exv10w5






Exhibit 10.5




     Execution Version



	 	 	 

	 

	 	April 16, 2010
	 
	 	 
	To:

	 	MGM MIRAGE
	 

	 	3600 Las Vegas Boulevard South
	 

	 	Las Vegas, NV 89109
	 

	 	Attn: Daniel D’Arrigo, Executive Vice President and Chief Financial Officer
	 

	 	Telephone: 702-693-8895
	 

	 	Facsimile: 702-693-7682
	 
	 	 
	From:

	 	Bank of America, N.A.
	 

	 	c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated
	 

	 	One Bryant Park
	 

	 	New York, NY 10036
	 

	 	Attn: John Servidio
	 

	 	Telephone: 646-855-8900
	 

	 	Facsimile: 704-208-2869
	 
	 	 
	Re:

	 	Additional Capped Call Transaction
	 

	 	(Transaction Reference Number:NY-40154)





Ladies and Gentlemen:




     The purpose of this communication (this “Confirmation”) is to set forth the terms and
conditions of the above-referenced transaction entered into on the Trade Date specified below (the
“Transaction”) between Bank of America, N.A. (“Dealer”) and MGM MIRAGE (“Counterparty”). This
communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified
below.



     1. This Confirmation is subject to, and incorporates, the definitions and provisions of the
2006 ISDA Definitions (the “2006 Definitions”) and the definitions and provisions of the 2002 ISDA
Equity Derivatives Definitions (the “Equity Definitions”, and together with the 2006 Definitions,
the “Definitions”), in each case as published by the International Swaps and Derivatives
Association, Inc. (“ISDA”). In the event of any inconsistency between the 2006 Definitions and the
Equity Definitions, the Equity Definitions will govern. Certain defined terms used herein have the
meanings assigned to them in the Offering Memorandum dated April 15, 2010 (the “Offering
Memorandum”) and the Indenture to be dated as of the closing date for the initial issuance of the
Convertible Securities described below between Counterparty, the Guarantors party thereto (the
“Guarantors”) and U.S. Bank National Association as trustee (the “Indenture”) relating to the USD
1,000,000,000 principal amount of 4.25% convertible senior notes due 2015 and the additional USD
150,000,000 principal amount of 4.25% convertible senior notes due 2015 issued pursuant to the
over-allotment option exercised on the date hereof (the “Convertible Securities”). In the event of
any inconsistency between the terms defined in the Indenture and this Confirmation, this
Confirmation shall govern. For the avoidance of doubt, references herein to sections of the
Indenture are based on the description of the Convertible Securities set forth in the Offering
Memorandum. If any relevant sections of the Indenture differ in any material respect from those
described in the Offering Memorandum, the parties will amend this Confirmation in good faith to
preserve the economic intent of the parties based on the description of the Convertible Securities
set forth in the Offering Memorandum. The parties further acknowledge that references to the
Indenture herein are references to the Indenture as in effect on the date of its execution and if
the Indenture is amended following its execution, any such amendment will be disregarded for
purposes of this Confirmation (other than as provided in Section 8(a) below) unless the parties
agree otherwise in writing.



     This Confirmation evidences a complete and binding agreement between Dealer and Counterparty
as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be
subject to an agreement (the “Agreement”) in the form of the ISDA 2002 Master Agreement (the “ISDA
Form”) as if Dealer and Counterparty had executed an agreement in such form (without any Schedule
but with the elections set forth in this Confirmation). For the avoidance of doubt, the
Transaction shall be the only transaction under the Agreement.



     All provisions contained in, or incorporated by reference to, the Agreement will govern this
Confirmation except as expressly modified herein. In the event of any inconsistency between this
Confirmation and either the



1









 







Definitions or the Agreement, this Confirmation shall govern.



     2. The Transaction constitutes a Share Option Transaction for purposes of the Equity
Definitions. The terms of the particular Transaction to which this Confirmation relates are as
follows:



	 	 	 

	General Terms:
	 	 
	 
	 	 
	Trade Date:

	 	April 16, 2010
	 
	 	 
	Effective Date:

	 	The closing date of the initial
issuance of the Convertible
Securities.
	 
	 	 
	Option Type:

	 	Call
	 
	 	 
	Seller:

	 	Dealer
	 
	 	 
	Buyer:

	 	Counterparty
	 
	 	 
	Shares:

	 	The common stock of
Counterparty, par value USD0.01
per share (Ticker Symbol:
	 

	 	“MGM”).
	 
	 	 
	Number of Options:

	 	The number of Option Notes (as
defined in the Purchase
Agreement (as defined below)) in
denominations of USD1,000
principal amount issued by
Counterparty to the Initial
Purchasers (as defined below),
pursuant to the option under
Section 2(b) of the Purchase
Agreement (as defined below).
	 
	 	 
	Number of Shares:

	 	As of any date, the product of
the Number of Options, the
Conversion Rate and the
Applicable Percentage.
	 
	 	 
	Applicable Percentage:

	 	20%
	 
	 	 
	Conversion Rate:

	 	As of any date, the “Conversion
Rate” (as defined in the
Indenture as described in the
Offering Memorandum under
“Description of Notes —
General”) as of such date but
without regard to any
adjustments to the “Conversion
Rate” pursuant to (i) the
section of the Indenture
containing the provision
described in the Offering
Memorandum under “Description of
Notes — Conversion Rights —
Adjustment to Shares Delivered
upon Conversion upon Certain
Corporate Transactions” (a
“Make-Whole Fundamental Change
Adjustment”) or (ii) the section
of the Indenture containing the
provisions described in the
first two sentences of the fifth
to last paragraph in the
Offering Memorandum under
“Description of Notes —
Conversion Rights — Conversion
Rate Adjustments” (i.e., the
paragraph beginning “We are
permitted to increase the
applicable conversion rate...”)
(a “Discretionary Adjustment”
and, together with Make-Whole
Fundamental Change Adjustments,
the “Excluded Adjustments”).
	 
	 	 
	Strike Price:

	 	The “Conversion Price” (as
defined in the Indenture as
described in the Offering
Memorandum under “Description of
Notes — General”, but without
regard to any adjustments to the
“Conversion Rate” pursuant to
any Excluded Adjustments).
	 
	 	 
	Cap Price:

	 	USD 21.8550
	 
	 	 
	Premium:

	 	USD 2,125,500
	 
	 	 
	Premium Payment Date:

	 	The Effective Date
	 
	 	 
	Exchange:

	 	New York Stock Exchange






2









 






	 	 	 

	Related Exchange:

	 	All Exchanges
	 
	 	 
	Procedures for Exercise:
	 	 
	 
	 	 
	Exercise Dates:

	 	Each Conversion Date.
	 
	 	 
	Conversion Date:

	 	Each “Conversion Date”, as
defined in the Indenture as
described in the Offering
Memorandum under “Description of
Notes — Conversion Rights —
General”, occurring during the
period from and excluding the
Trade Date to and including the
Expiration Date, for Convertible
Securities, each in
denominations of USD1,000
principal amount, that are
submitted for conversion on such
Conversion Date in accordance
with the terms of the Indenture
(excluding Convertible
Securities that are Excluded
Convertible Securities hereunder
or “Excluded Convertible
Securities” under the Base
Convertible Capped Call
Transaction Confirmation (as
defined below)) but are not
“Relevant Convertible
Securities” under, and as
defined in, the confirmation
between the parties hereto
regarding the Base Convertible
Capped Call Transaction dated
April 15, 2010 (Transaction Ref.
No. NY-40150) (the “Base
Convertible Capped Call
Transaction Confirmation”) (such
Convertible Securities, the
“Relevant Convertible
Securities” for such Conversion
Date). For the purposes of
determining whether any
Convertible Securities will be
Relevant Convertible Securities
hereunder or under the Base
Convertible Capped Call
Transaction Confirmation,
Convertible Securities that are
converted pursuant to the
Indenture shall be allocated
first to the Base Convertible
Capped Call Transaction
Confirmation until all Options
thereunder are exercised or
terminated.
	 
	 	 
	Required Exercise on 

Conversion Dates:

	 	On each Conversion Date, a
number of Options equal to the
number of Relevant Convertible
Securities for such Conversion
Date in denominations of
USD1,000 principal amount shall
be automatically exercised.
	 
