Employment Agreement - MGM Grand Inc. and Scott Langsner
EMPLOYMENT AGREEMENT
This Employment Agreement (Agreement) is entered into on December 9, 1998, by
and between MGM GRAND, INC., Nevada corporation (Employer), and Scott Langsner,
("Employee").
1. Employment. Employer hereby employs Employee, and Employee hereby accepts
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employment by the Employer, as Employer's Secretary/Treasurer (which title
may be changed by Employer in its sole discretion) to perform such
executive, managerial or administrative duties as Employer may specify from
time to time. In construing the provisions of this Agreement, Employer
shall include all of Employer's subsidiary, parent and affiliated
corporations and entities.
2. Term. This Agreement shall commence on December 9, 1998, and continue for
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a period for four (4) years until it terminates on December 9, 2002
(Specified Term).
3. Compensation. Employee shall receive a minimum annual salary of $200,000
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effective 1/1/1998. Employee shall also be eligible to receive fringe
benefits commensurate with Employer's other employees in comparable
executive positions, and reimbursement for all reasonable business and
travel expenses incurred by Employee in performing the duties hereunder,
payable in accordance with Employer's customary practices. Employee's
performance may be reviewed periodically. Employee is eligible for
consideration for a discretionary raise, annual bonus and/or promotion by
Employer in its sole and absolute discretion.
4. Extent of Service. The Employee agrees that the duties and services to be
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performed by Employee shall be performed exclusively for Employer.
Employee further agrees to perform such duties in an efficient, trustworthy
and businesslike manner. The Employee agrees not to render to others any
service of any kind whether or not for compensation, or to engage in any
other business activity whether or not for compensation, that is similar
to or conflicts with the performance of Employee's duties under this
Agreement, without the approval of the Executive Committee of the Board of
Directors of MGM Grand, Inc. However, this provision shall not be construed
to prohibit rendering services to the Monorail company.
5. Policies and Procedures. In addition to the terms herein, Employee agrees
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to be bound by Employer's policies and procedures as they may be amended by
Employer from time to time. In the event the terms in this Agreement
conflict with Employer's policies and procedures, the terms herein shall
take precedence. Employer recognizes that it has a responsibility to see
that its employees understand the adverse effects that problem gambling and
underage gambling can have on individuals and the gaming industry as a
whole. Employee acknowledges having read Employer's policies, procedures
and manuals and agrees to abide by the same, including but not limited to
Employer's policy or prohibiting underage gaming and supporting programs
to treat compulsive gambling.
6. Licensing Requirements. Employee acknowledges that Employer is engaged in
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a business that is or may be subject to and exists because of privileged
licenses issued by governmental authorities in Nevada, Australia, New
Jersey and other jurisdictions in which Employer is engaged or has applied
or during the Specified Term may apply to engage in the gaming business. If
requested to do so by Employer, Employee shall apply for and obtain any
license, qualification, clearance or the like which shall be requested or
required of Employee by any regulatory authority having jurisdiction over
Employer. If Employee fails to satisfy such requirement, or if Employer is
directed to cease business
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with Employee by any such authority, or if Employer shall determine, in
Employer's sole and exclusive judgment, that Employee was, is or might be
involved in, or is about to be involved in, any activity, relationship(s)
or circumstance which could or does jeopardize Employer's business,
reputation or such licenses, or if any such license is threatened to be, or
is, denied, curtailed, suspended or revoked, this Agreement may be
terminated by Employer and the parties' obligations and responsibilities
shall be determined by the provisions of Paragraph 10(a).
7. Additional Consideration. Employee has received as consideration for this
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Agreement, in addition to the Compensation stated in Paragraph 3 above, the
sum of $25,000.00. Employee represents and warrants that such consideration
is reasonable, adequate and sufficient for Employee's agreement to the
terms contained herein, including but not limited to the undertakings
stated in Paragraphs 4, 6 and 8.
