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SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
(Amendment No. )
Check the appropriate box:
[X] Preliminary Information Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14c-5(d)(2))
[_] Definitive Information Statement
MGM GRAND, INC.
(Name of Registrant As Specified In Charter)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14c-5(g).
[_] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
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PRELIMINARY COPY
MGM GRAND, INC.
3799 Las Vegas Boulevard South
Las Vegas, Nevada 89109
INFORMATION STATEMENT
This Information Statement is furnished to holders of record of the common
stock, $.01 par value per share, of MGM Grand, Inc., a Delaware corporation,
as of February , 1999, pursuant to Section 14(c) of the Securities Exchange
Act of 1934, as amended, and Rule 14c-2 thereunder. The purpose of this
Information Statement is to inform all stockholders of the approval of the
MGM Grand, Inc. Replacement Stock Option Plan and the MGM Grand, Inc.
Directors' Replacement Stock Option Plan. These plans were adopted by
MGM Grand in connection with its acquisition of Primadonna Resorts, Inc. which
is expected to be completed on or about , 1999. This Information Statement
was first mailed or delivered to MGM Grand's stockholders on or about February
, 1999.
We are not asking you for a proxy and you are requested not to send us a
proxy.
This Information Statement is being furnished to stockholders solely to
provide them with certain information concerning the replacement stock option
plan and the directors' replacement stock option plan in accordance with the
requirements of the Securities Exchange Act of 1934, as amended, and the rules
and regulations adopted thereunder, including particularly Regulation 14C. We
are not seeking consent, authorization or proxies from our stockholders, as
the consent of stockholders entitled to cast the required number of votes to
approve these plans has been obtained pursuant to Section 228 of the Delaware
General Corporation Law. The plans will not become effective pursuant to the
written consent already obtained until 20 days after this Information
Statement is mailed to stockholders. This Information Statement also serves as
notice to stockholders of an action taken by less than unanimous written
consent as required by Section 228. Section 228 permits MGM Grand to take the
action approving the plans without a meeting of the stockholders if the
written consent by holders having not less than the minimum number of votes
that would be required to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted. The reported
closing price of the Company's common stock on the New York Stock Exchange on
February , 1999 was $ .
DESCRIPTION OF THE PRIMADONNA MERGER
Pursuant to an agreement and plan of merger, dated as of December 2, 1998,
MGM Grand and Primadonna have agreed on a merger of MGM Grand and Primadonna.
In the merger, a subsidiary of MGM Grand will merge into Primadonna, and
Primadonna will become a wholly owned subsidiary of MGM Grand. Each
stockholder of Primadonna will be entitled to receive .33 shares of MGM Grand
common stock for each share of Primadonna common stock held. The merger will
not have any effect on the MGM Grand common shares that MGM Grand stockholders
currently own. Of course, the number of outstanding shares of MGM Grand common
stock will increase from approximately 52 million shares to 61.5 million
shares because of the MGM Grand common stock to be issued to Primadonna's
stockholders in connection with the merger.
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While holders of a majority of Primadonna's outstanding common stock need to
approve the merger, the approval of MGM Grand's stockholders is not required in
order to complete the merger. A special meeting of Primadonna's stockholders
has been scheduled for February 23, 1999. Holders of approximately 53% of the
outstanding Primadonna common stock have given support letters to MGM Grand in
which they agree to vote to approve the merger agreement. Thus, the merger
agreement will be approved at the Primadonna stockholders meeting. MGM Grand's
board of directors will not be changed as a result of the merger. However, MGM
Grand will invite Gary E. Primm, Chairman of the Board and Chief Executive
Officer of Primadonna, to join its board of directors upon his approval by the
relevant gaming authorities. We expect that the executive officers of MGM Grand
will continue as the executive officers of MGM Grand after the merger.
Under the merger agreement, on the closing of the merger, each outstanding
option to purchase Primadonna common stock previously granted by Primadonna or
its subsidiaries will be converted into an option to acquire the number of
shares of MGM Grand common stock, rounded down to the nearest whole share,
determined by multiplying the number of shares of Primadonna common stock
subject to such option by .33, the merger conversion ratio. The exercise price
per share of MGM Grand common stock subject to the replacement option shall be
equal to the exercise price per share of Primadonna common stock subject to the
relevant Primadonna option divided by .33 and then rounded up to the nearest
whole cent. Under the terms of the Primadonna options, the closing of the
merger will have the effect of causing unvested Primadonna options, other than
options granted under Primadonna's 1993 Directors' Stock Option Plan, to
accelerate and vest. MGM Grand has agreed to adopt, subject to the consent of
MGM Grand stockholders, stock option plans substantially similar to the
existing Primadonna plans prior to completion of the merger. Copies of the new
plans adopted by MGM Grand pursuant to which it will grant replacement options
to Primadonna option holders are attached as Appendices A and B to this
Information Statement and are incorporated herein by this reference. Tracinda
Corporation, holder of approximately 65.6% of the outstanding MGM Grand common
stock, has consented to the adoption of the new option plans, which are
substantially similar to the existing Primadonna option plans. The sole purpose
of the new MGM Grand option plans is to provide replacement options to
Primadonna option holders.
DESCRIPTION OF THE OPTION PLANS
Replacement Stock Option Plan Summary
Administration. The replacement option plan will be administered by the
compensation committee of MGM Grand's board (James D. Aljian, Fred Benninger
and Jerome B. York). The compensation committee may permit any recipient of an
option to pay the purchase price of the common stock issuable pursuant to the
option in any lawful manner and for any lawful consideration that the
compensation committee approves.
The maximum number of shares of MGM Grand common stock authorized for
issuance under the replacement option plan is 704,259. The plan expires in
April 2003. No options may be granted after such expiration, but options
granted under the plan may continue to be exercised after that date in
accordance with their terms. In addition, options may be amended after that
date, so long as there is no increase in the number of shares subject to or
comprising the option. Options may be reduced by the amount necessary to
satisfy any applicable tax withholding requirements imposed on
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MGM Grand in respect of the option. Shares of common stock reserved for options
that terminate, expire or are cancelled (and thus are not exercised) will not
be available for future grant under this plan.
