<PAGE>
As filed with the Securities and Exchange Commission on July 21, 1999
Registration No. 333-81285
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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MGM GRAND, INC.
(Exact name of registrant as specified in its charter)
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Delaware 88-0215232
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
3799 Las Vegas Boulevard South
Las Vegas, Nevada 89109
(702) 891-3333
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
----------------
Scott Langsner
3799 Las Vegas Boulevard South
Las Vegas, Nevada 89109
(702) 891-3333
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Janet S. McCloud, Esq.
Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP
2121 Avenue of the Stars, 18th Floor
Los Angeles, California 90067
(310) 553-3000
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Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this registration statement as determined
by market conditions and other factors.
----------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest investment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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Proposed
Proposed Maximum
Amount Maximum Aggregate Amount of
Title of Each Class of to be Offering Price Offering Price Registration
Securities to be Registered Registered Per Unit (1) (1) Fee (2)
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<S> <C> <C> <C> <C>
Common Stock, $0.01 par value... 3,894,406 shares $45.9375 $178,899,276 $49,734
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</TABLE>
(1) Estimated solely for purposes of calculating the registration fee.
(2) Calculated pursuant to Rule 457(c) under the Securities Act of 1933.
----------------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+We will amend and complete the information in this prospectus. The Selling +
+Stockholders may not sell these securities until the Registration Statement +
+filed with the Securities and Exchange Commission is effective. This +
+prospectus is not an offer to sell these securities or our solicitation of +
+your offer to buy these securities, nor will we sell them or accept your +
+offer to buy them, in any jurisdiction where that would not be permitted or +
+legal prior to registration or qualification in that jurisdiction. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JULY 21, 1999
PROSPECTUS
MGM GRAND, INC.
3,894,406 Shares of
Common Stock
The 3,894,406 shares of common stock of MGM Grand, Inc. included in this
prospectus may be offered by the stockholder named under the heading "Selling
Stockholder" on page 4. We will not receive any proceeds from the sale of
shares by the selling stockholder.
Our common stock is listed on the New York Stock Exchange under the symbol
"MGG." On July 19, 1999, the last reported sale price of our common stock on
the New York Stock Exchange was $47.25 per share.
Neither the Securities and Exchange Commission nor any state securities
regulators has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
None of the Nevada Gaming Commission, the Nevada State Gaming Control Board,
the New Jersey Casino Control Commission nor any other gaming authority has
passed upon the accuracy or adequacy of this prospectus or the investment
merits of the securities offered. Any representation to the contrary is
unlawful.
The date of this prospectus is , 1999.
<PAGE>
You should not assume that the information in this prospectus or any
applicable prospectus supplement is accurate as of any date other than the date
in the front of those documents regardless of the time of delivery of this
prospectus or any applicable prospectus supplement. You should rely only on the
information incorporated by reference or provided in this prospectus and any
applicable prospectus supplement. We have not authorized anyone else to provide
you with different information. The selling stockholder is offering his shares
of our common stock and seeking offers to buy such shares only in jurisdictions
where offers and sales of such shares are permitted.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
The Company................................................................ 3
Use of Proceeds............................................................ 4
Selling Stockholder........................................................ 4
Regulation and Licensing................................................... 4
Description of Common Stock................................................ 11
Plan of Distribution....................................................... 12
Legal Matters.............................................................. 13
Experts.................................................................... 13
Where You Can Find More Information........................................ 13
Disclosure Regarding Forward-Looking Statements............................ 14
</TABLE>
2
<PAGE>
THE COMPANY
We are a leading operator of first class hotel and casino properties with an
emphasis on the total gaming and entertainment experience. We own and operate
the MGM Grand Las Vegas and the New York-New York Hotel and Casino, two of the
most prominent hotel and casinos on the Las Vegas Strip. We believe the MGM
Grand Las Vegas is one of the largest hotel/casinos in the world with
approximately 5,000 rooms, 171,500 square feet of gaming space and one of the
largest arenas in Las Vegas. We have nearly completed an approximate $570
million master plan to expand and transform the MGM Grand Las Vegas into "The
City of Entertainment." Our New York-New York property has 2,033 hotel rooms
and 84,000 square feet of casino space. In Primm, Nevada, we own and operate
the three hotel and casinos that travelers first encounter on the principal
route from Southern California. We also own and operate the MGM Grand Hotel and
Casino in Darwin, Australia and operate three casinos in South Africa. We
expect to open an interim casino resort in Detroit in the fall of this year
while a permanent property is under development, and also announced plans to
develop a casino resort in Atlantic City, New Jersey.
<TABLE>
<CAPTION>
Casino Number Number
Number of Square of of Table
Location/Property Rooms/Suites Footage Slots Games
----------------- ------------ ------- ------ --------
<S> <C> <C> <C> <C>
Las Vegas, Nevada
MGM Grand City of Entertainment.......... 5,034 171,500 3,566 153
New York-New York Hotel and Casino....... 2,033 84,000 2,292 71
Primm, Nevada
Primm Valley Resort...................... 623 38,000 1,446 33
Buffalo Bill's........................... 1,240 62,000 1,585 39
Whiskey Pete's........................... 777 36,400 1,374 28
Detroit, Michigan
MGM Grand Detroit (interim casino)(1).... -- 73,000 2,300 80
Australia
MGM Grand Australia...................... 96 28,000 360 32
South Africa (operated properties)
Johannesburg............................. -- 58,000 1,700 50
Nelspruit................................ -- 10,500 275 10
Witbank.................................. -- 15,500 375 13
</TABLE>
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(1) Under construction, expected to open Fall of 1999.
We were incorporated in the state of Delaware on January 29, 1986. Our
executive offices are located at 3799 Las Vegas Boulevard South, Las Vegas,
Nevada 89109. Our mailing address is P.O. Box 98655, Las Vegas, Nevada 89193,
and our telephone number is (702) 891-3333. For additional information about
us, see the documents incorporated by reference in this prospectus, as
described under "Where You Can Find More Information" on page 13.
3
<PAGE>
USE OF PROCEEDS
We will not receive any proceeds from the sale of shares by the selling
stockholder.
SELLING STOCKHOLDER
This prospectus may be used in connection with the sale of shares of common
stock by the selling stockholder, Kirk Kerkorian. Mr. Kerkorian has been a
director of MGM Grand since 1987. Mr. Kerkorian has also been a director of
Metro-Goldwyn-Mayer Inc. since 1996, and beneficially owns 134,997,723 shares
of the common stock of Metro-Goldwyn-Mayer Inc., or approximately 89% of its
outstanding shares.
The following table provides information regarding the shares of the
company's common stock beneficially owned by Mr. Kerkorian as of June 15, 1999,
the number of shares which may be sold by Mr. Kerkorian and the number of
shares which will be beneficially owned by Mr. Kerkorian after the contemplated
sale.