	 	 
	Excluded Convertible 

Securities:

	 	Convertible Securities
surrendered for conversion on
any date prior to December 12,
2014 that are not “Excluded
Convertible Securities” under,
and as defined in, the Base
Convertible Capped Call
Transaction Confirmation. For
purposes of determining whether
any Convertible Securities will
be Excluded Convertible
Securities hereunder or under
the Base Convertible Capped Call
Transaction Confirmation,
Convertible Securities that are
converted prior to such date
shall be allocated first to the
Base Convertible Capped Call
Transaction Confirmation until
all Options thereunder are
exercised or terminated.
Counterparty shall, within three
Scheduled Trading Days of the
“Conversion Date” relating to
any Excluded Convertible
Securities, provide written
notice to Dealer specifying the
number of Excluded Convertible
Securities converted on such
“Conversion Date”.
	 
	 	 
	Expiration Date:

	 	The second Scheduled Trading Day
immediately preceding the
“Maturity Date” (as defined in
the Indenture as described in
the Offering Memorandum under
“Description of Notes —
General”).
	 
	 	 
	Automatic Exercise:

	 	As provided above under
“Required Exercise on Conversion
Dates”.
	 
	 	 
	Exercise Notice Deadline:

	 	In respect of any exercise of
Options hereunder on any
Conversion






3









 






	 	 	 

	 

	 	Date, the Exchange
Business Day immediately
following such Conversion Date;
provided that, in respect of any
exercise of Options hereunder on
any Conversion Date occurring on
or after December 12, 2014, the
Exercise Notice Deadline shall
be the Scheduled Trading Day
immediately following the
Expiration Date.
	 
	 	 
	Notice of Exercise:

	 	Notwithstanding anything to the
contrary in the Equity
Definitions, Dealer shall have
no obligation to make any
payment or delivery in respect
of any exercise of Options
hereunder unless Counterparty
notifies Dealer in writing prior
to 4:00 PM (New York City time)
on the Exercise Notice Deadline
in respect of such exercise of
the number of Options being
exercised on the relevant
Exercise Date; provided that any
“Notice of Exercise” delivered
to Dealer pursuant to the Base
Convertible Capped Call
Transaction Confirmation shall
be deemed to be a Notice of
Exercise pursuant to this
Confirmation and the terms of
such Notice of Exercise shall
apply, mutatis mutandis, to this
Confirmation. For the avoidance
of doubt, if Counterparty fails
to give such notice when due in
respect of any exercise of
Options hereunder, Dealer’s
obligation to make any payment
or delivery in respect of such
exercise shall be permanently
extinguished, and late notice
shall not cure such failure.
	 
	 	 
	Dealer’s Telephone Number
and Telex and/or Facsimile
Number
and Contact Details for
purpose of
Giving Notice:

	 	To be provided by Dealer.
	 
	 	 
	Settlement Terms:
	 	 
	 
	 	 
	Settlement Date:

	 	In respect of any Exercise Date,
the date two Clearance System
Business Days following the
Expiration Date.
	 
	 	 
	Delivery Obligation:

	 	In lieu of the obligations set
forth in Sections 8.1 and 9.1 of
the Equity Definitions, and
subject to “Notice of Exercise”
above, in respect of any
Exercise Date, Dealer will
deliver to Counterparty, on the
related Settlement Date, (i) the
Net Share Settlement Amount for
such Exercise Date and (ii) cash
in lieu of any fractional Shares
to be delivered with respect to
such Net Share Settlement Amount
valued at the VWAP Price on the
last Valuation Date.
	 
	 	 
	Net Share Settlement Amount:

	 	For any Exercise Date, a number
of Shares equal to the product
of (i) the Applicable
Percentage, (ii) the sum of the
Daily Settlement Amounts for all
Valuation Dates and (iii) the
Number of Options exercised on
such Exercise Date; provided
that in no event shall the Net
Share Settlement Amount exceed
the product of the Applicable
Percentage and the excess, if
any, of (A) the aggregate number
of Shares that Counterparty is
obligated to deliver to the
holder(s) of the Relevant
Convertible Securities for the
Conversion Date occurring on
such Exercise Date (the
“Convertible Obligation”) over
(B) the product of (I) the
Number of Options exercised on
such Exercise Date and (II)
USD1,000 divided by the opening
price of the Shares as displayed
under the heading “Op” on
Bloomberg page MGM.N
<equity> (or any successor
thereto) on the settlement date
for the Shares to be delivered
under the Relevant Convertible
Securities related to such
Exercise Date






4









 






	 	 	 

	 

	 	under the terms of
the Indenture. If such Exercise
Date relates to the conversion
of Relevant Convertible
Securities in connection with
which holders thereof are
entitled to receive additional
Shares and/or cash pursuant to a
Make-Whole Fundamental Change
Adjustment, then,
notwithstanding the foregoing,
the Net Share Settlement Amount
shall include the Applicable
Percentage of such additional
Shares and/or cash, except that
the Net Share Settlement Amount
shall be capped so that the
value of the Net Share
Settlement Amount (with the
value of the Shares included in
the Net Share Settlement Amount
determined by the Calculation
Agent using the VWAP Price on
the last Valuation Date) does
not exceed the amount as
determined by the Calculation
Agent that would be payable by
Dealer pursuant to Section 6 of
the Agreement if such Conversion
Date were an Early Termination
Date resulting from an
Additional Termination Event
with respect to which the
Transaction (except that, for
purposes of determining such
amount (aa) the Number of
Options shall be deemed to be
equal to the number of Options
exercised on such Exercise Date
and (bb) such amount payable
will be determined as if the
sections of the Indenture
containing the provisions
relating to Make-Whole
Fundamental Change Adjustments
were deleted) was the sole
Affected Transaction and
Counterparty was the sole
Affected Party (determined
without regard to Section 8(b)
of this Confirmation) (this
sentence, as it relates to an
increase in the Net Share
Settlement Amount relating to a
Make-Whole Fundamental Change
Adjustment (subject to the
cumulative limitations herein),
the “Limited Make-Whole
Provision”), it being understood
that the cap described in this
sentence is in addition to, and
cumulative with the proviso in
the preceding sentence.
	 
	 	 
	Valuation Dates:

	 	Each of the 75 consecutive
Exchange Business Days
commencing on and including
December 12, 2014; provided that
if any such day is a Disrupted
Day, then the Calculation Agent
shall determine if such day is a
Disrupted Day in whole or in
part, and if such day is a
Disrupted Day in whole, such day
shall not be considered an
Exchange Business Day for
purposes of determining the
Valuation Dates, and if such day
is a Disrupted Day in part, then
(i) such day shall be a
Valuation Date and the Exchange
Business Day immediately
following the last scheduled
Valuation Date (including any
additional Valuation Date added
pursuant to this clause (i))
shall also be a Valuation Date,
(ii) the VWAP Price for such
Disrupted Day shall be
determined by the Calculation
Agent based on transactions in
the Shares on such Disrupted Day
taking into account the nature
and duration of such Market
Disruption Event on such day and
(iii) the Calculation Agent
shall adjust the Daily
Settlement Amounts as
appropriate to take into account
the nature and duration of such
Market Disruption Event; and
provided further that, without
limitation of Section 8(h)
below, if the final Valuation
Date has not occurred as of the
Expiration Date, the Expiration
Date shall be the final
Valuation Date, in which case
the VWAP Price for such
Valuation Date shall be the
prevailing market value per
share determined by the
Calculation Agent in a
commercially reasonable manner
and, if the total number of
Valuation Dates that have
occurred prior to the Expiration
Date (each such Valuation Date,
a “Past Valuation Date”) is less
than






5









 






	 	 	 

	 

	 	74, then a number of
Valuation Dates equal to 75
minus the number of Past
Valuation Dates shall be deemed
to occur on the Expiration Date
(subject to adjustment by the
Calculation Agent if any Past
Valuation Date was a Disrupted
Day in part). Any day on which
the Exchange is scheduled to
close prior to its normal
closing time shall be considered
a Disrupted Day in whole.
Section 6.6 of the Equity
Definitions shall not apply to
any Valuation Date.
	 
