EMPLOYMENT AGREEMENT


This Employment Agreement ("Agreement") is entered into on 1/16/98, by and 
between MGM GRAND, INC. a Delaware corporation ("Employer"), and James Murren, 
("Employee")

1.   Employment.  Employer hereby employs Employee, and Employee hereby accepts
     ----------
     employment by the Employer, as Employer's Exec., VP and CFO (which title
     may be changed by Employer in its sole discretion) to perform such
     executive, managerial or administrative duties as Employer may specify from
     time to time. In construing the provisions of this Agreement, "Employer"
     shall include all of Employer's subsidiary, parent and affiliated
     corporations and entities.

2.   Term.  This Agreement shall commence on 1/16, 1998, and continue for a
     ----
     period of four (4) years until it terminates on 1/16, 2002 ("Specified 
     Term").

3.   Compensation.  Employee shall receive a minimum annual salary of $375,000, 
     ------------
     effective 1/16, 1998. Employee shall also be eligible to receive fringe
     benefits commensurate with Employer's other employees in comparable
     executive positions, and reimbursement for all reasonable business and
     travel expenses incurred by Employee in performing the duties hereunder,
     payable in accordance with Employer's customary practices. Employee's
     performance may be reviewed periodically. Employee is eligible for
     consideration for a discretionary raise, annual bonus and/or promotion by
     Employer in its sole and absolute discretion.

4.   Extent of Services.  The Employee agrees that the duties and services to be
     ------------------
     performed by Employee shall be performed exclusively for Employer. Employee
     further agrees to perform such duties in an efficient, trustworthy and
     businesslike manner. The Employee agrees not to render to others any
     service of any kind whether or not for compensation, or to engage in any
     other business activity whether or not for compensation, that is similar to
     or conflicts with the performance of Employee's duties under this
     Agreement, without the approval of the Executive Committee of the Board of
     Directors of MGM Grand, Inc.

5.   Policies and Procedures.  In addition to the terms herein, Employee agrees 
     -----------------------
     to be bound by Employer's policies and procedures as they may be amended by
     Employer from time to time. In the event the terms in the Agreement
     conflict with Employer's policies and procedures, the terms herein shall
     take precedence. Employer recognizes that it has a responsibility to see
     that its employees understand the adverse effects that problem gambling and
     underage gambling can have on individuals and the gaming industry as a
     whole. Employee acknowledges having read Employer's policies, procedures
     and manuals and agrees to abide by the same, including but not limited to
     Employer's policy of prohibiting underage gaming and supporting programs to
     treat compulsive gambling.

6.   Licensing Requirements.  Employee acknowledges that Employer is engaged in 
     ----------------------
     a business that is or may be subject to and exists because of privileged
     licenses issued by governmental authorities in Nevada, Australia, New
     Jersey and other jurisdictions in which Employer is engaged or has applied
     or during the Specified Term may apply to engage in the gaming business. If
     requested to do so by Employer, Employee shall apply for and obtain any
     license, qualification, clearance or the like which shall be requested or
     required of Employee by any regulatory authority having jurisdiction over
     Employer. If Employee fails to satisfy such requirement, or if Employer is
     directed to cease business

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<PAGE>
      with Employee by any such authority, or if Employer shall determine, in
      Employer's sole and exclusive judgment, that Employee was, is or might be
      involved in, or is about to be involved in, any activity, relationship(s)
      or circumstance which could or does jeopardize Employer's business,
      reputation or such licenses, or if any such license is threatened to be,
      or is, denied, curtailed, suspended or revoked, this Agreement may be
      terminated by Employer and the parties' obligations and responsibilities
      shall be determined by the provisions of Paragraph 10(a).
      
7.    Additional Consideration.  Employee has received as consideration for this
      ------------------------
      Agreement, in addition to the Compensation stated in Paragraph 3 above, 
      the sum of  $30,000. Employee represents and warrants that such  
                  ------- 
      consideration is reasonable, adequate and sufficient for Employee's
      agreement to the terms contained herein, including but not limited to the
      undertakings stated in Paragraphs 4, 6 and 8.