<TABLE>
<CAPTION>
Number of shares Number of shares Beneficial Percentage
Name of selling beneficially owned which may be ownership after Ownership after
stockholder prior to offering offered(2) offering offering(3)
- --------------- ------------------ ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
Kirk Kerkorian.......... 38,005,122(1) 3,894,406 34,110,716 55%
</TABLE>
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(1) Includes 34,110,716 shares held by Tracinda Corporation, which is wholly
owned by Mr. Kerkorian.
(2) The aggregate number of shares which Mr. Kerkorian may sell pursuant to
this offer is 3,894,406.
(3) Based upon 62,217,545 shares of common stock outstanding as of June 15,
1999, net of treasury shares. The Company commenced a tender offer for
6,000,000 shares of its common stock on June 17, 1999. Neither Mr.
Kerkorian nor Tracinda will participate in the tender offer. If the company
acquires all 6,000,000 shares, the percentage ownership after the offering
would be approximately 61%.
REGULATION AND LICENSING
Nevada Gaming Regulation
The ownership and operation of casino gaming facilities in Clark County,
Nevada are subject to the Nevada Gaming Control Act and the related regulations
and various local regulations. Our gaming operations in Nevada are subject to
the licensing and regulatory control of the Nevada Gaming Commission, the
Nevada State Gaming Control Board and the Clark County Liquor and Gaming
Licensing Board.
The laws, regulations and supervisory procedures of the Nevada gaming
authorities are based upon declarations of public policy that are concerned
with, among other things:
. the prevention of unsavory or unsuitable persons from having a direct or
indirect involvement with gaming at any time or in any capacity;
. the establishment and maintenance of responsible accounting practices
and procedures;
. the maintenance of effective controls over the financial practices of
licensees, including the establishment of minimum procedures for
internal fiscal affairs and the safeguarding of assets and revenues;
. providing reliable record keeping and requiring the filing of periodic
reports with the Nevada gaming authorities;
. the prevention of cheating and fraudulent practices; and
. providing a source of state and local revenues through taxation and
licensing fees.
Any change in such laws, regulations and procedures could have an adverse
effect on our gaming operations.
4
<PAGE>
MGM Grand Las Vegas, New York-New York and Primm Valley Resort, Buffalo
Bill's and Whiskey Pete's, which we refer to collectively as the Primm
properties, operate casinos and are required to be licensed by the Nevada
gaming authorities. The gaming licenses require the periodic payment of fees
and taxes and are not transferable. MGM Grand Las Vegas is also licensed as a
manufacturer and distributor of gaming devices, as the operator of the racebook
and sportspool at New York-New York and MGM Grand and an indirect wholly-owned
subsidiary are licensed as the two managers of New York-New York. We are also
required to be registered by the Nevada Commission as a publicly traded
corporation and as such, we are required periodically to submit detailed
financial and operating reports to the Nevada Commission and furnish any other
information that the Nevada Commission may require. No person may become a
stockholder or member of, or receive any percentage of profits from, MGM Grand
Las Vegas, New York-New York or the Primm properties without first obtaining
licenses and approvals from the Nevada gaming authorities. The company, MGM
Grand Las Vegas, New York-New York and the Primm properties have obtained from
the Nevada gaming authorities the various registrations, approval permits and
licenses required in order to engage in gaming activities in Nevada.
The Nevada gaming authorities may require any beneficial holder of MGM
Grand's voting securities, regardless of the number of shares owned, to file an
application, and they may investigate any such holder to determine whether such
holder is suitable. The applicant for a finding of suitability must pay all the
costs of investigation incurred by the Nevada gaming authorities.
The Nevada Act requires any person who acquires more than 5% of any class of
the company's voting securities to report the acquisition to the Nevada
Commission. The Nevada Act requires that beneficial owners of more than 10% of
the company's voting securities apply to the Nevada Commission for a finding of
suitability within 30 days after the chairman of the Nevada Board mails the
written notice requiring such filing. Under certain circumstances, an
"institutional investor" as defined in the Nevada Act, which acquires more than
10% but not more than 15% of the company's voting securities, may apply to the
Nevada Commission for a waiver of such finding of suitability if such
institutional investor holds the voting securities for investment purposes
only. An institutional investor shall not be deemed to hold voting securities
for investment purposes unless the voting securities were acquired and are held
in the ordinary course of business as an institutional investor and not for the
purpose of causing, directly or indirectly, the election of a majority of the
members of the board of directors of the company, any change in the company's
corporate charter, bylaws, management, policies or operations of the company or
any of its gaming affiliates, or any other action which the Nevada Commission
finds to be inconsistent with holding the company's voting securities for
investment purposes only. Activities that are not deemed to be inconsistent
with holding voting securities for investment purposes only include:
. voting on all matters voted on by stockholders;
. making financial and other inquiries of management of the type normally
made by securities analysts for informational purposes and not to cause
a change in its management, policies or operations; and
. such other activities as the Nevada Commission may determine to be
consistent with such investment intent.
If the beneficial holder of voting securities who must be found suitable is a
corporation, partnership or trust, it must submit detailed business and
financial information including a list of beneficial owners. The applicant is
required to pay all costs of investigation.
Any person who fails or refuses to apply for a finding of suitability or a
license within thirty days after being ordered to do so by the Nevada
Commission or the chairman of the Nevada Board, may be found unsuitable. The
same restrictions apply to a record owner if the record owner, after request,
fails to identify the beneficial owner. Any stockholder found unsuitable and
who holds, directly or indirectly, any beneficial ownership of the common stock
of a registered corporation beyond such period of time as may be prescribed by
the Nevada Commission may be guilty of a criminal offense. The company is
subject to disciplinary action
5
<PAGE>
if, after it receives notice that a person is unsuitable to be a stockholder or
to have any other relationship with the company, MGM Grand Las Vegas, New York-
New York or the Primm properties, and subsequently the company, MGM Grand Las
Vegas, New York-New York or the Primm properties:
. pays that person any dividend or interest upon voting securities of the
company;
. allows that person to exercise, directly or indirectly, any voting right
conferred through securities held by that person;
. pays remuneration in any form to that person for services rendered or
otherwise; or
. fails to pursue all lawful efforts to require such unsuitable person to
relinquish his voting securities for cash at fair market value.
Additionally, the Clark County Board has taken the position that it has the
authority to approve all persons owning or controlling the stock of any
corporation controlling a gaming licensee.
If any securities are held in trust by an agent or by a nominee, the record
holder may be required to disclose the identity of the beneficial owner to the
Nevada gaming authorities. A failure to make such disclosure may be grounds for
finding the record holder unsuitable. The company is also required to render
maximum assistance in determining the identity of the beneficial owner.
The company may not make a public offering of any securities without the
prior approval of the Nevada Commission if the securities or the proceeds
therefrom are intended to be used to construct, acquire or finance gaming
facilities in Nevada, or to retire or extend obligations incurred for such
purposes. Such approval, if given, does not constitute a finding,
recommendation or approval by the Nevada Commission or the Nevada Board as to
the accuracy or adequacy of the prospectus or the investment merits of the
securities. Any representation to the contrary is unlawful. Since the sale of
the shares will not be made by the company, no approval of the Nevada Board or
the Nevada Commission will be necessary for the sale of the shares by the
selling stockholder.
