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Sample Business Contracts

Incentive Stock Option Plan - MGM Mirage

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                   MGM MIRAGE 1997 INCENTIVE STOCK OPTION PLAN


     1.   PURPOSE. The purpose of the MGM MIRAGE 1997 Incentive 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.
1.
          (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 as defined in accordance with
Treasury Regulation Section 1.421-7(h)(1).

          (f) "Incentive Option" shall mean an option to purchase shares of
Stock, subject to the terms and conditions described in the Incentive Plan,
which is an incentive stock option within the meaning of Code Section 422.

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

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

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

          (j) "Subsidiary" shall mean a subsidiary corporation as defined in
Code Section 424(f).

     3.   ADMINISTRATION. The Incentive 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 Incentive 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 Incentive Plan and the number of shares of Stock to be
subject to the Incentive Options to be granted to each Participant; provided,
however, that no Incentive Option shall be granted after the expiration of the
period of ten years from the effective date of the Incentive Plan specified in
Section 9; (b) authorize the granting of Incentive Options to Participants; and
(c) determine the time or times and the manner when each Incentive Option shall
be exercisable and the duration of the exercise period.

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     For all purposes of the Incentive 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 Incentive Plan, prescribe, amend, and
rescind any rules and regulations necessary or appropriate for the
administration of the Incentive 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 Incentive
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 Incentive Plan or the
Incentive Options.

     4.   BENEFITS AVAILABLE UNDER THE INCENTIVE PLAN. The benefits provided by
the Incentive Plan to Participants are Incentive Options. Incentive 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(i), and reduced by the number of shares subject to options which
are granted under the MGM MIRAGE 1997 Nonqualified Stock Option Plan. The shares
to be delivered upon exercise of Incentive 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 purchased in the open
market. If any Incentive Option terminates, expires or is canceled with respect
to any shares of Stock, new Incentive Options may thereafter be granted covering
such shares.

     5.   TERMS AND CONDITIONS. Each Incentive 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 Incentive
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 Incentive Option
thereunder is granted for a period not to exceed ten years (the "Option Period")
and shall provide that the Incentive Option shall expire at the end of such
period.

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

          (c) EXERCISE OF OPTION. In order to exercise Incentive 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 Incentive Options. This notice shall be accompanied by payment for the shares
as provided in Paragraph 5(e). 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 limitations: no part of
any Incentive Option may be exercised until the Participant holding the
Incentive Option shall have performed services for the Company or for a Parent
or Subsidiary for such period after the date on which the Incentive Option is
granted as the Committee may specify in the Agreement; provided, however, that,
although an Incentive Option may provide for earlier exercise, the Incentive
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
Incentive 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


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shares no later than the fifth such anniversary; and provided, further, that no
Incentive 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 Incentive Option.

          (d) TEN-PERCENT OWNERS. Notwithstanding the provisions of Paragraphs
5(b) and 5(c), the following terms and conditions shall apply to Incentive
Options granted to a "ten-percent owner." For this purpose, a "ten-percent
owner" shall mean a Participant who, at the time the Incentive Option is
granted, owns stock possessing more than ten percent of the total combined
voting power of all classes of stock of the Company or of any Subsidiary. With
respect to a ten-percent owner: (1) the price at which shares of stock may be
purchased under the Incentive Option shall not be less than 110 percent of the
fair market value thereof, said fair market value determined in the manner
described in Paragraph 5(b); and (2) the period during which the Incentive
Option may be exercised shall expire not later than five years from the date the
Incentive Option is granted.

          (e) PAYMENT OF OPTION PRICE. The Option Price of the Stock transferred
to a Participant pursuant to the exercise of an Incentive 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.

          (f) LIMITATION ON THE VALUE OF INCENTIVE OPTIONS. The aggregate fair
market value (determined at the time an option is granted) of the Stock with
respect to which Incentive Options described in Code Section 422(b) are
exercisable for the first time by any Participant during any calendar year
(under all plans of the Company and any Parent and any Subsidiary) shall not
exceed $100,000.

          (g) EXERCISE IN THE EVENT OF DEATH OR TERMINATION OF EMPLOYMENT. If a
Participant holding Incentive 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 Incentive
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 Incentive
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, Incentive 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).

          (h) NONTRANSFERABILITY. No Incentive Option granted under the
Incentive Plan shall be transferable other than by will or by the laws of
descent and distribution. No interest of any Participant under the Incentive
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, Incentive Options shall be exercisable only by the
Participant who received them.

          (i) INVESTMENT REPRESENTATION. Each Agreement shall contain a
provision that, upon demand by the Company for such a representation, the
Participant holding the Incentive Options (or any person acting under Paragraph
5(g)) shall deliver to the Company at the time of any exercise of any Incentive
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 Incentive 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.


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          (j) 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 Incentive Plan, the number and
class of shares subject to outstanding Agreements, the Option Price per share
thereof, and any other terms of the Incentive Plan or the Agreements which in
the Committee's sole discretion require adjustment (including, without
limitation, relating to the Stock, other securities, cash or other consideration
which may be acquired upon exercise of the Incentive Options) shall be
appropriately adjusted consistent with such change in such manner as the
Committee may deem appropriate.

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

          (l) NO RIGHTS TO CONTINUED EMPLOYMENT. Neither the Incentive Plan nor
any Incentive Options granted under the Incentive Plan shall not confer upon any
employee any right with respect to continuance of employment by the Company or
any Parent or Subsidiary, nor shall they interfere in any way with the right of
the Company or any Parent or Subsidiary for which a Participant performs
services to terminate such employment at any time.

          (m) 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.

          (n) CERTAIN CORPORATE TRANSACTIONS. Each Agreement shall provide that
nothing in the Incentive 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 Incentive 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 Incentive Plan, the
grant and exercise of Incentive Options under the Incentive Plan, and the
obligation of the Company to transfer shares under these Incentive 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) the compliance
with applicable federal and state securities laws and regulations relating to
the issuance and delivery of 1. 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.   CERTAIN DISPOSITIONS. All Incentive Options shall provide that if the
Participant makes a disposition, within the meaning of Code Section 424(c), of
any shares of Stock transferred upon exercise of an Incentive Option within two
years from the date of the granting of the Incentive Option or within one year
after the transfer of the shares of Stock to the Participant pursuant to the
exercise of the Incentive Option, the Participant shall


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notify the Company within ten days of the disposition. The Company may cause an
appropriate legend to be affixed to any stock certificates representing the
shares of Stock issued under the Plan to enable it to receive notice of the
disposition.

     8.   AMENDMENT AND DISCONTINUANCE. The Board may from time to time amend,
suspend or discontinue the Incentive Plan; provided, however, that, subject to
the provisions of Paragraph 5(i), 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 Incentive Option at an Option Price less than that determined in
accordance with Paragraph 5(b), (c) permit the granting of Incentive 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 Incentive
Plan.

     9.   COMPLIANCE WITH RULE 16(b)(3) OF THE SECURITIES EXCHANGE ACT OF 1934.
(a) The Incentive 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 Incentive Plan; and (c) any provision of the Incentive Plan or action by
the Committee that is contrary to a condition of Rule 16(b)(3) shall not apply
to insider-participants.

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