kerkorian to cause Tracinda and Rodeo to enter into, the Voting Agreement and thereby to facilitate the Merger, which the Board of Directors of the Company has unanimously determined is in the best interests of the stockholders of the Company, and in recognition of the substantial benefits which the Board of Directors of the Company believes will inure to the stockholders of the Company by reason of the Merger, the Board of Directors of the Company has determined to enter into this agreement. NOW, THEREFORE, in consideration of the foregoing, the parties agree as follows: 1. Indemnification. The Company shall hold harmless and indemnify each of Kerkorian, Tracinda and Rodeo, his or its respective successors and assigns and, in the case of each of Tracinda and Rodeo, its respective directors, officers and employees and, in the case of any of the foregoing parties that is an individual, his or her personal or legal representatives, executors, administrators, successors, heirs, distributees, divisees and legatees (each, an "Indemnitee" and, collectively, the "Indemnitees"), against any and all claims, expenses, liabilities and losses (including, without limitation, the reasonable investigation expenses, expert witnesses' and attorneys' fees and expenses, judgments, penalties, fines, amounts paid or to be paid in settlement any interest, assessments, or other charges imposed thereon and any federal, state, local or foreign taxes imposed as a result of actual or deemed receipt of any payment hereunder) actually incurred by such Indemnitee (net of any related insurance proceeds or other amounts received by the Indemnitee or paid by or on behalf of the Company on the Indemnitee's behalf in compensation of such expenses, liabilities or losses) in connection with any actual or threatened action, suit or proceeding, whether civil, criminal, administrative or investigative or in arbitration, to or in which the Indemnitee is a party or participant or is threatened to be made a party or participant (a "Proceeding"), as a plaintiff, defendant, respondent, witness or otherwise, based upon, arising from, relating to or by reason of the execution, delivery and/or performance of the Merger Agreement and/or the Voting Agreement and/or the consummation of the transactions contemplated by the foregoing agreements. Notwithstanding the foregoing, the Company shall not be obligated to hold harmless and indemnify an Indemnitee: (i) except as provided in Section 10(b) hereof, in connection with a Proceeding initiated by the Indemnitee unless such proceeding (or part thereof) was authorized by a two-thirds vote of the Board of Directors of the Company; or (ii) in connection with any claim to the extent that such claim arises by reason of the insolvency of the Company. 2. Standard of Conduct. Notwithstanding any provision of this Agreement (but subject to Section 3 hereof), the indemnification provided to each Indemnitee by this Agreement shall be subject to satisfaction by the Indemnitee of the same standards of conduct, and shall be subject to the same limitations, that are applicable to indemnification of directors and officers of a Delaware corporation under Section 145 of the Delaware General Corporation Law (the "DGCL"), whether or not, but for the agreement contained in this paragraph, such standards of conduct and limitations would be applicable to the Indemnitee. 3. Presumption. Each Indemnitee shall be presumed to be entitled to such indemnification under this Agreement upon submission of a written claim pursuant to Section 4 hereof. Thereafter, the Company shall have the burden of proof to overcome the presumption that the Indemnitee is so entitled. Such presumption shall only be overcome by a judgment or other final adjudication, after all appeals and all time for appeals has expired ("Final Determination"), which is adverse to the Indemnitee and which establishes (i) that his or its acts were (a) not committed in good faith or in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or (b) with respect to a criminal action or proceeding, committed with a reasonable cause to believe his or its conduct was unlawful or (ii) that the Indemnitee in fact personally gained a financial profit or other advantage to which he or it was not legally entitled. If any Indemnitee is not wholly successful in any Proceeding but is successful on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company agrees to indemnify the Indemnitee to the maximum extent permitted by law against all losses and expenses incurred by the Indemnitee in connection with each successfully resolved claim, issue or matter. Neither the failure of the Company (including its Board of Directors, legal counsel or stockholders) to have made a determination prior to the commencement of such Proceeding that indemnification of the Indemnitee is proper in the circumstances, nor an actual determination by the Company (including its Board of Directors, its legal counsel or its stockholders) that the Indemnitee has not met the applicable standard of conduct, shall be a defense to the action or create a presumption that the Indemnitee has not met the applicable standard of conduct. The purchase, establishment or maintenance of any insurance or similar protection or other arrangements (any such insurance, protection or arrangement, an "Indemnification Arrangement") shall not in any way diminish, restrict, limit or adversely affect the rights and obligations of the Company or of any Indemnitee under this Agreement, except as expressly provided herein, and the execution and delivery of this Agreement by the Company and the Indemnitees shall not in any way diminish, restrict, limit or adversely affect any Indemnitee's right to indemnification from the Company or any other party or parties under any other Indemnification Arrangement, the Certificate of Incorporation or Bylaws of the Company, or the DGCL. Any presumption pursuant to this Section 3 that an Indemnitee is or is not entitled to indemnification shall not be deemed to broaden or limit the scope of such Indemnitee's right to indemnification as set forth in Sections 1 and 2. 