MGM GRAND, INC.
                        NONQUALIFIED STOCK OPTION PLAN


     1.  Purpose.  The purpose of the MGM Grand, Inc. Nonqualified Stock Option
Plan is to provide a means whereby MGM Grand, Inc. may attract and retain
persons of ability as employees and motivate such persons to exert their best
efforts on behalf of the Company and any Parent or Subsidiary.

     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.

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

         (d) "Company" shall mean MGM Grand, Inc., a Delaware Corporation.

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

         (f) "Parent" shall mean a parent corporation as defined in Code Section
425(e).

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

         (h) "Plan" shall mean the MGM Grand, Inc. Nonqualified Stock Option
Plan.

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

         (j) "Subsidiary" shall mean a subsidiary corporation as defined in Code
Section 425(f) or any partnership or joint venture in which the Company owns a
50 percent or greater ownership interest.

     3.  Administration.  The Plan shall be administered by the Committee,
consisting of at least three members, appointed by and holding office at the
pleasure of the Board.  Members of the Committee shall be members of the Board.
No participant in the Plan shall be entitled to receive options to purchase more
than 1,000,000 share of Common Stock in any calendar year.

     All employees of the Company or any Parent or Subsidiary (other than any
employee who owns stock possession more than 10 percent of the total combined
voting power or value
<PAGE>
 
of all classes of stock of the Company or any Parent or Subsidiary) shall be
eligible to receive Nonqualified Options.  Subject to the provisions of the
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
Parent or Subsidiary who shall be Participants in the Plan and the number of
shares to be subject to the Nonqualified Options to be granted to each
Participant; provided, however, that the Nonqualified option shall be granted
after the expiration of the period of ten years from the effective date of the
Plan specified in Section 8; (b) authorize the granting of Nonqualified Options
to Participants; and (c) determine the time and the manner when each
Nonqualified Option shall be exercisable and the duration of the exercised
period.

     For all purposes of this 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 Plan, prescribe, amend, and rescind any
rules and regulations necessary or appropriate for the administration of the
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, it 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 Parent or Subsidiary as a period of service of
such Participant with the Company or a Parent or Subsidiary, as the case may be,
for purposes of accrual of his or her 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 Plan or the Nonqualified
Options.

     4.  Benefits Available Under Plan.  The benefits provided by the Plan to
Participants are Nonqualified Options. Nonqualified Option. may be granted by
the Company from time to time for all Participants to acquire an aggregate of
5,000,000 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 Grand, Inc. Incentive Stock Option Plan. 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 purchased in the open market. If any
Nonqualified Option terminates, expires or is cancelled 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

                                      -2-
<PAGE>
 
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 granted for a period not to exceed ten years (the "Option Period")
and shall provided 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 the 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 the 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
provision 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
Parent or 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,
each Nonqualified Option must be exercisable so that at least 20 percent of the
shares subject to the Nonqualified Option are exercisable no later than the
third anniversary of the grant of the Nonqualified Option, 40 percent of such
shares no later than the fourth such anniversary, 60 percent of such shares no
later than the fifth such anniversary, 80 percent of such shares no later than
the sixth such anniversary, and 100 percent of such shares no later than the
seventh such anniversary; provided, further, that if the Committee authorizes a
Nonqualified Option exercisable in more than one installment and if the
employment of any Participant holding such a Nonqualified Option is terminated
for any reason after the first day on which the right to exercise any portion of
the Nonqualified Option has accrued, the number of shares with respect to which
the Nonqualified Option shall be deemed to have accrued at the date of
termination of employment shall be such number of shares as to which the right
to exercise the Nonqualified Option accrued prior to the date of termination of
employment, plus, in case the Nonqualified Option was not fully exercisable on
such date, that proportion of the number of shares with respect to which the
Nonqualified Option would next have become exercisable but for such termination
of employment as the number of days the Participant was employed by the Company,
or a Parent or Subsidiary, prior to such date and subsequent to the last
preceding on which the right to exercise the Nonqualified Option as to
additional shares accrued (the "Preceding Exercise Date") bears the number of
days between the Preceding Exercise Date and the next date on which the right to
exercise the Nonqualified Option as to additional shares would otherwise accrue;
and provided, further, that no Nonqualified Option may at any time be exercised
in part with respect to fewer than the

                                      -3-
<PAGE>
 
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 to exercise: (1) in cash; (2)
with previously acquired Stock having a fair market value 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, its Parent or Subsidiaries because of death, or shall die within three
months of termination of employment by the Company, its Parent and 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 person to whom the Participant's rights under the
Nonqualified Options pass by will or applicable law, or if no such person has
such rights, the Participant's executors or administrators, at any time, within
one year after the date of such termination of employment, but in no event later
than the expiration date specified pursuant to Paragraph 5(a).  If a
Participant's employment by the Company, its Parent or Subsidiaries shall
terminate for any reason other than death, he may exercise his Nonqualified
Options, to the extent he 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 specified pursuant to Paragraph 5(a).

