Sample Business Contracts

Nonqualified Stock Option Plan - MGM Mirage

                 MGM MIRAGE 1997 NONQUALIFIED STOCK OPTION PLAN


     1.   PURPOSE. The purpose of the MGM MIRAGE 1997 Nonqualified Stock Option
Plan is to provide a means whereby MGM MIRAGE may attract and retain persons of
ability and motivate such persons to exert their best efforts on behalf of the
Company and its Subsidiaries.

     2.   DEFINITIONS.

          (a) "Board" shall mean the Board of Directors of the Company.

          (b) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time. Reference to any section of the Code shall include any
provision successor thereto.

          (C) "Committee" shall mean the administrative committee appointed
pursuant to Section 3.

          (d) "Company" shall mean MGM MIRAGE, a Delaware corporation.

          (e) "Employee" shall mean an employee of the Company or any of its
Subsidiaries, as defined in Instruction 1(a) to Form S-8 under the Securities
Act of 1933, as amended.

          (f) "Nonqualified Option" shall mean an option to purchase shares of
Stock, subject to the terms and conditions described in the Nonqualified Plan,
which is not an incentive stock option within the meaning of Code Section 422.

          (g) "Nonqualifed Plan" shall mean the MGM MIRAGE 1997 Nonqualified
Stock Option Plan.

          (h) "Participant" shall mean an Employee of the Company or any
Subsidiary who is designated to receive Nonqualified Options pursuant to Section
3.

          (i) "Stock" shall mean the Company's $.01 par value common stock.

          (i) "Subsidiary" shall mean a subsidiary corporation as defined in
Code Section 424(f) or any partnership or joint venture in which the Company
owns a 50 percent or greater ownership interest.

     3.   ADMINISTRATION. The Nonqualified Plan shall be administered by the
Committee, consisting of at least two members, who shall be members of the
Board, appointed by and holding office as Committee members at the pleasure of
the Board. Subject to the provisions of the Nonqualified Plan, the Committee
shall have the power to: (a) determine and designate from time to time those
Employees who perform services for the Company or for any Subsidiary who shall
be Participants in the Nonqualified Plan and the number of shares to be subject
to the Nonqualified Options to be granted to each Participant; provided,
however, that no Nonqualified Option shall be granted after the expiration of
ten years from the effective date of the Nonqualified Plan specified in Section
8; (b) authorize the granting of Nonqualified Options to Participants; and (c)
determine the time or times and the manner when each Nonqualified Option shall
be exercisable and the duration of the exercise period.


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     For all purposes of the Nonqualified Plan, the fair market value of the
Stock shall be determined in good faith by the Committee by applying the
rules and principles of valuation set forth in Treasury Regulations Section
20.2031-2, relating to the valuation of stocks and bonds for purposes of Code
Section 2031.

         The Committee may interpret the Nonqualified Plan, prescribe, amend,
and rescind any rules and regulations necessary or appropriate for the
administration of the Nonqualified Plan, and make such other determinations and
take such other action as it deems necessary or advisable. Without limiting the
generality of the foregoing sentence, the Committee may, in its discretion,
treat all or any portion of any period during which a Participant is on military
or on an approved leave of absence from the Company or a Subsidiary as a period
of service of such Participant with the Company or a Subsidiary, as the case may
be, for purposes of accrual of such Participant's rights under the Nonqualified
Options. Any interpretation, determination, or other action made or taken by the
Committee shall be final, binding, and conclusive. Any action reduced to writing
and signed by all members of the Committee shall be as fully effective as if it
had been taken by vote at a meeting duly called and held. No member of the
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Nonqualified Plan or the
Nonqualified Options.

     4.   BENEFITS AVAILABLE UNDER THE NONQUALIFIED PLAN. The benefits
provided by the Nonqualified Plan to Participants are Nonqualified Options.
Nonqualified Options may be granted by the Company from time to time for all
Participants to acquire up to an aggregate of 8,500,000 shares of Stock, subject
to adjustment as provided in Paragraph 5(h) and reduced by the number of shares
subject to options which are granted under the MGM MIRAGE 1997 Incentive Stock
Option Plan. However, no Participant in the Nonqualified Plan shall be entitled
to receive options to purchase more than 1,000,000 shares in any calendar year.
The shares to be delivered upon exercise of Nonqualified Options shall be made
available, at the discretion of the Board, either from authorized but unissued
shares of Stock or from Stock reacquired by the Company, including shares
purchase in the open market. If any Nonqualified Option terminates, expires or
is canceled with respect to any shares of Stock, new Nonqualified Options may
thereafter be granted covering such shares.