4. Claims for Payments. Each Indemnitee shall have the right to receive from the Company on demand or, at his or its option, to have the Company pay promptly on his or its behalf, in advance of a Final Determination of a Proceeding, all amounts payable by the Company pursuant to the terms of this Agreement as corresponding amounts are expended or incurred by the Indemnitee in connection with any Proceeding or otherwise (such amounts so expended or incurred being referred to as "Advanced Amounts"). In making any claim for payment by the Company of any amount, including any Advanced Amount, pursuant to this Agreement, an Indemnitee shall submit to the Company a written request for payment (a "Claim") which includes a schedule setting forth in reasonable detail the dollar amount expended (or incurred or expected to be expended or incurred). Each item on such schedule shall be supported by the bill, agreement, or other documentation relating thereto, a copy of which shall be appended to the schedule as an exhibit. Where an Indemnitee is requesting Advanced Amounts, the Indemnitee must also provide an undertaking reasonably acceptable to the Company to repay such Advanced Amounts within thirty (30) days if a Final Determination is made that the Indemnitee is not entitled to indemnification or reimbursement hereunder. 5. Section 16(b) Liability. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against any Indemnitee for an accounting of profits made from the purchase or sale by the Indemnitee of securities of the Company within the meaning of Section 16(b) of the Securities Exchange Act of 1934, and amendments thereto (the "Exchange Act"), or similar provisions of any state statutory law or common law. 6. Continuation of Indemnity. All agreements and obligations of the Company contained herein shall continue for so long as any Indemnitee shall be subject to the possibility of any Proceeding in respect of which the Indemnitee is or may be entitled to indemnification hereunder. 7. Representations and Warranties of the Indemnitees. Each of Kerkorian, Tracinda and Rodeo represents and warrants to the Company as of the date of this Agreement that, except for this Agreement and the Voting Agreement, all contracts, arrangements, understandings or relationships (legal or otherwise) among Kerkorian, Tracinda and Rodeo or their directors and executive officers or between any of such persons and any other person with respect to any securities of the Company that are required to be disclosed under Item 6 of Schedule 13D under the Exchange Act have been disclosed in the Statement on Schedule 13D, as amended, filed by Kerkorian, Tracinda and Rodeo with the Securities and Exchange Commission. 8. Successors; Binding Agreement. This Agreement shall be binding on, and shall inure to the benefit of and be enforceable by, each of the Company's successors and assigns and by each Indemnitee's successors and assigns and, in the case of any individual, his or her personal or legal representatives, executors, administrators, successors, heirs, distributees, divisees and legatees. The Company shall require any successor or assignee (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by written agreement in form and substance reasonably satisfactory to the Company and to each Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession or assignment had taken place. 9. Notification and Defense of Claim. Promptly after receipt by any Indemnitee of notice of the commencement of any Proceeding, the Indemnitee shall, if a claim in respect thereof is to be made against the Company under this Agreement, notify the Company of the commencement thereof (which notice shall specify in reasonable detail the nature and amount of the claim (to the extent known), but the failure to so notify the Company will not relieve the Company from any liability which it may have to the Indemnitee, except to the extent that the Company is actually and materially prejudiced by the Indemnitee's failure to so notify. With respect to any such Proceeding, the Company will be entitled (but not obligated) to participate in and/or assume the defense of the Proceeding. If the Company assumes such defense, the Indemnitee will have the right to participate in the defense thereof and to employ counsel, separate from the counsel employed by the Company, at the Indemnitee's own expense; provided, however, that such Indemnitee shall be entitled to participate in any such defense with separate counsel at the expense of the Company if, (i) requested by the Company to employ separate counsel or (ii) in the opinion of counsel to the Indemnitee (which counsel shall be reasonably satisfactory to the Company), there are potential defenses available to the Indemnitee that are materially in conflict with those available to the Company, provided that the Company shall not be responsible for the fees and expenses of more than one firm of separate counsel for the Indemnitees in connection with any Proceeding in the same jurisdiction, in addition to any local counsel, unless the Company otherwise consents or a conflict of interest requires separate counsel for particular Indemnitees. If the Company fails to assume the defense of such Proceeding within thirty (30) days after the receipt of an Indemnity Notice, the Indemnitee (upon delivering written notice to such effect to the Company) shall have the right to undertake, at the Company's cost and expense, the defense, compromise or settlement of such Claim; provided, however, that the Indemnitee shall not enter into any such compromise or settlement without the prior written consent of the Company (which consent shall not be unreasonably withheld or delayed). In the event the Company assumes the defense of the Proceeding, the Company will keep the Indemnitee reasonably informed of the progress of any such defense, compromise or settlement. The Company shall not, except with the written consent of the Indemnitee (which consent may be withheld in the Indemnitee's sole and absolute discretion), consent to the entry of a judgment or enter into a settlement of any Proceeding other than a judgment or settlement (i) involving only the payment of money which the Company is required to pay to or on behalf of the Indemnitee pursuant to the indemnification provisions of this Agreement and (ii) that includes an unconditional release of the Indemnitee with respect to the Proceeding. 