In the event of a stock split, the declaration of a stock dividend, the
exchange or conversion of securities of the class subject to an option into
cash, property or different kinds of securities pursuant to a merger,
reorganization or otherwise, or the sale of substantially all of the assets of
MGM Grand or if an extraordinary dividend is declared, adjustments will be made
in (i) the number and type of shares or other securities or cash or other
property that may be acquired pursuant to each option and (ii) any other terms
as are necessarily affected by such event.
Amendments. The MGM Grand board of directors may amend or terminate the plan
at any time, but may not unilaterally change or affect any outstanding option
that would deprive the holder of any of the material benefits thereunder.
Termination of the replacement option plan would have no effect on outstanding
options.
Eligibility. Holders of Primadonna options granted under Primadonna's
Amended and Restated 1993 Incentive Stock Plan at the effective time of the
merger are the only persons eligible to receive options under this plan.
Approximately 64 persons are eligible to participate in this plan.
Non-Transferability. Generally, options under the plan are not transferable
by a holder other than by will or the laws of descent and distribution and are
generally exercisable, during his or her lifetime, only by the holder; and the
shares issuable pursuant to an option will be paid only to the holder or the
holder's beneficiary or representative. However, the compensation committee may
establish conditions and procedures (for example, in connection with a holder's
estate or tax planning initiatives) under which options may be transferred to a
third party, to the extent permitted by law.
Other Information. The replacement option plan is not exclusive. Options may
also be awarded to eligible persons pursuant to other incentive plans or
without reference to a plan as from time to time authorized by MGM Grand.
Directors' Replacement Stock Option Plan Summary
Administration. The directors' replacement option plan will be administered
by the compensation committee of MGM Grand's board. The compensation committee
may permit any recipient of an option to pay the purchase price of the common
stock issuable pursuant to the option in any lawful manner and for any lawful
consideration that the compensation committee approves.
The maximum number of shares of MGM Grand common stock authorized for
issuance under the directors' replacement option plan is 31,845. The plan
expires in April 2003. No options may be granted after such expiration, but
options granted under the plan may continue to be exercised after that date in
accordance with their terms. In addition, options may be amended after that
date, so long as there is no increase in the number of shares subject to or
comprising the option. Options may be reduced by the amount necessary to
satisfy any applicable tax withholding requirements imposed on MGM Grand in
respect of the option. Shares of common stock reserved for options that
terminate, expire or are cancelled (and thus are not exercised) will not be
available for future grant under this plan.
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In the event of a stock split, the declaration of a stock dividend, the
exchange or conversion of securities of the class subject to an option into
cash, property or different kinds of securities pursuant to a merger,
reorganization or otherwise, or the sale of substantially all of the assets of
MGM Grand or if an extraordinary dividend is declared, adjustments will be made
in (i) the number and type of shares or other securities or cash or other
property that may be acquired pursuant to each option and (ii) any other terms
as are necessarily affected by such event.
Amendments. The MGM Grand board of directors may amend or terminate the plan
at any time, but may not unilaterally change or affect any outstanding option
that would deprive the holder of any of the material benefits thereunder.
Termination of the directors' replacement option plan would have no effect on
outstanding options.
Eligibility. Holders of Primadonna options granted under Primadonna's 1993
Directors' Stock Option Plan at the effective time of the merger are the only
persons eligible to receive options under this plan. Approximately 4 persons
are eligible to participate in this plan.
Non-Transferability. Generally, options under the plan are not transferable
by a holder other than by will or the laws of descent and distribution and are
generally exercisable, during his or her lifetime, only by the holder; and the
shares issuable pursuant to an option will be paid only to the holder or the
holder's beneficiary or representative. However, the compensation committee may
establish conditions and procedures (for example, in connection with a holder's
estate or tax planning initiatives) under which options may be transferred to a
third party, to the extent permitted by law.
Other Information. The director's replacement option plan is not exclusive.
Options may also be awarded to eligible persons pursuant to other incentive
plans or without reference to a plan as from time to time authorized by MGM
Grand.
FEDERAL INCOME TAX TREATMENT OF OPTIONS UNDER THE NEW OPTION PLANS
Certain of the federal income tax consequences to optionees and MGM Grand of
options granted under the new plans should generally be as set forth in the
following summary.
A person to whom an option is granted will not recognize income at the time
of grant of such option. When the holder exercises such option, the holder will
recognize ordinary income equal to the excess, if any, of the fair market
value, as of the date of the option exercise, of the shares that the holder
receives upon such exercise over the option price paid plus the amount, if any,
includable in the holder's gross income, and the holder's holding period for
such shares will commence on the date on which the holder recognizes taxable
income in respect of such shares. Gain or loss upon a subsequent sale of any
MGM Grand common stock received upon the exercise of an option generally would
be taxed as capital gain or loss (long-term or short-term depending upon the
holding period of the stock sold). Certain additional rules apply if the holder
pays the option price in shares previously owned by the holder.
MGM Grand is generally entitled to deduct an amount equal to the difference
between the option exercise price and the fair market value of the shares at
the time of exercise of the option.
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SPECIFIC BENEFITS
The number, amount and type of options to be received by eligible persons
under the new option plans will be determined by the number, amount and type of
Primadonna options outstanding at the effective time of the merger of MGM Grand
and Primadonna. No officers or directors of MGM Grand will receive any options
under either of the new option plans. Gary E. Primm, Chairman of the Board and
Chief Executive Officer of Primadonna, is to be invited to join the MGM Grand
board after receipt of all required gaming approvals. Upon completion of the
merger, his Primadonna options will be replaced with options to purchase 72,600
shares of MGM Grand common stock. Such options will have no dollar value based
upon the $30.875 per share closing price of MGM Grand stock on January 27,
1999.
