Document:

exv10w3

 

Exhibit 10.3

EMPLOYMENT AGREEMENT

(John Redmond)

This Employment Agreement (this “Agreement”) is entered into as of September 16, 2005, (the
“Effective Date”) by and between MGM MIRAGE (“Employer”, “we” or “us”), and John Redmond
(“Employee” or “you”).

	1.	 	Employment. We hereby employ you, and you hereby accept employment by us, as our
President and Chief Executive Officer of MGM Grand Resorts to perform such executive,
managerial or administrative duties as we may specify from time to time during the Specified
Term (as defined in Section 2). In construing the provisions of this Agreement, the term
“Employer”, “we” or “us” includes all of our subsidiary, parent and affiliated companies, but
specifically excludes Tracinda Corporation, its stockholder or stockholders, and its
subsidiaries.

	2.	 	Term. The term of your employment under this Agreement commences on the Effective
Date and it terminates on January 4, 2010 (the “Specified Term”). Unless a new written
employment agreement is executed by the parties, upon the expiration of the Specified Term,
all terms and conditions of this Agreement will continue, except that the new Specified Term
of the Agreement shall be three (3) months, which shall renew for successive three (3) month
periods on each successive three (3) month anniversary, if the Agreement is not otherwise
terminated pursuant to its terms. This Agreement replaces and supersedes in all respects the
Employment Agreement between you and us dated June 1, 2002 (the “Prior Agreement”).

	3.	 	Compensation. During the Specified Term, we shall pay you a minimum annual salary of
$1,500,000 effective May 10, 2005, payable in arrears at such frequencies and times as we pay
our other employees. You are also eligible to receive generally applicable fringe benefits
commensurate with our employees in the most senior executive positions. We will also
reimburse you for all reasonable business and travel expenses you incur in performing your
duties under this Agreement, payable in accordance with our customary practices and policies,
as we may modify and amend them from time to time. You shall be entitled to an annual bonus
(“Bonus”) determined under our Annual Performance-Based Incentive Plan for Executive Officers,
or any successor plan (the “Bonus Plan”), with your participation to be determined on a pro
rata basis to the extent the termination date of this Agreement does not coincide with the end
of our fiscal year (such Bonus shall be paid at such time as we pay Bonuses under the Bonus
Plan to our other senior executives with respect to such fiscal year, but not later than March
31 following the end of such fiscal year). For calendar year 2005, you will receive in 2006 a
special bonus such that the aggregate of the Bonus you receive under our Bonus Plan and the
special bonus is equivalent to the Bonus received by Robert H. Baldwin under the Bonus Plan.
You shall also be eligible to receive additional bonuses as determined by us in our sole and
absolute discretion.

	4.	 	Extent of Services. You agree that your employment by us is full time and exclusive.
You further agree to perform your duties in a competent, trustworthy

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	 	 	and businesslike manner. You agree that during the Specified Term, you will not render
any services of any kind (whether or not for compensation) for any person or entity other
than us, and that you will not engage in any other business activity (whether or not for
compensation) that is similar to or conflicts with your duties under this Agreement,
without the approval of the Board of Directors of MGM MIRAGE or the person or persons
designated by the Board of Directors to determine such matters. Subject to the
above-referenced discretion of the Board of Directors, it is understood that you may
continue to serve in the capacities specified on Exhibit B hereto.
	 
	5.	 	Policies and Procedures. You agree and acknowledge that you are bound by our
policies and procedures as they may be modified and amended by us from time to time. In the
event the terms in this Agreement conflict with our policies and procedures, the terms of this
Agreement shall take precedence. As you are aware, problem gaming and underage gambling can
have adverse effects on individuals and the gaming industry as a whole. You acknowledge that
you have read and are familiar with our policies, procedures and manuals and agree to abide by
them. Because these matters are of such importance to us, you specifically confirm that you
are familiar with and will comply with our policies of prohibiting underage gaming, supporting
programs to treat compulsive gambling and promoting diversity in all aspects of our business.
	 
	6.	 	Licensing Requirements. You acknowledge that we are engaged in a business that is or
may be subject to and exists because of privileged licenses issued by governmental authorities
in Nevada, New Jersey, Michigan, Mississippi, Illinois, Macau S.A.R., the United Kingdom, and
other jurisdictions in which we are engaged in a gaming business or where we have applied to
(or during the Specified Term may apply to) engage in a gaming business. You shall apply for
and obtain any license, qualification, clearance or other similar approval which we or any
regulatory authority which has jurisdiction over us requests or requires that you obtain.
	 
	7.	 	Failure to Satisfy Licensing Requirement. We have the right to terminate your
employment under Section 10.1 of this Agreement if: (i) you fail to satisfy any licensing
requirement referred to in Section 6 above; (ii) we are directed to cease business with you by
any governmental authority referred to in Section 6 above; (iii) we determine, in our
reasonable judgment, that you were, are or might be involved in, or are about to be involved
in, any activity, relationship(s) or circumstance which could or does jeopardize our business,
reputation or such licenses; or (iv) any of our licenses is threatened to be, or is, denied,
curtailed, suspended or revoked as a result of your employment by us or as a result of your
actions.
	 
	8.	 	Restrictive Covenants

	 	8.1	 	Competition. You acknowledge that, in the course of performing your
responsibilities under this Agreement, you will form relationships and become
acquainted with Confidential Information. You further acknowledge that such
relationships and the Confidential Information are valuable to us, and the
restrictions on your future employment contained in this Agreement, if any, are
reasonably necessary in order for us to remain competitive in our various businesses.
In consideration of this Agreement and the compensation payable to you under this
Agreement, and in recognition of our heightened need for protection from abuse of

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	 	 	 	relationships formed or Confidential Information garnered before and during the
Specified Term of this Agreement, you covenant and agree that, except as otherwise
explicitly provided in Section 10 of this Agreement, if you are not employed by us
for the entire Specified Term, then during the entire Restrictive Period you shall
not directly or indirectly be employed by, provide consultation or other services
to, engage in, participate in or otherwise be connected in any way (other than
through passive ownership of 1% or less of the outstanding voting securities) with
any Competitor. The terms “Confidential Information,” “Restrictive Period” and
“Competitor” are defined in Section 23. Your obligations during the Specified Term
and Restrictive Period under this Section 8.1 include but are not limited to the
following:

	 	8.1.1	 	You will not make known to any third party the names and
addresses of any of our customers, or any other information pertaining to
those customers.
	 
	 	8.1.2	 	You will not call on, solicit and/or take away, or attempt
to call on, solicit and/or take away, any of our customers, either for your
own account or for any third party.
	 
	 	8.1.3	 	You will not call on, solicit and/or take away, any of our
potential or prospective customers, on whom you called or with whom you became
acquainted during employment by us (either before or during the Specified
Term), either for your own account or for any third party.
	 
	 	8.1.4	 	You will not approach or solicit any of our employees with a
view towards enticing such employee to leave our employ to work for you or for
any third party, or hire any of our employees, without our prior written
consent, which we may give or withhold in our sole discretion.

	 	8.2	 	Confidentiality. You further covenant and agree that you will not at
any time during or after the Specified Term, without our prior written consent,
disclose to any other person or business entities any Confidential Information or
utilize any Confidential Information in any way, including communications with or
contact with any of our customers or other persons or entities with whom we do
business, other than in connection with your employment hereunder.
	 
	 	8.3	 	Employer’s Property. You hereby confirm that the Confidential
Information constitutes our sole and exclusive property (regardless of whether you
possessed or claim to have possessed any of such Confidential Information prior to the
date hereof). You agree that upon termination of your active employment with us, you
will promptly return to us all notes, notebooks, memoranda, computer disks, and any
other similar repositories of Confidential Information (regardless of whether you
possessed such Confidential Information prior to the date hereof) containing or
relating in any way to the Confidential Information, including but not limited to the
documents referred to on Exhibit A hereto. Such repositories of Confidential
Information also include but are not limited to any so-called personal files or other
personal data compilations in any form, which in any manner contain any Confidential
Information.

