AMENDMENT NO. 1 TO
EMPLOYMENT AGREEMENT
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”).
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
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