For a more detailed description of the various applicable Nevada gaming
regulatory requirements, see "Item 1. Business-Hotels and Gaming-Nevada
Government Regulation" in the company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998.
Michigan Government Regulation and Taxation
The Michigan Act subjects the ownership and operation of casino gaming
facilities to extensive state licensing and regulatory requirements. The
Michigan Act also authorizes local regulation of casino gaming facilities by
Detroit, provided that any such local ordinances regulating casino gaming are
consistent with the Michigan Act and rules promulgated to implement it.
The Michigan Act creates the Michigan Gaming Control Board and authorizes it
to grant casino licenses to not more than three applicants who have entered
into development agreements with Detroit. The Michigan Board is granted
extensive authority to conduct background investigations and determine the
suitability of casino license applicants, affiliated companies, officers,
directors, or managerial employees of applicants and affiliated companies and
persons or entities holding a one percent or greater direct or indirect
interest in an applicant or affiliated company. Institutional investors holding
less than certain specified amounts of debt or equity securities are exempted
from meeting the suitability requirements of the Michigan Act, provided such
securities are issued by a publicly traded corporation, such as the company,
and the securities were purchased for investment purposes only and not for the
purpose of influencing or affecting the affairs of the issuer.
6
<PAGE>
The Michigan Act imposes the burden of proof on the applicant for a casino
license to establish its suitability to receive and hold the license. The
applicant must establish its suitability as to integrity, moral character and
reputation, business probity, financial ability and experience, responsibility,
and other criteria deemed appropriate by the Michigan Board. A casino license
is valid for a period of one year and the Michigan Board may refuse to renew it
upon a determination that the licensee no longer meets the requirements for
licensure.
The Michigan Board may, among other things, revoke, suspend or restrict a
casino license. Substantial fines or forfeiture of assets for violations of
gaming laws or rules may also be levied against a casino licensee. In the event
that a casino license is revoked or suspended for more than 120 days, the
Michigan Act provides for the appointment of a conservator who, among other
things, is required to sell or otherwise transfer the assets of the casino
licensee or former licensee to another person or entity who meets the
requirements of the Michigan Act for licensure.
The Michigan Board has adopted administrative rules, which became effective
on June 23, 1998, to implement the terms of the Michigan Act. Among other
things, the Rules impose more detailed substantive and procedural requirements
with respect to casino licensing and operations. Included are requirements
regarding such things as licensing investigations and hearings, record keeping
and retention, contracting, reports to the Michigan Board internal control and
accounting procedures, security and surveillance, extensions of credit to
gaming patrons, conduct of gaming, and transfers of ownership interests in
licensed casinos. The rules also establish numerous Michigan Board procedures
regarding licensing, disciplinary and other hearings, and similar matters. The
rules have the force of law and are binding on the Michigan Board as well as on
applicants for or holders of casino licenses.
The Detroit City Council recently enacted an ordinance entitled "Casino
Gaming Authorization and Casino Development Agreement Certification and
Compliance." The ordinance authorizes casino gaming only by operators who are
licensed by the Michigan Board and are parties to a development agreement which
has been approved and certified by the City Council and is currently in effect
or are acting on behalf of such party. The development agreement between MGM
Grand Detroit, LLC, the City and the City Economic Development Corporation has
been so approved and certified and is currently in effect. The ordinance
requires each casino operator to submit to the Mayor and to the City Council
periodic reports regarding the operator's compliance with its development
agreement or, in the event of non-compliance, reasons of non-compliance and an
explanation of efforts to comply. The ordinance requires the Mayor to monitor
each casino operator's compliance with its development agreement, to take
appropriate enforcement action in the event of default and to notify the City
Council of defaults and enforcement action taken and, if a development
agreement is terminated, it requires the City Council to transmit notice of
such action to the Michigan Board within 5 business days along with the City's
request that the Michigan Board revoke the relevant operator's certificate of
suitability or casino license.
The Michigan Act effectively provides that each of the three casinos in
Detroit shall pay a wagering tax equal to 18% of its adjusted gross receipts,
to be paid 8.1% to Michigan and 9.9% to Detroit, a municipal services fee equal
to the greater of $4 million or 1.25% of adjusted gross receipts of each casino
to be paid to Detroit to defray its cost of hosting casinos and an annual
assessment, as adjusted based upon a consumer price index, in the initial
amount of approximately $8.3 million to be paid by each casino to Michigan to
defray its regulatory enforcement and other casino-related costs. These are in
addition to the taxes, fees, and assessments customarily paid by business
entities situated in Detroit.
Australia Government Regulation
The Northern Territory of Australia, like Nevada, has comprehensive laws and
regulations governing the conduct of gaming. MGM Grand Australia's operations
are subject to the Gaming Control Act of 1993 and regulations promulgated
thereunder and to the licensing and general control of the Minister for Racing
and Gaming. MGM Grand Australia Pty. Ltd. has entered into a casino operator's
agreement with the Minister pursuant to which MGM Grand Australia was granted a
license to conduct casino gaming on an exclusive basis through June 30, 2005 in
the northern half of the Northern Territory (which includes Darwin, its largest
city,
7
<PAGE>
where MGM Grand Australia is located). The license provides for good faith
negotiations to reach agreement on an extension of the license. The license
provides for a tax payable to the Northern Territory government on gross
profits derived from gaming, including gaming devices. The license is not
exclusive with respect to gaming devices, and the Minister may permit such
devices to be placed in limited numbers in locations not operated by MGM Grand
Australia. However, under the license, a portion of the operators' win on such
gaming devices is to be offset against gaming tax otherwise payable by MGM
Grand Australia.
The license may be terminated if MGM Grand Australia breaches the casino
operator's agreement or the Northern Territory law or fails to operate in
accordance with the requirements of the license. The Northern Territory
authorities have the right under the Northern Territory law, the casino
operator's agreement and the license to monitor and approve virtually all
aspects of the conduct of gaming by MGM Grand Australia.
Additionally, under the terms of the license, the Minister has the right to
approve the directors and corporate secretary of the company and its
subsidiaries which own or operate MGM Grand Australia, as well as changes in
the ownership or corporate structure of such subsidiaries. The company is
required to file with the Northern Territory authorities copies of all
documents required to be filed by the company or any of its subsidiaries with
the Nevada gaming authorities. In the event of any person becoming the
beneficial owner of 10% or more of the outstanding stock of the company, the
Minister must be so notified and may investigate the suitability of such
person. If the Minister determines such person to be unsuitable and following
such determination such person remains the beneficial owner of 10% or more of
the company's stock, that would constitute a default under the license.