MATTERS REGARDING THE STOCKHOLDER APPROVAL
As of February , 1999, the date on which holders of majority of MGM
Grand's common stock approved the new option plans by written consent, there
were outstanding 52,033,097 shares of common stock, and MGM Grand had received
the written consent approving the new option plans from Tracinda Corporation,
its principal stockholder, representing 34,110,716 shares of common stock or
approximately 65.6% of the outstanding shares. Information with respect to the
beneficial ownership of MGM Grand's common stock is set forth in Appendix C and
incorporated herein by reference.
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APPENDIX A
MGM GRAND, INC.
REPLACEMENT STOCK OPTION PLAN
1. PURPOSE OF PLAN. The purpose of this Replacement Stock Option Plan
(referred to herein as the "PLAN") of MGM Grand, Inc., a Delaware corporation
(the "COMPANY"), is to enable the Company to grant options to replace
outstanding options previously granted by Primadonna Resorts, Inc., a Nevada
corporation ("Primadonna"), in accordance with that certain Agreement and Plan
of Merger, dated as of December 2, 1998, by and among the Company, MGM Grand
Acquisition Corp. and Primadonna (the "Merger Agreement"). Pursuant to the
Merger Agreement, MGM Grand Acquisition Corp. will be merged into Primadonna,
and Primadonna will become a wholly owned subsidiary of the Company (the
"Merger").
2. PERSONS ELIGIBLE UNDER PLAN. Any individual person who holds options to
purchase Primadonna common stock granted under Primadonna's Amended and
Restated 1993 Incentive Plan ("Primadonna Options") shall be eligible for the
grant of an option or options under this Plan ("ELIGIBLE PERSON").
3. STOCK SUBJECT TO PLAN. The maximum number of shares of the Company's
Common Stock, $.01 par value per share (the "COMMON SHARES"), that may be
issued pursuant to options granted under this Plan is 704,259, subject to
adjustment as provided in or pursuant to Section 6, and such maximum number, as
so adjusted, shall be referred to as the "SHARE LIMIT." Common Shares subject
to outstanding Options shall be reserved for issuance. If any Option shall
expire or be canceled or terminated without having been exercised in full, the
undelivered Common Shares subject thereto shall cease to be available for the
purposes of this Plan.
4. ADMINISTRATION OF PLAN.
(a) The Committee. This Plan shall be, to the maximum extent possible, self-
effectuating. This Plan shall be interpreted and, to the extent any
determinations are required hereunder, shall be administered by a committee
(the "COMMITTEE") of the entire Board of Directors of the Company (the "BOARD")
or a committee consisting of two or more directors designated by the Board for
this purpose.
(b) Binding Determinations. Any action taken by, or inaction of, the
Company, the Board or the Committee relating or pursuant to this Plan shall be
within the absolute discretion of that entity or body and shall be conclusive
and binding upon all persons. No member of the Board or officer of the Company
shall be liable for any such action or inaction of the entity or body, of
another person or, except in circumstances involving such person's bad faith.
(c) Reliance On Experts. In making any determination or in taking or not
taking any action under this Plan, the Board and the Committee may obtain and
may rely upon the advice of experts, including professional advisors to the
Company. No director, officer or agent of the Company shall be liable for any
such action or determination taken or made or omitted in good faith.
(d) Delegation. The Committee may delegate ministerial, non-discretionary
functions to individuals who are officers or employees of the Company.
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5. OPTIONS.
(a) Option Grants. Subject to adjustments contemplated by Section 6(a), each
holder of a Primadonna Option upon consummation of the Merger shall be granted
an Option to purchase that number of Common Shares which is the product of (y)
the number of shares of Primadonna's common stock subject to the holder's
Primadonna Option and (z) .33, the conversion ratio pursuant to the Merger
Agreement.
(b) Option Agreements. The Committee may authorize any officer (other than
the particular recipient) to execute any or all agreements memorializing any
grant of an option by the Committee under this Plan. All options shall be
evidenced by a writing executed on behalf of the Company (the "OPTION
AGREEMENT") and, if required by the Committee, by the recipient of the option.
(c) Price; Consideration. The purchase price per Common Share covered by
each Option shall be determined by dividing the option price of the Primadonna
Option it replaces by .33 and rounding up to the nearest whole cent. Common
Shares may be issued pursuant to an Option for any lawful consideration as
determined by the Committee, including, without limitation, services rendered
by the recipient of such Option, but shall not be issued for less than the
minimum lawful consideration.
(d) Term and Vesting. The terms and conditions of each Option shall be the
same as those of the Primadonna Option it replaces, after adjustment to take
into account the .33 conversion ratio pursuant to the Merger Agreement provided
herein.
(e) Loans. The Committee shall have the express authority to make or
authorize loans to finance, or to otherwise accommodate the financing of, the
acquisition or exercise of an Option, subject to Section 10(a).
(f) Transfer Restrictions.
(i) LIMIT ON EXERCISE AND TRANSFER. Unless otherwise expressly
provided in (or pursuant to) this Section 5(e), by applicable law or by the
applicable Option Agreement: (A) all options are non-transferable and shall
not be subject in any manner to sale, transfer, anticipation, alienation,
assignment, pledge, encumbrance or charge; (B) options shall be exercised
only by the holder; and (C) amounts payable or shares issuable pursuant to
an option shall be delivered only to (or for the account of) the holder.
(ii) CERTAIN EXCEPTIONS. The Committee by express provision in the
Option Agreement may permit an option to be transferred to, exercised by
and paid to certain persons or entities related to the participant,
including but not limited to members of the participant's family,
charitable institutions, or trusts or other entities whose beneficiaries or
beneficial owners are members of the participant's family and/or charitable
institutions, or to such other persons or entities as may be expressly
approved by the Board or the Committee, pursuant to such conditions and
procedures as the Board or the Committee may establish. Any permitted
transfer shall be subject to the condition that the Committee receive
evidence satisfactory to it that the transfer is being made for estate
and/or tax planning purposes and on a basis consistent with the Company's
registration of securities (if applicable) and the incentive purposes of
the option and this Plan.