         (f) Nontransferability.  No Nonqualified Option granted under the Plan
shall be transferrable other than by will or by the laws of descent and
distribution.  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 Participant 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

                                      -4-
<PAGE>
 
affecting the Stock, the number and class of shares which thereafter may be
acquired under the Plan, the number and class of shares subject to outstanding
Agreements, the Option Price per share thereof, and any other terms of the 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 Nonqualified
Options) shall be appropriately adjusted consistent with such change in such
manner as the Committee may deem appropriate.

         (i) No Rights as Shareholder. No Participant shall have any rights as a
shareholder with respect to any shares subject to Nonqualified Options prior to
the date of issuance to him of a certificate or certificates for such shares.

         (j) No Rights to Continued Employment. The Plan any Nonqualified
Options granted under the 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 an employee performs services to terminate his
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 Parent or 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 Plan or the Agreement shall in any way prohibit the Company from
merging 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 shareholders 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 Plan, the grant and
exercise of Nonqualified Options under the 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 the 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

                                      -5-
<PAGE>
 
regulations of such exchange, and (b) the 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 Plan; provided, however, that subject to the
provisions of Paragraph 5(h), no action of the Board may (a) increase the number
of shares reserved for options pursuant to Section 4 without approval of the
shareholders 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) many any material change in the class of
eligible employees as defined in the Plan.

     8.  Effective Date.  The effective date of the Plan shall be the earlier of
the date the Plan is adopted by the Board or the date the Plan is approved  by
shareholders of the Company.

                                      -6-
<PAGE>
 
                                MGM GRAND, INC.
                          INCENTIVE STOCK OPTION PLAN

     1.  Purpose.  The purpose of the MGM Grand, Inc. Incentive Option Plan is
to provide a means whereby MGM Grand, Inc. may attract and retain persons of
ability as employees and motivate such persons to exert their best efforts on
behalf of the Company and any Parent or Subsidiary.

     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.

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

         (d) "Company" shall mean MGM Grand, Inc., a Delaware Corporation.

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

         (f) "Parent" shall mean a parent corporation as defined in Code Section
425(e).

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

         (h) "Plan" shall mean the MGM Grand, Inc. Incentive Stock Option Plan.

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

         (j) "Subsidiary" shall mean a subsidiary corporation as defined in Code
Section 425(f) or any partnership or joint venture in which the Company owns a
50 percent or greater ownership interest.

     3.  Administration.  The Plan shall be administered by the Committee,
consisting of at least three members, appointed by and holding office at the
pleasure of the Board.  Members of the Committee shall be members of the Board
and shall not be eligible to participate in the Plan while serving on the
Committee.

     All employees of the Company or any Parent or Subsidiary (other than any
employee who owns stock possession more than 10 percent of the total combined
voting power or value of all classes of stock of the Company or any Parent or
Subsidiary) shall be eligible to

                                      -7-
<PAGE>
 
receive Incentive Options.  Subject to the provisions of the 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 Parent or Subsidiary
who shall be Participants in the Plan and the number of shares to be subject to
the Incentive Options to be granted to each Participant; provided, however, that
the Incentive option shall be granted after the expiration of the period of ten
years from the effective date of the Plan specified in Section 8; (b) authorize
the granting of Incentive Options to Participants; and (c) determine the time
and the manner when each Incentive Option shall be exercisable and the duration
of the exercised period.

     For all purposes of this 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 Plan, prescribe, amend, and rescind any
rules and regulations necessary or appropriate for the administration of the
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, it 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 Parent or Subsidiary as a period of service of
such Participant with the Company or a Parent or Subsidiary, as the case may be,
for purposes of accrual of his or her 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 Plan or the Incentive
Options.

     4.  Benefits Available Under Plan.  The benefits provided by the Plan to
Participants are Incentive Options. Incentive Option may be granted by the
Company from time to time for all Participants to acquire an aggregate of
5,000,000 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 Grand, Inc. Incentive 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 cancelled 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:

