BALLYS PARK PLACE INC, S-1/A, 1994-02-14

BALLYS PARK PLACE INC
S-1/A, 1994-02-14
MISCELLANEOUS AMUSEMENT & RECREATION

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<PAGE> 1
This filing is being resubmitted because the core document, "S-1/A", was
inadvertently left out of the filing, as filed 11-February 1994.

*****************************************************************************
* *
* AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 11, 1994 *
* *
*****************************************************************************

REGISTRATION NO. 33-51765

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 1

FORM S-1
REGISTRATION STATEMENT
UNDER

THE SECURITIES ACT OF 1933
------------------------

BALLY'S PARK PLACE FUNDING, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------

<TABLE>
<S> <C> <C>
Delaware 7993 22-510861
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION)
</TABLE>

------------------------
PARK PLACE AND THE BOARDWALK
Atlantic City, New Jersey 08401
(609) 340-2000

(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
------------------------
BALLY'S PARK PLACE, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------

<TABLE>
<S> <C> <C>
Delaware 7993 22-2264974
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION)
</TABLE>

PARK PLACE AND THE BOARDWALK
Atlantic City, New Jersey 08401
(609) 340-2000

(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)

DENNIS P. VENUTI
Park Place and The Boardwalk
Atlantic City, New Jersey 08401
(609) 340-2000

(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER OF AGENT FOR SERVICE)

COPIES TO:

LEE S. HILLMAN
8700 West Bryn Mawr Avenue
Chicago, Illinois 60631
(312) 399-1300

IRV BERLINER
Benesch, Friedlander,
Coplan & Aronoff
1100 Citizens Building
850 Euclid Avenue
Cleveland, Ohio 44114
(216) 363-4500

PHYLLIS G. KORFF
STACY J. KANTER
Skadden, Arps, Slate,
Meagher & Flom
919 Third Avenue
New York, New York 10022
(212) 735-3000

------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
------------------------
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM
TITLE OF EACH CLASS PROPOSED MAXIMUM AGGREGATE AMOUNT OF
OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER UNIT PRICE FEE(2)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
% First Mortgage Notes
of Bally's Park Place
Funding, Inc............. $425,000,000 $1,000 $425,000,000(1) $146,552
- ---------------------------------------------------------------------------------------------------------
Guaranty of Bally's Park
Place, Inc............... $425,000,000 -- -- None
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee.

(2) A Registration Fee of $131,035 was paid on December 30, 1993 in connection
with the original filing of the Registration Statement.

------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

BALLY'S PARK PLACE FUNDING, INC.

CROSS REFERENCE SHEET

PURSUANT TO ITEM 501(B) OF REGULATION S-K

<TABLE>
<CAPTION>
FORM S-1 ITEM NUMBER AND HEADING CAPTION OR LOCATION IN PROSPECTUS
----------------------------------------------- ----------------------------------------
<C> <S> <C>
1. Forepart of Registration Statement and Outside Forepart of the Registration Statement;
Front Cover Page of Prospectus Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of Inside Front Cover Page of Prospectus;
Prospectus Outside Back Cover Page of Prospectus
3. Summary Information, Risk Factors and Ratio of Prospectus Summary; Summary Financial
Earnings to Fixed Charges Data; Investment Considerations
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Outside Front Cover Page of Prospectus;
Underwriting
6. Dilution Not Applicable
7. Selling Security Holders Not Applicable
8. Plan of Distribution Outside Front Cover Page of Prospectus;
Underwriting
9. Description of Securities to be Registered Description of the Notes
10. Interest of Named Experts and Counsel Legal Matters
11. Information with Respect to the Registrants Outside Front Cover Page of Prospectus;
Available Information; Prospectus
Summary; Summary Financial Data;
Investment Considerations; The Company;
Ownership of Bally's Park Place and the
Issuer; Use of Proceeds; Consolidated
Capitalization; Selected Financial Data;
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Business; Management;
Security Ownership; Certain
Transactions; Description of the Notes;
Consolidated Financial Statements
12. Disclosure of Commission Position on Not Applicable
Indemnification for Securities Act Liabilities
</TABLE>

<PAGE> 3

***************************************************************************

* SUBJECT TO COMPLETION DATED FEBRUARY 11, 1994 *

* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED *
* WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT *
* BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE *
* REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT *
* CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY *
* NOR SHALL THERE BY ANY SALE OF THESE SECURITIES IN ANY JURISDICTION *
* IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO *
* REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH *
* JURISDICTION. *
* *
***************************************************************************

PROSPECTUS

$425,000,000

BALLY'S PARK PLACE FUNDING, INC.