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(iii) FURTHER EXCEPTIONS TO LIMITS ON TRANSFER. The exercise and
transfer restrictions in Section 5(f)(i) shall not apply to: (A) transfers
to the Company; (B) the designation of a beneficiary to receive benefits in
the event of the participant's death or, if the participant has died,
transfers to or exercise by the participant's beneficiary, or, in the
absence of a validly designated beneficiary, transfers by will or the laws
of descent and distribution; (C) transfers pursuant to a domestic relations
order (if approved or ratified by the Board or the
Committee); (D) if the participant has suffered a disability, permitted
transfers to or exercises on behalf of the holder by his or her legal
representative; or (E) the authorization by the Board or the Committee of
"cashless exercise" procedures with third parties who finance or who
otherwise facilitate the exercise of options consistent with applicable
laws and the express authorization of the Committee.
(f) TAX WITHHOLDING. Upon any exercise, vesting, or payment of any option,
the Company shall have the right, at its option, to (i) require the Eligible
Person (or personal representative or beneficiary, as the case may be) to pay
or provide for payment of the amount of any taxes which the Company may be
required to withhold with respect to such transaction or (ii) deduct from any
amount payable in cash the amount of any taxes which the Company may be
required to withhold with respect to such cash amount. In any case where a tax
is required to be withheld in connection with the delivery of Common Shares
under this Plan, the Committee may grant (either at the time of the grant of
the option or thereafter) to the participant the right to elect, pursuant to
such rules and subject to such conditions as the Committee may establish, to
have the Company reduce the number of shares to be delivered by (or otherwise
reacquire) the appropriate number of shares valued at their then fair market
value, to satisfy such withholding obligation.
6. ADJUSTMENTS.
(a) Adjustments. If (i) the outstanding securities of the class then subject
to this Plan (the "OUTSTANDING SHARES") (A) are increased, decreased, exchanged
or converted as a result of a stock split (including a split in the form of a
stock dividend), reverse stock split, reclassification or the like or (B) are
exchanged for or converted into cash, property or a different number or kind of
securities (or if cash, property or securities are distributed in respect of
the outstanding shares), as a result of a reorganization, merger,
consolidation, recapitalization, restructuring, or reclassification, or (ii)
all or substantially all of the business and/or assets of the Company are sold,
THEN, unless the terms of such transaction shall otherwise provide, the
Committee shall make equitable, appropriate and proportionate adjustments in
(x) the number and type of shares or other securities or cash or other property
that may be acquired pursuant to Options previously granted under this Plan,
(y) the maximum number and type of shares or other securities that may be
issued pursuant to Options thereafter granted under this Plan, and (z) such
other terms as necessarily are affected by such event.
(b) Termination. If any option or other right to acquire Common Stock under
this Plan is fully vested but is not exercised prior to (i) a dissolution of
the Company, or (ii) any other Event after which the Company does not survive,
such Option or right shall thereupon terminate, provided that (y) the Company
or a successor shall have given to the participant at least ten (10) days
notice of any such termination, and participant shall have had the right prior
to or simultaneously with the consummation of such occurrence or transaction to
exercise his or her option or right, or (z) the Committee shall have provided
for the termination of the option or right by making an adjustment pursuant to
Section 6(a).
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An "EVENT" means any of the following: (i) the dissolution or liquidation of
the Company; (ii) an agreement to merge or consolidate or otherwise reorganize,
with or into one or more entities which are not Subsidiaries, as a result of
which less than 50% of the outstanding voting securities of the surviving or
resulting entity are, or are to be, owned by former stockholders of the
Company; or (iii) the sale of all or substantially all of the Company's
business and/or assets to a person or entity which is not a Subsidiary. For
purposes of the foregoing, "Subsidiary" shall mean any corporation or other
entity a majority or more of the outstanding voting power or voting stock of
which is beneficially owned directly or indirectly by the Company.
7. AMENDMENT AND TERMINATION OF PLAN. The Board may amend or terminate this
Plan at any time and in any manner. No amendment or termination of this Plan or
change in or affecting any outstanding option shall deprive in any material
respect the recipient, without the consent of such recipient, of any of his or
her rights or benefits under or with respect to the option. Adjustments
contemplated by Section 6 shall not be deemed to constitute a change requiring
such consent.
8. TERM OF PLAN. No option shall be granted under this Plan after April 27,
2003. Although Common Shares may be issued after that date pursuant to options
granted prior to such date after such date. Notwithstanding the foregoing, any
option granted prior to such date may be amended after such date in any manner
that would have been permitted prior to such date, except that, subject to any
adjustments pursuant to Section 6(a), no such amendment shall increase the
number of shares subject to or comprising such option, or extend the final
expiration date of the option or reduce (below the fair market value on the
date of the amendment) the exercise price of or under such Option or increase
the maximum amount of cash payable under the option.
9. EFFECTIVE DATE OF PLAN. This Plan will become effective as of the date
the Merger is consummated.
10. LEGAL ISSUES.
(a) Compliance And Choice Of Law; Severability. This Plan, the granting and
vesting of options under this Plan and the issuance and delivery of Common
Shares under options granted hereunder are subject to compliance with all
applicable federal and state laws, rules and regulations (including but not
limited to state and federal securities law and federal margin requirements)
and to such approvals by any listing, regulatory or governmental authority as
may, in the opinion of counsel for the Company, be necessary or advisable in
connection therewith. Any securities delivered under this Plan shall be subject
to such restrictions as the Company may deem necessary or desirable to assure
compliance with all applicable legal requirements. This Plan, the options, all
documents evidencing options and all other related documents shall be governed
by, and construed in accordance with the laws of the state of incorporation of
the Company. If any provision shall be held by a court of competent
jurisdiction to be invalid and unenforceable, the remaining provisions of this
Plan (subject to Section 10(b)) shall continue in effect.