	 	 
	Settlement Averaging Period:

	 	The period beginning on, and
including, the first Valuation
Date and ending on, and
including, the last Valuation
Date.
	 
	 	 
	Daily Settlement Amount:

	 	For any Valuation Date, (i) the
amount, if any, by which (x) the
Daily Value for such Valuation
Date exceeds (y) USD1,000
divided by 75, divided by (ii)
the VWAP Price on such Valuation
Date.
	 
	 	 
	Daily Value:

	 	For any Valuation Date, (i) the
product of (x) the Conversion
Rate and (y) the lesser of (A)
the VWAP Price and (B) the Cap
Price, in each case on such
Valuation Date divided by (ii)
75.
	 
	 	 
	VWAP Price:

	 	For any Valuation Date, the per
Share volume-weighted average
price as displayed under the
heading “Bloomberg VWAP” on
Bloomberg page MGM.N
<equity> VAP (or any
successor thereto) in respect of
the period from 9:30 a.m. to
4:00 p.m. (New York City time)
on such Valuation Date (or if
such volume-weighted average
price is unavailable or is
manifestly incorrect, the market
value of one Share on such
Valuation Date, as determined by
the Calculation Agent using a
volume-weighted method).
	 
	 	 
	Market Disruption Events:

	 	Section 6.3(a) of the Equity
Definitions is hereby amended
(A) by deleting the words
“during the one hour period that
ends at the relevant Valuation
Time, Latest Exercise Time,
Knock-in Valuation Time or
Knock-out Valuation Time, as the
case may be” in clause (ii)
thereof. Section 6.3(d) of the
Equity Definitions is hereby
amended by deleting the
remainder of the provision
following the term “Scheduled
Closing Time” in the fourth line
thereof.
	 
	 	 
	Other Applicable Provisions:

	 	To the extent Dealer is
obligated to deliver Shares
hereunder, the provisions of
Sections 9.1(c), 9.8, 9.9, 9.10,
9.11 (except that the
Representation and Agreement
contained in Section 9.11 of the
Equity Definitions shall be
modified by excluding any
representations therein relating
to restrictions, obligations,
limitations or requirements
under applicable securities laws
arising as a result of the fact
that Counterparty is the Issuer
of the Shares) and 9.12 of the
Equity Definitions will be
applicable as if “Physical
Settlement” applied to the
Transaction.
	 
	 	 
	Restricted Certificated 

Shares:

	 	Notwithstanding anything to the
contrary in the Equity
Definitions, Dealer may, in
whole or in part, deliver Shares
required to be delivered to
Counterparty hereunder in
certificated form in lieu of
delivery through the Clearance
System. With respect to such
certificated Shares, the
Representation and Agreement
contained in Section 9.11 of the
Equity Definitions shall be
modified by






6









 






	 	 	 

	 

	 	deleting the
remainder of the provision after
the word “encumbrance” in the
fourth line thereof.
	 
	 	 
	Share Adjustments:
	 	 
	 
	 	 
	Method of Adjustment:

	 	Notwithstanding Section 11.2 of
the Equity Definitions, upon the
occurrence of any event or
condition set forth in the
section of the Indenture
containing the provisions
described in the Offering
Memorandum under “Description of
Notes — Conversion Rights —
Conversion Rate Adjustments”
(other than a Merger Event or an
event described in clauses 1 or
2 of the definition of
“Fundamental Change” in the
Indenture as described in the
Offering Memorandum under
“Description of Notes —
Conversion Rights — Adjustment
to Shares Delivered upon
Conversion upon Certain
Corporate Transactions”) that
results in an adjustment under
the Indenture, the Calculation
Agent (i) shall, except in the
case of a Discretionary
Adjustment, make a corresponding
adjustment to the terms relevant
to the exercise, settlement or
payment of the Transaction and
(ii) may adjust the Cap Price as
appropriate to account for the
economic effect on the
Transaction of such event or
condition; provided that the Cap
Price shall not be adjusted so
that it is less than the Strike
Price. Promptly upon the
occurrence of any event that
Counterparty reasonably expects
to result in an adjustment to
the “Conversion Rate”,
Counterparty shall notify the
Calculation Agent of such event;
and once the adjustments to be
made to the terms of the
Indenture and the Convertible
Securities in respect of such
event have been determined,
Counterparty shall promptly
notify the Calculation Agent in
writing of the details of such
adjustments.
	 
	 	 
	Extraordinary Events:
	 	 
	 
	 	 
	Merger Events:

	 	Notwithstanding Section 12.1(b)
of the Equity Definitions, a
“Merger Event” means the
occurrence of any event or
condition set forth in the
section of the Indenture
containing the provisions
described in the Offering
Memorandum under the
seventh-to-last paragraph in
“Description of Notes —
Conversion Rights — Conversion
Rate Adjustments” (i.e., the
paragraph beginning with “In the
event of: any
reclassification...”).
	 
	 	 
	Consequences of Merger Events
or Tender Offers:

	 	Notwithstanding Sections 12.2
and 12.3 of the Equity
Definitions, upon the occurrence
of a Merger Event that results
in an adjustment under the
Indenture or an event described
in clauses 1 or 2 of the
definition of “Fundamental
Change” therein, (i) the
Calculation Agent shall make a
corresponding adjustment to the
terms relevant to the exercise,
settlement or payment of the
Transaction; provided that such
adjustment shall be made without
regard to any Excluded
Adjustments; and provided
further that if, with respect to
a Merger Event, the
consideration for the Shares
includes (or, at the option of a
holder of Shares, may include)
shares (or depositary receipts
with respect to shares) of an
entity or person not organized
under the laws of the United
States, any State thereof or the
District of Columbia, and the
Calculation Agent determines
that (x) treating such Shares as
“Reference Property” (as such
term is defined in the Indenture
as described in the Offering
Memorandum under the seventh to
last paragraph in “Description
of Notes — Conversion Rights —
Conversion Rate






7









 






	 	 	 

	 

	 	Adjustments”)
will have a material adverse
effect on Dealer’s rights or
obligations in respect of the
Transaction, on its Hedging
Activities in respect of the
Transaction or on the costs
(including, without limitation,
due to any increase in tax
liability, decrease in tax
benefit or other adverse effect
on its tax position) of engaging
in any of the foregoing and (y)
Dealer cannot promptly avoid the
occurrence of each such material
adverse effect by (I)
transferring or assigning its
rights and obligations under
this Confirmation and the
Agreement pursuant to Section
8(f) or (II) amending the terms
of this Confirmation (whether
because amendments would not
avoid such occurrence or because
Counterparty fails to agree
promptly to such amendments), no
such adjustment shall be made
and Cancellation and Payment
(Calculation Agent
Determination) shall apply; and
(ii) the Calculation Agent may
adjust the Cap Price as
appropriate to account for the
economic effect on the
Transaction of such Merger Event
or other event described above;
provided that the Cap Price
shall not be adjusted so that it
is less than the Strike Price.
	 
	 	 
	Notice of Merger
Consideration:

	 	Upon the occurrence of a Merger
Event that causes the Shares to
be converted into the right to
receive more than a single type
of consideration (determined
based in part upon any form of
stockholder election),
Counterparty shall reasonably
promptly (but, in any event
prior to the effective date of
the relevant Merger Event)
notify the Calculation Agent of
(i) the weighted average of the
types and amounts of
consideration received by the
holders of Shares entitled to
receive cash, securities or
other property or assets with
respect to or in exchange for
such Shares in any Merger Event
who affirmatively make such an
election and (ii) the details of
the adjustment to be made under
the Indenture in respect of such
Merger Event.
	 
	 	 
	Nationalization, Insolvency 

or Delisting:

	 	Cancellation and Payment
(Calculation Agent
Determination); provided that,
in addition to the provisions of
Section 12.6(a)(iii) of the
Equity Definitions, it shall
also constitute a Delisting if
the Exchange is located in the
United States and the Shares are
not immediately re-listed,
re-traded or re-quoted on any of
the New York Stock Exchange, The
NASDAQ Global Select Market or
The NASDAQ Global Market (or
their respective successors); if
the Shares are immediately
re-listed, re-traded or
re-quoted on any such exchange
or quotation system, such
exchange or quotation system
shall thereafter be deemed to be
the Exchange.
	 