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	 	8.4	 	Notice to Employer. You agree to notify us immediately of any other
persons or entities for whom you work or provide services during the Specified Term or
within the Restrictive Period. You further agree to promptly notify us, during the
Specified Term, of any contacts made by any gaming licensee which concern or relate to
an offer to employ you or for you to provide consulting or other services.

	9.	 	Representation and Additional Agreements. You hereby represent, warrant and agree
that:

	 	9.1	 	The covenants and agreements contained in Sections 4 and 8 above are
reasonable in their geographic scope, duration and content; our agreement to employ
you and a portion of the compensation and consideration we have agreed to pay you
under Section 3 of this Agreement, are in partial consideration for such covenants and
agreements; you agree that you will not raise any issue of the reasonableness of the
geographic scope, duration or content of such covenants and agreements in any
proceeding to enforce such covenants and agreements, and such covenants and agreements
shall survive the termination of this Agreement;
	 
	 	9.2	 	The enforcement of any remedy under this Agreement will not prevent you from
earning a livelihood, because your past work history and abilities are such that you
can reasonably expect to find work in other areas and lines of business;
	 
	 	9.3	 	The covenants and agreements stated in Sections 4, 6, 7 and 8 of this
Agreement are essential for our reasonable protection;
	 
	 	9.4	 	We have reasonably relied on your representations, warranties and agreements,
including those set forth in this Section 9; and
	 
	 	9.5	 	You have the full right to enter into this Agreement and by entering into and
performance of this Agreement, you will not violate or conflict with any arrangements
or agreements you may have with any other person or entity.
	 
	 	9.6	 	You agree that in the event of your breach of any covenants and agreements
set forth in Sections 4 and 8 above, we may seek to enforce such covenants and
agreements through any equitable remedy, including specific performance or injunction,
without waiving any claim for damages. In any such event, you waive any claim that we
have an adequate remedy at law.

	10.	 	Termination.

	 	10.1	 	Employer’s Good Cause Termination. We have the right
to terminate this Agreement at any time during the Specified Term hereof for
Employer’s Good Cause (which term is defined in Section 23). Upon any such
termination, we will have no further liability or obligations whatsoever to
you under this Agreement

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	 	 	 	except as provided under Sections 10.1.1, 10.1.2, and 10.1.3 below.

	 	10.1.1	 	In the event Employer’s Good Cause termination is the result of your death
during the Specified Term, your beneficiary (as designated by you on our
benefit records) will be entitled to receive (x) your salary through your
death (to the extent not previously paid) and for a twelve (12) month period
following your death, such amount to be paid at regular payroll intervals, (y)
any Bonus attributable to our most recently completed fiscal year to the
extent not previously paid (determined through application of the Bonus
formula with respect to such year on a non-discretionary basis), and (z) an
additional amount equal to what your Bonus would have been for the fiscal year
in which your death occurs (determined through application of the Bonus
formula with respect to such year on a non-discretionary basis), pro rated
through the date of your death. Such Bonuses shall be paid to your
beneficiary at such time as we pay Bonuses to our other senior executives with
respect to such fiscal year (but not later than March 31 following the end of
the applicable fiscal year).
	 
	 	10.1.2	 	In the event Employer’s Good Cause termination is the result of your
Disability (which term is defined in Section 23), we will pay you or your
beneficiary in the event of your death during the period in which payments are
being made (x) your salary through the date of termination (to the extent not
previously paid), and for an additional twelve (12) month period following the
date of termination, such amount to be paid at regular payroll intervals, net
of payments received by you from any short term disability policy which is
either self-insured by us or the premiums of which were paid by us (and not
charged as compensation to you), (y) any Bonus attributable to our most
recently completed fiscal year to the extent not previously paid (determined
through application of the Bonus formula with respect to such year on a
non-discretionary basis), and (z) an additional amount equal to what your
Bonus would have been for the fiscal year in which your termination occurs
(determined through application of the Bonus formula with respect to such year
on a non-discretionary basis), pro rated through the date of termination.
Such Bonuses shall be paid at such time as we pay Bonuses to our other senior
executives with respect to the fiscal year in which your termination occurs
(but not later than March 31 following the end of the applicable fiscal year).
	 
	 	10.1.3	 	You or your beneficiary will be entitled to exercise your vested but
unexercised stock options, if any, as of the date of termination to acquire
Company stock, upon compliance with all of the terms and conditions required
to exercise such options and to such stock as has vested pursuant to the
Restricted Stock Plan without regard to any deferred vesting provisions
arising out of your senior employment status, and, if Employer’s Good Cause
termination is the result of your death or disability during the Specified
Term, you or your beneficiary (as applicable) shall be entitled to exercise
such additional stock options as would have been vested as of the first
anniversary of the date of termination, upon compliance with all of

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	 	 	 	the terms and conditions required to exercise such options, and to all of
your restricted stock pursuant to the Restricted Stock Plan without regard
to any deferred vesting provisions.

	 	10.2	 	Employer’s No Cause Termination. We have the right to terminate this
Agreement on written notice to you in our sole discretion for any cause we deem
sufficient or for no cause, at any time during the Specified Term. Upon such
termination, our sole liability to you shall be as follows:

	 	10.2.1	 	We will treat you as an inactive employee through the Specified Term and (i)
pay your salary for the period remaining in the Specified Term, (ii) pay your
Bonus (or Bonuses) through the Restrictive Period, and (iii) maintain you as a
participant in all health and insurance programs in which you and your
dependents, if applicable, are then participating (as such programs may be
changed by us from time to time for its employees in positions comparable to
yours and subject to satisfying the eligibility requirements of such programs
to the extent imposed by third party providers) through the first to occur of
(x) the end of the Specified Term or (y) the date on which you become eligible
to receive equivalent health and/or insurance benefits, as applicable from a
new employer. However, you would not be eligible for flex or vacation time,
discretionary bonus or new stock option grants, but (subject to Section 10.5.1
of this Agreement, if applicable) you would continue to vest previously
granted stock options and restricted stock, if any, and to receive continued
Employer contributions to and vesting of benefits in the Supplemental
Executive Retirement Plans (“SERP I” and “SERP II”) and Deferred Compensation
Plans (“DCP I” AND “DCP II”) for the remaining period of the Specified Term so
long as you remain in inactive status for such period; and
	 
	 	10.2.2	 	You will be entitled to exercise your vested but unexercised stock options,
if any, to acquire Company stock while you are on inactive status and upon
termination of your inactive status, upon your compliance with all of the
terms and conditions required to exercise such options.
	 
	 	10.2.3	 	In determining your Bonus (or Bonuses) for the period through the
Restrictive Period, the Bonus formula applicable to you will be no less
favorable than the Bonus formula which was applicable to you for the fiscal
year in which your termination occurred, provided however that application of
the Bonus formula with respect to you shall be on a non-discretionary basis
(except to the extent all participants in the Bonus Plan are treated in an
identical fashion with respect to their Bonuses). Such Bonuses shall be paid
at such time as we pay Bonuses to our other senior executives with respect to
such fiscal year or years (but not later than March 31 following the end of
the applicable fiscal year). In the event: (x) your employment terminates
pursuant to Section 10.2 following a Change of Control (as defined), or (y) in
any fiscal year during which or after you are terminated pursuant to Section
10.2, bonuses are paid to senior executives outside of the Bonus Plan, your

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	 	 	 	Bonuses shall not be subject to reduction through operation of the
parenthetical in the first sentence of this Section 10.2.3.

	 	 	 	Upon any such termination, you will continue to be bound by the restrictions in
Section 8 above. Notwithstanding anything herein to the contrary, while you are in
an inactive status, you may be employed by or provide consultation services to a
non-Competitor, provided that we will be entitled to offset the compensation being
paid by us during the Specified Term by the compensation and/or consultant’s fees
being paid to you, and provided further, that we will not be required to continue
to provide benefits to the extent that you are entitled to receive benefits from a
third party. In addition, at any time after the end of the Restrictive Period, if
you are in an inactive status, you may notify us in writing that you desire to
terminate your inactive status (an “Employee Inactive Termination Notice”) and
immediately thereafter we will have no further liability or obligations to you,
except under Section 10.2.2 above.
	 