(b) Plan Construction. It is the intent of the Company that transactions in
and affecting options in the case of participants who are or may be subject to
Section 16 of the Securities Exchange Act of 1934, as amended, satisfy any then
applicable requirements of Rule 16b-3 so that such persons (unless they
otherwise agree) will be entitled to the benefits of Rule 16b-3 or other
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exemptive rules under Section 16 in respect of those transactions and will not
be subjected to avoidable liability thereunder. If any provision of this Plan
or of any option would otherwise frustrate or conflict with the intent
expressed above, that provision to the extent possible shall be interpreted as
to avoid such conflict. If the conflict remains irrevocable, the Committee may
disregard the provision if it concludes that to do so furthers the interest of
the Company and is consistent with the purposes of this Plan as to such persons
in the circumstances.
(c) Non-Exclusivity Of Plan. Nothing in this Plan shall limit or be deemed
to limit the authority of the Board or the Committee to grant options or
authorize any other compensation, with or without reference to the Common
Shares, under any other plan or authority.
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APPENDIX B
MGM GRAND, INC.
DIRECTORS' REPLACEMENT STOCK OPTION PLAN
ARTICLE 1. THE PLAN
1.1 Purpose. The purposes of this Director's Replacement Stock Option Plan
is to enable the Corporation, in accordance with the Merger Agreement, to grant
options to replace outstanding options previously granted pursuant to the
Primadonna Director Option Plan. Capitalized terms are defined in Article 4.
1.2 Administration.
(a) Board Authority and Powers; Interpretation. This Plan shall be, to
the maximum extent possible, self-effectuating. This Plan shall be
interpreted and, to the extent any determinations are required hereunder,
shall be administered by the Board. Subject to the express provisions of
this Plan, the Board shall have the authority to construe and interpret
this Plan and any agreements defining the rights and obligations of the
Corporation and Participants under this Plan.
(b) Binding Determinations. Any action taken by, or inaction of, the
Corporation or the Board relating to pursuant to this Plan shall be within
the absolute discretion of that entity and shall be conclusive and binding
upon all persons. No member of the Board or officer of the Corporation
shall be liable for any such action or inaction, except in circumstances
involving such person's bad faith.
(c) Reliance on Experts. In making any determination or in taking or not
taking any action under this plan, the Board may obtain and may rely upon
the advice of experts, including professional advisors to the Corporation.
No director, officer or agent of the Corporation shall be liable for any
such action or determination taken or made or omitted in good faith.
(d) Delegation. The Board may delegate ministerial, non-discretionary
functions to individuals who are officers and employees of the Corporation.
1.3 Shares Available for Options. Subject to the provisions of Section 3.3,
the capital stock that may be delivered under this Plan shall be shares of the
Corporation's authorized but unissued Common Stock and any shares of its Common
Stock held as treasury shares.
(a) Number of Shares. The maximum number of shares of Common Stock that
may be delivered pursuant to Options granted to Eligible Directors under
this Plan shall not exceed 31,845 shares, subject to adjustments
contemplated by Section 3.3.
(b) Calculation of Available Shares and Replenishment. Shares of Common
Stock subject to outstanding Options shall be reserved for issuance. If any
Option shall expire or be canceled or terminated without having been
exercised in full, the undelivered shares subject thereto shall cease to be
available for the purposes of this Plan.
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ARTICLE 2. THE OPTIONS
2.1 Option Terms.
(a) Automatic Option Grants. Subject to adjustments contemplated by
Section 3.3, each holder of a Primadonna Director Option shall be granted
an Option to purchase that number of shares of Common Stock which is the
product of (y) the number of shares of Primadonna's common stock subject to
the holder's Primadonna Option and (z) .33, the conversion ratio pursuant
to the Merger Agreement.
(b) Option Price. The purchase price per share of the Common Stock
covered by each Option granted pursuant to Section 2.1(a) shall be
determined by dividing the option price of the Primadonna Director Option
it replaces by .33 and rounding up to the nearest whole cent.
(c) Option Period and Exercisability. Each Option granted under this
Plan shall become exercisable in installments at the rate of one-third of
the shares underlying such Option on the Option Date on the first
anniversary of the Option Date and an additional one-third of such shares
on each of the next two anniversaries thereof.
(d) Non-Qualified Options. Each Option granted under this Plan is
intended to be a non-qualified stock option (i.e., not an "incentive stock
option") under the Internal Revenue Code and shall be so designated.
2.2 Payment of Exercise Price. The exercise price of any Option granted
under this Plan shall be paid in full at the time of each exercise in cash or
by check or in shares of Common Stock valued at their Fair Market Value on the
date of exercise of the Option, or partly in such shares and partly in cash,
provided that any such shares used in payment shall have been owned by the
Participant at least six months prior to the date of the exercise.
2.3 Option Period. Each Option granted under this Plan and all rights or
obligations thereunder shall expire ten (10) years after the Option Date and
shall be subject to earlier termination as provided herein.
2.4 Effect of Termination of Service. If a Participant dies while serving as
a director or within the three-month period following termination of service as
a director and the Participant had been an Eligible Director for at least three
(3) years, any Option granted pursuant to this Plan then held by such
Participant shall immediately become and shall remain fully exercisable for
twelve (12) months after the date of death or until the expiration of the
stated term of such Option, whichever first occurs, and shall thereafter
terminate. If a Participant dies while serving as a director or within the
three-month period following termination of service as a director and the
Participant had been an Eligible Director for less than three (3) years, any
portion of any Option granted pursuant to this Plan which is not then
exercisable shall terminate and any portion of such Option which is then
exercisable may be exercised for twelve (12) months after the date of death or
until the expiration of the state term, whichever first occurs, and shall
thereafter terminate. If a Participant's services as a member of the Board
terminate for any other reason, then (except to the extent otherwise provided
in this Section 2.4) any portion of an Option granted pursuant to this Plan
which is not then exercisable shall terminate and any portion of such Option
which is then exercisable may be exercised for three (3) months after the date
of such termination or until the expiration of the stated term, whichever first
occurs, and shall thereafter terminate.
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2.5 Limitations on Exercise and Vesting of Options.