8. Restrictive Covenants
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a. Competition. Employee acknowledges that, in the course of Employee's
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responsibilities hereunder, Employee will form relationships and
become acquainted with certain confidential and proprietary
information as further defined in Paragraph 8(b). Employee further
acknowledges that such relationships and information are valuable to
the Employer and that the restrictions on future employment, if any,
are reasonably necessary in order for Employer to remain competitive
in the gaming industry. In consideration for the Compensation and
Additional Consideration hereunder, and in recognition of Employer's
heightened need for protection from abuse of relationships formed or
information garnered before and during the Specified Term of the
Employee's employment hereunder, Employee covenants and agrees that,
except as set forth in subparagraphs 10(b)(ii)[b], 10(e)(v)[ii] and
Paragraph 10(c), in the event Employee is not employed by Employer for
the entire Specified Term, then for the twelve (12) month period
immediately following separation from active employment, or for such
shorter period remaining in the Specified Term should Employee
separate from active employment with less than twelve (12) months
remaining in the Specified Term (the "Restrictive Period"), Employee
shall not directly or indirectly be employed by, provide consultation
or other services to, engage in, participate in or otherwise be
connected in any way with any firm, person, corporation or other
entity which is either directly, indirectly or through an affiliated
company, engaged in non-restricted gaming in the State of Nevada, or
in or within a 150 mile radius of any other jurisdiction in which
Employer during the Restrictive Period is operating or has applied for
a gaming license ("Competitor"). The convenants under this Paragraph
include but are not limited to Employee's covenant not to:
i. Make known to any third party the names and addresses of any of
the customers of the Employer, or any other information
pertaining to those customers.
ii. Call on, solicit and/or take away, or attempt to call on, solicit
and/or take away, any of the customers of the Employer, either
for Employee's own account or for any third party.
iii. Call on, solicit and/or take away, any potential or prospective
customer of the Employer, on whom the Employee called or with
whom Employee became acquainted during employment (either before
or during the Specified Term) by the Employer, either for
Employee's own account or for any third party.
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iv. Approach or solicit any employee of the Employer with a view
towards enticing such employee to leave the employ of the
Employer to work for the Employee or for any third party, or
hire any employee of the Employer, without the prior written
consent of the Employer, such consent to be within
Employer's sole discretion.
b. Confidentiality. Employee further covenants and agrees that
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Employee shall not at any time during the Specified Term or
thereafter, without Employer's prior written consent, disclose to
any other person or business entities any trade secret (as that
term is defined on Exhibit A attached hereto) proprietary or
other confidential information concerning Employer, including
without limitation, Employer's customers and its casino, hotel
and marketing practices, procedures, management policies or any
other information regarding the Employer which is not already and
generally known to the public. Employee further covenants and
agrees that Employee shall not at any time during the Specified
Term, or thereafter, without the Employer's prior written
consent, utilize any such trade secrets, proprietary or
confidential information in any way, including communications
with or contact with any such customer other than in connection
with employment hereunder. Not by way of limitation but by way of
illustration, Employee agrees that such trade secrets,
proprietary or confidential information specifically include but
are not limited to those documents and reports set forth on
Exhibit B.
c. Employer's Property. Employee hereby confirms that such trade
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secrets, proprietary or confidential information and all
information concerning customers who utilize the goods, services
or facilities of the MGM Grand Hotel/Casino and any other hotel
and/or casino owned, operated or managed by Employer constitute
Employer's exclusive property (regardless of whether Employee
possessed or claims to have possessed such information prior to
the date hereof). Employee agrees that upon termination of active
employment, Employee shall promptly return to the Employer all
notes, notebooks, memoranda, computer disks, and any other
similar repositories of information (regardless of whether
Employee possessed such information prior to the date hereof)
containing or relating in any way to the trade or business
secrets or proprietary and confidential information of the
Employer, including but not limited to the documents referred to
in Paragraph 8(b). Such repositories of information also include
but are not limited to any so-called personal files or other
personal data compilations in any form, which in any manner
contain any trade secrets or proprietary or confidential
information of the Employer
d. Notice to Employer. Employee agrees to notify Employer
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immediately of any employers for whom Employee works during the
Specified Term or within the Restrictive Period. Employee further
agrees to promptly notify Employer, during Employee's employment
with Employer, of any contacts made by non-restricted gaming
licensees which concern or relate to an offer of future
employment (or consulting services) to Employee.