                                      -8-
<PAGE>
 
         (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 provided 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 the 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 the Incentive 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
provision of this Section 5, including the following limitation: 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 a Incentive Option may provide for earlier exercise, each Incentive
Option must be exercisable so that at least 20 percent of the shares subject to
the Incentive Option are exercisable no later than the third anniversary of the
grant of the Incentive Option, 40 percent of such shares no later than the
fourth such anniversary, 60 percent of such shares no later than the fifth such
anniversary, 80 percent of such shares no later than the sixth such anniversary,
and 100 percent of such shares no later than the seventh such anniversary;
provided, further, that if the Committee authorizes a Incentive Option
exercisable in more than one installment and if the employment of any
Participant holding such a Incentive Option is terminated for any reason after
the first day on which the right to exercise any portion of the Incentive Option
has accrued, the number of shares with respect to which the Incentive Option
shall be deemed to have accrued at the date of termination of employment shall
be such number of shares as to which the right to exercise the Incentive Option
accrued prior to the date of termination of employment, plus, in case the
Incentive Option was not fully exercisable on such date, that proportion of the
number of shares with respect to which the Incentive Option would next have
become exercisable but for such termination of employment as the number of days
the Participant was employed by the Company, or a Parent or Subsidiary, prior to
such date and subsequent to the last preceding on which the right to exercise
the Incentive Option as to additional shares accrued (the "Preceding Exercise
Date") bears the number of days between the Preceding Exercise Date and the next
date on which the right to exercise the Incentive Option as to additional shares
would otherwise accrue; 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) Payment of Option Price. The Option Price of the Stock transferred
to a Participant pursuant to the exercise of a Incentive Option shall be paid to
the Company at

                                      -9-
<PAGE>
 
the time of delivery of notice to exercise: (1) in cash; (2) with previously
acquired Stock having a fair market value 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) Limitation. The aggregate fair market value (determined at the time
an option is granted) of the Stock with respect to which incentive stock options
described in Code Section 422A(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.

         (f) Exercise in the Event of Death or Termination of Employment.  If a
Participant holding Incentive Options shall terminate employment by the Company,
its Parent or Subsidiaries because of death, or shall die within three months of
termination of employment by the Company, its Parent and 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 person to whom the Participant's rights under the Incentive
Options pass by will or applicable law, or if no such person has such rights,
the Participant's executors or administrators, at any time, within one year
after the date of such termination of employment, but in no event later than the
expiration date specified pursuant to Paragraph 5(a).  If a Participant's
employment by the Company, its Parent or Subsidiaries shall terminate for any
reason other than death, he may exercise his Incentive Options, to the extent he
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 specified pursuant to
Paragraph 5(a).

         (g) Nontransferability. No Incentive Option granted under the Plan
shall be transferrable other than by will or by the laws of descent and
distribution. 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,
Incentive Options shall be exercisable only by the Participant who received
them.

         (h) 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(e)) shall
deliver to the Participant 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.

         (i) 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,

                                      -10-
<PAGE>
 
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 Plan, the number and class of shares subject to
outstanding Agreements, the Option Price per share thereof, and any other terms
of the 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.

         (j) No Rights as Shareholder. No Participant shall have any rights as a
shareholder with respect to any shares subject to Incentive Options prior to the
date of issuance to him of a certificate or certificates for such shares.

         (k) No Rights to Continued Employment.  The Plan any Incentive Options
granted under the 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 an employee performs services to terminate his employment
at any time.

         (l) Certain Corporate Transactions.  Each Agreement shall provide that
nothing in the Plan or the Agreement shall in any way prohibit the Company from
merging 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 shareholders 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 Plan, the grant and
exercise of Incentive Options under the 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 the 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 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.

                                      -11-
<PAGE>
 
     7.  Certain Dispositions.  All Incentive Options shall provide that if the
Participant makes a disposition, within the meaning of Code Section 425(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 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 Plan; provided, however, that subject to the
provisions of Paragraph 5(h), no action of the Board may (a) increase the number
of shares reserved for options pursuant to Section 4 without approval of the
shareholders 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) many any material change in the class of eligible
employees as defined in the Plan.

     9.  Effective Date.  The effective date of the Plan shall be the earlier of
the date the Plan is adopted by the Board or the date the Plan is approved  by
shareholders of the Company.

                                      -12-
<PAGE>
 
                  WORD PROCESSING DEPARTMENT WORK REQUEST FORM
            THIS REQUEST FORM MUST ACCOMPANY EACH DOCUMENT SUBMITTED
            --------------------------------------------------------





 
 
TIME/DATE OUT                             TIME/DATE IN
----------------------------------   -----------------------
                                           
 
ATTY/REQUESTER:      Janet McCloud   EXT.:               247
 
CLIENT NAME:         MGM Grand       BILLING NO.:   0176-071
 
DOCUMENT NO.:        JSM 0054

DOCUMENT
DESCRIPTION:        Option Plans

________________________________________________________________________


DATE/TIME DUE:  _______________________________________________________

DRAFT _________     DUPLICATE (COPY DOC./RETAIN ORIGINAL) _____________

FINAL _________     TOC/TOA  __________ (ALLOW 1 HR FOR GENERATION)

REDLINING:  CUMULATIVE __________   CURRENT VERSION __________

SPECIAL INSTRUCTIONS: __________________________________________________

________________________________________________________________________

________________________________________________________________________

================================================================================
              SPACE BELOW FOR WORD PROCESSING DEPARTMENT USE ONLY
              ---------------------------------------------------


TIME STARTED: ______  TIME FINISHED: ______  TOTAL/INIT:         /
                                                         ---------------


Date/Initials:  03.13.97/HSH

                                      -13-

Source: OneCLE Business Contracts.