(a) Provisions for Exercise. No Option shall be exercisable or shall
vest until at least six months after the initial Option Date, and once
exercisable an Option shall remain exercisable until the expiration or
earlier termination of the Option.
(b) Procedure. Any exercisable Option shall be deemed to be exercised
when the Secretary of the Corporation receives written notice of such
exercise from the Participant, together with the required payment of the
exercise price.
(c) Fractional Shares/Minimum Issues. Fractional share interests shall
be disregarded, but may be accumulated. No fewer than 100 shares may be
purchased on exercise of any Option at one time unless the number purchased
is the total number at the time available for purchase under the Option.
ARTICLE 3. OTHER PROVISIONS.
3.1 Rights of Participants and Beneficiaries.
(a) No Service Commitment. Nothing contained in this Plan (or in any
other documents related to this Plan or to any Option) shall confer upon
any Participant any right to continue to serve as a director of the
Corporation nor shall interfere in any way with the right of the
Corporation to change director compensation or other benefits or to
terminate the director's service as a director, with or without cause.
Nothing contained in this Plan or any document related hereto shall
influence the construction or interpretation of the Corporation's
Certificate of Incorporation or Bylaws regarding service on the Board or
adversely affect any independent contractual right of any Eligible Director
without his or her consent thereto.
(b) Plan Not Funded. Options payable under this Plan shall be payable in
shares and (except as provided in Section 1.3(b)) no special or separate
reserve, fund or deposit shall be made to assure payment of such Options.
3.2 No Transferability. Options may be exercised only by, and shares
issuable pursuant to an Option shall be paid only to, the Participant or, if
the Participant has died, the Participant's Beneficiary or, if the Participant
has suffered a disability, the Participant's Personal Representative, if any,
or if there is none, the Participant, or (to the extend permitted by applicable
law and Rule 16b-3) to a third party pursuant to such conditions and procedures
as the Board may establish. Other than by will or the laws of descent and
distribution or pursuant to an exception (by rule or interpretation) to
transfer restrictions under Rule 16b-3, no right or benefit under this Plan or
any Option, including, without limitation, any Option that has not vested,
shall be transferrable by the Participant or shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge and any such attempted action shall be void. The designation of a
Beneficiary hereunder shall not constitute a transfer for these purposes.
3.3 Adjustments. If there shall occur any extraordinary distribution in
respect of the Common Stock (whether in the form of Common Stock, other
securities, or other property), or any recapitalization, stock split (including
a stock split in the form of a stock dividend), reverse stock split,
reclassification, reorganization, merger, combination, consolidation, split-up,
spin-off,
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combination, or exchange or Common Stock or other securities of the
Corporation, or a sale of substantially all of the assets of the Corporation as
an entirety, then the Board shall, in such manner and to such extent (if any)
as may be appropriate and equitable, (1) proportionately adjust any or all of
(a) the number and type of shares of Common Stock (or other securities) which
thereafter may be made the subject of Options (including the specific maxima
and numbers of shares set forth elsewhere in this Plan), (b) the number, amount
and type of shares of Common Stock (or other securities or property) subject to
any or all outstanding Options and the vesting provisions of the Options, (c)
the grant, purchase, or exercise price of any or all outstanding Options, or
(d) the securities, cash or other property deliverable upon exercise of any
outstanding Options, or (2) in the case of any extraordinary distribution,
merger, reorganization, consolidation, combination, sale of assets, split up,
exchange, or spin off, make provision for a substitution or exchange of any or
all outstanding Options or for a change in the securities, cash or property
deliverable upon exercise of outstanding options, based upon the distribution
or consideration payable to holders of the Common Stock of the Corporation upon
or in respect of such event; provided, however, that (i) such adjustment and
the Board's actions in respect thereof are based on objective criteria and (ii)
such adjustment (to the extent consistent with Section 3.9(c)) is consistent
with adjustments to comparable Options (if any) held by persons other than
directors of the Corporation.
3.4 Compliance with Laws. This Plan, the granting and vesting of Options
under this Plan and the issuance and delivery of shares of Common Stock, and/or
of other securities or property pursuant to Section 3.3, under this Plan or
under Options granted hereunder are subject to compliance with all applicable
federal and state laws, rules and regulations (including but not limited to
state and federal tax and securities laws) and to such approvals by and
listing, regulatory or governmental authority as may, in the opinion of counsel
for the Corporation, be necessary or advisable in connection therewith. Any
securities delivered under this Plan shall be subject to such restrictions, and
the person acquiring such securities shall, if requested by the Corporation,
provide such assurances and representations to the Corporation as the
Corporation may deem necessary or desirable to assure such compliance.
3.5 Plan Amendment, Shareholder Approval and Suspension.
(a) Board Authorization The Board may, at any time, terminate or, from
time to time, amend, modify or suspend this Plan, in whole or in part. No
Options may be granted during any suspension of this Plan or after
termination of this Plan, but the Board shall retain jurisdiction as to
Options then outstanding in accordance with the terms of this Plan.
(b) Stockholder Approval. To the extent required by law or the
provisions of Rule 16b-3, any amendment to this Plan or any then
outstanding Option shall be subject to shareholder approval.
(c) Limitations on Amendments to Plan and Options. The provisions of
this Plan shall not be amended more than once every six months (other than
as may be necessary to conform to any applicable changes in the Internal
Revenue Code or the rules thereunder), unless such amendment would be
consistent with the provisions of Rule 16b-3(c)(2)(ii) (or any successor
provision). No amendment, suspension or termination of this Plan or change
of or affecting any outstanding Option shall, without written consent of
the Participant, affect in any manner materially adverse to the Participant
any rights or benefits of the Participant or obligations of the
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Corporation under any Option granted under this Plan prior to the effective
date of such change. Changes contemplated by Section 3.3 shall not be
deemed to constitute changes or amendments for purposes of this Section
3.5.
3.6 Privileges of Stock Ownership. Except as otherwise expressly authorized
by this Plan, a Participant shall not be entitled to any privilege of stock
ownership as to any shares of Common Stock subject to an Option granted under
this Plan prior to the satisfaction of all conditions to the valid exercise of
the Option.