	 	 
	Additional Disruption Events:
	 	 
	 
	 	 
	(a)   Change in Law:

	 	Applicable
	 
	 	 
	(b)   Failure to Deliver:

	 	Applicable
	 
	 	 
	(c)   Insolvency Filing:

	 	Applicable
	 
	 	 
	(d)   Hedging Disruption:

	 	Applicable
	 
	 	 
	(e)   Increased Cost of
Hedging:

	 	Applicable
	 
	 	 
	Hedging Party:

	 	For all applicable Extraordinary
Events, Dealer
	 
	 	 
	Determining Party:

	 	For all applicable Extraordinary
Events, Dealer






8









 






	 	 	 

	Non-Reliance:

	 	Applicable
	 
	 	 
	Agreements and Acknowledgments
Regarding Hedging Activities:

	 	Applicable
	 
	 	 
	Additional Acknowledgments:

	 	Applicable
	 
	 	 
	3.       Calculation Agent:

	 	Dealer. Following any
determination or calculation by
the Calculation Agent hereunder,
upon a written request by
Counterparty, the Calculation
Agent will use its reasonable
best efforts to promptly (but in
any event within three Scheduled
Trading Days) provide to
Counterparty, by e-mail to the
e-mail address provided by
Counterparty in such written
request, a report (in a commonly
used file format for the storage
and manipulation of financial
data without disclosing Dealer’s
proprietary models) displaying
in reasonable detail the basis
for such determination or
calculation, as the case may be.
	 
	 	 
	4.       Account Details:
	 	 
	 
	 	 
	Dealer Payment Instructions:

	 	Bank of America, N.A.
	 

	 	New York, NY
	 

	 	SWIFT: BOFAUS3N
	 

	 	Bank Routing: 026-009-593
	 

	 	Account Name: Bank of America
	 

	 	Account No. : 0012333-34172
	 
	 	 
	Counterparty Payment Instructions:

	 	To be provided by Counterparty.







	 	5.	 	Offices:
	 
	 	 	 	The Office of Dealer for the Transaction is: New York
	 
	 	 	 	The Office of Counterparty for the Transaction is: Not applicable
	 
	 	6.	 	Notices: For purposes of this Confirmation:
	 
	 	 	 	Address for notices or communications to Counterparty:






	 	To: 	 	MGM MIRAGE

3600 Las Vegas Boulevard South

Las Vegas, NV 89109
	 	Attn: 	 	Daniel D’Arrigo, Executive Vice President and Chief Financial Officer
	 	Telephone: 	 	702-693-8895
	 	Facsimile: 	 	702-693-7682






	 	 	 	Address for notices or communications to Dealer:






	 	To: 	 	Bank of America, N.A.

c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated

Bank of America Tower at One Bryant Park

New York, NY 10036
	 	Attn: 	 	John Servidio
	 	Telephone: 	 	646-855-7127
	 	Facsimile: 	 	704-208-2869






	7.	 	Representations, Warranties and Agreements:





     (a) In addition to the representations and warranties in the Agreement and those
contained elsewhere herein, Counterparty represents and warrants to and for the benefit of,
and agrees with, Dealer as follows:



9









 






     (i) On the Trade Date, and as of the date of any election by Counterparty of the
Share Termination Alternative under (and as defined in) Section 8(b) below, (A)
Counterparty is not aware of any material nonpublic information regarding
Counterparty or the Shares and (B) all reports and other documents filed by
Counterparty with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) when considered as a whole
(with the more recent such reports and documents deemed to amend inconsistent
statements contained in any earlier such reports and documents), do not contain any
untrue statement of a material fact or any omission of a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading.




     (ii) (A) On the Trade Date, the Shares or securities that are convertible into,
or exchangeable or exercisable for Shares, are not, and shall not be, subject to a
“restricted period,” as such term is defined in Regulation M under the Exchange Act
(“Regulation M”) and (B) Counterparty shall not engage in any “distribution” as such
term is defined in Regulation M, other than a distribution meeting the requirements
of the exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M,
until the second Exchange Business Day immediately following the Trade Date.




     (iii) On the Trade Date, neither Counterparty nor any “affiliate” or “affiliated
purchaser” (each as defined in Rule 10b-18 under the Exchange Act (“Rule 10b-18”))
shall directly or indirectly (including, without limitation, by means of any
cash-settled or other derivative instrument) purchase, offer to purchase, place any
bid or limit order that would effect a purchase of, or commence any tender offer
relating to, any Shares (or an equivalent interest, including a unit of beneficial
interest in a trust or limited partnership or a depository share) or any security
convertible into or exchangeable or exercisable for Shares, except through Dealer.




     (iv) Without limiting the generality of Section 13.1 of the Equity Definitions,
Counterparty acknowledges that Dealer is not making any representations or warranties
with respect to the treatment of the Transaction under any accounting standards
including FASB Statements 128, 133, 149 (each as amended), or 150, EITF Issue No.
00-19, 01-6, 03-6 or 07-5 (or any successor issue statements) or under FASB’s
Liabilities & Equity Project.




     (v) Without limiting the generality of Section 3(a)(iii) of the Agreement, the
Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.




     (vi) On or prior to the Trade Date, Counterparty shall deliver to Dealer a
resolution of Counterparty’s board of directors (or a duly authorized committee
thereof) authorizing the Transaction.




     (vii) Counterparty is not entering into this Confirmation or making any election
hereunder or under the Convertible Securities to create actual or apparent trading
activity in the Shares (or any security convertible into or exchangeable for Shares)
or to raise or depress or otherwise manipulate the price of the Shares (or any
security convertible into or exchangeable for Shares) or otherwise in violation of
the Exchange Act.




     (viii) Counterparty is not, and after giving effect to the transactions
contemplated hereby will not be, required to register as an “investment company” as
such term is defined in the Investment Company Act of 1940, as amended.




     (ix) On each of the Trade Date and the Premium Payment Date, Counterparty is
not, or will not be, “insolvent” (as such term is defined under Section 101(32) of
the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy
Code”)) and Counterparty would be able to purchase the Number of Shares hereunder in
compliance with the laws of the jurisdiction of its incorporation.




     (x) As of the Trade Date, Counterparty is not aware of any applicable gaming
law, rule or regulation in any jurisdiction in which it then operates or is licensed
that imposes or would impose



10









 







an affirmative obligation on any person (in the absence
of any action taken by any relevant gaming authority with competent jurisdiction over
such person) who, under any relevant definition of ownership, owns less than 5.0% of
any class of securities of Counterparty. Counterparty shall promptly notify Dealer
if it becomes aware of such an affirmative obligation after the Trade Date.




     (xi) Counterparty understands no obligations of Dealer to it hereunder will be
entitled to the benefit of deposit insurance and that such obligations will not be
guaranteed by any affiliate of Dealer or any governmental agency.



     (b) Each of Dealer and Counterparty agrees and represents that it is an “eligible
contract participant” as defined in Section 1a(12) of the U.S. Commodity Exchange Act, as
amended.



     (c) Each of Dealer and Counterparty acknowledges that the offer and sale of the
Transaction to it is intended to be exempt from registration under the Securities Act of
1933, as amended (the “Securities Act”), by virtue of Section 4(2) thereof. Accordingly,
Counterparty represents and warrants to Dealer that (i) it has the financial ability to bear
the economic risk of its investment in the Transaction and is able to bear a total loss of
its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D
as promulgated under the Securities Act, (iii) it is entering into the Transaction for its
own account and without a view to the distribution or resale thereof, and (iv) the
assignment, transfer or other disposition of the Transaction has not been and will not be
registered under the Securities Act and is restricted under this Confirmation, the
Securities Act and state securities laws.