     5.   TERMS AND CONDITIONS. Each Nonqualified Option shall be evidenced by
an agreement (the "Agreement'), in a form approved by the Committee, which shall
be signed by an officer of the Company and the Participant receiving the
Nonqualified Option, and which shall be subject to the following express terms
and conditions and to such other terms and conditions as the Committee may deem
appropriate:

          (a) PERIOD. Each Agreement shall specify that the Nonqualified Option
thereunder is for a period not to exceed ten years (the "Option Period") and
shall provide that the Nonqualified Option shall expire at the end of such
period.

          (b) OPTION PRICE. The price per share at which a Nonqualified Option
may be exercised (the "Option Price") shall be determined by the Committee at or
prior to the time the Nonqualified Option is granted, but shall be at least
equal to the fair market value per share at the time the Nonqualified Option is
granted.

          (c) EXERCISE OF OPTION. In order to exercise Nonqualified Options, the
person or persons entitled to exercise them shall give written notice to the
Company specifying the number of shares to be purchased pursuant to the exercise
of Nonqualified Options. This notice shall be accompanied by payment for the
shares as provided in Paragraph 5(d). Options may be exercised at such time or
times as may be determined by the Committee at the time of grant, subject to the
provisions of this Section 5, including the following limitation: no part of any
Nonqualified Option may be exercised until the Participant holding the
Nonqualified Option shall have performed services for the Company or for a
Subsidiary for such period after the date on which the Nonqualified Option is
granted as the Committee may specify in the Agreement; provided, however, that,
although a Nonqualified Option may provide for earlier exercise, the
Nonqualified Option shall be exercisable with respect to at least 20 percent of
the shares subject thereto no later than the first anniversary of the grant of
the Nonqualified


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Option, 40 percent of such shares no later than the second such anniversary, 60
percent of such shares no later than the third such anniversary, 80 percent of
such shares no later than the fourth such anniversary and 100 percent of such
shares no later than the fifth such anniversary; and provided, further, that no
Nonqualified Option may at any time be exercised in part with respect to fewer
than the lesser of (i) fifty shares, or (ii) the number of shares which remain
to be purchased pursuant to the Nonqualified Option.

          (d) PAYMENT OF OPTION PRICE. The Option Price of the Stock transferred
to a Participant pursuant to the exercise of a Nonqualified Option shall be paid
to the Company at the time of delivery of notice of exercise: (1) in cash; (2)
with previously acquired Stock having a fair market value equal to the Option
Price; or (3) with cash and previously acquired Stock having a fair market value
which together with the cash is equal to the Option Price.

          (e) EXERCISE IN THE EVENT OF DEATH OR TERMINATION OF EMPLOYMENT. If a
Participant holding Nonqualified Options shall terminate employment by the
Company and its Subsidiaries because of death, or shall die within three months
of termination of employment by the Company and its Subsidiaries, the
Nonqualified Options held by the Participant may be exercised, to the extent
that the Participant was entitled to do so at the date of termination of
employment, by the person or persons to whom the Participant's rights under the
Nonqualified Options pass by will or applicable law, or if no such person has
such rights, by the Participant's executors or administrators, at any time, or
from time to time, within one year after the date of such termination of
employment, but in no event later than the expiration date determined pursuant
to Paragraph 5(a). If a Participant's employment by the Company, its Parent and
Subsidiaries shall terminate for any reason other than death, Nonqualified
Options held by such Participant may be exercised, to the extent the Participant
was entitled to do so at the date of termination of employment at any time, or
from time to time, within three months after the date of termination of
employment, but in no event later than the expiration date determined pursuant
to Paragraph 5(a). Notwithstanding the foregoing, the Committee may, in its sole
discretion, vary the foregoing provisions with respect to a particular
Participant or particular Nonqualified Options granted to such Participant to
make the termination provisions applicable to such Participant more favorable to
such Participant so long as such variation does not extend the expiration date
of such Nonqualified Options. Any such variation shall be set forth in the
applicable Agreement or amendment thereto.

          (f) NONTRANSFERABILITY. No Nonqualified Option under the Nonqualified
Plan shall be transferable other than by will or by the laws of descent and
distritbution. No interest of any Participant under the Plan shall be subject to
attachment, execution, garnishment, sequestration, the laws of bankruptcy or any
other legal or equitable process. During the lifetime of the Participant,
Nonqualified Options shall be exercisable only by the Participant who received
them.

          (g) INVESTMENT REPRESENTATION. Each Agreement shall contain a
provision that, upon demand by the Company for such a representation, the
Participant holding the Nonqualified Options (or any person acting under
Paragraph 5(e)) shall deliver to the Company at the time of any exercise of any
Nonqualified Options a written representation that the shares to be acquired
upon such exercise are to be acquired for investment and not for resale or with
a view to the distribution thereof. Upon such demand, delivery of such
representation prior to the delivery of any shares issued upon exercise of
Nonqualified Options and prior to the expiration of the Option Period shall be a
condition precedent to the right of the Participant or such other person to
acquire any shares.