3.7 Effective Date of Plan. This Plan shall be effective as of the date the
Merger is consummated.
3.8 Term of Plan. No Option shall be granted more than ten (10) years after
the effective date of this Plan. Unless otherwise expressly provided in this
Plan or in an applicable Option Agreement, any Option theretofore granted may
extend beyond such date, and this Plan shall continue to apply thereto.
3.9 Legal Issues.
(a) Choice of Law. This Plan, the Options, all documents evidencing
Options and all other related documents shall be governed by, and construed
in accordance with the laws of the state of incorporation of the
Corporation.
(b) Severability. If any provision shall be held by a court of competent
jurisdiction to be invalid and unenforceable, the remaining provisions of
this Plan shall continue in effect.
(c) Plan Construction. It is the intent of the Corporation that this
Plan and Options hereunder satisfy and be interpreted in a manner that in
the case of persons who are or may be subject to Section 16 of the Exchange
Act satisfies the applicable requirements of Rule 16b-3 so that such
persons will be entitled to the benefits of Rule 16b-3 or other exemptive
rules under Section 16 of the Exchange Act and will not be subjected to
avoidable liability thereunder. If any provision of this Plan or of any
Option would otherwise frustrate or conflict with the intent expressed
above, that provision to the extent possible shall be interpreted and
deemed amended so as to avoid such conflict, but to the extent as to such
persons in the circumstances, such provision shall be deemed void.
(d) Non-Exclusivity of Plan. Nothing in this Plan shall limit or be
deemed to limit the authority of the Board to grant awards or authorize any
other compensation under any other plan or authority.
ARTICLE 4. DEFINITIONS
4.1 Definitions.
(a) "Beneficiary" shall mean the person, persons, trust or trusts
entitled by will or the laws of descent and distribution to receive the
benefits specified in the Option Agreement and under this Plan in the event
of a Participant's death, and shall mean the Participant's executor or
administrator if no other Beneficiary is identified and able to act under
the circumstances.
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(b) "Board" shall mean the Board of Directors of the Corporation or,
with respect to administrative matters (as distinguished from Plan
amendments, suspension, or termination), any duly authorized Committee of
members of the Board designated to administer this Plan.
(c) "Commission" shall mean the Securities and Exchange Commission.
(d) "Common Stock" shall mean the Common Stock, $.01 par value per
share, of the Corporation and such other securities or property as may
become the subject of Options, or become subject to Options, pursuant to an
adjustment made under Section 3.3 of this Plan.
(e) "Corporation" shall mean MGM Grand, Inc., a Delaware corporation,
and its successors.
(f) "Eligible Director" shall mean a member of the Board of Directors of
Primadonna on the date the Merger is consummated who is not (1) an officer
or employee of Primadonna or any subsidiary at the time of the grant of the
Option or (2) a person to whom equity securities of Primadonna or an
affiliate have been granted or awarded within the year prior to the date of
grant or other applicable date of determination, under or pursuant to the
Primadonna 1993 Stock Incentive Plan (the "SIP") or any other plan of
Primadonna or an affiliate (except this Plan or any other formula or
ongoing securities acquisition plan, the participation in which does not
compromise the disinterested administration of the SIP or any other such
plan under Rule 16b-3).
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(h) "Fair Market Value" on any specified date shall mean (i) if the
stock is listed or admitted to trade on a national securities exchange, the
closing price of the stock on the Composite Tape, as published in the
Western Edition of The Wall Street Journal, of the principal national
securities exchange on which the stock is so listed or admitted to trade,
on such date, or, if there is no trading of the stock on such date, then
the closing price of the stock as quoted on such Composite Tape on the next
preceding date on which there was trading in such shares; (ii) if the stock
is not listed or admitted to trade on a national securities exchange, the
last price for the stock on such date, as furnished by the National
Association of Securities Dealers, Inc. ("NASD") through the NASDAQ
National Market Reporting System or a similar organization if the NASD is
no longer reporting such information; (iii) if the stock is not listed or
admitted to trade on a national securities exchange and is not reported on
the National Market Reporting System, the mean between the bid and asked
price for the stock on such date, as furnished by the NASD or a similar
organization; or (iv) if the NASD or a similar organization does not
furnish the mean between the bid and asked price for the stock on such
date, the valuation furnished by an independent advisor or investment
banker to the Corporation who is recognized in valuations of this type.
(i) "Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
(k) "Merger" shall mean the merger of MGM Grand Acquisition Corp. with
and into Primadonna pursuant to the Merger Agreement.
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(l) "Merger Agreement" shall mean that certain Agreement and Plan of
Merger, dated as of December 2, 1998, by and among the Corporation, MGM
Grand Acquisition Corp. and Primadonna.
(m) "Option" shall mean an option to purchase Common Stock authorized
and granted under this Plan.
(n) "Option Agreement" shall mean an agreement in the form of Exhibit A,
completed in the manner required by this Plan and executed on behalf of the
Corporation by an executive officer of the Corporation.
(o) "Option Date" shall mean the date on which a Primadonna Director
Option was granted.
(p) "Participant" shall mean an Eligible Director who has been granted
an option under the provisions of this Plan.
(q) "Personal Representative" shall mean the person or persons who, upon
the disability or incompetence of a Participant, shall have acquired on
behalf of the Participant, by legal proceeding or otherwise, the power to
exercise the rights or receive benefits under this Plan and who shall have
become the legal representative of the Participant.
(r) "Plan" shall mean this MGM Grand, Inc. Directors' Replacement Stock
Option Plan.
(s) "Primadonna" shall mean Primadonna Resorts, Inc., a Nevada
corporation.
(t) "Primadonna Director Option" shall mean an option granted pursuant
to the Primadonna 1993 Eligible Directors' Stock Option Plan.
(u) "Rule 16b-3" shall mean Rule 16b-3 as promulgated by the Commission
pursuant to the Exchange Act, as amended from time to time.
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EXHIBIT A
MGM GRAND, INC.