New Jersey Government Regulation
The ownership and operation of hotel/casino facilities and gaming activities
in Atlantic City, New Jersey are subject to extensive state regulation under
the New Jersey Casino Control Act and the regulations of the New Jersey Casino
Control Commission and other applicable laws. In order to operate a
hotel/casino property in New Jersey, MGM Grand Atlantic City, Inc. must obtain
a license from the New Jersey Commission and obtain numerous other licenses,
permits and approvals from other states as well as local governmental
authorities. The New Jersey Act also established the New Jersey Division of
Gaming Enforcement to investigate all license applications, enforce the
provisions of the New Jersey Act and Regulations and prosecute all proceedings
for violations of the New Jersey Act and Regulations before the New Jersey
Commission.
The New Jersey Commission has broad discretion regarding the issuance,
renewal, revocation and suspension of casino licenses. The New Jersey Act and
Regulations concern primarily the good character, honesty, integrity and
financial stability of casino licensees, their intermediary and holding
companies, their employees, their security holders and others financially
interested in casino operations; financial and accounting practices used in
connection with casino operations; rules of games, levels of supervision of
games and methods of selling and redeeming chips; manner of granting credit,
duration of credit and enforceability of gaming debts; and distribution of
alcoholic beverages.
The company's wholly-owned subsidiary MGM Grand Atlantic City, Inc. has
applied to be licensed by the New Jersey Commission to operate a casino, and
the company has applied to be approved as a qualified holding company. On July
24, 1996, the company and MGM Grand Atlantic City, Inc., and their then
officers, directors, and 5% or greater shareholders were found suitable for
licensing by the New Jersey Commission. These findings of suitability are
subject to review and revision by the New Jersey Commission based upon a change
in any material fact that is relevant to the findings.
The New Jersey Act further provides that each person who directly or
indirectly holds any beneficial interest or ownership of the securities issued
by a casino licensee or any of its intermediary or holding companies, those
persons who, in the opinion of the New Jersey Commission, have the ability to
control the casino licensee or its intermediary or holding companies or elect a
majority of the board of directors of said companies, other than a banking or
other licensed lending institution which makes a loan or holds a mortgage
8
<PAGE>
or other lien acquired in the ordinary course of business, lenders and
underwriters of said companies are required to be qualified by the New Jersey
Commission. However, with respect to a publicly traded holding company such as
the company, a waiver of qualification may be granted by the New Jersey
Commission, with the concurrence of the Director of the New Jersey Division, if
the New Jersey Commission determines that said persons or entities are not
significantly involved in the activities of MGM Grand Atlantic City, Inc. and
in the case of security holders, do not have the ability to control the company
or elect one or more of its directors. There exists a rebuttable presumption
that any person holding 5% or more of the equity securities of a casino
licensee's intermediary or holding company or a person having the ability to
elect one or more of the directors of such a company has the ability to control
the company and thus must obtain qualification from the New Jersey Commission.
Notwithstanding this presumption of control, the New Jersey Act provides for
a waiver of qualification for passive "institutional investors," as defined by
the New Jersey Act, if the institutional investor purchased publicly traded
securities for investment purposes only and where such securities constitute
less than 10% of the equity securities of a casino licensee's holding or
intermediary company or debt securities of a casino licensee's holding or
intermediary company representing a percentage of the outstanding debt of such
company not exceeding 20% or a percentage of any issue of the outstanding debt
of such company not exceeding 50%. The waiver of qualification is subject to
certain conditions including, upon request of the New Jersey Commission, filing
a certified statement that the institutional investor has no intention of
influencing or affecting the affairs of the issuer, except that an
institutional investor holding voting securities shall be permitted to vote on
matters put to a vote of the holders of outstanding voting securities.
Additionally, a waiver of qualification may also be granted to institutional
investors holding a higher percentage of securities of a casino licensee's
holding or intermediary company upon a showing of good cause.
The New Jersey Act requires the certificate of incorporation of a publicly
traded holding company to provide that any securities of such corporation are
held subject to the condition that if a holder is found to be disqualified by
the New Jersey Commission pursuant to the New Jersey Act, such holder shall
dispose of his interest in such company. Accordingly, the company amended its
certificate of incorporation to provide that a holder of the company's
securities must dispose of such securities if the holder is found disqualified
under the New Jersey Act. In addition, the company amended its certificate of
incorporation to provide that the company may redeem the stock of any holder
found to be disqualified.
If the New Jersey Commission should find a security holder to be unqualified
to be a holder of securities of a casino licensee or holding company, not only
must the disqualified holder dispose of such securities but in addition,
commencing on the date the New Jersey Commission serves notice upon such a
company of the determination of disqualification, it shall be unlawful for the
disqualified holder to:
. receive any dividends or interest upon any such securities;
. to exercise, directly or through any trustee or nominee, any right
conferred by such securities; or
. to receive any remuneration in any form from the licensee for services
rendered or otherwise.
If the New Jersey Commission should find a security holder to be unqualified
to be a holder of securities of a casino licensee or holding company, the New
Jersey Commission shall take any necessary action to protect the public
interest including the suspension or revocation of the casino license except
that if the disqualified person is the holder of securities of a publicly
traded holding company, the New Jersey Commission shall not take action against
the casino license if:
. the holding company has the corporate charter provisions concerning
divestiture of securities by disqualified owners required by the New
Jersey Act;
. the holding company has made good faith efforts including the pursuit of
legal remedies to comply with any order of the New Jersey Commission;
and
. the disqualified holder does not have the ability to control the company
or elect one or more members of the company's board of directors.
9
<PAGE>
If, after licensure, the New Jersey Commission determines that MGM Grand
Atlantic City, Inc. has violated the New Jersey Act or Regulations, or if any
security holder of the company or MGM Grand Atlantic City, Inc. who is required
to be qualified under the New Jersey Act is found to be disqualified but does
not dispose of the securities, MGM Grand Atlantic City, Inc. could be subject
to fines or its license could be suspended or revoked. If MGM Grand Atlantic
City, Inc.'s license is revoked after issuance, the New Jersey Commission could
appoint a conservator to operate and to dispose of any hotel/casino facilities
of MGM Grand Atlantic City, Inc. Net proceeds of a sale by a conservator and
net profits of operations by a conservator, at least up to an amount equal to a
fair return on MGM Grand Atlantic City, Inc.'s investment which is reasonable
for casinos or hotels, would be paid to the company.
The New Jersey Act imposes an annual tax of eight percent on gross casino
revenues, as defined in the New Jersey Act. In addition, casino licensees are
required to invest one and one-quarter percent of gross casino revenues for the
purchase of bonds to be issued by the Casino Reinvestment Development Authority
or make other approved investments equal to that amount. In the event the
investment requirement is not met, the casino licensee is subject to a tax in
the amount of two and one-half percent on gross casino revenues. The New Jersey
Commission has established fees for the issuance or renewal of casino licenses
and casino hotel alcoholic beverage licenses and an annual license fee on each
slot machine.