8.    Restrictive Covenants.
      ---------------------

      a.     Competition.   Employee acknowledges that, in the course of 
             -----------
             Employee's responsibilities hereunder, Employee will form
             relationships and become acquainted with certain confidential and
             proprietary information as further defined in Paragraph 8 (b).
             Employee further acknowledges that such relationships and
             information are valuable to the Employer and that the restrictions
             on future employment, if any, are reasonably necessary in order for
             Employer to remain competitive in the gaming industry. In
             consideration for the Compensation and Additional Consideration
             hereunder, and in recognition of Employer's heightened need for
             protection from abuse of relationships formed or information
             garnered before and during the Specified Term of the Employee's
             employment hereunder, Employee covenants and agrees that, except as
             set forth in subparagraphs 10(b)(ii)[b], 10(e)(v)[ii] and Paragraph
             10(c), in the event Employee is not employed by Employer for the
             entire Specified Term, then for the twelve (12) month period
             immediately following separation from active employment, or for
             such shorter period remaining in the Specified Term should Employee
             separate from active employment with less than twelve (12) months
             remaining in the Specified Term (the "Restrictive Period"),
             Employee shall not directly or indirectly be employed by, provide
             consultation or other services to, engage in, participate in or
             otherwise be connected in any way with any firm, person,
             corporation or other entity which is either directly, indirectly or
             through an affiliated company, engaged in non-restricted gaming in
             the State of Nevada, or in or within a 150 mile radius of any other
             jurisdiction in which Employer during the Restrictive Period is
             operating or has applied for a gaming license ("Competitor"). The
             covenants under this Paragraph include but are not limited to
             Employee's covenant not to:

             i.     Make known to any third party the names and addresses of any
                    of the customers of the Employer, or any other information
                    pertaining to those customers.

             ii.    Call on, solicit and/or take away, or attempt to call on,
                    solicit and/or take away, any of the customers of the
                    Employer, either for Employee's own account or for any third
                    party.

             iii.   Call on, solicit and/or take away, any potential or
                    prospective customer of the Employer, on whom the Employee
                    called or with whom Employee became acquainted during
                    employment (either before or during the


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<PAGE>
 
                Specified Term) by the Employer, either for Employee's own 
                account or for any third party.

         iv.    Approach or solicit any employee of the Employer with a view
                towards enticing such employee to leave the employ of the
                Employer to work for the Employee or for any third party, or
                hire any employee of the Employer, without the prior written
                consent of the Employer, such consent to be within Employer's
                sole discretion.

   b.    Confidentiality. Employee further covenants and agrees that Employee
         ---------------
         shall not at any time during the Specified Term or thereafter, without
         Employer's prior written consent, disclose to any other person or
         business entities any trade secret (as that term is defined on Exhibit
         A attached hereto) proprietary or other confidential information
         concerning Employer, including without limitation, Employer's customers
         and its casino, hotel and marketing practices, procedures, management
         policies or any other information regarding the Employer which is not
         already and generally known to the public. Employee further covenants
         and agrees that Employee shall not at any time during the Specified
         Term, or thereafter, without the Employer's prior written consent,
         utilize any such trade secrets, proprietary or confidential information
         in any way, including communications with or contact with any such
         customer other than in connection with employment hereunder. Not by way
         of limitation but by way of illustration, Employee agrees that such
         trade secrets, proprietary or confidential information specifically
         include but are not limited to those documents and reports set forth on
         Exhibit B.


   c.    Employer's Property. Employee hereby confirms that such trade secrets,
         -------------------
         proprietary or confidential information and all information concerning
         customers who utilize the goods, services or facilities of the MGM
         Grand Hotel/Casino and any other hotel and/or casino owned, operated or
         managed by Employer constitute Employer's exclusive property
         (regardless of whether Employee possessed or claims to have possessed
         such information prior to the date hereof). Employee agrees that upon
         termination of active employment, Employee shall promptly return to the
         Employer all notes, notebooks, memoranda, computer disks, and any
         other similar repositories of information (regardless of whether
         Employee possessed such information prior to the date hereof)
         containing or relating in any way to the trade or business secrets or
         proprietary and confidential information of the Employer, including but
         not limited to the documents referred to in Paragraph 8(b). Such
         repositories of information also include but are not limited to any so-
         called personal files or other personal data compilations in any form,
         which in any manner contain any trade secrets or proprietary or
         confidential information of the Employer.

          
   d.    Notice to Employer. Employee agrees to notify Employer immediately of
         ------------------
         any employers for whom Employee works during the Specified Term or
         within the Restrictive Period. Employee further agrees to promptly
         notify Employer, during Employee's employment with Employer, of any
         contacts made by non-restricted gaming licensees which concern or
         relate to an offer of future employment (or consulting services) to 
         Employee.