10. Enforcement. (a) The Company has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Tracinda and Rodeo to enter into, and to induce Kerkorian to cause Tracinda and Rodeo to enter into, the Voting Agreement and thereby to facilitate the Merger and acknowledges that the Indemnitees are relying upon this Agreement in entering into the Voting Agreement. (b) All expenses incurred by any Indemnitee in connection with the preparation and submission of a request for indemnification hereunder shall be borne by the Company. In the event any Indemnitee has requested payment of any amount under this Agreement and has not received payment thereof within thirty (30) days of such request, the Indemnitee may bring any action to enforce rights or collect moneys due under this Agreement, and, if the Indemnitee is successful in such action, the Company shall reimburse the Indemnitee for all of the Indemnitee's fees and expenses in bringing and pursuing such action. If it is determined that the Indemnitee is entitled to indemnification for part (but not all) of the indemnification so requested, expenses incurred in seeking enforcement of such partial indemnification shall be reasonably prorated among the claims, issues or matters for which the Indemnitee is entitled to indemnification for claims, issues or matter for which the Indemnitee is not so entitled. The Indemnitee shall be entitled to the advancement of such amounts to the full extent contemplated by Section 4 hereof in connection with such Proceeding. 11. Separability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever, (i) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, all portions of any sections or subsections of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not by themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby, and (ii) to the fullest extent possible, the provisions of any section or subsections of this Agreement containing any such provisions held to be invalid, illegal or unenforceable shall be construed so as to give effect to the intent of the parties that the Indemnitors (or any of them) provide protection to the Indemnitee to the fullest extent enforceable. 12. Miscellaneous. No provision of this Agreement may be modified, waived or discharged except by an instrument in writing executed by or on behalf of each party sought to be bound thereby. No waiver by any party at any time of any breach by another party of, or of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or at any prior or subsequent time. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Delaware, without giving effect to the principles of conflicts of laws thereof. Any legal action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby shall be brought solely in the Federal courts of the United States located in the State of Delaware; provided that if (and only after) such courts determine that they lack subject matter jurisdiction over any such legal action, suit or proceeding, such legal action, suit or proceeding shall be brought in the United States District Court for the Southern District of New York; provided, further, that if (and only after) both the Federal courts of the United States located in the State of Delaware and the United States District Court for the Southern District of New York determine that they lack subject matter jurisdiction over any such legal action, suit or proceeding, such legal action, suit or proceeding shall be brought in the Chancery Court of the State of Delaware. Each party to this Agreement hereby irrevocably submits to the exclusive jurisdiction of such courts in respect of any legal action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, and hereby waives, and agrees not to assert, as a defense in any such action, suit or proceeding, any claim that it is not subject personally to the jurisdiction of such courts, that the action, suit or proceeding is brought in an inconvenient forum, that the venue of the action, suit or proceeding is improper or that this Agreement or the transactions contemplated hereby may not be enforced in or by such courts. Each party agrees that notice or the service of process in any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby shall be properly served or delivered if delivered in the manner contemplated by Section 13. In addition, each of the parties hereto waives any right to trial by jury with respect to any claim or proceeding related to or arising out of this Agreement or any transactions provided for herein. 13. Notices. For the purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, as follows: If to any Indemnitee: c/o Tracinda Corporation 150 South Rodeo Drive Suite 250 Beverly Hills, CA 90212 Attn: General Counsel If to the Company: Metro-Goldwyn-Mayer Inc. Fourteenth Floor 10250 Constellation Boulevard Los Angeles, CA 90067 Attn: Secretary or to such other address as any party may have furnished to the other parties in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 14. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. 15. Effectiveness. This Agreement shall be effective as of the day and year first above written. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the day and year first above written. METRO-GOLDWYN-MAYER INC. By: /s/ Jay Rakow -------------------------------------- Name: Jay Rakow Title: Senior Executive Vice President and General Counsel TRACINDA CORPORATION By: /s/ Anthony L. Mandekic -------------------------------------- Name: Anthony L. Mandekic Title: Secretary/Treasurer 250 RODEO, INC. By: /s/ Anthony L. Mandekic -------------------------------------- Name: Anthony L. Mandekic Title: Secretary/Treasurer /s/ Kirk Kerkorian -------------------------------------- KIRK KERKORIAN The undersigned hereby agrees, assuming the consummation of the Merger, to cause the surviving corporation in the Merger to honor and perform its obligations under this Agreement. LOC ACQUISITION COMPANY By: /s/ Michael Dominguez -------------------------------------- Name: Michael Dominguez Title: Chairman of the Board -----END PRIVACY-ENHANCED MESSAGE-----