     (d) Counterparty agrees and acknowledges that Dealer is a “financial institution,”
“swap participant” and “financial participant” within the meaning of Sections 101(22),
101(53C) and 101(22A) of the Bankruptcy Code. The parties hereto further agree and
acknowledge that it is the intent of the parties that (A) this Confirmation is (i) a
“securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code,
with respect to which each payment and delivery hereunder or in connection herewith is a
“termination value,” “payment amount” or “other transfer obligation” within the meaning of
Section 362 of the Bankruptcy Code and a “settlement payment,” within the meaning of Section
546 of the Bankruptcy Code and (ii) a “swap agreement,” as such term is defined in Section
101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder
or in connection herewith is a “termination value,” “payment amount” or “other transfer
obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer,” as
such term is defined in Section 101(54) of the Bankruptcy Code and a “payment or other
transfer of property” within the meaning of Sections 362 and 546 of the Bankruptcy Code, (B)
the Agreement is a “master netting agreement” and each of the parties thereto is a “master
netting agreement participant”, each as defined in the Bankruptcy Code, (C) a party’s right
to liquidate a Transaction and to exercise any other remedies upon the occurrence of any
Event of Default under the Agreement with respect to the other party to constitute a
“contractual right ... to cause the liquidation, termination or acceleration” of the
Transaction as described in the Bankruptcy Code and (D) Dealer is entitled to the
protections afforded by, among other sections, Sections 362(b)(6), 362(b)(17), 362(b)(27),
362(o), 546(e), 546(g), 546(j), 548(d)(2), 555, 560 and 561 of the Bankruptcy Code.



     (e) Counterparty shall deliver to Dealer an opinion of counsel, dated as of the
Effective Date and reasonably acceptable to Dealer in form and substance reasonably
satisfactory to Dealer.


8. Other Provisions:




     (a) Additional Termination Events. The occurrence of (i) an “Event of Default” with
respect to Counterparty under the terms of the Convertible Securities as set forth in the
section of the Indenture containing the provisions described in the Offering Memorandum
under “Description of Notes — Events of Default” that results in the acceleration of
Counterparty’s payment obligations under the Convertible Securities pursuant to the
Indenture, (ii) an Amendment Event, (iii) a Regulatory Event, (iv) a Repayment Event or (v)
an Excluded Conversion Event, in each case shall be an Additional Termination Event with
respect to which the Transaction is the sole Affected Transaction and Counterparty is the
sole Affected Party, and Dealer shall be the party entitled to designate an Early
Termination Date pursuant to Section 6(b) of the Agreement; provided that (A) in the case of
a Regulatory Event, (I) if Dealer determines that such Regulatory Event relates solely to an



11









 







additional monetary cost of having to comply with applicable gaming laws, rules or
regulations and that Counterparty would be permitted under applicable law, rules and
regulations to pay Dealer for such cost, Dealer shall notify Counterparty of such cost and
Dealer shall be entitled to designate an Early Termination Date with respect to such
Regulatory Event only if Counterparty does not, within two Currency Business Days of receipt
of such notice, agree that it shall (x) promptly pay for any such cost previously incurred
by Dealer and (y) pay from time to time any such cost incurred or to be incurred following
notice of the amount or estimated amount thereof from Dealer (and, if such estimate differs
from the actual amount incurred, Dealer shall promptly notify Counterparty of such
deficiency or excess, and Counterparty shall pay any deficiency or Dealer shall reimburse
any excess, as applicable, promptly following such notice), with such payment due on the
later of the date that is five Scheduled Trading Days prior to the date Dealer would incur
such cost and the second Currency Business Day following notice of such amount from Dealer,
(II) Dealer shall be entitled to designate an Early Termination Date with respect to such
Regulatory Event only if Dealer is unable to effect a transfer or assignment to a third
party in accordance with the requirements set forth in the first three sentences of Section
8(f) after using its commercially reasonable efforts on pricing terms and within a time
period reasonably acceptable to Dealer such that such Regulatory Event would cease to exist,
and (III) Dealer shall, if partial termination would cause such Regulatory Event to cease to
exist, treat only that portion of the Transaction as the Affected Transaction as necessary
so that such Regulatory Event no longer exists and (B) in the case of a Repayment Event or
an Excluded Conversion Event, the Transaction shall be subject to termination only in
respect of a number of Options equal to the number of Convertible Securities that cease to
be outstanding in connection with or as a result of such Repayment Event or Excluded
Conversion Event, as the case may be (the portion of the Transaction represented by such
number of Options, the “Affected Portion”), and, notwithstanding anything to the contrary in
the Agreement or this Confirmation, Dealer shall designate an Early Termination Date
pursuant to Section 6(b) of the Agreement in respect of such Affected Portion, which Early
Termination Date shall be no earlier than one Scheduled Trading Day following Dealer’s
receipt from Counterparty of notice of the occurrence of such Repayment Event or Excluded
Conversion Event, as the case may be, and no later than five Scheduled Trading Days
following the receipt of such notice. For the avoidance of doubt, in determining the amount
payable in respect of such Affected Transaction pursuant to Section 6 of the Agreement
(which, for the avoidance of doubt, shall take into account the Limited Make-Whole Provision
in the case of an Excluded Conversion Event in connection with which holders thereof are
entitled to receive additional Shares pursuant to a Make-Whole Fundamental Change
Adjustment) in connection with an Excluded Conversion Event, the Calculation Agent shall
assume that (x) the relevant Excluded Convertible Securities shall not have been converted
and remain outstanding and (y) in the case of an Induced Conversion, any adjustments,
agreements, additional payments, deliveries or acquisitions by or on behalf of Counterparty
or any affiliate of Counterparty in connection therewith had not occurred. Counterparty
shall, within three Scheduled Trading Days of the occurrence of any event that constitutes a
Repayment Event, provide written notice to Dealer specifying the details (including, without
limitation, the number of Convertible Securities affected by such Repayment Event or the
amount of any related principal repayment, as applicable) of such Repayment Event.



     “Amendment Event” means that Counterparty amends, modifies, supplements, waives or
obtains a waiver in respect of any term of the Indenture or the Convertible Securities
governing the principal amount, coupon, maturity, repurchase obligation of Counterparty,
redemption right of Counterparty, any term relating to conversion of the Convertible Securities (including changes to the conversion price,
conversion settlement dates or conversion conditions), or any term that would require
consent of the holders of not less than 100% of the principal amount of the Convertible
Securities to amend, in each case without the consent of Dealer (such consent not to be
unreasonably withheld or delayed).



     “Regulatory Event” means that Dealer determines in its sole good faith reasonable
discretion that in connection with being party to this Transaction or acquiring,
establishing, reestablishing, substituting, maintaining, unwinding or disposing of any Hedge
Position that Dealer or its affiliates deems necessary or appropriate to hedge Dealer’s risk
in respect of this Transaction, Dealer or its affiliates could either (i) be obligated to
register or make filings with or provide notification or information to any gaming
authority, and that such registration, filings or notification or the provision of such
information would pose an Undue Burden on Dealer or its affiliates or (ii) incur additional
risk, liability or cost as a result of having to comply with any applicable gaming laws,
rules or regulations. An “Undue Burden” means (A) any obligation to disclose information
that Dealer or any of its affiliates is not otherwise required to disclose to the general
public in



12









 







generally available filings (other than information that is readily and generally
publicly available) or to disclose any information earlier or more frequently than it
otherwise does or would otherwise be obligated to do, (B) any registration of, or provision
of information by or in respect of, any employee, officer or director or agents of Dealer
and/or any of its affiliates, other than that which Dealer and/or any of its affiliates is
otherwise required to disclose to the general public in generally available filings and
other readily and generally publicly available information, or (C) any requirement in
respect of the gaming laws, rules or regulations of any applicable jurisdiction which, in
the sole good faith reasonable discretion of Dealer, would cause (x) undue hardship on, (y)
injury to the business or reputation of, or (z) disclosure of confidential or sensitive
information of, Dealer and/or any of its affiliates or any of their employees, officers,
directors and agents.



