Sample Business Contracts


Commitment Letter for Bridge Credit Facility - Bank of America and MGM Grand Inc.


                 [LETTERHEAD OF BANK OF AMERICA APPEARS HERE]



                                           May 13, 1996



Mr. Alex Yemenidjian
MGM Grand, Inc.
3799 Las Vegas Boulevard South
Las Vegas, Nevada 89109



Dear Alex:

     Bank of America National Trust and Savings Association is pleased to commit
to provide the $125,000,000 bridge credit facility (the "Bridge Facility") for
MGM Grand, Inc. (the "Company") described on the attached Summary of Bridge
Facility Terms and Conditions (the "Bridge Summary"), the terms and provisions
of which are incorporated herein by this reference.

     Together with proceeds of the proposed offering of common stock of the
Company, borrowings under the existing $60,000,000 credit facility maintained by
MGM Grand Hotel Finance Corp., and the Company's existing cash, the Bridge
Facility would be used to fund the approximately $523,000,000 deposit necessary
to defease the FMN's described in the Bridge Summary.

     Our commitment is subject to our receipt, concurrently with our issuance of
this letter, of commitments for the entire amount of the proposed $500,000,000
Senior Secured Reducing Revolving Credit Facilities (on the terms and conditions
set forth in the Summary of Terms and Conditions of even date herewith and our
separate commitment letter to you with respect thereto).  Our commitment is also
conditioned upon your acceptance of this letter by signing it and returning it
to us not later than close of business on May 14, 1996.

     This letter may not be disclosed to any person, or its existence referred
to in a communication to any such person, prior to such acceptance and payment.
This commitment will terminate if the $523,000,000 deposit to the FMN trustee
has not been made by August 31, 1996.
<PAGE>
 
     Our commitment is conditioned upon execution of mutually satisfactory
definitive loan documentation containing appropriate and customary
representations, warranties, covenants and events of default.  Our commitment is
also subject to the absence of any material and adverse change in the financial
condition, operations, assets or business of the Company and its subsidiaries,
laws or governmental regulations which are relevant to the transactions
contemplated, or the financial and credit markets disrupting the bank loan
syndication market generally.

     By executing this letter, you agree that you shall not solicit or accept
any other proposal or commitment to provide financing for the transactions
contemplated by the Bridge Summary during the period between the date of this
letter and December 5, 1996.

     By accepting this letter, the Company agrees that it shall pay on demand
all reasonable costs and expenses of BofA (including legal fees and
disbursements and the allocated costs of internal counsel) in connection with
the preparation of the Bridge Summary and the negotiation and documentation of
the Credit Documents and syndication of the Bridge Facility, whether or not the
transactions contemplated by the Bridge Summary are actually consummated.  In
addition, the Company shall defend and indemnify BofA and its officers,
directors, employees and agents (each, an "Indemnified Person"), against all
claims, damages, liabilities and expenses which may be incurred by or asserted
against any of them in connection with the transactions contemplated by this
letter and the Bridge Summary and for any reasonable legal or other expenses
incurred in connection with investigating, defending or participating in any
such loss, claim, damage, liability or action or other proceeding, whether
commenced or threatened, or in any way relating to the extension of the
financing contemplated by this letter and the Bridge Summary or from any use or
intended use of any of the proceeds thereof except, in the case of any
Indemnified Person, to the extent any such loss, claim, damage or liability
results from the gross negligence or willful misconduct of such Indemnified
Person.
<PAGE>
 
     Please sign this letter in the space provided below to accept this
commitments.  We look forward to a prompt closing of this transaction.


                    Sincerely,


                    BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
 
 
                    By: /s/William S. Newby
                        -------------------------------
                    William S. Newby, Managing Director


                    By: /s/Jon Varnell
                        -------------------------------
                    Jon Varnell, Managing Director



Accepted and agreed:

MGM GRAND, INC.

By: Alejandro Yemenidjian
   -----------------------
Title: Pres, COO, & CFO
      --------------------
<PAGE>
 
Confidential Draft                                                 May 13, 1996
                                MGM GRAND, INC.

                      $125,000,000 BRIDGE CREDIT FACILITY

                        Summary of Terms and Conditions
- ------------------------------------------------------------------------------


BORROWER:              MGM Grand, Inc.

BRIDGE FACILITY:       91 day term loan.

AMOUNT:                $125,000,000

LENDER:                Bank of America National Trust and Savings Association
                       ("BofA").

PURPOSE:               Together with the proceeds from the proposed issuance of
                       common stock of Borrower, borrowings of the entire
                       balance available under the existing $60,000,000 credit
                       facility maintained by MGM Grand Hotel Finance Corp.
                       ("Finance Corp.") and the Company's existing cash, to
                       fund an approximately $523,000,000 deposit necessary to
                       defease the $473,000,000 (face amount) of existing First
                       Mortgage Notes ("FMN's") issued by Finance Corp.

AVAILABILITY:          The Bridge Facility will become available concurrently
                       with the consummation of the equity offering and the
                       deposit of sufficient funds with the trustee for the
                       FMN's to successfully defease the FMN's.  The final
                       structure of the transaction in which the FMN's will be
                       defeased is to be negotiated, but must be acceptable to
                       BofA.

                       The availability of the Bridge Facility would also be
                       conditioned upon the execution and delivery of
                       substantially all loan documentation for the proposed
                       $500,000,000 Senior Secured Reducing Revolving Credit
                       Facilities (as described in the Summary of Terms and
                       Conditions of even date herewith (the "Takeout Summary")
                       delivered to Borrower by Bank of America.

MATURITY:              Earlier of successful defeasance of the FMN's and
                       December 4, 1996.