9. Representations. Employee hereby represents, warrants and agrees with
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Employer that:
a. The covenants and agreements contained in Paragraphs 4 and 8
above are reasonable in their geographic scope, duration and
content; the Employer's agreement to employ the Employee and a
portion of the compensation and consideration to be paid to
Employee under Paragraphs 3 and 7 hereof, are in partial
consideration for such covenants; the Employee shall not raise
any issue of the reasonableness of the geographic scope, duration
or content of such covenants
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in any proceeding to enforce such covenants; and such covenants shall
survive the termination of this Agreement, in accordance with its
terms;
b. The enforcement of any remedy under this Agreement will not prevent
Employee from earning a livelihood, because Employee's past work
history and abilities are such that Employee can reasonably expect to
find work in other areas and lines of business;
c. The covenants and undertakings stated in Paragraphs 4, 6 and 8 above
are essential for the Employer's reasonable protection; and
d. Employer has reasonably relied on these representations, warranties
and agreements by Employee.
10. Termination.
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a. This Agreement may be terminated by Employer at any time during the
Specified Term hereof for good cause. Upon any such termination,
Employer shall have no further liability or obligations whatsoever to
Employee hereunder except as provided under 10(a)(1)[a] and
10(a)(1)[b] and except that Employee shall be entitled to receive so
much of the stock from the Executive Stock Option Plan as had been
vested but unexercised as of the date of termination upon compliance
by the Employee with all the terms and conditions required to exercise
such options. Good cause shall be defined as:
i. Employee's death or disability, which is hereby defined to
include incapacity for medical reasons certified to by a
licensed physician which precludes the Employee from
performing the essential functions of Employee's duties
hereunder for a substantially consecutive period of six (6)
months or more;
[a] In the event of Employee's death during the term of
this Agreement, Employee's beneficiary (as designated
by Employee on the Employer's benefit records) shall
be entitled to receive Employee's salary for a three
(3) month period following Employee's death, such
amount to be paid at regular payroll intervals.
[b] In the event that this Agreement is terminated by
Employer due to Employee's disability, as provided
under sub paragraph 10(a)(i), Employer shall pay to
Employee an amount equal to Employee's salary for an
additional period of three (3) months such amount to
be paid at regular payroll intervals, net of payments
received by Employee from any Short Term Disability
Policy which is either self-insured by Employer or the
premiums of which were paid by Employer.
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ii. Employee's failure to abide by Employer's policies and procedures,
misconduct, insubordination, inattention to Employer's business,
failure to perform the duties required of Employee up to the
standards established by the Employer's Senior Management, or other
material breach of this Agreement; or
iii. Employee's failure or inability to satisfy the requirements stated
in Paragraph 6 above.
b. Except as set forth in subparagraph 10(e)(iv), this Agreement may be
terminated by Employer at any time during the Specified Term hereof, for
any or no cause deemed sufficient by Employer upon written notice to
Employee. Upon such termination, as its sole liability to Employee,
Employer shall:
i. Treat Employee as an inactive employee, pay Employee's salary and
continue Employee's benefits (excluding eligibility for flex time,
discretionary bonus and new stock option grants, but including the
continued vesting of previously granted stock options, if any, for
a period of up to twelve (12) months from the date Employee is in
an inactive Employee status, if Employee remains in such inactive
status for such period) for the period remaining in the Specified
Term; and
ii. Provide for Employee to receive so much stock from the Executive
Stock Option Plan as had been vested but unexercised as of the date
of termination of Employee's inactive Employee status upon
compliance by the Employee with all the terms and conditions
required to exercise such options.
Employee shall continue to be bound by the restrictions in Paragraph 8 above, as
modified by subparagraph 10(f).
Notwithstanding anything herein to the contrary:
[a] While Employee is in an inactive status Employee may be
employed by or provide consultation services to a non-
Competitor of Employer, provided that Employer shall be
entitled to offset the salary being paid by Employer during
the Specified Term by the compensation and/or consultant's
fee being paid to Employee by the non-Competitor of
Employer, and provided further, that Employer shall not be
required to continue to provide benefits from and after the
time that Employee is entitled to receive benefits from the
non-Competitor of Employer; and
[b] At any time after the end of the Restricted Period, if the
Employee is in an inactive status, Employee may notify
Employer in writing that Employee desires to terminate
Employee's inactive status and immediately thereafter
Employer shall have no further liability or obligations to
Employee hereunder, except that Employee shall be entitled
to receive so much stock from the Executive Stock Option
Plan as is vested but unexercised as of the date of
termination of Employee's inactive status upon compliance
by the Employee with all the terms and conditions required
to exercise such options.