9. Representations.  Employee hereby represents, warrants and agrees with 
   ---------------
   Employer that:
 
   a.   The covenants and agreements contained in Paragraphs 4 and 8 above are


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<PAGE>
               reasonable in their geographic scope, duration and content; the
               Employer's agreement to employ the Employee and a portion of the
               compensation and consideration to be paid to Employee under
               Paragraphs 3 and 7 hereof, are in partial consideration for such
               covenants; the Employee shall not raise any issue of the
               reasonableness of the geographic scope, duration or content of
               such covenants in any proceeding to enforce such covenants; and
               such covenants shall survive the termination of this Agreement,
               in accordance with its terms;

        b.     The enforcement of any remedy under this Agreement will not
               prevent Employee from earning a livelihood, because Employee's
               past work history and abilities are such that Employee can
               reasonably expect to find work in other areas and lines of
               business;

        c.     The covenants and undertakings stated in Paragraphs 4, 6 and 8
               above are essential for the Employer's reasonable protection; and

        d.     Employer has reasonably relied on these representations, 
               warranties and agreements by Employee.

        Additionally, the Employee agrees that in the event of Employee's breach
        of any covenants set forth in Paragraphs 4 and 8 above, the Employer may
        seek to enforce such covenants through any equitable remedy, including
        specific performance or injunction, without waiving any claim for
        damages. In any such event, the Employee waives any claim that the
        Employer has an adequate remedy at law.
 
10.     Termination.
        -----------
       
        a.     This Agreement may be terminated by Employer at any time during
               the Specified Term hereof for good cause. Upon any such
               termination, Employer shall have no further liability or
               obligations whatsoever to Employee hereunder except as provided
               under 10(a)(1)[a] and 10(a)(1)[b] and except that Employee shall
               be entitled to receive so much of the stock from the Executive
               Stock Option Plan as had been vested but unexercised as of the
               date of termination upon compliance by the Employee with all the
               terms and conditions required to exercise such options. Good
               cause shall be defined as:

               i.     Employee's death or disability, which is hereby defined to
                      include incapacity for medical reasons certified to by a
                      licensed physician which precludes the Employee from
                      performing the essential functions of Employee's duties
                      hereunder for a substantially consecutive period of six
                      (6) months or more;

                      [a]   In the event of Employee's death during the term of
                            this Agreement, Employee's beneficiary (as
                            designated by Employee on the Employer's benefit
                            records) shall be entitled to receive Employee's
                            salary for a three (3) month period following
                            Employee's death, such amount to be paid at regular
                            payroll intervals.

                      [b]   In the event that this Agreement is terminated by
                            Employer due to Employee's disability, as provided
                            under subparagraph 10(a)(i), Employer shall pay to
                            Employee an amount equal to Employee's


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<PAGE>

<PAGE>
 
                         salary for an additional period of three (3) months
                         such amount to be paid at regular payroll intervals,
                         net of payments received by Employee from any Short
                         Term Disability Policy which is either self-insured by
                         Employer or the premiums of which were paid by
                         Employer.

               ii.   Employee's failure to abide by Employer's policies and
                     procedures, misconduct, insubordination, inattention to
                     Employer's business, failure to perform the duties required
                     of Employee up to the standards established by the
                     Employer's Board of Directors, or other material breach of
                     this Agreement; or

              iii.   Employee's failure or inability to satisfy the requirements
         stated in Paragraph 6 above.