% FIRST MORTGAGE NOTES DUE 2004

PAYMENT OF PRINCIPAL AND INTEREST FULLY AND UNCONDITIONALLY GUARANTEED BY

BALLY'S PARK PLACE, INC.
------------------------

The % First Mortgage Notes due 2004 (the "Notes") are being offered (the
"Offering") by Bally's Park Place Funding, Inc. (the "Issuer"), and are fully
and unconditionally guaranteed (the "Guaranty") on a senior basis by its parent,
Bally's Park Place, Inc., a Delaware corporation ("Bally's Park Place"), which
Guaranty will rank pari passu in right of payment with other senior debt of
Bally's Park Place. Bally's Park Place is a wholly owned subsidiary of Bally's
Casino Holdings, Inc., a Delaware corporation ("Casino Holdings"), which is a
wholly owned subsidiary of Bally Manufacturing Corporation, a Delaware
corporation ("Bally").

Interest on the Notes will be payable semi-annually on and
of each year, commencing , 1994 at a rate of % per
annum. The Notes will be redeemable at the option of the Issuer, in whole or in
part, at any time on or after , 1999, at the redemption prices set
forth herein, together with accrued and unpaid interest to the redemption date.
In addition, at any time prior to , 1997, the Issuer may, at its
option, redeem up to an aggregate of 33 1/3% of the principal amount of the
Notes originally issued with the net proceeds of one or more Public Equity
Offerings (as defined) at % of the principal amount thereof, together with
accrued and unpaid interest to the redemption date, provided that immediately
following such redemptions at least $100 million principal amount of the Notes
remains outstanding.

Upon a Change in Control (as defined), each holder of the Notes may require
the Issuer to repurchase all or a portion of such holder's Notes at 101% of the
principal amount thereof, together with accrued and unpaid interest to the
repurchase date. There can be no assurance that the Issuer will have sufficient
funds to satisfy its repurchase obligations upon a Change in Control. See
"Description of the Notes."

The Notes will be secured by certain collateral (the "Collateral"),
including a first mortgage on certain fee and leasehold interests comprising the
Bally's Park Place casino hotel in Atlantic City, New Jersey ("Bally's Park
Place Casino Hotel"), and by a security interest in certain personal property
located at Bally's Park Place Casino Hotel. In addition, the Notes will be
secured by the assignment of a $425 million promissory note of Bally's Park
Place's gaming subsidiary, Bally's Park Place, Inc., a New Jersey corporation
(the "Operating Company"). The Operating Company owns and operates Bally's Park
Place Casino Hotel. The Notes and the Guaranty will rank pari passu in right of
payment with other senior debt of the Issuer and Bally's Park Place
respectively. After giving effect to the Offering and the application of the net
proceeds as described herein, on December 31, 1993, the Issuer and Bally's Park
Place would have had approximately $430 million of consolidated indebtedness.
The Notes and the Guaranty are securities of the Issuer and Bally's Park Place,
respectively, and are not securities of either Bally or Casino Holdings.

SEE "INVESTMENT CONSIDERATIONS" FOR A DISCUSSION OF CERTAIN FACTORS WHICH
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN EVALUATING AN INVESTMENT IN THE
NOTES.

------------------------

NEITHER THE NEW JERSEY CASINO CONTROL COMMISSION NOR THE NEW JERSEY DIVISION OF
GAMING ENFORCEMENT HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) ISSUER(2)(3)
- ----------------------------------------
<S> <C> <C> <C>
Per Note................................ % % %
- ----------------------------------------
Total................................... $ $ $
- ----------------------------------------
</TABLE>

- --------------------------------------------------------------------------------

(1) Plus accrued interest, if any, from , 1994.

(2) The Issuer and Bally's Park Place have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."

(3) Before deducting expenses of the Offering payable by the Issuer estimated at
$ .
------------------------

The Notes are being offered by the Underwriters, subject to prior sale,
when, as and if delivered to and accepted by them, and subject to the approval
of certain legal matters by counsel for the Underwriters and to certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify the
offer and to reject orders in whole or in part. It is expected that delivery of
the Notes will be made in New York, New York on or about , 1994.
------------------------

MERRILL LYNCH & CO.

JEFFERIES & COMPANY, INC.

DONALDSON, LUFKIN & JENRETTE

SECURITIES CORPORATION

LIBRA INVESTMENTS, INC.

