AMENDMENT NO. 1 TO
THIS AMENDMENT NO. 1 is made and entered into as of December 31, 2008 (the “Amendment”), to the EMPLOYMENT AGREEMENT made and entered into as of September 10, 2007 (the “Agreement”), by and between MGM MIRAGE (“Employer”), and Robert Selwood (“Employee”).
W I T N E S S E T H:
WHEREAS, the Employer and the Employee desire to amend the Agreement as required pursuant to the final Treasury regulations under section 409A of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the mutual covenants set forth in this Amendment and in the Agreement, the Employer and the Employee agree that the Agreement is hereby amended as follows, effective January 1, 2009:
1. Equity Treatment Upon a Change of Control. Section 10.5 is amended and restated to read as follows:
10.5 Change of Control . In the event there is a Change of Control of the Company (which term is defined in Section 22), then:
10.5.1 All of your unvested options, stock appreciation rights or Other Rights (including restricted stock units), if any, shall become fully vested.
10.5.2 If the Change of Control results from an exchange of outstanding common stock as a result of which the common stock of MGM MIRAGE is no longer publicly held, then all of your options to purchase common stock of MGM MIRAGE, stock appreciation rights, and Other Rights (including restricted stock units) will vest or be exercisable, as applicable, for the consideration (cash, stock or otherwise) which the holders of MGM MIRAGE common stock received in such exchange. For example, if immediately prior to the effective date of the transaction, you had vested and exercisable options to acquire 5,000 shares of MGM MIRAGE’s common stock and the exchange of stock is one share of common stock of MGM MIRAGE for two shares of common stock of the acquiring entity, then your options will be converted into options to acquire, upon payment of the exercise price, 10,000 shares of the acquiring entity’s common stock. If, in addition, you had unvested stock options, each option would become immediately vested and on exercise and payment of the exercise price, entitle you to receive two shares of the acquiring company’s common stock.
10.5.3 If the Change of Control results from a sale of MGM MIRAGE’s outstanding common stock for cash with the result that MGM MIRAGE’s common stock is no longer publicly held, then upon the Change of Control, all of
your options to purchase common stock of MGM MIRAGE, stock appreciation rights, and restricted stock units will become vested and cashed out for an amount of cash equal to the difference between the purchase price and the exercise price (if applicable), less any applicable withholding taxes. The cash-out payment will be made on or within 30 days after the Change of Control. For example, if immediately prior to the Change of Control, you have options to acquire 2,000 shares of MGM MIRAGE’s common stock at an exercise price of $35, and the purchase price for MGM MIRAGE’s common stock was $40, then upon the Change of Control you would be entitled to receive $10,000 in full satisfaction of such options (2,000 shares times $5 per share). If, in addition, you had unvested stock options, those options would become vested and immediately exercisable upon the Change of Control and you would be entitled to receive $5, net of applicable taxes, for each option in full satisfaction of that option. The foregoing applies to all options, stock appreciation rights, and restricted stock units granted to you, notwithstanding the provisions of Section 10.7, to the extent required to comply with Section 409A (as defined below).
2. Definition of “Change of Control.” The definition of “Change of Control” in Section 22 is hereby amended by adding the following as the last paragraph thereof:
Notwithstanding the foregoing, any accelerated vesting of any restricted stock units granted to you that are “deferred compensation” (as defined under Treasury Regulation Section 1.409A-l(b)(l), after giving effect to the exemptions in Treasury Regulation Sections 1.409A-l(b)(3) through (b)(12)), may occur only upon or as a result of a “Change of Control,” as described above, that is also a “change in control event” as described in Section 409A (as defined in Section 24).
Under Section 409A, a “change in control event” means: a (i) Change in Ownership of the Company, (ii) Change in Effective Control of the Company, or (iii) Change in the Ownership of Assets of the Company, as described herein and construed in accordance Section 409A.
(i) A Change in Ownership of the Company shall occur on the date that any one Person acquires, or Persons Acting as a Group acquire, ownership of the capital stock of the Company that, together with the stock held by such Person or Group, constitutes more man 50% of the total fair market value or total voting power of the capital stock of the Company. However, if any one Person is, or Persons Acting as a Group are, considered to own more than 50% of the total fair market value or total voting power of the capital stock of the Company, the acquisition of additional stock by the same Person or Persons Acting as a Group is not considered to cause a Change in Ownership of the Company or to cause a Change in Effective Control of the Company (as described below). An increase in the percentage of capital stock owned by any one Person, or Persons Acting as a Group, as a