         b.    Except as set forth in subparagraph 10(e)(iv), this Agreement may
               be terminated by Employer at any time during the Specified Term
               hereof, for any or no cause deemed sufficient by Employer upon
               written notice to Employee. Upon such termination, as its sole
               liability to Employee, Employer shall:

               i.    Treat Employee as an inactive employee, pay Employee's 
                     salary and continue Employee's benefits (excluding
                     eligibility for flex time, discretionary bonus and new
                     stock option grants, but including the continued vesting of
                     previously granted stock options, if any, for a period of
                     up to twelve (12) months from the date Employee is in an
                     inactive employee status, if Employee remains in such
                     inactive status for such period) for the period remaining
                     in the Specified Term; and

              ii.    Provide for Employee to receive so much stock from the 
                     Executive Stock Option Plan as had been vested but
                     unexercised as of the date of termination of Employee's
                     inactive employee status upon compliance by the Employee
                     with all the terms and conditions required to exercise such
                     options.

     Employee shall continue to be bound by the restrictions in Paragraph 8 
     above, as modified by subparagraph 10(f).

     Notwithstanding anything herein to the contrary:

                     [a]  While Employee is in an inactive status Employee may
                          be employed by or provide consultation services to a
                          non-Competitor of Employer, provided that Employer
                          shall be entitled to offset the salary being paid by
                          Employer during the Specified Term by the compensation
                          and/or consultant's fee being paid to Employee by the
                          non-Competitor of Employer, and provided further, that
                          Employer shall not be required to continue to provide
                          benefits from and after the time that Employee is
                          entitled to receive benefits from the non-Competitor
                          of Employer; and

                     [b]  At any time after the end of the Restricted Period, if
                          the Employee is in an inactive status, Employee may
                          notify Employer in writing that Employee desires to
                          terminate Employee's inactive status and immediately
                          thereafter Employer shall have no further liability or

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<PAGE>
 
               obligations to Employee hereunder, except that Employee shall be
               entitled to receive so much stock from the Executive Stock Option
               Plan as is vested but unexercised as of the date of termination
               of Employee's inactive status upon compliance by the Employee
               with all the terms and conditions required to exercise such
               options.

      For clarification, upon a Change of Control (as described in Paragraph
      10(c), below), Employer may no longer terminate this Agreement pursuant to
      this Paragraph 10(b).

c.    Employee may terminate this Agreement for good cause. For purposes of this
      Paragraph 10(c), good cause shall mean:

               i.    the failure of Employer to pay Employee any compensation
                     when due, save and except a "Disputed Claim" to
                     compensation; or

               ii.   material reduction in the scope of duties or
                     responsibilities of Employee or any reduction in Employee's
                     salary save and except a "Disputed Claim".

      For any termination under this Paragraph 10(c), Employee shall give
      Employer thirty (30) days advance written notice specifying the facts and
      circumstances of Employer's breach. During such thirty (30) day period,
      Employer may either cure the breach or declare that a dispute exists with
      the breach claimed, in either of which case this Agreement continues in
      full force until the dispute is resolved in accordance with Paragraph 11.
      As a result of any termination under this Paragraph 10(c), Employee shall
      be entitled to receive so much of the stock from the Executive Stock
      Option Plan as had been vested but unexercised as of the date of
      termination, upon compliance by the Employee with all the terms and
      conditions required to exercise such option. Employee shall have no
      further claim against Employer arising out of such breach.

d.    Employee shall also have the right to terminate Employee's employment
      without cause upon thirty (30) days advance written notice to Employer.
      Upon any such termination Employer shall have no further liability or
      obligations whatsoever to Employee hereunder, except that Employee shall
      be entitled to receive so much of the stock from the Executive Stock
      Option Plan as had been vested but unexercised as of the date of
      termination, upon compliance by the Employee with all the terms and
      conditions required to exercise such option. Upon any such termination,
      Employee shall be subject to the undertakings contained in Paragraph 8.