	 	10.3	 	Employee’s Good Cause Termination. You may terminate this Agreement
for Employee’s Good Cause (which term is defined in Section 23). Prior to any
termination under this Section 10.3 being effective, you agree to give us thirty (30)
days’ advance written notice specifying the facts and circumstances of our alleged
breach. During such thirty (30) day period, we may either cure the breach (in which
case your notice will be considered withdrawn and this Agreement will continue in full
force and effect) or declare that we dispute that Employee’s Good Cause exists, in
which case this Agreement will continue in full force until the dispute is resolved in
accordance with Section 11. In the event this Agreement is terminated under this
Section 10.3, you will be treated as if you had been terminated pursuant to Section
10.2 and shall be entitled to all the compensation and benefits provided for therein.
	 
	 	10.4	 	Employee’s No Cause Termination. In the event you terminate your
employment under this Agreement without cause, we will have no further liability or
obligations whatsoever to you hereunder, except that you will be entitled to (i)
exercise your vested but unexercised stock options, if any, to acquire Company stock
upon your compliance with all the terms and conditions required to exercise such
options (ii) all salary through the date of termination, (iii) any Bonus attributable
to our most recently completed fiscal year to the extent not previously paid
(determined in accordance with the Plan, including the exercise of discretion by the
committee administering such Plan which may reduce or eliminate such Bonus) and (iv)
all other vested benefits; provided, however, that we will be entitled to all of our
rights and remedies by reason of such termination, including without limitation, the
right to enforce the covenants and agreements contained in Section 8 and our right to
recover damages.
	 
	 	10.5	 	Change in Control. In the event there is a Change in Control of
Company (which term is defined in Section 23), then:

	 	10.5.1	 	All of your unvested stock options and restricted stock shall become fully
vested and exercisable without regard to any deferral of vesting of restricted
stock arising out of your status as a senior executive.

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	 	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 your options to purchase common stock of MGM MIRAGE
will be exercisable 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, 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 will become vested and immediately
exercisable for cash equal to the difference between the purchase price and the
exercise price for the options. For example, if immediately prior to the
Change in 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
common stock was $40, then upon the exercise of such options 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 and on exercise, you
would be entitled to receive $5, net of applicable taxes, for each option in
full satisfaction of that option.
	 
	 	10.5.4	 	You shall have the right to terminate your employment upon thirty (30) days
notice to us, provided that such notice must be given by you to us no later
than ninety (90) days following the Change of Control (and may be given to us
prior to the Change of Control conditional upon occurrence of the Change of
Control). Upon any such termination pursuant to this Section 10.5.4 (i) we
shall pay you in a lump sum an amount equal to the sum of (x) your unpaid
salary through the end of the Specified Term, and (y) an amount in lieu of
your Bonuses through the end of the Specified Term (such amount to be
determined by computing your actual Bonus, whether previously paid or accrued,
for the most recently completed fiscal year of the Company (and if accrued,
your Bonus shall not be subject to reduction through operation of the
parenthetical in the first sentence of Section 10.2.3), dividing such Bonus
(whether previously paid or accrued) by twelve, and multiplying such amount by
the number of months in the Specified Term for which you have not been paid
your Bonus, pro-rated for any partial month); (ii) we shall contribute, for
the benefit of your SERP II and

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	 	 	 	DCP II accounts, amounts determined based on your aggregate salary through
the end of the Specified Term as referred to in clause (i)(x) above; (iii)
we shall maintain you as a participant in all health and insurance
programs in which you and your dependents, if applicable, are then
participating (as such programs may be changed by us from time to time for
its employees in positions comparable to yours and subject to satisfying
the eligibility requirements of such programs to the extent imposed by
third party providers) through the first to occur of (x) the end of the
Specified Term or (y) the date on which you become eligible to receive
equivalent health and/or insurance benefits, as applicable from a new
employer; and (iv) you shall be released from your obligations pursuant to
Section 8.1. We will cooperate with you, consistent with applicable law,
to minimize excise tax, if any, pursuant to Internal Revenue Code 4999 (or
any successor provision) which may arise as a consequence of the
foregoing.

	 	10.6	 	Survival of Covenants. Notwithstanding anything contained in this
Agreement to the contrary, except as specifically provided in Section 10.3 with
respect to the undertaking contained in Section 8.1, the covenants and agreements
contained in Section 8 will survive a termination of this Agreement or of your
employment, regardless of the reason for such termination.
	 
	 	10.7	 	Acknowledgement Concerning Options. The parties acknowledge that the
provisions contained herein with respect to stock options are only applicable to stock
options, if any, which are granted to you contemporaneously with, or after the date of
this Agreement. With respect to any other stock options, if any, granted to you prior
to the date of this Agreement, such provisions herein shall not be applicable and the
provisions originally governing such stock options shall remain in full force and
effect and shall not be altered by this Agreement. Notwithstanding the foregoing, the
parties affirm that the provisions contained in this Agreement with respect to stock
options are substantially identical to those contained in the Prior Agreement.

	11.	 	Disputed Claim/Arbitration. In the event of any Disputed Claim (such term in defined
in Section 23), such Disputed Claim shall be resolved by arbitration administered by the
American Arbitration Association under its National Rules for the Resolution of Employment
Disputes (or its then equivalent). Any arbitration under this Section 11 shall take place in
Las Vegas, Nevada. Unless and until the arbitration process is finally resolved in your favor
and we thereafter fail to satisfy such award within thirty (30) days of its entry, no
Employee’s Good Cause exists for purposes of your termination rights pursuant to Section 10.3
with respect to such Disputed Claim. Nothing herein shall preclude or prohibit us from
invoking the provisions of Section 10.2, or of our seeking or obtaining injunctive or other
equitable relief. In the event of a purported termination by us pursuant to Section 10.1 or by
you under Section 10.3 which is disputed by the other, if you prevail in the arbitration, you
shall not be entitled to reinstatement, but shall be entitled to the Termination Benefits. To
the extent we shall not have paid Termination Benefits during the period of such dispute and
you are the prevailing party in such arbitration, in addition to any other award, you shall be
entitled to interest at a rate equal to our blended cost of funds during such period.

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	12.	 	Severability. If any provision hereof is unenforceable, illegal, or invalid for any
reason whatsoever, such fact shall not affect the remaining provisions of this Agreement,
except in the event a law or court decision, whether on application for declaration, or
preliminary injunction or upon final judgment, declares one or more of the provisions of this
Agreement that impose restrictions on you unenforceable or invalid because of the geographic
scope or time duration of such restriction. In such event, you and we agree that the
invalidated restrictions are retroactively modified to provide for the maximum geographic
scope and time duration which would make such provisions enforceable and valid. This Section
12 does not limit our rights to seek damages or such additional relief as may be allowed by
law and/or equity in respect to any breach by you of the enforceable provisions of this
Agreement.

	13.	 	Travel and Related Matters. During the Specified Term, it is anticipated that you
will be required to travel extensively on behalf of us. Such travel, if by air, may be on
aircraft provided by us (if authorized by the Chief Executive Officer), or if commercial
airlines are used, on a first-class basis (or best available basis, if first class is not
available).

	14.	 	Attorneys’ Fees. In the event suit is brought to enforce, or to recover damages
suffered as a result of breach of this Agreement the prevailing party shall be entitled to
recover its reasonable attorneys’ fees and costs of suit.

	15.	 	No Waiver of Breach or Remedies. No failure or delay on the part of you or us in
exercising any right, power or remedy hereunder shall operate as a waiver thereof nor shall
any single or partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy hereunder. The
remedies herein provided are cumulative and not exclusive of any remedies provided by law.