SECURITY:              Second priority pledge by the Borrower of the stock of
                       the MGM Grand Hotel, Inc. and Finance Corp., subject only
                       to the liens therein now held by the lenders under the
                       existing $60,000,000 Facility and the FMN's.


INTEREST RATE:         Base Rate or a single 90 day LIBOR loan at LIBOR plus
                       1.50%. "Base Rate" and "LIBOR" have the meanings set
                       forth in the Takeout Summary.

MGM Grand, Inc.                                            BankAmerica Corp.
                                      -1-
<PAGE>
 
Confidential Draft                                                 May 13, 1996


INTEREST PAYMENTS:     Interest will be payable at the end of each calendar
                       month.


UNDERWRITING AND
BREAKUP FEES:          As set forth in a letter agreement with BofA.

DOCUMENTATION:         The Bridge Facility will be subject to preparation,
                       execution, and delivery of a Loan Agreement and other
                       mutually acceptable loan documentation which will contain
                       the normal conditions precedent, representations and
                       warranties, covenants, events of default and other
                       provisions including, without limitation, those outlined
                       below.

COVENANTS:             As set forth in the Takeout Summary, except that No
                       repayments of the $60,000,000 Finance Corp. facility
                       during the term of the Bridge Facility would be
                       permitted.

CONDITIONS:            Successful consummation of the proposed offering of
                       common stock of Borrower yielding net proceeds to
                       Borrower of not less than $250,000,000.  Concurrent
                       equity contribution of not less than $350,000,000 to
                       Finance Corp.

                       Execution and delivery of substantially all documentation
                       for the Takeout Facility by all parties thereto, and the
                       satisfaction of all conditions precedent thereto, other
                                                                         -----
                       than successful defeasance of the FMN's, the absence of a
                       Default or Event of Default thereunder, and the receipt
                       by the lenders of the Takeout Facility of the guarantees
                       of MGM Grand Hotel, Inc. and MGM Grand Atlantic City and
                       their receipt of the Security described in the Takeout
                       Summary.

                       Concurrent deposit of funds to defease the FMN's with the
                       trustee pursuant to an irrevocable trust and security
                       agreement which is reasonably acceptable to BofA, but in
                       any event providing for the release of all security for
                       the FMN's upon the end of the 90 day period if no
                       intervening bankruptcy or insolvency of Borrower, MGM
                       Grand Hotel, Inc. or Finance Corp. has occurred.

                       Preparation, execution and delivery of loan documentation
                       in a form which is usual and customary for transactions
                       of a similar nature, including, without limitation, the
                       following, in form and substance satisfactory to BofA:

                       (A) all legal matters shall be satisfactory to the Banks,
                           including favorable legal opinions and no judgment,
                           order, injunction or other restraint shall exist, and
                           no litigation shall be pending or threatened, that in
                           the judgment of the Banks would prohibit or impose,
                           or result in the imposition of, materially adverse
                           conditions upon the financing contemplated hereby;

MGM Grand, Inc.                                            BankAmerica Corp.

                                      -2-
<PAGE>
 
Confidential Draft                                                 May 13, 1996


                       (B) receipt by Borrower, and continuing effectiveness, of
                           all licenses, regulatory approvals, governmental
                           authorizations, permits, etc., necessary to the
                           ongoing business as now conducted;

                       (C) execution and delivery of satisfactory closing
                           documentation;

                       (D) no material adverse change (i) in the financial
                           condition, operations, assets, or business of
                           Borrower or (ii) that would have a material adverse
                           effect on the rights or remedies of the BofA, or on
                           the ability of Borrower to perform its obligations
                           under the Loan Agreement and other loan documents.

REPORTING              As set forth in the Takeout Summary.
REQUIREMENTS:


EVENTS OF DEFAULT:     As set forth in the Takeout Summary - Cross Default to
                       Takeout Facility.

CLEAR MARKET:          Borrower shall agree that, except for the anticipated
                       equity offering, the Takeout Facility and subordinated
                       debt, from the date of this Summary of Terms and
                       Conditions through December 5, 1996 neither it nor any of
                       its subsidiaries will engage in any other material
                       financing transaction, or solicit interest in such a
                       transaction, without the consent of BofA.

TAXES:                 All payments will be made free and clear of any present
                       or future taxes, withholdings or other deductions
                       whatsoever (other than taxes imposed on the overall
                       income (whether gross or net) of a Bank by the
                       jurisdiction in which the Bank is organized, resident or
                       doing business).

MISCELLANEOUS:         Customary indemnity and yield protection (including risk-
                       based capital adequacy, increased costs and interest
                       period breakage indemnities), illegality and similar
                       provisions.

ASSIGNMENTS AND
PARTICIPATIONS:        As set forth in the Takeout Summary.

FEES AND EXPENSES:     Borrower shall pay all reasonable costs and expenses
                       (including without limitation, the allocated fees and
                       expenses of in-house counsel), incurred by BofA in the
                       enforcement and collection of obligations under the
                       Bridge Facility.

MGM Grand, Inc.                                            BankAmerica Corp.

                                      -3-
<PAGE>
 
Confidential Draft                                                 May 13, 1996


GOVERNING LAW:         State of Nevada.

This Summary is not meant to be, nor should it be construed as, an attempt to
define all of the terms and conditions of the transaction contemplated hereby,
nor is it intended to reflect specific document phrasing that will exist in the
Loan Agreement.  This Summary is intended only to outline the basic points of
business understanding around which a Loan Agreement can be structured.

MGM Grand, Inc.                                            BankAmerica Corp.
                                      -4-

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