For clarification, upon a Change of Control (as described in Paragraph
10(e), below), Employer may no longer terminate this Agreement pursuant to
this Paragraph 10(b).
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c. Employee may terminate this Agreement for good cause. For purposes of
this Paragraph 10(c), good cause shall mean:
i. the failure of Employer to pay Employee any compensation when
due, save and except a "Disputed Claim" to compensation; or
ii. material reduction in the scope of duties or responsibilities
of Employee or any reduction in Employee's salary save and
except a "Disputed Claim".
For any termination under this Paragraph 10(c), Employee shall give
Employer thirty (30) days advance written notice specifying the facts
and circumstances of Employer's breach. During such thirty (30) day
period, Employer may either cure the breach or declare that a dispute
exists with the breach claimed, in either of which case this Agreement
continues in full force until the dispute is resolved in accordance
with Paragraph 11. As a result of any termination under this Paragraph
10(c), Employee shall be entitled to receive so much of the stock from
the Executive Stock Option Plan as had been vested but unexercised as
of the date of termination, upon compliance by the Employee with all
the terms and conditions required to exercise such option. Employee
shall have no further claim against Employer arising out of such
breach.
d. Employee shall also have the right to terminate Employee's employment
without cause upon thirty (30) days advance written notice to
Employer. Upon any such termination Employer shall have no further
liability or obligations whatsoever to Employee hereunder, except that
Employee shall be entitled to receive so much of the stock from the
Executive Stock Option Plan as had been vested but unexercised as of
the date of termination, upon compliance by the Employee with all the
terms and conditions required to exercise such option. Upon any such
termination, Employee shall be subject to the undertakings contained
in Paragraph 8.
e. In the event that there is a change in control of MGM Grand, Inc.
("Parent"), if such change of control is a result of a sale or
exchange of outstanding common stock of Parent to a third party, as a
result thereof the ownership by Kirk Kerkorian, Tracinda Corporation
and/or their affiliates of the voting stock of the acquiring or
surviving entity (after completion of the transactions set forth in
the sale or exchange agreement documents, including without limitation
subsequent stock buybacks contemplated in such transactions),
represents in the aggregate less than twenty percent (20%) of the
voting power of the voting stock of such entity as distinguished from
a change in control resulting from the issuance of Treasury shares or
from any other transaction, ("Change of Control"), then upon the
effective date of the Change of Control ("Effective Date"):
i. All of Employee's unvested stock options shall become fully
vested, provided that Employee shall have the right to elect (by
notifying the Employer in writing as set forth on Exhibit C) that
all or any portion of Employee's unvested stock options shall not
become fully vested upon a Change of Control.
ii. If the Change of Control results from an exchange of outstanding
common stock as a result of which the Common Stock of Parent is
no longer publicly held, then upon the Effective Date of the
Change of Control all
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options held by Employee to purchase common stock of Parent shall
be exercisable at the time or times they would otherwise have
been exercisable for the consideration (cash, stock or otherwise)
which the holders of Parent common stock received in such
exchange. For example, if immediately prior to the Effective
Date, Employee has options to acquire 5,000 shares of Parent's
common stock and the exchange of stock is one share of common
stock of Parent for two shares of common stock of the acquiring
entity, then Employee's options shall be converted into options
to acquire, upon payment of the exercise price, 10,000 shares of
the acquiring entity's common stock.
iii. If the Change of Control results from a sale of Parent's
outstanding common stock for cash with the result that Parent's
common stock is no longer publicly held, then upon the Effective
Date all options held by Employee to purchase common stock of
Parent shall be exercisable at the time or times they would
otherwise have been exercisable for cash equal to the difference
between the price per share of common stock paid by the acquiring
entity for Parent's shares of common stock ("Purchase Price") and
the price per share at which the options were granted ("Strike
Price"). For example, if immediately prior to the Effective Date,
Employee has options to acquire 2,000 shares of Parent common
stock at a Strike Price of $35, and the Purchase Price was $40,
then upon the vesting of such options Employee would be entitled
to receive $10,000 in full satisfaction of such options (2,000
shares times $5 per share).