	16.	 	Amendment or Modification. No amendment, modification, termination or waiver of any
provision of this Agreement shall be effective unless the same shall be in writing and signed
by you and a duly authorized member of our senior management. No consent to any departure by
you from any of the terms of this Agreement shall be effective unless the same is signed by a
duly authorized member of our senior management. Any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.

	17.	 	Governing Law. The laws of the State of Nevada shall govern the validity,
construction and interpretation of this Agreement, and except for Disputed Claims, the courts
of the State of Nevada shall have exclusive jurisdiction over any claim with respect to this
Agreement.

	18.	 	Number and Gender. Where the context of this Agreement requires the singular shall
mean the plural and vice versa and references to males shall apply equally to females and vice
versa.

	19.	 	Headings. The headings in this Agreement have been included solely for convenience
of reference and shall not be considered in the interpretation or construction of this
Agreement.

	20.	 	Assignment. This Agreement is personal to you and may not be assigned by you.

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	21.	 	Successors and Assigns. This Agreement shall be binding upon our successors and
assigns.

	22.	 	Prior Agreements. This Agreement shall supersede and replace any and all other
employment agreements which may have been entered into by and between the parties. Any such
prior employment agreements shall be of no force and effect.

	23.	 	Certain Definitions. As used in this Agreement:
	 
	 	 	“Change of Control” shall mean the first to occur of any of the following events:

	 	(1)	 	Any “person” or “group” of persons (as such terms are used in
§13 and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)), other than the Company’s principal stockholder as reflected
in the Company’s Proxy Statement dated March 29, 2002 (the “Principal
Stockholder”), the Principal Stockholder’s sole shareholder, members of the
immediate family, as well as the heirs and legatees, of the Principal
Stockholder’s sole shareholder and trusts or other entities for the benefit of
such persons or affiliates of such persons (as such term “affiliates” is
defined in the rules promulgated by the Securities and Exchange Commission)
(the “Principal Stockholder Group”), becomes the beneficial owner (as that
term is used in §13(d) of the Exchange Act), directly or indirectly, of fifty
percent (50%) or more of the Company’s capital stock entitled to vote
generally in the election of directors. (For the avoidance of doubt, as of
the date hereof, the Principal Stockholder Group is the beneficial owner of
fifty percent (50%) or more of the Company’s capital stock);
	 
	 	(2)	 	At any time, individuals who, at the date of this Agreement,
constitute the Board of Directors of the Company, and any new director whose
election by the Board or nomination for election by the Company’s stockholders
was approved by a vote of in excess of seventy five percent (75%) either (1)
the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so
approved, or (2) the members of the Company’s Executive Committee then still
in office who either were members at the beginning of the period or whose
election or nomination for election to the Executive Committee was previously
so approved by the directors or the Executive Committee, cease for any reason
to constitute at least a majority of the Board;
	 
	 	(3)	 	Any consolidation or merger of the Company, other than a
consolidation or merger of the Company in which the holders of the Stock
immediately prior to the consolidation or merger hold

11

 

	 	 	 	more than fifty percent (50%) of the Stock of the surviving corporation
immediately after the consolidation or merger;
	 
	 	(4)	 	Any liquidation or dissolution of the Company; or
	 
	 	(5)	 	The sale or transfer of all or substantially all of the
assets of the Company to parties that are not within a “controlled group of
corporations” (as defined in Internal Revenue Code §1563) in which the Company
is a member.

	 	 	“Company” means MGM MIRAGE.
	 
	 	 	“Competitor” means any person, corporation, partnership, limited liability company or other
entity which is either directly, indirectly or through an affiliated company, engaged in
gaming or proposes to engage in gaming in the State of Nevada, or in or within a 150 mile
radius of any other jurisdiction in which Employer is engaged in gaming or proposes to
engage in gaming.
	 
	 	 	“Confidential Information” means all knowledge, know-how, information, devices or
materials, whether of a technical or financial nature, or otherwise relating in any manner
to the business affairs of Employer, including without limitation, names and addresses of
Employer’s customers, any and all other information concerning customers who utilize the
goods, services or facilities of any hotel and/or casino owned, operated or managed by
Employer, Employer’s casino, hotel, retail, entertainment and marketing practices,
procedures, management policies, any trade secret, including but not limited to any
formula, pattern, compilation, program, device, method, technique or process, that derives
economic value, present or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain any economic value
from its disclosure or use, and any other information regarding the Employer which is not
already and generally known to the public, whether or not any of the foregoing is subject
to or protected by copyright, patent, trademark, registered or unregistered design, and
whether disclosed or communicated (in writing or orally) before, on or after the date of
this Agreement, by Employer to Employee. Confidential Information shall also specifically
include, without limitation, those documents and reports set forth on Exhibit A attached
hereto and incorporated herein by this reference.
	 
	 	 	“Disputed Claim” means that Employee maintains pursuant to Section 10.3 that Employer has
breached its duty to Employee and Employer has denied such breach.
	 
	 	 	“Employee’s Good Cause” shall mean (i) the failure of Employer to pay Employee any
compensation when due, save and except a Disputed Claim to compensation; or (ii) a material
reduction in the scope of duties or responsibilities of Employee or any reduction in
Employee’s salary save and except a Disputed Claim.
	 
	 	 	“Employee’s Physician” shall mean a licensed physician selected by Employee for purposes of
determining Employee’s disability pursuant to the terms of this Agreement.
	 
	 	 	“Employer’s Good Cause” shall mean:

12

 

	 	(1)	 	Employee’s death or disability; disability is hereby defined to include
incapacity for medical reasons certified to by Employer’s Physician which precludes
the Employee from performing the essential functions of Employee’s duties hereunder
for a substantially consecutive period of six (6) months or more. (In the event
Employee disagrees with the conclusions of Employer’s Physician, Employee (or
Employee’s representative) shall designate an Employee’s Physician, and Employer’s
Physician and Employee’s Physician shall jointly select a third physician, who shall
make the determination);
	 
	 	(2)	 	Employee’s failure to abide by Employer’s policies and procedures,
misconduct, insubordination, inattention to Employer’s business, failure to perform
the duties required of Employee up to the standards established by the Employer’s
senior management, or other material breach of this Agreement; or
	 
	 	(3)	 	Employee’s failure or inability to satisfy the requirements stated in Section
6 above.

	 	 	“Employer’s Physician” shall mean a licensed physician selected by Employer for purposes of
determining Employee’s disability pursuant to the terms of this Agreement.
	 
	 	 	“Restrictive Period” means the twelve (12) month period immediately following any
separation by Employee from active employment occurring during the Specified Term (or such
shorter period remaining in the Specified Term should Employee separate from active
employment with less than twelve (12) months remaining in the Specified Term).
	 
	24.	 	The parties acknowledge that neither Tracinda Corporation nor Kirk Kerkorian, individually or
collectively, is a party to this Agreement or any exhibit or agreement provided for herein.
Accordingly, the parties hereby agree that in the event (i) there is any alleged breach or
default by any party under this Agreement or any exhibit or agreement provided for herein, or
(ii) any party has any claim arising from or relating to any such agreement, no party, nor any
party claiming through it (to the extent permitted by applicable law), shall commence any
proceedings or otherwise seek to impose any liability whatsoever against Tracinda Corporation
or Kirk Kerkorian by reason of such alleged breach, default or claim.

13

 

	 	 	IN WITNESS WHEREOF, Employer and Employee have entered into this Agreement in Las Vegas,
Nevada, as of the date first written above.

	 	 	 
	 

	 	 
	EMPLOYEE — JOHN REDMOND
	 	 
	 
	 	 
	      /s/ John Redmond
 

	 	 
	 
	 	 
	EMPLOYER — MGM MIRAGE
	 	 
	 
	 	 
	      /s/ J. Terrence Lanni
 

	 	 

14exv10w4

 

Exhibit 10.4

EMPLOYMENT AGREEMENT

(James J. Murren)

This Employment Agreement (this “Agreement”) is entered into as of September 16, 2005, (the
“Effective Date”) by and between MGM MIRAGE (“Employer”, “we” or “us”), and James J. Murren
(“Employee” or “you”).