In addition to compliance with the New Jersey Act and Regulations relating
to gaming, any property built in Atlantic City by MGM Grand Atlantic City, Inc.
or any other subsidiary of the company must comply with the New Jersey and
Atlantic City laws and regulations relating to, among other things, the Coastal
Area Facilities Review Act, construction of buildings, environmental
considerations, and the operation of hotels.
10
<PAGE>
DESCRIPTION OF COMMON STOCK
The authorized capital stock of MGM Grand consists of 75 million shares of
common stock. As of June 15, 1999, there were 62,217,545 shares of common stock
outstanding. Holders of the common stock are entitled to dividends when and as
declared by the company's board of directors. Holders have one vote per share
and the right to the net assets in liquidation after payment of any amounts due
to creditors. Holders are not liable for further calls or assessments by the
company. There are no sinking fund or redemption provisions relating to the
common stock. The common stock has noncumulative voting rights, which means
that the holders of a majority of the shares voting for the election of
directors can elect 100% of the directors if they choose to do so.
The company's certificate of incorporation provides that if and when the
company shall become, and so long as the company shall remain, a publicly
traded holding company as defined in the New Jersey Casino Control Act, all
securities of the company shall be held subject to the condition that if a
holder thereof is disqualified by the New Jersey Casino Control Commission,
such disqualified holder shall dispose of his interest in the securities,
including common stock within 120 days, or such other time period required by
the New Jersey Commission, following the company's receipt of notice of such
disqualified holder. Promptly after the notice date, the company is required to
deliver a copy of such written notice to the disqualified holder by personal
delivery, mail or any other reasonable means.
The company's certificate of incorporation also provides that so long as the
company holds, directly or indirectly, a license or franchise from a
governmental agency to conduct its business, which license or franchise is
conditioned upon some or all of the holders of the common stock possessing
prescribed qualifications, any and all shares of the common stock shall be
subject to redemption by the company, at its sole option and in its sole
discretion, to the extent necessary to prevent the loss of such license or
franchise or to reinstate it. Any shares of the common stock redeemable
pursuant to such provision may be called for redemption immediately for cash,
property or rights, including securities of the company or another corporation,
on not less than five days notice to the disqualified holder at a redemption
price equal to the average closing price of such stock on a national securities
exchange for the 45 trading days immediately preceding the date of the
redemption notice; or if the stock is not so traded, then the average of the
high and low closing bid price of the stock as quoted by the National
Association of Securities Dealers Automated Quotation system for such 45
trading day period; or if such stock is not so quoted, the redemption price
shall be determined in good faith by the board of directors.
The transfer agent and registrar for the common stock is ChaseMellon
Shareholder Services, LLC, Overpeck Centre, 85 Challenger Road, Ridgefield, New
Jersey 07660.
11
<PAGE>
PLAN OF DISTRIBUTION
We are registering 3,894,406 shares of our common stock on behalf of the
selling stockholder. The selling stockholder will pay all fees and expenses
incurred in connection with the preparation and filing of this registration
statement, including all filing, printing, legal and accounting fees and
expenses and underwriting or brokerage fees, discounts or commissions relating
to the sale of the shares. We have agreed to maintain the effectiveness of this
registration statement until all of these shares have been sold.
The selling stockholder may sell the shares covered by this prospectus in
one or more transactions on the New York Stock Exchange, in the over-the-
counter market, in privately-negotiated transactions, or a combination of such
methods of sale. The selling stockholder may sell his shares at market prices
prevailing at the time of the sale, at negotiated prices or at fixed prices.
The selling stockholder may offer his shares of our common stock in any manner
permitted by law, including to or through underwriters, brokers, dealers or
agents and directly to one or more purchasers. Sales of the shares of our
common stock may involve:
- sales to underwriters who will acquire the shares for their own account
and resell them in one or more transactions at fixed prices or at varying
prices determined at the time of sale;
- block transactions in which the broker or dealer engaged will attempt to
sell the share of our common stock as an agent but may position and
resell a portion of the block as a principal to facilitate the
transaction;
- purchases by a broker or dealer as principal and resale by such broker or
dealer for its account;
- an exchange distribution in accordance with the rules of any such
exchange; or
- ordinary brokerage transactions and transactions in which a broker
solicits purchasers.
Brokers and dealers may receive compensation in the form of discounts,
concessions or commissions from the selling stockholder and/or the purchasers
of the shares for whom such brokers or dealers may act as agent or to whom they
may sell as principal, or both. The selling stockholder and any broker or
dealer that participates in the distribution of shares of our common stock may
be deemed to be "underwriters" as that term is defined in Section 2(11) of the
Securities Act. Any commissions received by such broker or dealer and profit on
any resale of the shares as principal may be deemed to be underwriting
discounts and commissions under the Securities Act. In addition, such a
determination may subject them to the prospectus delivery requirements of the
Securities Act. In the event the selling stockholder engages an underwriter in
connection with the sale of the shares of our common stock, to the extent
required, a prospectus supplement will be distributed, which will set forth the
number of shares being offered and the terms of the offering, including the
name of the underwriter, any discounts, commissions or concessions allowed or
reallowed or paid by underwriters to dealers.
The selling stockholder also may sell all or a portion of the shares covered
by this prospectus in open market transactions in reliance on Rule 144 under
the Securities Act, provided that the selling stockholder meets the criteria
and conforms to the requirements of such rule.
We have agreed to indemnify the selling stockholder for certain liabilities,
including liabilities arising under the Securities Act.
12
<PAGE>
LEGAL MATTERS
Certain legal matters in connection with the validity of the shares of
common stock to which this prospectus relates will be passed upon for the
company by Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP.
Terry N. Christensen, a partner of Christensen, Miller, Fink, Jacobs, Glaser,
Weil & Shapiro, LLP, is an MGM Grand director, and he and other attorneys in
such firm beneficially own an aggregate of approximately 2,250 shares of our
common stock.
EXPERTS
The audited financial statements incorporated by reference in this
prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are incorporated herein by reference in
reliance upon the authority of said firm as experts in giving said reports.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file at the SEC's public reference rooms in Washington, D.C.,
New York, New York and Chicago, Illinois. Please call the SEC at (202) 942-8090
for further information on the public reference rooms. You can also obtain
copies of these materials from the public reference section of the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The SEC also
maintains a web site that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the
SEC (http://www/sec.gov). Our SEC filings are also available at the office of
the New York Stock Exchange. For further information on obtaining copies of our
public filings at the New York Stock Exchange, you should call (212) 656-5060.
We are "incorporating by reference" into this prospectus the information we
file with the SEC until all of the shares have been sold. This means that we
are disclosing important information to you by referring you to those
documents. The information incorporated by reference is an important part of
this memorandum. The information that we file later with the SEC will
automatically update and supersede information in this memorandum. We have
filed the following documents with the SEC and they are incorporated by
reference in this memorandum:
. our Annual Report on Form 10-K for the fiscal year ended December 31,
1998;
. our Quarterly Report on Form 10-Q for the period ended March 31, 1999;
. our Information Statement dated February 5, 1999;
. our Proxy Statement dated March 31, 1999;
. our Current Reports on Form 8-K dated March 1, 1999 and March 31, 1999;
and
. our Statement on Schedule 13E-4 dated June 17, 1999.