iv. Employer may terminate the Agreement only for good cause pursuant
to Paragraph 10(a) or pursuant to subparagraph 10(e)(v). Employee
may terminate the Agreement only for good cause pursuant to
Paragraph 10(c) or pursuant to Paragraph 10(d). and
V. Employer may terminate this Agreement for any or no cause upon
written notice to Employee. In the event of a termination
hereunder, as its sole liability to Employee, Employer shall:
[a] Treat Employee as an inactive employee, pay Employee's
salary, continue Employee's benefits (excluding eligibility
for flex time, discretionary bonus and new stock option
grants) and comply with the provisions of subparagraphs
10(e)(ii) and 10 (e)(iii) for the remainder of the Specified
Term.
Employee shall continue to be bound by the restrictions in Paragraph 8
above.
Notwithstanding anything herein to the contrary:
[i] While Employee is in an inactive status Employee may be
employed by or provide consultation services to a non-
Competitor of Employer, provided that Employer shall be
entitled to offset the salary being paid by Employer during
the Specified Term by the compensation and/or a
fee being paid to Employee by the non-Competitor of
Employer, and provided further, that Employer shall not be
required to continue to provide benefits from and after the
time that Employee is entitled to receive benefits from the
non-Competitor of Employer; and
[ii] At any time after the end of the Restrictive Period, if the
Employee is in an inactive status, Employee may be employed
by or provide
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consultation services to a Competitor of Employer,
provided that Employer shall be entitled to offset the
salary being paid by Employer during the Specified Term by
the compensation and/or consultant's fee being paid to
Employee by the Competitor of Employer, and provided
further, that Employer shall not be required to continue
to provide benefits from and after the time that Employee
is entitled to receive benefits from the Competitor of
Employer, and provided further that the obligations and
restrictions on Employee which are set forth in Paragraphs
8(b) and (c) shall still apply.
f. Notwithstanding anything contained in this Agreement to the contrary, the
undertakings contained in Paragraph 8 shall survive a termination of the
Agreement or of the Employee's employment, regardless of the reason for
such termination, except where termination occurs pursuant to
subparagraph 10(b)(ii)[b] or Paragraph 10(c). In the event the Agreement
is terminated pursuant to subparagraph 10(b)(ii)[b] the restriction
stated in Paragraph 8(a) on Employee accepting employment elsewhere
shall not apply; however, the obligations and restrictions set forth in
Paragraphs 8(b) and (c) shall still apply. For a termination under
Paragraph 10(c), the restriction stated in Paragraph 8(a) on Employee
accepting employment elsewhere shall not apply except that the
restrictions under subparagraphs 8(a)(i) - (iv) and Paragraphs 8(b) -(d)
shall still apply.
11. Disputed Claim/Arbitration A "Disputed Claim" occurs when Employee maintains
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pursuant to Paragraph 10(c) that Employer has breached it duty to Employee
and Employer has denied such breach. In such event, the Disputed Claim shall
be resolved by arbitration administered by the American Arbitration
Association under its National Rules for the Resolution of Employment
Disputes. Any arbitration under this paragraph shall take place in Las
Vegas, Nevada. Until the arbitration process is finally resolved in the
Employee's favor and Employer fails to satisfy such award within thirty (30)
days of its entry, no "for good cause" termination within the meaning of
Paragraph 10(c) exists with respect to Employer's breach of a Disputed
Claim. Nothing herein shall preclude or prohibit Employer or Employee from
invoking the provisions of Paragraph 10(b), or of Employer seeking or
obtaining injunctive or other equitable relief, provided that upon a Change
of Control (as described in Paragraph 10(e), above, Employer may no longer
invoke the provisions of Paragraph 10(b), but may invoke the provisions of
subparagraph 10(e)(v).
12. Severability. If any provision hereof is unenforceable, illegal, or invalid
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for any reason whatsoever, such fact shall not affect the remaining
provisions hereof, except in the event a law or court decision, whether on
application for declaration, or preliminary injunction or upon final
judgment, declares one or more of the provisions of this Agreement that
impose restrictions on Employee unenforceable or invalid because of the
geographic scope or time duration of such restriction. In such event,
Employer shall have the option:
(A) To deem the invalidated restrictions retroactively
modified to provide for the maximum geographic scope and time
duration which would make such provisions enforceable and
valid; or
(B) To terminate this Agreement pursuant to Paragraph 12, in
which event neither party shall have any further obligation to
the other, except that Employee still shall be subject to the
restrictions contained in Paragraphs 8(b) and (c).