	1.	 	Employment. We hereby employ you, and you hereby accept employment by us, as our
President, Chief Financial Officer and Treasurer of MGM MIRAGE to perform such executive,
managerial or administrative duties as we may specify from time to time during the Specified
Term (as defined in Section 2). In construing the provisions of this Agreement, the term
“Employer”, “we” or “us” includes all of our subsidiary, parent and affiliated companies, but
specifically excludes Tracinda Corporation, its stockholder or stockholders, and its
subsidiaries.

	2.	 	Term. The term of your employment under this Agreement commences on the Effective
Date and it terminates on January 4, 2010 (the “Specified Term”). Unless a new written
employment agreement is executed by the parties, upon the expiration of the Specified Term,
all terms and conditions of this Agreement will continue, except that the new Specified Term
of the Agreement shall be three (3) months, which shall renew for successive three (3) month
periods on each successive three (3) month anniversary, if the Agreement is not otherwise
terminated pursuant to its terms. This Agreement replaces and supersedes in all respects the
Employment Agreement between you and us dated June 1, 2002 (the “Prior Agreement”).

	3.	 	Compensation. During the Specified Term, we shall pay you a minimum annual salary of
$1,500,000, which is effective August 1, 2005, payable in arrears at such frequencies and
times as we pay our other employees. You are also eligible to receive generally applicable
fringe benefits commensurate with our employees in the most senior executive positions. We
will also reimburse you for all reasonable business and travel expenses you incur in
performing your duties under this Agreement, payable in accordance with our customary
practices and policies, as we may modify and amend them from time to time. You shall be
entitled to an annual bonus (“Bonus”) determined under our Annual Performance-Based Incentive
Plan for Executive Officers, or any successor plan (the “Bonus Plan”), with your participation
to be determined on a pro rata basis to the extent the termination date of this Agreement does
not coincide with the end of our fiscal year (such Bonus shall be paid at such time as we pay
Bonuses under the Bonus Plan to our other senior executives with respect to such fiscal year,
but not later than March 31 following the end of such fiscal year). For calendar year 2005,
you will receive in 2006 a special bonus such that the aggregate of the Bonus you receive
under our Bonus Plan and the special bonus is equivalent to the Bonus received by Robert H.
Baldwin under the Bonus Plan. You shall also be eligible to receive additional bonuses as
determined by us in our sole and absolute discretion.

	4.	 	Extent of Services. You agree that your employment by us is full time and exclusive.
You further agree to perform your duties in a competent, trustworthy and businesslike manner.
You agree that during the Specified Term, you will not

1

 

	 	 	render any services of any kind (whether or not for compensation) for any person or entity
other than us, and that you will not engage in any other business activity (whether or not
for compensation) that is similar to or conflicts with your duties under this Agreement,
without the approval of the Board of Directors of MGM MIRAGE or the person or persons
designated by the Board of Directors to determine such matters. Subject to the
above-referenced discretion of the Board of Directors, it is understood that you may
continue to serve in the capacities specified on Exhibit B hereto.
	 
	5.	 	Policies and Procedures. You agree and acknowledge that you are bound by our
policies and procedures as they may be modified and amended by us from time to time. In the
event the terms in this Agreement conflict with our policies and procedures, the terms of this
Agreement shall take precedence. As you are aware, problem gaming and underage gambling can
have adverse effects on individuals and the gaming industry as a whole. You acknowledge that
you have read and are familiar with our policies, procedures and manuals and agree to abide by
them. Because these matters are of such importance to us, you specifically confirm that you
are familiar with and will comply with our policies of prohibiting underage gaming, supporting
programs to treat compulsive gambling and promoting diversity in all aspects of our business.
	 
	6.	 	Licensing Requirements. You acknowledge that we are engaged in a business that is or
may be subject to and exists because of privileged licenses issued by governmental authorities
in Nevada, New Jersey, Michigan, Mississippi, Illinois, Macau S.A.R., the United Kingdom, and
other jurisdictions in which we are engaged in a gaming business or where we have applied to
(or during the Specified Term may apply to) engage in a gaming business. You shall apply for
and obtain any license, qualification, clearance or other similar approval which we or any
regulatory authority which has jurisdiction over us requests or requires that you obtain.
	 
	7.	 	Failure to Satisfy Licensing Requirement. We have the right to terminate your
employment under Section 10.1 of this Agreement if: (i) you fail to satisfy any licensing
requirement referred to in Section 6 above; (ii) we are directed to cease business with you by
any governmental authority referred to in Section 6 above; (iii) we determine, in our
reasonable judgment, that you were, are or might be involved in, or are about to be involved
in, any activity, relationship(s) or circumstance which could or does jeopardize our business,
reputation or such licenses; or (iv) any of our licenses is threatened to be, or is, denied,
curtailed, suspended or revoked as a result of your employment by us or as a result of your
actions.
	 
	8.	 	Restrictive Covenants

	 	8.1	 	Competition. You acknowledge that, in the course of performing your
responsibilities under this Agreement, you will form relationships and become
acquainted with Confidential Information. You further acknowledge that such
relationships and the Confidential Information are valuable to us, and the
restrictions on your future employment contained in this Agreement, if any, are
reasonably necessary in order for us to remain competitive in our various businesses.
In consideration of this Agreement and the compensation payable to you under this
Agreement, and in recognition of our heightened need for protection from abuse of
relationships formed or Confidential Information garnered before and during the
Specified Term of this Agreement, you covenant and agree that,

2

 

	 	 	 	except as otherwise explicitly provided in Section 10 of this Agreement, if you are
not employed by us for the entire Specified Term, then during the entire
Restrictive Period you shall not directly or indirectly be employed by, provide
consultation or other services to, engage in, participate in or otherwise be
connected in any way (other than through passive ownership of 1% or less of the
outstanding voting securities) with any Competitor. The terms “Confidential
Information,” “Restrictive Period” and “Competitor” are defined in Section 23.
Your obligations during the Specified Term and Restrictive Period under this
Section 8.1 include but are not limited to the following:

	 	8.1.1	 	You will not make known to any third party the names and
addresses of any of our customers, or any other information pertaining to
those customers.
	 
	 	8.1.2	 	You will not call on, solicit and/or take away, or attempt
to call on, solicit and/or take away, any of our customers, either for your
own account or for any third party.
	 
	 	8.1.3	 	You will not call on, solicit and/or take away, any of our
potential or prospective customers, on whom you called or with whom you became
acquainted during employment by us (either before or during the Specified
Term), either for your own account or for any third party.
	 
	 	8.1.4	 	You will not approach or solicit any of our employees with a
view towards enticing such employee to leave our employ to work for you or for
any third party, or hire any of our employees, without our prior written
consent, which we may give or withhold in our sole discretion.

	 	8.2	 	Confidentiality. You further covenant and agree that you will not at
any time during or after the Specified Term, without our prior written consent,
disclose to any other person or business entities any Confidential Information or
utilize any Confidential Information in any way, including communications with or
contact with any of our customers or other persons or entities with whom we do
business, other than in connection with your employment hereunder.
	 
	 	8.3	 	Employer’s Property. You hereby confirm that the Confidential
Information constitutes our sole and exclusive property (regardless of whether you
possessed or claim to have possessed any of such Confidential Information prior to the
date hereof). You agree that upon termination of your active employment with us, you
will promptly return to us all notes, notebooks, memoranda, computer disks, and any
other similar repositories of Confidential Information (regardless of whether you
possessed such Confidential Information prior to the date hereof) containing or
relating in any way to the Confidential Information, including but not limited to the
documents referred to on Exhibit A hereto. Such repositories of Confidential
Information also include but are not limited to any so-called personal files or other
personal data compilations in any form, which in any manner contain any Confidential
Information.