You may request a free copy of these and future filings by writing or
telephoning us at the following address:
MGM Grand, Inc.
3799 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Attention: Secretary
Telephone: (702) 891-3333
13
<PAGE>
FORWARD-LOOKING STATEMENTS
This prospectus includes "forward-looking statements" that are subject to
risks and uncertainties. In portions of this prospectus, the words
"anticipates," "believes," "estimates," "seeks," "expects," "plans," "intends"
and similar expressions, as they relate to the company or its management, are
intended to identify forward-looking statements. Although we believe that the
expectations reflected in such forward-looking statements are reasonable, and
have based these expectations on our beliefs as well as assumptions we have
made, such expectations may prove to be incorrect. Important factors that could
cause actual results to differ materially from such expectations are disclosed
in this memorandum, including, without limitation, the following factors:
. development and construction activities;
. dependence on existing management;
. leverage and debt service, including sensitivity to fluctuations in
interest rates;
. domestic or global economic conditions, including sensitivity to
fluctuations in foreign currencies;
. changes or uncertainties in federal or state tax laws or the
administration of such laws;
. changes or uncertainties in gaming laws or regulations, including
legalization of gaming in certain jurisdictions; and
. any requirement to apply for licenses and approvals under applicable
laws, including gaming laws, on our part or on the part of our suppliers.
All subsequent written and oral forward-looking statements attributable to
us or persons acting on our behalf are expressly qualified in their entirety by
our cautionary statements. The forward-looking statements included or
incorporated herein are made only as of the date of this memorandum, or as of
the date of the document incorporated by reference. We do not intend, and
undertake no obligation, to update these forward-looking statements.
14
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
All expenses other than the Commission's filing fees are estimated.
<TABLE>
<S> <C>
Commission registration fee......................................... $49,734
Printing and shipping expenses...................................... $ 2,500
Accountants' fees and expenses...................................... $10,000
Legal fees and expenses............................................. 25,000
Miscellaneous....................................................... 5,000
-------
Total............................................................. $92,234
</TABLE>
- --------
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware provides
that a Delaware corporation may indemnify any person against expenses,
judgments, fines and amounts paid in settlements actually and reasonably
incurred by any such person in connection with a threatened, pending or
completed action, suit or proceeding, other than an action, suit or proceeding
in the name of the corporation, in which he is involved by reason of the fact
that he is or was a director, officer, employee or agent of such corporation,
provided that (i) he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation and (ii) with
respect to any criminal action or proceeding, he had no reasonable cause to
believe his conduct was unlawful. If the action or suit is by or in the name of
the corporation, the corporation may indemnify any such person against expenses
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in the best interests of the corporation, except that
no indemnification may be made in respect to any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation, unless and only
to the extent that the Delaware Court of Chancery or the court in which the
action or suit is brought determines upon application that, despite the
adjudication of the liability but in light of the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expense as
the court deems proper.
Article II, Section 12 of the Bylaws of MGM Grand provides for
indemnification of persons to the extent permitted by the Delaware General
Corporation Law.
In accordance with Section 102(b)(7) of the Delaware Law, the Certificate of
Incorporation, as amended, of MGM Grand limits the personal liability of its
directors for violations of their fiduciary duty. The Certificate of
Incorporation eliminates each director's liability to MGM Grand or its
stockholders for monetary damages except (i) for any breach of the director's
duty of loyalty to MGM Grand or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under the section of the Delaware law providing for
liability of directors for unlawful payment of dividends or unlawful stock
purchases or redemptions, or (iv) for any transaction from which a director
derived an improper personal benefit. The effect of this provision is to
eliminate the personal liability of directors for monetary damages for actions
involving a breach of their fiduciary duty of care, including any such actions
involving gross negligence. This provision will not, however, limit in any way
the liability of directors for violations of the Federal securities laws.
MGM Grand carries directors and officers liability insurance policies which
are maintained in effect on a yearly basis.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling MGM Grand
pursuant to the foregoing provisions, MGM Grand has been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
II-1
<PAGE>
Item 16. Exhibits
<TABLE>
<C> <S>
5 Opinion of Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro,
LLP.
10.1 Indemnification Agreement between MGM Grand and Tracinda Corporation.
23.1 Consent of Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP
(set forth as part of Exhibit 5).
23.2 Consent of Arthur Andersen LLP.
24.1 Power of Attorney (see Page II-3).
</TABLE>
Item 17. Undertakings
(a) MGM Grand hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
Provided, however, that the undertakings set forth in paragraphs (a)(1)(i) and
(a)(1)(ii) of this section do not apply if the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by MGM Grand
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) MGM Grand hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of MGM Grand's Annual
Report on Form 10-K pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of MGM Grand pursuant to the foregoing provisions, or otherwise, MGM
Grand has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by MGM Grand
of expenses incurred or paid by a director, officer or controlling person of
MGM Grand in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, MGM Grand will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication for such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
MGM Grand certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Las Vegas, State of Nevada on July 20, 1999.
MGM GRAND, INC.
By *
_____________________________________
J. Terrence Lanni
Chairman of the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chairman of the Board and July 20, 1999
____________________________________ Chief Executive Officer
J. Terrence Lanni (Principal Executive
Officer)
* President and Director July 20, 1999
____________________________________
Alex Yemenidjian
* Executive Vice President, July 20, 1999
____________________________________ Chief Operating Officer and
Daniel M. Wade Director
* Executive Vice President, July 20, 1999
____________________________________ Chief Financial Officer and
James J. Murren Director (Principal
Financial and Accounting
Officer)
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C> <C>
* Director July 20, 1999
____________________________________
James D. Aljian
* Director July 20, 1999
____________________________________
Fred Benninger
* Director July 20, 1999
____________________________________
Terry N. Christensen
* Director July 20, 1999
____________________________________
Glenn A. Cramer
Director , 1999
____________________________________
Willie D. Davis
Director , 1999
____________________________________
Alexander M. Haig, Jr.
Director , 1999
____________________________________
Gary E. Primm
Director , 1999
____________________________________
Kirk Kerkorian
* Director July 20, 1999
____________________________________
Walter M. Sharp
* Director July 20, 1999
____________________________________
Jerome B. York
*By: /s/ Scott Langsner
------------------------------
Scott Langsner
Attorney-In-Fact
</TABLE>
II-4
<PAGE>
Exhibit 5
[LETTERHEAD OF
CHRISTENSEN, MILLER, FINK, JACOBS, GLASER, WEIL & SHAPIRO, LLP]
July 20, 1999
MGM Grand, Inc.