          (h) ADJUSTMENTS IN EVENT OF CHANGE IN STOCK. In the event of any
change in the Stock by reason of any stock dividend, recapitalization,
reorganization, merger, consolidation, split-up, combination, or exchange of
shares, or of any similar change affecting the Stock, the number and class of
shares which thereafter may be acquired under the Nonqualified Plan, the number
and class of shares subject to outstanding Agreements, the Option Price per
share thereof, and any other terms of the Nonqualified Plan or the Agreements
which in the Committee's sole discretion require adjustment (including, without
limitation, relating to the Stock, other


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securities, cash or other consideration which may be acquired upon exercise of
the Nonqualified Options) shall be appropriately adjusted consistent with such
change in such manner as the Committee may deem appropriate.

          (i) NO RIGHTS AS STOCKHOLDER. No Participant shall have any rights as
a stockholder with respect to any shares subject to Nonqualified Options prior
to the date of issuance to such Participant of a certificate or certificates for
such shares.

          (j) NO RIGHT TO CONTINUED EMPLOYMENT. Neither the Nonqualified Plan
nor any Nonqualified Options granted under the Nonqualified Plan shall confer
upon any employee any right with respect to continuance of employment by the
Company or any Subsidiary, nor shall they interfere in any way with the right of
the Company or any Subsidiary for which a Participant performs services to
terminate such employment at any time.

          (k) ARRANGEMENT FOR TAX PAYMENT. Each Agreement shall contain a
provision that the Participant shall agree to make any arrangements required by
the Committee to insure that the amount of tax required to be withheld by the
Company or a Subsidiary as a result of the exercise of Nonqualified Options is
available for payment.

          (l) CERTAIN CORPORATE TRANSACTIONS. Each Agreement shall provide that
nothing in the Nonqualified Plan or the Agreement shall in any way prohibit the
Company from merging with or consolidating into another corporation, or from
selling or transferring all or substantially all of its assets, or from
distributing all or substantially all of its assets to its stockholders in
liquidation, or from dissolving and terminating its corporate existence, and in
any such event (other than a merger in which the Company is the surviving
corporation and under the terms of which the shares of Stock outstanding
immediately prior to the merger remain outstanding and unchanged), the
Participant shall be entitled to receive, at the time the Nonqualified Option or
portion thereof would otherwise become exercisable and upon payment of the
Option Price, the same shares of stock, cash or other consideration received by
stockholders of the Company in accordance with such merger, consolidation, sale
or transfer of assets, liquidation or dissolution.

     6.   COMPLIANCE WITH OTHER LAWS AND REGULATIONS. The Nonqualified Plan, the
grant and exercise of Nonqualified Options under the Nonqualified Plan, and the
obligation of the Company to transfer shares under these Nonqualified Options
shall be subject to all applicable federal and state laws, rules and
regulations, including those related to disclosure of financial and other
information to Participants, and to any approvals by any government or
regulatory agency as may be required. The Company shall not be required to issue
or deliver any certificates for shares of Stock prior to (a) the listing of such
shares on any stock exchange on which the Stock may then be listed, where such
listing is required under the rules or regulations of such exchange, and (b)
compliance with applicable federal and state securities laws and regulations
relating to the issuance and delivery of such certificates; provided, however,
that the Company shall make all reasonable efforts to so list such shares and to
comply with such laws and regulations.


     7.   AMENDMENT AND DISCONTINUANCE. The Board may from time to time amend,
suspend or discontinue the Nonqualified Plan; provided, however, that, subject
to the provisions of Paragraph 5(h), no action of the Board, or any committee
thereof, may (a) increase the number of shares reserved for options pursuant to
Section 4 without approval of the stockholders of the Company, (b) permit the
granting of any Nonqualified Option at an Option Price less than that determined
in accordance with Paragraph 5(b), (c) permit the granting of Nonqualified
Options which expire beyond the period provided for in Paragraph 5(a), or (d)
make any material change in the class of eligible Employees as defined in the
Nonqualified Plan.


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     8.   COMPLIANCE WITH RULE 16(b)(3) UNDER THE SECURITIESEXCHANGE ACT OF
1934. (a) The Nonqualified Plan is intended to comply with all applicable
conditions of Rule 16(b)(3) under the Securities Exchange Act of 1934, as
amended, or any successor rule; (b) all transactions involving insider
Participants are subject to such conditions, regardless of whether the
conditions are expressly set forth in the Plan; and (c) any provision of the
Nonqualified Plan or action by the Committee that is contrary to a condition of
Rule 16(b)(3) shall not apply to insider-participants.

     9.   EFFECTIVE DATE. The effective date of the Nonqualified Plan shall be
the earlier of the date the Nonqualified Plan is adopted by the Board or the
date it is approved by the stockholders of the Company.