3

 

	 	8.4	 	Notice to Employer. You agree to notify us immediately of any other
persons or entities for whom you work or provide services during the Specified Term or
within the Restrictive Period. You further agree to promptly notify us, during the
Specified Term, of any contacts made by any gaming licensee which concern or relate to
an offer to employ you or for you to provide consulting or other services.

	9.	 	Representation and Additional Agreements. You hereby represent, warrant and agree
that:

	 	9.1	 	The covenants and agreements contained in Sections 4 and 8 above are
reasonable in their geographic scope, duration and content; our agreement to employ
you and a portion of the compensation and consideration we have agreed to pay you
under Section 3 of this Agreement, are in partial consideration for such covenants and
agreements; you agree that you will not raise any issue of the reasonableness of the
geographic scope, duration or content of such covenants and agreements in any
proceeding to enforce such covenants and agreements, and such covenants and agreements
shall survive the termination of this Agreement;
	 
	 	9.2	 	The enforcement of any remedy under this Agreement will not prevent you from
earning a livelihood, because your past work history and abilities are such that you
can reasonably expect to find work in other areas and lines of business;
	 
	 	9.3	 	The covenants and agreements stated in Sections 4, 6, 7 and 8 of this
Agreement are essential for our reasonable protection;
	 
	 	9.4	 	We have reasonably relied on your representations, warranties and agreements,
including those set forth in this Section 9; and
	 
	 	9.5	 	You have the full right to enter into this Agreement and by entering into and
performance of this Agreement, you will not violate or conflict with any arrangements
or agreements you may have with any other person or entity.
	 
	 	9.6	 	You agree that in the event of your breach of any covenants and agreements
set forth in Sections 4 and 8 above, we may seek to enforce such covenants and
agreements through any equitable remedy, including specific performance or injunction,
without waiving any claim for damages. In any such event, you waive any claim that we
have an adequate remedy at law.

	10.	 	Termination.

	 	10.1	 	Employer’s Good Cause Termination. We have the right to terminate
this Agreement at any time during the Specified Term hereof for Employer’s Good Cause
(which term is defined in Section 23). Upon any such termination, we will have no
further liability or obligations whatsoever to you under this Agreement except as
provided under Sections 10.1.1, 10.1.2, and 10.1.3 below.

4

 

	 	10.1.1	 	In the event Employer’s Good Cause termination is the result of your death
during the Specified Term, your beneficiary (as designated by you on our
benefit records) will be entitled to receive (x) your salary through your
death (to the extent not previously paid) and for a twelve (12) month period
following your death, such amount to be paid at regular payroll intervals, (y)
any Bonus attributable to our most recently completed fiscal year to the
extent not previously paid (determined through application of the Bonus
formula with respect to such year on a non-discretionary basis), and (z) an
additional amount equal to what your Bonus would have been for the fiscal year
in which your death occurs (determined through application of the Bonus
formula with respect to such year on a non-discretionary basis), pro rated
through the date of your death. Such Bonuses shall be paid to your
beneficiary at such time as we pay Bonuses to our other senior executives with
respect to such fiscal year (but not later than March 31 following the end of
the applicable fiscal year).
	 
	 	10.1.2	 	In the event Employer’s Good Cause termination is the result of your
Disability (which term is defined in Section 23), we will pay you or your
beneficiary in the event of your death during the period in which payments are
being made (x) your salary through the date of termination (to the extent not
previously paid), and for an additional twelve (12) month period following the
date of termination, such amount to be paid at regular payroll intervals, net
of payments received by you from any short term disability policy which is
either self-insured by us or the premiums of which were paid by us (and not
charged as compensation to you), (y) any Bonus attributable to our most
recently completed fiscal year to the extent not previously paid (determined
through application of the Bonus formula with respect to such year on a
non-discretionary basis), and (z) an additional amount equal to what your
Bonus would have been for the fiscal year in which your termination occurs
(determined through application of the Bonus formula with respect to such year
on a non-discretionary basis), pro rated through the date of termination.
Such Bonuses shall be paid at such time as we pay Bonuses to our other senior
executives with respect to the fiscal year in which your termination occurs
(but not later than March 31 following the end of the applicable fiscal year).
	 
	 	10.1.3	 	You or your beneficiary will be entitled to exercise your vested but
unexercised stock options, if any, as of the date of termination to acquire
Company stock, upon compliance with all of the terms and conditions required
to exercise such options and to such stock as has vested pursuant to the
Restricted Stock Plan without regard to any deferred vesting provisions
arising out of your senior employment status, and, if Employer’s Good Cause
termination is the result of your death or disability during the Specified
Term, you or your beneficiary (as applicable) shall be entitled to exercise
such additional stock options as would have been vested as of the first
anniversary of the date of termination, upon compliance with all of the terms
and conditions required to exercise such options, and to all of your
restricted stock pursuant to the Restricted Stock Plan without regard to any
deferred vesting provisions.

5

 

	 	10.2	 	Employer’s No Cause Termination. We have the right to terminate this
Agreement on written notice to you in our sole discretion for any cause we deem
sufficient or for no cause, at any time during the Specified Term. Upon such
termination, our sole liability to you shall be as follows:

	 	10.2.1	 	We will treat you as an inactive employee through the Specified Term and (i)
pay your salary for the period remaining in the Specified Term, (ii) pay your
Bonus (or Bonuses) through the Restrictive Period, and (iii) maintain you as a
participant in all health and insurance programs in which you and your
dependents, if applicable, are then participating (as such programs may be
changed by us from time to time for its employees in positions comparable to
yours and subject to satisfying the eligibility requirements of such programs
to the extent imposed by third party providers) through the first to occur of
(x) the end of the Specified Term or (y) the date on which you become eligible
to receive equivalent health and/or insurance benefits, as applicable from a
new employer. However, you would not be eligible for flex or vacation time,
discretionary bonus or new stock option grants, but (subject to Section 10.5.1
of this Agreement, if applicable) you would continue to vest previously
granted stock options and restricted stock, if any, and to receive continued
Employer contributions to and vesting of benefits in the Supplemental
Executive Retirement Plans (“SERP I” and “SERP II”) and Deferred Compensation
Plans (“DCP I” AND “DCP II”) for the inactive status or the remaining period
of the Specified Term so long as you remain in inactive status for such
period; and
	 
	 	10.2.2	 	You will be entitled to exercise your vested but unexercised stock options,
if any, to acquire Company stock while you are on inactive status and upon
termination of your inactive status, upon your compliance with all of the
terms and conditions required to exercise such options.
	 
	 	10.2.3	 	In determining your Bonus (or Bonuses) for the period through the
Restrictive Period, the Bonus formula applicable to you will be no less
favorable than the Bonus formula which was applicable to you for the fiscal
year in which your termination occurred, provided however that application of
the Bonus formula with respect to you shall be on a non-discretionary basis
(except to the extent all participants in the Bonus Plan are treated in an
identical fashion with respect to their Bonuses). Such Bonuses shall be paid
at such time as we pay Bonuses to our other senior executives with respect to
such fiscal year or years (but not later than March 31 following the end of
the applicable fiscal year). In the event: (x) your employment terminates
pursuant to Section 10.2 following a Change of Control (as defined), or (y) in
any fiscal year during which or after you are terminated pursuant to Section
10.2, bonuses are paid to senior executives outside of the Bonus Plan, your
Bonuses shall not be subject to reduction through operation of the
parenthetical in the first sentence of this Section 10.2.3.

	 	 	 	Upon any such termination, you will continue to be bound by the restrictions in
Section 8 above. Notwithstanding anything herein to the contrary, while you are in
an inactive status, you may be employed by or

6

 

	 	 	 	provide consultation services to a non-Competitor, provided that we will be
entitled to offset the compensation being paid by us during the Specified Term by
the compensation and/or consultant’s fees being paid to you, and provided further,
that we will not be required to continue to provide benefits to the extent that you
are entitled to receive benefits from a third party. In addition, at any time
after the end of the Restrictive Period, if you are in an inactive status, you may
notify us in writing that you desire to terminate your inactive status (an
“Employee Inactive Termination Notice”) and immediately thereafter we will have no
further liability or obligations to you, except under Section 10.2.2 above.