3799 Las Vegas Boulevard South
Las Vegas, NV 89109
Re: Registration Statement on Form S-3 (File No. 333-81285)
-------------------------------------------------------
Gentlemen:
You have requested our opinion, as counsel to MGM Grand, Inc., a Delaware
corporation (the "Company"), in connection with the offer and sale by certain of
the Company's stockholders of up to 3,894,406 shares (the "Shares") of the
Company's common stock, $0.01 par value per share. The Shares are the subject
of the Company's Registration Statement on Form S-3 (File No. 333-81285), as
amended (the "Registration Statement").
We have acted as counsel for the Company in connection with the
Registration Statement. We have examined and relied upon copies, unless
otherwise stated, of the following documents: (i) the Certificate of
Incorporation and By-laws of the Company, as amended to date; (ii) minutes and
resolutions of the Executive Committee of the Company's Board of Directors
relating to the Registration Statement; (iii) the Registration Statement; and
(iv) such other documents, instruments and agreements as we have deemed
necessary or appropriate as a basis for the opinion set forth below.
In rendering our opinion herein, we have assumed, with your permission: the
genuineness and authenticity of all signatures on original documents submitted
to us; the authenticity of all documents submitted to us as originals; the
conformity to originals of all documents submitted to us as copies or
facsimiles; the continued accuracy of all certificates and other documents from
public officials dated earlier than the date of this letter; the Registration
Statement being declared effective by the Securities and Exchange Commission;
the issuance by any necessary regulatory agencies of appropriate permits,
consents, approvals, authorizations and orders relating to the offering and sale
of the Shares; and the offer and sale of the Shares being made in the manner set
forth in the Registration Statement and pursuant to said permits, consents
approvals, authorizations and orders. In addition, we have made such legal and
factual examinations and inquiries as we have deemed necessary or appropriate
for purposes of this opinion.
With respect to the matters set forth below, we are relying as to certain
factual matters solely upon a certificate of an officer of the Company.
<PAGE>
MGM Grand, Inc.
July 19, 1999
Page 2
Our opinions herein are limited to the General Corporation Law of the State
of Delaware (based upon the latest unofficial compilation thereof available to
us) and the federal laws of the United States. We express no opinion whatsoever
with respect to the laws of any other jurisdiction and can assume no
responsibility for the applicability or effect of any such laws. In addition,
please be advised that Mr. Terry N. Christensen, a partner of Christensen,
Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP, is a director of the Company.
Based on and subject to the foregoing, it is our opinion that the Shares
are validly issued, fully paid and non-assessable.
This opinion is addressed solely to the Company, and no one else has the
right to rely upon it, nor may anyone release it, quote from it, or employ it in
any transaction other than those discussed herein without the written consent of
the undersigned; however, the undersigned hereby consents to the filing of this
opinion as an exhibit to, and the references to the undersigned contained in,
the Registration Statement.
Very truly yours,
/s/ Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP
CHRISTENSEN, MILLER, FINK, JACOBS, GLASER, WEIL & SHAPIRO, LLP
<PAGE>
INDEMNITY AGREEMENT
-------------------
This Indemnity Agreement, dated as of July 20, 1999 (the "Agreement"), is
by and between MGM Grand, Inc., a Delaware corporation (the "Company"), and
Tracinda Corporation, a Nevada corporation ("Tracinda") wholly owned by Kirk
Kerkorian (the "Selling Stockholder").
WHEREAS, the Selling Stockholder has requested the Company to register the
offer and sale by the Selling Stockholder of up to 3,894,406 shares (the
"Shares") of the Company's common stock, $.01 par value per share (the "Common
Stock"), under the Securities Act of 1933, as amended;
WHEREAS, the Company believes it is in its best interests to increase the
public float of the Common Stock;
WHEREAS, the Company has filed with the Securities and Exchange Commission
a Registration Statement on Form S-3, File No. 333-81285 (the "Registration
Statement"), to register the offer and sale of the Shares by the Selling
Stockholder;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereby agree as follows:
1. Indemnification by the Company. The Company agrees to indemnify and
-------------------------------
hold harmless Tracinda and each person who controls Tracinda within the meaning
of Section 15 of the Securities Act of 1933, as amended, and each of their
respective officers, directors, employees and agents (each, a "Tracinda
Indemnified Party") as follows:
(a) against any and all losses, liabilities, claims, damages, judgments and
reasonable expenses whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, including all documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or arising out of any
untrue statement or alleged untrue statement of a material fact contained in any
prospectus contained in the Registration Statement (the "Prospectus"), including
all documents incorporated therein by reference, or the omission or alleged
omission therefrom of a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading;
(b) against any and all losses, liabilities, claims, damages, judgments and
reasonable expenses whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any other claim
whatsoever based upon any such untrue statement or omission, or
1
<PAGE>
any such alleged untrue statement or omission, if such settlement is effected
with the written consent of the Company; and
(c) against any and all reasonable expenses whatsoever, as incurred
(including fees and disbursements of counsel), incurred in investigating,
preparing or defending against any litigation, investigation or proceeding by
any governmental agency or body, commenced or threatened, in each case whether
or not the Tracinda Indemnified Party is a party, or any claim whatsoever based
upon any such untrue statement or omission, or any such alleged untrue statement
or omission, to the extent that any such expense is not paid under subsection
(a) or (b) above;
provided, however, that this Section 1 does not apply to any Tracinda
Indemnified Party with respect to any loss, liability, claim, damage, judgment
or expense to the extent arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus, or the omission of
alleged omission therefrom of a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, in any such case made in reliance upon and in conformity with
written information furnished to the Company by the Selling Stockholder
expressly for use in the Registration Statement (or any amendment thereof) or
the Prospectus (or any amendment thereof or supplement thereto).
2. Indemnification by Tracinda. Tracinda agrees to indemnify and hold
----------------------------
harmless the Company and each of its officers, directors, employees and agents,
including any person who signed the Registration Statement (each, a "Company
Indemnified Party") as follows:
(a) against any and all losses, liabilities, claims, damages, judgments and
reasonable expenses whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, including all documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or arising out of any
untrue statement or alleged untrue statement of a material fact contained in the
Prospectus, including all documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(b) against any and all losses, liabilities, claims, damages, judgments and
reasonable expenses whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any other claim
whatsoever based upon any such untrue statement or omission, or any such alleged
untrue statement or omission, if such settlement is effected with the written
consent of Tracinda; and
(c) against any and all reasonable expenses whatsoever, as incurred
(including fees and disbursements of counsel), incurred in investigating,
preparing or defending against any litigation, investigation or proceeding by
any governmental agency or body, commenced or threatened, in each
2
<PAGE>
case whether or not the Company Indemnified Party is a party, or any claim
whatsoever based upon any such untrue statement or omission, or any such alleged
untrue statement or omission, to the extent that any such expense is not paid
under subparagraph (a) or (b) above;
provided, however, that this Section 2 applies only with respect to any loss,
liability, claim, damage, judgment or expense to the extent arising out of any
untrue statement or alleged untrue statement of a material fact contained in the
Prospectus, or the omission of alleged omission therefrom of a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, in any such case made in reliance upon and
in conformity with written information furnished to the Company by the Selling
Stockholder expressly for use in the Registration Statement (or any amendment
thereof) or the Prospectus (or any amendment thereof or supplement thereto).