e.    In the event that there is a change in control of MGM Grand, Inc.
      ("Parent"), if such change of control is a result of a sale or exchange of
      outstanding common stock of Parent to a third party, and as a result
      thereof the ownership by Kirk Kerkorian, Tracinda Corporation and/or their
      affiliates of the voting stock of the acquiring or surviving entity (after
      completion of the transactions set forth in the sale or exchange agreement
      documents, including without limitation subsequent stock buybacks
      contemplated in such transactions), represents in the aggregate less than
      twenty percent (20%) of the voting power of the voting stock of such
      entity, as distinguished from a change in control resulting from the
      issuance of Treasury

                                       6



 





<PAGE>
 
     shares or from any other transaction ("Change of Control"), then upon the
     effective date of the Change of Control ("Effective Date"):

     i.     All of Employee's unvested stock options shall become fully vested,
            provided that Employee shall have the right to elect (by notifying
            the Employer in writing as set forth on Exhibit C) that all or any
            portion of Employee's unvested stock options shall not become fully
            vested upon a Change of Control.

     ii.    If the Change of Control results from an exchange of outstanding
            common stock as a result of which the Common Stock of Parent is no
            longer publicly held, then upon the Effective Date of the Change of
            Control all options held by Employee to purchase common stock of
            Parent shall be exercisable at the time or times they would
            otherwise have been exercisable for the consideration (cash, stock
            or otherwise) which the holders of Parent common stock received in
            such exchange. For example, if immediately prior to the Effective
            Date, Employee has options to acquire 5,000 shares of Parent's
            common stock and the exchange of stock is one share of common stock
            of Parent for two shares of common stock of the acquiring entity,
            then Employee's options shall be converted into options to acquire,
            upon payment of the exercise price, 10,000 shares of the acquiring
            entity's common stock.

     iii.   If the Change of Control results form a sale of Parent's outstanding
            common stock for cash with the result that Parent's common stock is
            no longer publicly held, then upon the Effective Date all options
            held by Employee to purchase common stock of Parent shall be
            exercisable at the time or times they would otherwise have been
            exercisable for cash equal to the difference between the price per
            share of common stock paid by the acquiring entity for Parent's
            shares of common stock ("Purchase Price") and the price per share at
            which the options were granted ("Strike Price"). For example, if
            immediately prior to the Effective Date, Employee has options to
            acquire 2,000 shares of Parent common stock at a Strike Price of
            $35, and the Purchase Price was $40, then upon the vesting of such
            options Employee would be entitled to receive $10,000 in full
            satisfaction of such options (2,000 shares times $5 per share).

     iv.    Employer may terminate the Agreement only for good cause pursuant to
            Paragraph 10(a) or pursuant to subparagraph 10(e)(v). Employee may
            terminate the Agreement only for good cause pursuant to Paragraph
            10(c) or pursuant to Paragraph 10(d). and

      v.    Employer may terminate this Agreement for any or no cause upon
            written notice to Employee. In the event of a termination hereunder,
            as its sole liability to Employee, Employer shall:

            [a]   Treat Employee as an inactive employee, pay Employee's salary,
                  continue Employee's benefits (excluding eligibility for flex
                  time, discretionary bonus and new stock option grants) and
                  comply with the provisions of subparagraphs 10(e)(ii) and
                  10(e)(iii) for the remainder of the Specified Term.

Employee shall continue to be bound by the restrictions in Paragraph 8 above.

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<PAGE>
 
Notwithstanding anything herein to the contrary:

               [i]   While Employee is in an inactive status Employee may be 
                     employed by or provide consultation services to a non-
                     Competitor of Employer, provided that Employer shall be
                     entitled to offset the salary being paid by Employer during
                     the Specified Term by the compensation and/or consultant's
                     fee being paid to Employee by the non-Competitor of
                     Employer, and provided further, that Employer shall not be
                     required to continue to provide benefits from and after the
                     time that Employee is entitled to receive benefits from the
                     non-Competitor of Employer; and

               [ii]  At any time after the end of the Restrictive Period, if the
                     Employee is in an inactive status, Employee may be employed
                     by or provide consultation services to a Competitor of
                     Employer, provided that Employer shall be entitled to
                     offset the salary being paid by Employer during the
                     Specified Term by the compensation and/or consultant's fee
                     being paid to Employee by the Competitor of Employer, and
                     provided further, that Employer shall not be required to
                     continue to provide benefits from and after the time that
                     Employee is entitled to receive benefits from the
                     Competitor of Employer, and provided further that the
                     obligations and restrictions on Employee which are set
                     forth in Paragraphs 8(b) and (c) shall still apply.