     “Repayment Event” means that (I) any Convertible Securities are repurchased (whether in
connection with or as a result of a fundamental change, howsoever defined, or for any other
reason) by Counterparty or any of its subsidiaries, (II) any Convertible Securities are
delivered to Counterparty or any of its subsidiaries in exchange for delivery of any
property or assets of Counterparty or any of its subsidiaries (howsoever described), (III)
any principal of any of the Convertible Securities is repaid prior to the final maturity
date of such Convertible Securities (whether following acceleration of such Convertible
Securities or otherwise), or (IV) any Convertible Securities are exchanged by or for the
benefit of the holders thereof for any other securities of Counterparty or any of its
affiliates (or any other property, or any combination thereof) pursuant to any exchange
offer or similar transaction; provided that, in the case of clause (II) and clause (IV),
conversions of the Convertible Securities pursuant to the terms of the Indenture shall not
be Repayment Events. For the purposes of determining whether a Repayment Event has occurred
hereunder or under the Base Convertible Capped Call Transaction Confirmation with respect to
any Convertible Security, Convertible Securities that are subject to a Repayment Event shall
be allocated first to the Base Convertible Capped Call Transaction Confirmation until all
Options thereunder are exercised, terminated or subject to a Repayment Event.



     “Excluded Conversion Event” means any conversion of any Excluded Convertible
Securities.



     “Induced Conversion” means a conversion of any Excluded Convertible Securities (A) in
connection with (x) an adjustment to the Conversion Rate effected by Counterparty (whether
pursuant to a Discretionary Adjustment or otherwise) that is not required under the terms of
the Indenture or (y) an agreement by Counterparty with the holder(s) of such Convertible
Securities whereby, in the case of either (x) or (y), the holder(s) of such Convertible
Securities receive upon conversion or pursuant to such agreement, as the case may be, a
payment of cash or delivery of Shares or any other property or item of value that was not
required under the terms of the Indenture or (B) after having been acquired from a holder of
Convertible Securities by or on behalf of Counterparty or any of its affiliates other than
pursuant to a conversion by such holder and thereafter converted by or on behalf of
Counterparty or any affiliate of Counterparty.



     (b) Alternative Calculations and Payment on Early Termination and on Certain
Extraordinary Events. If Dealer shall owe Counterparty any amount pursuant to “Consequences
of Merger Events or Tender Offers” above or Sections 12.6, 12.7 or 12.9 of the Equity
Definitions or pursuant to Section 6(d)(ii) of the Agreement (a “Payment Obligation”),
Counterparty shall have the right, in its sole discretion, to require Dealer to satisfy any
such Payment Obligation by the Share Termination Alternative (as defined below) by giving
irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading
Day, no later than 9:30 A.M. New York City time on the relevant merger date, Announcement
Date, Early Termination Date or date of cancellation or termination in respect of an Extraordinary Event, as applicable
(“Notice of Share Termination”); provided that Counterparty shall not have the right to so
elect in the event of (i) an Insolvency, a Nationalization or a Merger Event, in each case,
in which the consideration or proceeds to be paid to holders of Shares consists solely of
cash or (ii) an Event of Default in which Counterparty is the Defaulting Party or a
Termination Event in which Counterparty is the Affected Party, which Event of Default or
Termination Event resulted from an event or events within Counterparty’s control. Upon such
Notice of Share Termination, the following provisions shall apply on the Scheduled Trading
Day immediately following the relevant merger date, Announcement Date, Early Termination
Date or date of cancellation or termination in respect of an Extraordinary Event, as
applicable:



	 	 	 

	Share Termination Alternative:

	 	Applicable and means that Dealer shall
deliver to Counterparty the Share
Termination Delivery Property on the date
on which the Payment Obligation would
otherwise be due pursuant to
“Consequences of Merger Events” above,
Section 12.7 or 12.9 of the Equity
Definitions or Section






13









 






	 	 	 

	 

	 	6(d)(ii) of the
Agreement, as applicable, or such later
date as the Calculation Agent may
reasonably determine (the “Share
Termination Payment Date”), in
satisfaction of the Payment Obligation.
	 
	 	 
	Share Termination Delivery 

Property:

	 	A number of Share Termination Delivery
Units, as calculated by the Calculation
Agent, equal to the Payment Obligation
divided by the Share Termination Unit
Price. The Calculation Agent shall
adjust the Share Termination Delivery
Property by replacing any fractional
portion of the aggregate amount of a
security therein with an amount of cash
equal to the value of such fractional
security based on the values used to
calculate the Share Termination Unit
Price.
	 
	 	 
	Share Termination Unit Price:

	 	The value of property contained in one
Share Termination Delivery Unit on the
date such Share Termination Delivery
Units are to be delivered as Share
Termination Delivery Property, as
determined by the Calculation Agent in
its discretion by commercially reasonable
means and notified by the Calculation
Agent to Dealer at the time of
notification of the Payment Obligation.
	 
	 	 
	Share Termination Delivery Unit:

	 	In the case of a Termination Event, Event
of Default, Delisting or Additional
Disruption Event, one Share or, in the
case of an Insolvency, Nationalization or
Merger Event, one Share or a unit
consisting of the number or amount of
each type of property received by a
holder of one Share (without
consideration of any requirement to pay
cash or other consideration in lieu of
fractional amounts of any securities) in
such Insolvency, Nationalization or
Merger Event, as applicable. If such
Insolvency, Nationalization or Merger
Event involves a choice of consideration
to be received by holders, such holder
shall be deemed to have elected to
receive the maximum possible amount of
cash.
	 
	 	 
	Failure to Deliver:

	 	Applicable
	 
	 	 
	Other applicable provisions:

	 	If Share Termination Alternative is
applicable, the provisions of Sections
9.8, 9.9, 9.10, 9.11 (except that the
Representation and Agreement contained in
Section 9.11 of the Equity Definitions
shall be modified by excluding any
representations therein relating to
restrictions, obligations, limitations or
requirements under applicable securities
laws arising as a result of the fact that
Counterparty is the issuer of the Shares
or any portion of the Share Termination
Delivery Units) and 9.12 of the Equity
Definitions will be applicable as if
“Physical Settlement” applied to the
Transaction, except that all references
to “Shares” shall be read as references
to “Share Termination Delivery Units.”






     (c) Disposition of Hedge Shares. Counterparty hereby agrees that if, in the good faith
reasonable judgment of Dealer based on the advice of outside counsel, any Shares (the “Hedge
Shares”) acquired by Dealer or any of its affiliates (collectively for the purposes of this
paragraph (c) only, “Dealer”) for the purpose of hedging its obligations pursuant to the
Transaction cannot be sold in the public market by Dealer without registration under the
Securities Act, Counterparty shall, at its election: (i) in order to allow Dealer to sell
the Hedge Shares in a registered offering, make available to Dealer an effective
registration statement under the Securities Act to cover the resale of such Hedge Shares and
(A) enter into an agreement, in form and substance reasonably satisfactory to Dealer,
substantially in the form of an underwriting agreement for a registered offering of a
similar size, (B) provide accountant’s “comfort” letters in customary form for registered
offerings of equity securities of a similar size, (C) provide disclosure opinions of
nationally recognized outside counsel to Counterparty reasonably acceptable to Dealer, (D)
provide other customary opinions, certificates and closing documents customary in form for
registered offerings of equity securities of a similar size and (E) afford Dealer a
reasonable opportunity to conduct a “due diligence” investigation with respect to
Counterparty customary in scope for underwritten offerings of equity securities of a similar
size; provided, however, that if Dealer, in its



14









 







reasonable judgment, is not satisfied with
access to due diligence materials, the results of its due diligence investigation, or the
procedures and documentation for the registered offering referred to above, then clause (ii)
or clause (iii) of this Section 8(c) shall apply at the election of Counterparty; (ii) in
order to allow Dealer to sell the Hedge Shares in a private placement, enter into a private
placement agreement substantially similar to private placement purchase agreements customary
for private placements of equity securities of a similar size, in form and substance
reasonably satisfactory to Dealer, including customary representations, covenants, blue sky
and other governmental filings and/or registrations, indemnities to Dealer, due diligence
rights (for Dealer or any designated buyer of the Hedge Shares from Dealer), opinions and
certificates and such other documentation as is customary for private placements agreements
of a similar size, all reasonably acceptable to Dealer (in which case, the Calculation Agent
shall make any adjustments to the terms of the Transaction that are necessary, in its
reasonable judgment, to compensate Dealer for any discount from the public market price of
the Shares incurred on the sale of Hedge Shares in a private placement); or (iii) purchase
the Hedge Shares from Dealer at the VWAP Price on such Exchange Business Days, and in the
amounts, requested by Dealer.