ELIGIBLE DIRECTOR
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT dated as of the day of , 19 , between MGM
Grand, Inc., a Delaware corporation (the "Corporation"), and (the
"Participant").
W I T N E S S E T H
WHEREAS, the Corporation has adopted and the stockholders of the Corporation
have approved a Directors' Replacement Stock Option Plan (the "Plan").
WHEREAS, pursuant to Section 2.1 of the Plan, the Corporation has granted an
option (the "Option") to the Participant upon the terms and conditions
evidenced hereby, as required by the Plan, which Option is not intended as and
shall not be deemed to be an incentive stock option within the meaning of
Section 422 of the Code.
NOW, THEREFORE, in consideration of the surrender of an option to purchase
shares common stock of Primadonna Resorts, Inc., the Corporation and the
Participant agree to the terms and conditions set forth herein as required by
the terms of the Plan.
1. Option Grant. This Agreement evidences the grant to the Participant, as
of , , of an Option to purchase an aggregate of shares
of Common Stock, par value $.01 per share, under Section 2.1 of the Plan,
subject to adjustment as provided in or pursuant to the Plan.
2. Exercise Price. The Option entitles the Participant to purchase all or
any party of the Option shares at a price per share of $ .
3. Option Term. The Option shall terminate , ,* unless
earlier terminated in accordance with the terms of the Plan.
4. General Terms. The Option and this Agreement are subject to, and the
Corporation and the Director agree to be bound by, the provisions of the Plan
that apply to the Option. Such provisions are incorporated herein by this
reference. The Participant acknowledges receiving a copy of the Plan and
reading its applicable provisions. Capitalized terms not otherwise defined
herein shall have the meaning assigned to such terms in the Plan.
- --------
* Insert original expiration date of Primadonna Director Option being
replaced.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
MGM GRAND, INC.
(a Delaware corporation)
By:____________________________
Title:_________________________
PARTICIPANT
_______________________________
(Signature)
_______________________________
(Print Name)
_______________________________
(Address)
_______________________________
(City, State, Zip Code)
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APPENDIX C
SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS
The following table sets forth, as of January 27, 1999, information as to:
(a) the beneficial ownership of MGM Grand's common stock by (i) each person
serving as a director on such date, (ii) each person who qualifies as a "named
executive officer" (the "Named Executive Officers") as defined in Item
402(a)(3) of Regulation S-K under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and (iii) all of the directors and executive
officers of MGM Grand as a group; and (b) the beneficial ownership of MGM
Grand's common stock by each person known to MGM Grand as having beneficial
ownership of more than five percent of such stock.
<TABLE>
<CAPTION>
Number of Percent of
Name and Address(1) Shares(2) Class(3)
- ------------------- ---------- ----------
<S> <C> <C>
Kirk Kerkorian.................................. 38,005,122(4) 73.04%
150 S. Rodeo Drive
Beverly Hills, CA 90212
J. Terrence Lanni............................... 1,035,015(5) 1.93%
Alex Yemenidjian................................ 430,000(5) *
James J. Murren................................. 3,000 *
Daniel Wade..................................... 89,300(5) *
Scott Langsner.................................. 45,200(5) *
James D. Aljian................................. 12,600(6) *
Fred Benninger.................................. 60,200(5) *
Terry N. Christensen............................ 4,200(6) *
Glenn A. Cramer................................. 7,233(6) *
Willie D. Davis................................. 2,700(6) *
Alexander M. Haig, Jr........................... 2,400(6) *
Walter M. Sharp................................. 31,682(6) *
Jerome B. York.................................. 7,200(6) *
All current directors and executive officers
as a group (16 persons)........................ 39,751,189(4)(5)(6) 74.12%
FMR Corp. ...................................... 4,386,700(7) 8.43%
82 Devonshire Street
Boston, MA 02109
Capital Research & Management Company .......... 3,650,000(8) 7.01%
333 South Hope Street
Los Angeles, CA 90071
</TABLE>
- --------
* Less than 1%
(1) Unless otherwise indicated, the address for the persons listed is 3799 Las
Vegas Boulevard South, Las Vegas, Nevada 89109.
(2) Based upon information furnished to MGM Grand by the named persons and
information contained in filings with the SEC. Under the rules of the SEC,
a person is deemed to beneficially own shares over which the person has or
shares voting or investment power or which the person
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has the right to acquire beneficial ownership within 60 days. Unless
otherwise indicated, the named persons have sole voting and investment power
with respect to their respective shares.
(3) Based on 52,033,097 shares of common stock outstanding as of January 27,
1999. Shares of common stock subject to options exercisable within 60 days
are deemed outstanding for computing the percentage of class of the persons
holding such options but are not deemed outstanding for computing the
percentage of class for any other person.
(4) Of these shares, 34,110,716 are held by Tracinda Corporation, a Nevada
corporation wholly owned by Mr. Kerkorian.
(5) Included in these amounts are 1,000,000 shares, 390,000 shares, 89,000
shares and 41,000 shares subject to stock options exercisable on or prior
to March 28, 1999 held by Messrs. Lanni, Yemenidjian, Wade and Langsner,
respectively, and shares in Mr. Langsner's 401(k) Savings Plan.
(6) Included in these amounts are 2,200 shares subject to stock options
exercisable on or prior to March 28, 1999 held by each of Messrs. Aljian,
Christensen, Cramer, Davis, Haig, Sharp and York.
(7) Based upon a Schedule 13G, dated February 14, 1998, filed by FMR Corp.,
Edward C. Johnson 3d and Abigail P. Johnson with the SEC. Of these shares,
3,681,800 are held by Fidelity Management & Research Company and 704,900
are held by Fidelity Management Trust Company, each a wholly owned
subsidiary of FMR Corp. FMR Corp. and Edward C. Johnson 3d each has sole
power to dispose of 4,386,700 of such shares and the sole power to vote or
to direct the voting of 539,000 of such shares.
(8) Based upon a Schedule 13G, dated July 9, 1998, filed by Capital Research &
Management Company with the SEC.
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