          f.  Notwithstanding anything contained in this Agreement to the 
              contrary, the undertakings contained in Paragraph 8 shall survive
              a termination of the Agreement or of the Employee's employment,
              regardless of the reason for such termination, except where
              termination occurs pursuant to subparagraph 10(b)(ii)[b] or
              Paragraph 10(c). In the event the Agreement is terminated pursuant
              to subparagraph 10(b)(ii)[b] the restriction stated in Paragraph
              8(a) on Employee accepting employment elsewhere shall not apply;
              however, the obligations and restrictions set forth in Paragraphs
              8(b) and (c) shall still apply. For a termination under Paragraph
              10(c), the restriction stated in Paragraph 8(a) on Employee
              accepting employment elsewhere shall not apply except that the
              restrictions under subparagraphs 8(a)(i) - (iv) and Paragraphs
              8(b) -(d) shall still apply.

11.  Disputed Claim/Arbitration  A "Disputed Claim" occurs when Employee 
     --------------------------
     maintains pursuant to Paragraph 10(c) that Employer has breached its duty
     to Employee and Employer has denied such breach. In such event, the
     Disputed Claim shall be resolved by arbitration administered by the
     American Arbitration Association under its National Rules for the
     Resolution of Employment Disputes. Any arbitration under this paragraph
     shall take place in Las Vegas, Nevada. Until the arbitration process is
     finally resolved in the Employee's favor and Employer fails to satisfy such
     award within thirty (30) days of its entry, no "for good cause" termination
     within the meaning of Paragraph 10(c) exists with respect to Employer's
     breach of a Disputed Claim. Nothing herein shall preclude or prohibit
     Employer or Employee from invoking the provisions of Paragraph 10(b), or of
     Employer seeking or obtaining injunctive or other equitable relief,
     provided that upon a Change of Control (as described in Paragraph 10(c),
     above, Employer may no longer invoke the provisions of Paragraph 10(b), but
     may invoke the provisions of subparagraph 10(e)(v).

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<PAGE>
 
12.     Severability.   If any provision hereof is unenforceable, illegal, or 
        ------------  
        invalid for any reason whatsoever, such fact shall not affect the
        remaining provisions hereof, except in the event a law or court
        decision, whether on application for declaration, or preliminary
        injunction or upon final judgment, declares one or more of the
        provisions of this Agreement that impose restrictions on Employee
        unenforceable or invalid because of the geographic scope or time
        duration of such restriction. In such event, Employer shall have the
        option:
        
                        (A)     To deem the invalidated restrictions
                        retroactively modified to provide for the maximum
                        geographic scope and time duration which would make such
                        provisions enforceable and valid; or

                        (B)     To terminate this Agreement pursuant to
                        Paragraph 12, in which event neither party shall have
                        any further obligation to the other, except that
                        Employee still shall be subject to the restrictions
                        contained in Paragraphs 8(b) and (c).

                        Exercise of any of these options shall not affect
                        Employer's right to seek damages or such additional
                        relief as may be allowed by law in respect to any
                        breach by Employee of the enforceable provisions of
                        this Agreement.

13.     Attorneys' Fees.   In the event suit is brought to enforce, or to     
        --------------- 
        recover damages suffered as a result of breach of this Agreement the
        prevailing party shall be entitled to recover its reasonable attorneys'
        fees and costs of suit.

14.     No Waiver of Breach or Remedies.   No failure or delay on the part of 
        -------------------------------
        Employer or Employee in exercising any right, power or remedy hereunder
        shall operate as a waiver thereof nor shall any single or partial
        exercise of any such right, power or remedy preclude any other or
        further exercise thereof or the exercise of any other right, power or
        remedy hereunder. The remedies herein provided are cumulative and not
        exclusive of any remedies provided by law.