     (d) Amendment to Equity Definitions. The following amendment shall be made to the
Equity Definitions:



     Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from
the fourth line thereof the word “or” after the word “official” and inserting a comma
therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting
the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events
specified in Section 5(a)(vii) (1) through (9) of the ISDA Master Agreement with respect to
that Issuer.”



     (e) Repurchase and Conversion Rate Adjustment Notices. Counterparty shall, at least
five Scheduled Trading Days prior to effecting any repurchase of Shares or consummating or
otherwise executing or engaging in any transaction or event (other than a stock split,
reverse stock split or stock dividend) (a “Conversion Rate Adjustment Event”) that would
lead to an increase in the “Conversion Rate”, give Dealer a written notice of such
repurchase or Conversion Rate Adjustment Event (a “Repurchase Notice”) if, following such
repurchase or Conversion Rate Adjustment Event, the Notice Percentage as determined on the
date of such Repurchase Notice is (i) greater than 4.0% and (ii) greater by 0.5% than the
Notice Percentage included in the immediately preceding Repurchase Notice (or, in the case
of the first such Repurchase Notice, greater than the Notice Percentage as of the date hereof), and, if such repurchase or Conversion Rate
Adjustment Event, or the intention to effect the same, would constitute material non-public
information with respect to Counterparty or the Shares, Counterparty shall make public
disclosure thereof at or prior to delivery of such Repurchase Notice. The “Notice
Percentage” as of any day is the fraction, expressed as a percentage, the numerator of which
is the sum of (x) Number of Shares for the Transaction and (y) the “Number of Shares” as
defined in the Base Convertible Capped Call Transaction Confirmation and the denominator of
which is the number of Shares outstanding on such day. In the event that Counterparty fails
to provide Dealer with a Repurchase Notice on the day and in the manner specified in this
Section 8(e) then Counterparty agrees to indemnify and hold harmless Dealer, its affiliates
and their respective directors, officers, employees, agents and controlling persons (Dealer
and each such person being an “Indemnified Party”) from and against any and all losses
(including losses relating to the Dealer’s hedging activities as a consequence of becoming,
or of the risk of becoming, a Section 16 “insider”, including without limitation, any
forbearance from hedging activities or cessation of hedging activities and any losses in
connection therewith with respect to this Transaction), claims, damages and liabilities (or
actions in respect thereof), joint or several, to which such Indemnified Party may become
subject under applicable securities laws, including without limitation, Section 16 of the
Exchange Act or under any federal, state or local (including non-U.S.) law, regulation or
regulatory order, relating to or arising out of such failure. If for any reason the
foregoing indemnification is unavailable to any Indemnified Party or insufficient to hold
harmless any Indemnified Party, then Counterparty shall contribute, to the maximum extent
permitted by law, to the amount paid or payable by the Indemnified Party as a result of such
loss, claim, damage or liability. In addition, Counterparty will reimburse any Indemnified
Party for all expenses (including reasonable counsel fees and expenses) as they are incurred
(after notice to Counterparty) in connection with the investigation of, preparation for or
defense or settlement of any pending or threatened claim or any action, suit or proceeding
arising therefrom, whether or not such Indemnified Party is a party thereto and whether or
not such claim, action, suit or proceeding is initiated or brought by or on behalf of
Counterparty. This indemnity shall survive the completion of the Transaction contemplated
by this Confirmation and any assignment and delegation of the



15









 







Transaction made pursuant to
this Confirmation or the Agreement shall inure to the benefit of any permitted assignee of
Dealer.



     (f) Transfer and Assignment. Either party may transfer any of its rights or
obligations under the Transaction only with the prior written consent of the
non-transferring party, such consent not to be unreasonably withheld or delayed. For the
avoidance of doubt, (A) Dealer may condition its consent on any of the following, without
limitation: (i) the receipt by Dealer of opinions and documents reasonably satisfactory to
Dealer in connection with such assignment, (ii) such assignment being effected on terms
reasonably satisfactory to Dealer with respect to any legal and regulatory requirements
relevant to Dealer, and (iii) Counterparty continuing to be obligated to provide notices
hereunder relating to the Convertible Securities and continuing to be obligated with respect
to “Disposition of Hedge Shares” and “Repurchase and Conversion Rate Adjustment Notices”
above and (B) Counterparty may condition its consent on, without limitation, whether such
transfer or assignment would, in the sole discretion of the Counterparty, result in the
termination of the Transaction, or otherwise result in adverse consequences to Counterparty,
for U.S. federal income tax purposes. In addition, Dealer may transfer or assign without
any consent of Counterparty its rights and obligations hereunder and under the Agreement, in
whole or in part, to any of its affiliates which has (or whose guarantor has) credit quality
equivalent to Dealer; provided that Dealer shall provide Counterparty with five Scheduled
Trading Days’ prior notice of such assignment; and provided further that such transfer and
assignment would not, in the reasonable judgment of Counterparty, result in a termination of
the Transaction for U.S. federal income tax purposes. At any time at which any Excess
Ownership Position exists, if Dealer is unable to effect a transfer or assignment to a third
party in accordance with the requirements set forth above after using its commercially
reasonable efforts on pricing terms and within a time period reasonably acceptable to Dealer
such that an Excess Ownership Position no longer exists, Dealer may designate any Scheduled
Trading Day as an Early Termination Date with respect to a portion (the “Terminated
Portion”) of the Transaction, such that such Excess Ownership Position no longer exists. In
the event that Dealer so designates an Early Termination Date with respect to a portion of
the Transaction, a payment or delivery shall be made pursuant to Section 6 of the Agreement
and Section 8(b) of this Confirmation as if (i) an Early Termination Date had been
designated in respect of a Transaction having terms identical to the Terminated Portion of
the Transaction, (ii) Counterparty shall be the sole Affected Party with respect to such
partial termination and (iii) such portion of the Transaction shall be the only Terminated
Transaction. “Excess Ownership Position” means any of the following: (i) the Equity Percentage exceeds 4.5%, or (ii) Dealer or any “affiliate” or “associate” of
Dealer would own in excess of 13% of the outstanding Shares for purposes of Section 203 of
the Delaware General Corporation Law or (iii) Dealer, Dealer Group (as defined below) or any
person whose ownership position would be aggregated with that of Dealer or Dealer Group
(Dealer, Dealer Group or any such person, a “Dealer Person”) under any federal, state or
local (including non-U.S.) laws, regulations or regulatory orders applicable to ownership of
Shares (“Applicable Laws”), owns, beneficially owns, constructively owns, controls, holds
the power to vote or otherwise meets a relevant definition of ownership in excess of a
number of Shares equal to (x) the number of Shares that would give rise to reporting or
registration obligations or other requirements (including obtaining prior approval by a
state or federal regulator) of a Dealer Person under Applicable Laws and with respect to
which such requirements have not been met or the relevant approval has not been received or
that would give rise to any adverse consequences for a Dealer Person under the constitutive
documents of Counterparty, in each case minus (y) 0.5% of the number of Shares outstanding
on the date of determination. The “Equity Percentage” as of any day is the fraction,
expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer
and any of its affiliates or any other person subject to aggregation with Dealer, for
purposes of the “beneficial ownership” test under Section 13 of the Exchange Act, or of any
“group” (within the meaning of Section 13) of which Dealer is or may be deemed to be a part
(Dealer and any such affiliates, persons and groups, collectively, “Dealer Group”),
beneficially owns (within the meaning of Section 13 of the Exchange Act), without
duplication, on such day (or, to the extent that, as a result of a change in law, regulation
or interpretation after the date hereof, the equivalent calculation under Section 16 of the
Exchange Act and the rules and regulations thereunder results in a higher number, such
number) and (B) the denominator of which is the number of Shares outstanding on such day.