	 	10.3	 	Employee’s Good Cause Termination. You may terminate this Agreement
for Employee’s Good Cause (which term is defined in Section 23). Prior to any
termination under this Section 10.3 being effective, you agree to give us thirty (30)
days’ advance written notice specifying the facts and circumstances of our alleged
breach. During such thirty (30) day period, we may either cure the breach (in which
case your notice will be considered withdrawn and this Agreement will continue in full
force and effect) or declare that we dispute that Employee’s Good Cause exists, in
which case this Agreement will continue in full force until the dispute is resolved in
accordance with Section 11. In the event this Agreement is terminated under this
Section 10.3, you will be treated as if you had been terminated pursuant to Section
10.2 and shall be entitled to all the compensation and benefits provided for therein.
	 
	 	10.4	 	Employee’s No Cause Termination. In the event you terminate your
employment under this Agreement without cause, we will have no further liability or
obligations whatsoever to you hereunder, except that you will be entitled to (i)
exercise your vested but unexercised stock options, if any, to acquire Company stock
upon your compliance with all the terms and conditions required to exercise such
options (ii) all salary through the date of termination, (iii) any Bonus attributable
to our most recently completed fiscal year to the extent not previously paid
(determined in accordance with the Plan, including the exercise of discretion by the
committee administering such Plan which may reduce or eliminate such Bonus) and (iv)
all other vested benefits; provided, however, that we will be entitled to all of our
rights and remedies by reason of such termination, including without limitation, the
right to enforce the covenants and agreements contained in Section 8 and our right to
recover damages.
	 
	 	10.5	 	Change in Control. In the event there is a Change in Control of
Company (which term is defined in Section 23), then:

	 	10.5.1	 	All of your unvested stock options and restricted stock shall become fully
vested and exercisable without regard to any deferral of vesting of restricted
stock arising out of your status as a senior executive.
	 
	 	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 your options to purchase common stock of MGM MIRAGE
will be exercisable 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, you had vested

7

 

	 	 	 	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 will become vested and immediately
exercisable for cash equal to the difference between the purchase price and the
exercise price for the options. For example, if immediately prior to the
Change in 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
common stock was $40, then upon the exercise of such options 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 and on exercise, you
would be entitled to receive $5, net of applicable taxes, for each option in
full satisfaction of that option.
	 
	 	10.5.4	 	You shall have the right to terminate your employment upon thirty (30) days
notice to us, provided that such notice must be given by you to us no later
than ninety (90) days following the Change of Control (and may be given to us
prior to the Change of Control conditional upon occurrence of the Change of
Control). Upon any such termination pursuant to this Section 10.5.4 (i) we
shall pay you in a lump sum an amount equal to the sum of (x) your unpaid
salary through the end of the Specified Term, and (y) an amount in lieu of
your Bonuses through the end of the Specified Term (such amount to be
determined by computing your actual Bonus, whether previously paid or accrued,
for the most recently completed fiscal year of the Company (and if accrued,
your Bonus shall not be subject to reduction through operation of the
parenthetical in the first sentence of Section 10.2.3), dividing such Bonus
(whether previously paid or accrued) by twelve, and multiplying such amount by
the number of months in the Specified Term for which you have not been paid
your Bonus, pro-rated for any partial month); (ii) we shall contribute, for
the benefit of your SERP II and DCP II accounts, amounts determined based on
your aggregate salary through the end of the Specified Term as referred to in
clause (i)(x) above; (iii) we shall maintain you as a participant in all
health and insurance programs in which you and your dependents, if applicable,
are then participating (as such programs may be changed by us from time to
time for its employees in positions comparable to yours and subject to
satisfying the eligibility requirements of such programs to the extent imposed
by

8

 

	 	 	 	third party providers) through the first to occur of (x) the end of the
Specified Term or (y) the date on which you become eligible to receive
equivalent health and/or insurance benefits, as applicable from a new
employer; and (iv) you shall be released from your obligations pursuant to
Section 8.1. We will cooperate with you, consistent with applicable law,
to minimize excise tax, if any, pursuant to Internal Revenue Code 4999 (or
any successor provision) which may arise as a consequence of the
foregoing.

	 	10.6	 	Survival of Covenants. Notwithstanding anything contained in this
Agreement to the contrary, except as specifically provided in Section 10.3 with
respect to the undertaking contained in Section 8.1, the covenants and agreements
contained in Section 8 will survive a termination of this Agreement or of your
employment, regardless of the reason for such termination.
	 
	 	10.7	 	Acknowledgement Concerning Options. The parties acknowledge that the
provisions contained herein with respect to stock options are only applicable to stock
options, if any, which are granted to you contemporaneously with, or after the date of
this Agreement. With respect to any other stock options, if any, granted to you prior
to the date of this Agreement, such provisions herein shall not be applicable and the
provisions originally governing such stock options shall remain in full force and
effect and shall not be altered by this Agreement. Notwithstanding the foregoing, the
parties affirm that the provisions contained in this Agreement with respect to stock
options are substantially identical to those contained in the Prior Agreement.

	11.	 	Disputed Claim/Arbitration. In the event of any Disputed Claim (such term in defined
in Section 23), such Disputed Claim shall be resolved by arbitration administered by the
American Arbitration Association under its National Rules for the Resolution of Employment
Disputes (or its then equivalent). Any arbitration under this Section 11 shall take place in
Las Vegas, Nevada. Unless and until the arbitration process is finally resolved in your favor
and we thereafter fail to satisfy such award within thirty (30) days of its entry, no
Employee’s Good Cause exists for purposes of your termination rights pursuant to Section 10.3
with respect to such Disputed Claim. Nothing herein shall preclude or prohibit us from
invoking the provisions of Section 10.2, or of our seeking or obtaining injunctive or other
equitable relief. In the event of a purported termination by us pursuant to Section 10.1 or by
you under Section 10.3 which is disputed by the other, if you prevail in the arbitration, you
shall not be entitled to reinstatement, but shall be entitled to the Termination Benefits. To
the extent we shall not have paid Termination Benefits during the period of such dispute and
you are the prevailing party in such arbitration, in addition to any other award, you shall be
entitled to interest at a rate equal to our blended cost of funds during such period.

	12.	 	Severability. If any provision hereof is unenforceable, illegal, or invalid for any
reason whatsoever, such fact shall not affect the remaining provisions of this Agreement,
except in the event a law or court decision, whether on application for declaration, or
preliminary injunction or upon final judgment, declares one or more of the provisions of this
Agreement that impose restrictions on you unenforceable or invalid because of the geographic
scope or time duration of such restriction. In such event, you and we agree that the
invalidated restrictions are retroactively modified to provide for the maximum geographic
scope and time duration which would make such provisions enforceable and valid. This

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	 	 	Section 12 does not limit our rights to seek damages or such additional relief as may be
allowed by law and/or equity in respect to any breach by you of the enforceable provisions
of this Agreement.
	 
	13.	 	Travel and Related Matters. During the Specified Term, it is anticipated that you
will be required to travel extensively on behalf of us. Such travel, if by air, may be on
aircraft provided by us (if authorized by the Chief Executive Officer), or if commercial
airlines are used, on a first-class basis (or best available basis, if first class is not
available).
	 
	14.	 	Attorneys’ Fees. In the event suit is brought to enforce, or to recover damages
suffered as a result of breach of this Agreement the prevailing party shall be entitled to
recover its reasonable attorneys’ fees and costs of suit.
	 
	15.	 	No Waiver of Breach or Remedies. No failure or delay on the part of you or us in
exercising any right, power or remedy hereunder shall operate as a waiver thereof nor shall
any single or partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy hereunder. The
remedies herein provided are cumulative and not exclusive of any remedies provided by law.
	 