15.     Amendment or Modification.   No amendment, modification, termination or 
        -------------------------
        waiver of any provision of this Agreement shall be effective unless the
        same shall be in writing and signed by the Employer's Chairman of the
        Board of Directors, and Employee, nor consent to any departure by the
        Employee from any of the terms of this Agreement shall be effective
        unless the same is signed by the Employer's Chairman of the Board of
        Directors. Any such waiver or consent shall be effective only in the
        specific instance and for the specific purpose for which given.

16.     Governing Law.   The laws of the State of Nevada shall govern the 
        -------------
        validity, construction and interpretation of this Agreement, and except
        for Dispute Claims, the courts of the State of Nevada shall have
        exclusive jurisdiction over any claim with respect to this Agreement.

17.     Number and Gender.   Where the context of this Agreement requires the 
        -----------------
        singular shall mean the plural and vice versa and references to males
        shall apply equally to females and vice versa.

18.     Headings.   The headings in this Agreement have been included solely for
        --------
        convenience of reference and shall not be considered in the
        interpretation or construction of this Agreement.

19.     Assignment.   This Agreement is personal to Employee and may not be 
        ----------
        assigned.


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<PAGE>
 
20.   Successors and Assigns.  This Agreement shall be binding upon the 
      ----------------------
      successors and assigns of Employer.

21.   Prior Agreements. This Agreement shall supersede and replace any and all
      ----------------
      other employment agreements which may have been entered into by and
      between the parties, including, but not limited to that certain letter
      agreement dated     N/A     . Any such prior employment agreements shall
                      ------------
      be of no force and effect.

      IN WITNESS WHEREOF, Employer and Employee have entered into this Agreement
in Las Vegas, Nevada, on      1/16     , 1998.
                         --------------

EMPLOYEE                                          EMPLOYER - MGM GRAND, INC.

/s/ James Murren                                  /s/ Alejandro Yemenidjian
------------------------------                    ------------------------------

------------------------------                    Title:  President & COO
Cast Number                                              -----------------------


                                      10
<PAGE>
 
                                   EXHIBIT A

     Trade secret means information, including a formula, pattern, compilation, 
program, device, method, technique or process, that derives economic value, 
present or potential, from not being generally known to, and not being readily 
ascertainable by proper means by, other persons who can obtain any economic 
value from its disclosure or use.

                                      11
<PAGE>
 
                                   EXHIBIT B

           NAME OF REPORT                         GENERATED BY
           --------------                         ------------
Including, but not limited to:

Baccarat Pit Discrepancy Report              Casino Marketing Analyst
Commission Summary Report                    Casino Marketing Analyst
Customer W/L Discrepancy Report              Casino Marketing Analyst
Int'l Marketing Detailed Budget Summaries    Casino Marketing Analyst
Arrival Report                               International Marketing
Departure Report                             International Marketing
Daily Gaming Report                          Casino Audit
Department Financial Statement               Finance
$10K Over High Action Play Report            Customer Analysis Dept.
$50K Over High Action Play Report            Customer Analysis Dept.
International Market Segment Report          Customer Analysis Dept.
Collection Aging Report(s)                   Collection Department
Accounts Receivable Aging                    Finance
Marketing Report                             Finance
Daily Player Action Report                   Casino Operations

                                      12
<PAGE>
 
                                   EXHIBIT C

                                                         , 1997
                                            -------------


Dear               :
     --------------

      This letter will supplement the employment agreement, dated 
                                                                  ----------,
between you and MGM Grand, Inc. (the "Agreement").  Notwithstanding anything 
contained in the Agreement to the contrary, if you so elect, all or any portion 
of your unvested stock options shall not become fully vested upon a Change of 
Control (as defined in the Agreement) of MGM Grand, Inc.  Any such election 
shall be effective upon written notice to MGM Grand, Inc. at or prior to the 
Effective Date (as defined in the Agreement) of any such Change of Control.

      Except as specifically modified hereby, the terms and conditions of the 
Agreement shall remain in full force and effect.

                                            Sincerely,

                                            MGM GRAND, INC.



                                            By: 
                                               -------------------------------
                                                J. Terrence Lanni

AGREED TO AND ACKNOWLEDGED


                                            Dated:                 , 1997
---------------------------------                  ----------------


                                      13

Source: OneCLE Business Contracts.