     (g) Staggered Settlement. If upon the advice of outside counsel with respect to
applicable legal and regulatory requirements, including any requirements relating to
Dealer’s Hedging Activities with respect to the Transaction, Dealer determines, in its
reasonable discretion, that it would not be practicable to deliver, or to



16









 







acquire Shares to
deliver, any or all of the Shares to be delivered by Dealer on a Settlement Date, Dealer
may, by notice to Counterparty on or prior to such Settlement Date (a “Nominal Settlement
Date”), elect to deliver the Shares on two or more dates (each, a “Staggered Settlement
Date”) or at two or more times on the Nominal Settlement Date as follows:




     (i) in such notice, Dealer will specify to Counterparty the related Staggered
Settlement Dates (each of which will be on or prior to such Nominal Settlement Date,
but not prior to the beginning of the related Settlement Averaging Period) or
delivery times and how it will allocate the Shares it is required to deliver under
“Delivery Obligation” (above) among the Staggered Settlement Dates or delivery times;
and




     (ii) the aggregate number of Shares that Dealer will deliver to Counterparty
hereunder on all such Staggered Settlement Dates and delivery times will equal the
number of Shares that Dealer would otherwise be required to deliver on such Nominal
Settlement Date.



     (h) Right to Extend. Dealer may postpone any Settlement Date, in whole or in part, or
extend the Settlement Averaging Period, such postponement or extension not to exceed 20
Scheduled Trading Days in the aggregate, in each case if the Calculation Agent determines
that such postponement or extension is reasonably necessary or appropriate to (i) preserve
Dealer’s hedging or hedge unwind activity hereunder in light of existing liquidity
conditions in the cash market, the stock loan market or any other relevant market (but only
if there is a material decrease in such liquidity conditions relative to the Trade Date) or
(ii) to enable Dealer to effect purchases of Shares in connection with its hedging, hedge
unwind or settlement activity hereunder in a manner that would, if Dealer were Counterparty
or an affiliated purchaser of Counterparty, be in compliance with applicable legal,
regulatory or self-regulatory requirements, or with related policies and procedures
applicable to Dealer. In connection with any Settlement Date that is postponed or any
Settlement Averaging Period that is extended pursuant to the immediately preceding sentence,
if Shares are to be delivered by Dealer to Counterparty on such postponed Settlement Date or
on the Settlement Date related to such extension to the Settlement Averaging Period and the
record date for any dividend or distribution on the Shares occurs during the period from,
and including, the original Settlement Date to, but excluding, such postponed or extended
Settlement Date, then on such postponed or extended Settlement Date, in addition to
delivering such Shares, Dealer shall pay or deliver, as the case may be, to Counterparty, the per Share amount
of such dividend or distribution multiplied by the number of postponed Shares to be
delivered.



     (i) Disclosure. Effective from the date of commencement of discussions concerning the
Transaction, Counterparty and each of its employees, representatives, or other agents may
disclose to any and all persons, without limitation of any kind, the tax treatment and tax
structure of the Transaction and all materials of any kind (including opinions or other tax
analyses) that are provided to Counterparty relating to such tax treatment and tax
structure.



     (j) Designation by Dealer. Notwithstanding any other provision in this Confirmation to
the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares
or other securities to or from Counterparty, Dealer may designate any of its affiliates to
purchase, sell, receive or deliver such Shares or other securities and otherwise to perform
Dealer’s obligations in respect of the Transaction and any such designee may assume such
obligations. Dealer shall be discharged of its obligations to Counterparty only to the
extent of any such performance.



     (k) No Netting and Set-off. Each party waives any and all rights it may have to set
off obligations arising under the Agreement and the Transaction against other obligations
between the parties, whether arising under any other agreement, applicable law or otherwise.



     (l) Equity Rights. Dealer acknowledges and agrees that this Confirmation is not
intended to convey to it rights with respect to the Transaction that are senior to the
claims of common stockholders in the event of Counterparty’s bankruptcy. For the avoidance
of doubt, the parties agree that the preceding sentence shall not apply at any time other
than during Counterparty’s bankruptcy to any claim arising as a result of a breach by
Counterparty of any of its obligations under this Confirmation or the Agreement. For the
avoidance of doubt,



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the parties acknowledge that this Confirmation is not secured by any
collateral that would otherwise secure the obligations of Counterparty herein under or
pursuant to any other agreement.



     (m) Counterparty’s Obligation to Pay Cancellation Amounts and Early Termination
Amounts. Dealer and Counterparty hereby agree that, notwithstanding anything to the
contrary herein or in the Agreement, following Dealer’s receipt of the Premium from
Counterparty on the Premium Payment Date, in the event that (a) an Early Termination Date
(whether as a result of an Event of Default or a Termination Event) occurs or is designated
with respect to such Transaction and, as a result, Counterparty owes to Dealer an Early
Termination Amount or (b) Counterparty owes to Dealer, pursuant to Section 12.7 or Section
12.9 of the Equity Definitions, a Cancellation Amount, in each case, such amount shall be
deemed to be zero. If Counterparty pays the Premium on the Premium Payment Date, then under
no circumstances shall Counterparty be required to pay any amount in addition to the Premium
with respect to the Transaction. For the avoidance of doubt, the preceding sentence shall
not be construed as limiting any damages that may be payable by Counterparty as a result of
a breach of or an indemnity under this Confirmation or the Agreement or any amount that may
be payable by Counterparty pursuant to clause (A)(I) of Section 8(a) of this Confirmation.



     (n) Early Unwind. In the event the sale by Counterparty of the Option Notes (as
defined in the Purchase Agreement) is not consummated with the Initial Purchasers pursuant
to the Purchase Agreement dated as of April 15, 2010, among the Counterparty, the Guarantors
and Merrill Lynch, Pierce, Fenner & Smith Incorporated as representative of the Initial
Purchasers party thereto (the “Initial Purchasers” and such agreement, the “Purchase
Agreement”) for any reason by the close of business in New York on the relevant Date of
Delivery (as defined in the Purchase Agreement) (or such later date as agreed upon by the
parties, which in no event shall be later than the date that is ten business days following
such date) (such Date of Delivery or such later date being the “Early Unwind Date”), the
Transaction shall automatically terminate (the “Early Unwind”), on the Early Unwind Date and
(i) the Transaction and all of the respective rights and obligations of Dealer and
Counterparty thereunder shall be cancelled and terminated and (ii) if such Early Unwind is
the result of a breach by Counterparty under the Purchase Agreement, Counterparty shall pay
to Dealer an amount in cash equal to the aggregate amount of all reasonable costs and
expenses incurred by Dealer in connection with the unwinding of Dealer’s hedging activities
in respect of the Transaction (including market losses incurred in reselling any Shares
purchased by Dealer or its affiliates in connection with such hedging activities). Following such termination, cancellation and payment, each party shall be
released and discharged by the other party from and agrees not to make any claim against the
other party with respect to any obligations or liabilities of either party arising out of
and to be performed in connection with the Transaction either prior to or after the Early
Unwind Date. Dealer and Counterparty represent and acknowledge to the other that upon an
Early Unwind and following the payment referred to above, if applicable, all obligations
with respect to the Transaction shall be deemed fully and finally discharged.



     (o) Waiver of Trial by Jury. EACH OF COUNTERPARTY AND DEALER HEREBY IRREVOCABLY WAIVES
(ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS
STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER
BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE
ACTIONS OF DEALER OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.



     (p) Governing Law; Jurisdiction. THIS CONFIRMATION AND ANY CLAIM, CONTROVERSY OR
DISPUTE ARISING UNDER OR RELATED TO THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF
THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE
LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.



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     Counterparty hereby agrees (a) to check this Confirmation carefully and immediately upon
receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm
that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the
agreement between Dealer and Counterparty with respect to the Transaction, by manually signing this
Confirmation or this page hereof as evidence of agreement to such terms and providing the other
information requested herein and immediately returning an executed copy to us.



	 	 	 	 	 
	 	Yours faithfully,



BANK OF AMERICA, N.A.

 	 
	 	By:  	/s/ Christopher A. Hutmaker 	 
	 	 	Name:  	Christopher A. Hutmaker	 
	 	 	Title:  	Managing Director 	 
	 




	 	 	 	 	 
	Agreed and Accepted By:



MGM MIRAGE

 	 	 
	By:  	/s/ William M. Scott IV	 	 
	 	Name:  	William M. Scott IV 	 	 
	 	Title:  	Senior Vice President, Deputy General Counsel	 	 
	 





Additional Capped Call Confirmation





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