	16.	 	Amendment or Modification. No amendment, modification, termination or waiver of any
provision of this Agreement shall be effective unless the same shall be in writing and signed
by you and a duly authorized member of our senior management. No consent to any departure by
you from any of the terms of this Agreement shall be effective unless the same is signed by a
duly authorized member of our senior management. Any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
	 
	17.	 	Governing Law. The laws of the State of Nevada shall govern the validity,
construction and interpretation of this Agreement, and except for Disputed Claims, the courts
of the State of Nevada shall have exclusive jurisdiction over any claim with respect to this
Agreement.
	 
	18.	 	Number and Gender. Where the context of this Agreement requires the singular shall
mean the plural and vice versa and references to males shall apply equally to females and vice
versa.
	 
	19.	 	Headings. The headings in this Agreement have been included solely for convenience
of reference and shall not be considered in the interpretation or construction of this
Agreement.
	 
	20.	 	Assignment. This Agreement is personal to you and may not be assigned by you.
	 
	21.	 	Successors and Assigns. This Agreement shall be binding upon our successors and
assigns.
	 
	22.	 	Prior Agreements. This Agreement shall supersede and replace any and all other
employment agreements which may have been entered into by and between the parties. Any such
prior employment agreements shall be of no force and effect.
	 
	23.	 	Certain Definitions. As used in this Agreement:
	 
	 	 	“Change of Control” shall mean the first to occur of any of the following events:

10

 

	 	(1)	 	Any “person” or “group” of persons (as such terms are used in
§13 and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)), other than the Company’s principal stockholder as reflected
in the Company’s Proxy Statement dated March 29, 2002 (the “Principal
Stockholder”), the Principal Stockholder’s sole shareholder, members of the
immediate family, as well as the heirs and legatees, of the Principal
Stockholder’s sole shareholder and trusts or other entities for the benefit of
such persons or affiliates of such persons (as such term “affiliates” is
defined in the rules promulgated by the Securities and Exchange Commission)
(the “Principal Stockholder Group”), becomes the beneficial owner (as that
term is used in §13(d) of the Exchange Act), directly or indirectly, of fifty
percent (50%) or more of the Company’s capital stock entitled to vote
generally in the election of directors. (For the avoidance of doubt, as of
the date hereof, the Principal Stockholder Group is the beneficial owner of
fifty percent (50%) or more of the Company’s capital stock);
	 
	 	(2)	 	At any time, individuals who, at the date of this Agreement,
constitute the Board of Directors of the Company, and any new director whose
election by the Board or nomination for election by the Company’s stockholders
was approved by a vote of in excess of seventy five percent (75%) either (1)
the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so
approved, or (2) the members of the Company’s Executive Committee then still
in office who either were members at the beginning of the period or whose
election or nomination for election to the Executive Committee was previously
so approved by the directors or the Executive Committee, cease for any reason
to constitute at least a majority of the Board;
	 
	 	(3)	 	Any consolidation or merger of the Company, other than a
consolidation or merger of the Company in which the holders of the Stock
immediately prior to the consolidation or merger hold more than fifty percent
(50%) of the Stock of the surviving corporation immediately after the
consolidation or merger;
	 
	 	(4)	 	Any liquidation or dissolution of the Company; or
	 
	 	(5)	 	The sale or transfer of all or substantially all of the
assets of the Company to parties that are not within a “controlled group of
corporations” (as defined in Internal Revenue Code §1563) in which the Company
is a member.

	 	 	“Company” means MGM MIRAGE.

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	 	 	“Competitor” means any person, corporation, partnership, limited liability company or other
entity which is either directly, indirectly or through an affiliated company, engaged in
gaming or proposes to engage in gaming in the State of Nevada, or in or within a 150 mile
radius of any other jurisdiction in which Employer is engaged in gaming or proposes to
engage in gaming.
	 
	 	 	“Confidential Information” means all knowledge, know-how, information, devices or
materials, whether of a technical or financial nature, or otherwise relating in any manner
to the business affairs of Employer, including without limitation, names and addresses of
Employer’s customers, any and all other information concerning customers who utilize the
goods, services or facilities of any hotel and/or casino owned, operated or managed by
Employer, Employer’s casino, hotel, retail, entertainment and marketing practices,
procedures, management policies, any trade secret, including but not limited to any
formula, pattern, compilation, program, device, method, technique or process, that derives
economic value, present or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain any economic value
from its disclosure or use, and any other information regarding the Employer which is not
already and generally known to the public, whether or not any of the foregoing is subject
to or protected by copyright, patent, trademark, registered or unregistered design, and
whether disclosed or communicated (in writing or orally) before, on or after the date of
this Agreement, by Employer to Employee. Confidential Information shall also specifically
include, without limitation, those documents and reports set forth on Exhibit A attached
hereto and incorporated herein by this reference.
	 
	 	 	“Disputed Claim” means that Employee maintains pursuant to Section 10.3 that Employer has
breached its duty to Employee and Employer has denied such breach.
	 
	 	 	“Employee’s Good Cause” shall mean (i) the failure of Employer to pay Employee any
compensation when due, save and except a Disputed Claim to compensation; or (ii) a material
reduction in the scope of duties or responsibilities of Employee or any reduction in
Employee’s salary save and except a Disputed Claim.
	 
	 	 	“Employee’s Physician” shall mean a licensed physician selected by Employee for purposes of
determining Employee’s disability pursuant to the terms of this Agreement.
	 
	 	 	“Employer’s Good Cause” shall mean:

	 	(1)	 	Employee’s death or disability; disability is hereby defined to include
incapacity for medical reasons certified to by Employer’s Physician which precludes
the Employee from performing the essential functions of Employee’s duties hereunder
for a substantially consecutive period of six (6) months or more. (In the event
Employee disagrees with the conclusions of Employer’s Physician, Employee (or
Employee’s representative) shall designate an Employee’s Physician, and Employer’s
Physician and Employee’s Physician shall jointly select a third physician, who shall
make the determination);
	 
	 	(2)	 	Employee’s failure to abide by Employer’s policies and procedures,
misconduct, insubordination, inattention to Employer’s business, failure to

12

 

	 	 	 	perform the duties required of Employee up to the standards established by the
Employer’s senior management, or other material breach of this Agreement; or
	 
	 	(3)	 	Employee’s failure or inability to satisfy the requirements stated in Section
6 above.

	 	 	“Employer’s Physician” shall mean a licensed physician selected by Employer for purposes of
determining Employee’s disability pursuant to the terms of this Agreement.
	 
	 	 	“Restrictive Period” means the twelve (12) month period immediately following any
separation by Employee from active employment occurring during the Specified Term (or such
shorter period remaining in the Specified Term should Employee separate from active
employment with less than twelve (12) months remaining in the Specified Term).
	 
	24.	 	The parties acknowledge that neither Tracinda Corporation nor Kirk Kerkorian, individually or
collectively, is a party to this Agreement or any exhibit or agreement provided for herein.
Accordingly, the parties hereby agree that in the event (i) there is any alleged breach or
default by any party under this Agreement or any exhibit or agreement provided for herein, or
(ii) any party has any claim arising from or relating to any such agreement, no party, nor any
party claiming through it (to the extent permitted by applicable law), shall commence any
proceedings or otherwise seek to impose any liability whatsoever against Tracinda Corporation
or Kirk Kerkorian by reason of such alleged breach, default or claim

13

 

	 	 	IN WITNESS WHEREOF, Employer and Employee have entered into this Agreement in Las Vegas,
Nevada, as of the date first written above.

	 	 	 
	EMPLOYEE — JAMES J. MURREN
	 	 
	 
	 	 
	      /s/ James J. Murren
 

	 	 
	 
	 	 
	EMPLOYER — MGM MIRAGE
	 	 
	 
	 	 
	      /s/ J. Terrence Lanni
 

	 	 
	 
	 	 

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