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Exercise of any of these options shall not affect Employer's right to
seek damages or such additional relief as may be allowed by law in
respect to any breach by Employee of the enforceable provisions of
this Agreement.
13. Attorneys Fees. In the event suit is brought to enforce, or to recover
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damages suffered as a result of breach of this Agreement the prevailing
party shall be entitled to recover its reasonable attorneys fees and costs
of suit.
14. No Waiver of Breach or Remedies. No failure or delay on the part of
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Employer or Employee in exercising any right, power or remedy hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
of any such right, power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy hereunder. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
15. Amendment or Modification. No amendment, modification, termination or
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waiver of any provision of this Agreement shall be effective unless the
same shall be in writing and signed by the Employer's President, and
Employee, nor consent to any departure by the Employee from any of the
terms of this Agreement shall be effective unless the same is signed by the
Employer's President. Any such waiver of consent shall be effective only in
the specific instance and for the specific purpose for which given.
16. Governing Law. The laws of the State of Nevada shall govern the validity,
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construction and interpretation of this Agreement, and except for Dispute
Claims, the courts of the State of Nevada shall have exclusive jurisdiction
over any claim with respect to this Agreement.
17. Number and Gender. Where the context of this Agreement requires the
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singular shall mean the plural and vice versa and references to males shall
apply equally to females and vice versa.
18. Headings. The headings in this Agreement have been included solely for
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convenience of reference and shall not be considered in the interpretation
or construction of this Agreement.
19. Assignment. This Agreement is personal to Employee and may not be
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assigned.
20. Successors and Assigns. This Agreement shall be binding upon the
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successors and assigns of Employer.
21. Prior Agreements. This Agreement shall supersede and replace any and all
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other employment agreements which may have been entered into by and between
the parties, including, but not limited to that certain letter agreement
dated NONE. Any such prior employment agreements shall be of no force and
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effect.
IN WITNESS WHEREOF, Employer and Employee have entered into this Agreement
in Las Vegas, Nevada, on December 9, 1998.
EMPLOYEE - EMPLOYER - MGM GRAND, INC.
/s/ Scott Langsner By: /s/ Alexander Yemenidjian
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Cast Number: NONE Title: President & COO
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EXHIBIT A
Trade secret means information, including a formula, pattern, compilation,
program, device, method, technique or process, that derives economic value,
present or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain any economic
value from its disclosure or use.
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EXHIBIT B
Name of Report Generated By
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Including, but not limited to:
Baccarat Pit Discrepancy Report Casino Marketing Analyst
Commission Summary Report Casino Marketing Analyst
Customer W/L Discrepancy Report Casino Marketing Analyst
Int l Marketing Detailed Budget Summaries Casino Marketing Analyst
Arrival Report International Marketing
Departure Report International Marketing
Daily Gaming Report Casino Audit
Department Financial Statement Finance
$10K Over High Action Play Report Customer Analysis Dept.
$50K Over High Action Play Report Customer Analysis Dept.
International Market Segment Report Customer Analysis Dept.
Collection Aging Report(s) Collection Department
Accounts Receivable Aging Finance
Marketing Report Finance
Daily Player Action Report Casino Operations
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EXHIBIT C
December 9, 1998
Dear Scott Langsner:
This letter will supplement the employment agreement, dated December
9, 1998, between you and MGM Grand, Inc. (the "Agreement"). Notwithstanding
anything contained in the Agreement to the contrary, if you so elect, all or any
portion of your unvested stock options shall not become fully vested upon a
Change of Control (as defined in the Agreement) of MGM Grand, Inc. Any such
election shall be effective upon written notice to MGM Grand, Inc. at or prior
to the Effective Date (as defined in the Agreement) of any such Change of
Control.
Except as specifically modified hereby, the terms and conditions of
the Agreement shall remain in full force and effect.
Sincerely,
MGM GRAND, INC.
By: /s/ Alex Yemenidjian
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Title:
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AGREED TO AND ACKNOWLEDGED
/s/ Scott Langsner Dated: December 9, 1998
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