3. Conduct of Indemnification Proceedings. Each Tracinda Indemnified
---------------------------------------
Party and each Company Indemnified Party (hereafter an "indemnified party")
shall give reasonably prompt notice to the Company or Tracinda, as the case may
be (hereafter the "indemnifying party") of any action or proceeding commenced
against it in respect of which indemnity may be sought hereunder, but failure so
to notify an indemnifying party shall not relieve it from any liability which it
may have under this Agreement, except to the extent that the indemnifying party
is materially prejudiced by such failure to give notice. If the indemnifying
party so elects within a reasonable time after receipt of such notice, the
indemnifying party may assume the defense of such action or proceeding at such
indemnifying party's expense with counsel chosen by the indemnifying party and
approved by the indemnified party, which approval shall not be unreasonably
withheld or delayed; provided, however, that, if such indemnified party
determines in good faith that a conflict of interest exists and that, therefore,
it is advisable for such indemnified party to be represented by separate counsel
or that, upon advice of counsel, there may be legal defenses available to it
which are different from or in addition to those available to the indemnifying
party, then the indemnifying party shall not be entitled to assume such defense,
and the indemnified party shall be entitled to separate counsel (limited in each
jurisdiction to one counsel for all indemnified parties under this Agreement) at
the indemnifying party's expense. If an indemnifying party is not so entitled
to assume the defense of such action or does not assume such defense, after
having received the notice referred to the first sentence of this Section 3, the
indemnifying party will pay the reasonable fees and expenses of one counsel for
all indemnified parties (limited in each jurisdiction to one counsel for all
indemnified parties under this Agreement). No indemnifying party will be liable
for any settlement effected without the written consent of such indemnifying
party, which consent will not be unreasonably withheld or delayed. If an
indemnifying party is entitled to assume, and assumes, the defense of such
action or proceeding in accordance with this Section 3, such indemnifying party
shall not, except as otherwise provided in this Section 3, be liable for any
fees and expenses of counsel for the indemnified parties incurred thereafter in
connection with such action or proceeding.
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4. Contribution.
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(a) In order to provide for just and equitable contribution in
circumstances in which the indemnity provided for in this Agreement is for any
reason held to be unenforceable by an indemnified party although applicable in
accordance with its terms in respect of any losses, liabilities, claims,
damages, judgments and expenses suffered by an indemnified party referred to
therein, each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, liabilities, claims, damages,
judgments and expenses in such proportion as is appropriate to reflect the
relative fault of the Company, on the one hand, and Tracinda and the Selling
Stockholder (including that of their respective officers, directors, employees
and agents), on the other, in connection with the statements or omissions which
resulted in such losses, liabilities, claims, damages, judgments or expenses, as
well as, any other relevant equitable considerations. The relative fault of the
Company, on the one hand, and of Tracinda and the Selling Stockholder (including
their respective officers, directors, employees and agents), on the other, shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, on the one hand,
or by or on behalf of Tracinda and the Selling Stockholder, on the other, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The amount paid or payable by
a party as a result of the losses, liabilities, claims, damages, judgments and
expenses referred to above shall be deemed to include, subject to the
limitations set forth in Section 3, any legal other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.
(b) The Company and Tracinda agree that it would not be just and equitable
if contribution pursuant to this Section 4 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in Subsection (a) above.
Notwithstanding the provisions of this Section 4, in the case of distributions
to the public, Tracinda shall not be required to contribute any amount in excess
of the amount by which (X) the total price at which the Shares sold by the
Selling Stockholder pursuant to the Registration Statement exceeds (Y) the
amount of any damages which Tracinda and the Selling Stockholder have otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act of 1933) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
Section 5. Miscellaneous.
--------------
(a) All notices, requests and other communications under this Agreement
shall be in writing and shall be given to such party at its address or facsimile
number set forth below or such other address or facsimile number as such party
may hereafter specify for the purpose by notice to the other. Each such notice,
request or other communication shall be effective: (i) if given by facsimile,
when such facsimile is transmitted to the facsimile number specified below and
the party
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sending the facsimile has received an electronic confirmation of receipt; (ii)
if given by registered or certified mail deposited in the United States mails
return receipt requested with postage prepaid, addressed as aforesaid, five
business days after such deposit; or (iii) if given by any other reasonable
means (which shall include Federal Express and personal delivery), on the
Business Day on which it can be proven that delivery was attempted at the
address specified in this Section 5.
If to the Company, to:
MGM Grand, Inc.
3799 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Attention: Secretary/Treasurer
Facsimile: 702-891-1114
If to Tracinda, to:
Tracinda Corporation
150 South Rodeo Drive, Suite 250
Beverly Hills, California 90212
Attention: Secretary/Treasurer
Facsimile: 310-271-3416
(b) This Agreement and the rights and obligations of the parties created
hereby shall be governed by the internal laws of the State of Nevada without
regard to the conflict of law and choice of law provisions thereof.
(c) If a court or an arbitrator of competent jurisdiction holds any
provision of this Agreement to be illegal, unenforceable or invalid in whole or
in part for any reason, such provision shall be adjusted rather than voided, if
possible to achieve the intent of the parties to the extent possible, and in the
event the validity and enforceability of the remaining sections shall not be
affected unless an essential purpose of this Agreement would be defeated by the
loss of the illegal, unenforceable or invalid provision.
(d) Except for the indemnified parties as described herein, no third person
is a beneficiary of this Agreement, nor shall any third person have any
liability with respect to the performance by any party to this Agreement.
(e) This Agreement may be executed in one or more counterparts, including
executed counterparts forwarded by facsimile transmission, each of which shall
be deemed to be an original and all of which together shall be deemed to be one
and the same instrument.
(f) This Agreement may not be modified or amended, nor may any provisions
hereof be waived, except by a writing executed by the parties hereto which
specifically states an intent to modify or amend the Agreement or waive one or
more provisions hereof. No failure or delay by either party in exercising any
right, power or privilege under this Agreement shall operate as a
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waiver thereof nor shall any single or partial exercise thereof preclude any
other or further partial exercise of any other right, power or privilege. Except
as otherwise provided herein, the rights and remedies shall be cumulative and
not exclusive of any rights or remedies provided herein.
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IN WITNESS WHEREOF, the undersigned have caused this Indemnity Agreement to
be executed as of the date first written above.
MGM GRAND, INC.
By: /s/ Scott Langsner
---------------------------
Name: Scott Langsner
Title: Secretary/Treasurer
TRACINDA CORPORATION
By: /s/ Anthony L. Mandekic
---------------------------
Name: Anthony L. Mandekic
Title: Secretary/Treasurer
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CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated February 1, 1999
included in MGM Grand, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1998 and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
July 20, 1999