The date of this Prospectus is , 1994.
<PAGE> 4

IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

AVAILABLE INFORMATION

The Issuer and Bally's Park Place have filed with the Securities and
Exchange Commission (the "SEC" or the "Commission") a Registration Statement on
Form S-1 (the "Registration Statement," which term shall encompass all
amendments, exhibits, annexes and schedules thereto) pursuant to the Securities
Act of 1933, as amended (the "Securities Act"), and the rules and regulations
promulgated thereunder, with respect to the Notes offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the SEC. The omitted information may be obtained from the
Registration Statement and exhibits thereto, which may be inspected and copied
at the public reference facilities maintained by the SEC at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and its regional offices
located at Seven World Trade Center, 13th Floor, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511.

Bally's Park Place is subject to the reporting and other informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, in accordance therewith, files abbreviated reports with the SEC that
must be read in conjunction with the reports filed with the SEC by Bally.
Information regarding Bally's Park Place and Bally may be inspected at the
public reference facilities maintained by the SEC at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and its regional offices located
at Seven World Trade Center, 13th Floor, New York, New York 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.

In addition, under the Indenture, Bally's Park Place will be obligated to
file with the SEC the annual reports, quarterly reports and other reports
required to be filed with the SEC pursuant to Sections 13 or 15 of the Exchange
Act, regardless of whether Bally's Park Place is otherwise subject to the
reporting requirements of the Exchange Act. Bally's Park Place will be required
to file with the Trustee and provide to each Holder of the Notes within 15 days
after it files them with the SEC (or if any such filing is not permitted under
the Exchange Act, 15 days after Bally's Park Place would have been required to
make such filing) copies of such reports and documents.

2
<PAGE> 5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus.
Prospective purchasers of the Notes should carefully read the entire Prospectus
and should consider, among other things, the matters set forth under "Investment
Considerations."

Bally's Park Place Casino Hotel opened in 1979 under the ownership of the
Operating Company, a wholly owned subsidiary of Bally's Park Place. The Issuer
is also a wholly owned subsidiary of Bally's Park Place. Bally's Park Place was
a direct wholly owned subsidiary of Bally until June 16, 1993, when Bally
contributed all of the capital stock of Bally's Park Place to Casino Holdings.
Casino Holdings was formed as a wholly owned subsidiary of Bally in April 1993.
As used in this Prospectus, unless the context otherwise requires, "Bally's Park
Place" refers to Bally's Park Place and its subsidiaries and "Bally" refers to
Bally and its subsidiaries, including Bally's Park Place. The Notes will be
issued by the Issuer and are fully and unconditionally guaranteed on a senior
basis by Bally's Park Place.

THE COMPANY

Bally's Park Place, through the Operating Company, owns and operates the
Bally's Park Place Casino Hotel, which is situated on an eight-acre site with
ocean frontage at the well-known intersection of Park Place and the Boardwalk in
Atlantic City, New Jersey. The casino hotel complex is centrally located among
the nine other casino hotels adjacent to the Boardwalk and is within four blocks
of Atlantic City's Convention Hall and the new convention corridor, currently
under development, which will include a new convention facility. Bally's Park
Place Casino Hotel's central location on the Boardwalk contributes to its
success in attracting significant walk-in casino business, including strong
crossover business from competing casinos located nearby. Equipped with two
multi-story parking garages and surface valet parking lots, management believes
that Bally's Park Place Casino Hotel is also strongly positioned to attract the
desirable drive-in business.

Bally's Park Place Casino Hotel offers more than 1,250 rooms (including 77
suites), making it the largest four-star hotel in New Jersey, approximately
50,000 square feet of meeting and exhibition space and a 38,000-square foot
health spa facility. Dining areas include three specialty restaurants, a
cocktail lounge, a coffee shop, a buffet, a delicatessen, two fast food
facilities and a bar and lounge in the spa. Bally's Park Place Casino Hotel
offers a variety of other facilities and amenities to its patrons. Bally's
Parking Place, a self-park garage located across the street from the casino
hotel, offers over 1,500 parking spaces and is connected to Bally's Park Place
Casino Hotel by a people-mover and glass-enclosed, climate-controlled skywalk.

Bally's Park Place Casino Hotel's operating strategy capitalizes on its
central location and quality facilities and promotes the diversity of Bally's
Park Place Casino Hotel's casino games and courteous approach to guests.
Historically believed to be a leader in Atlantic City's middle to upper middle
tier slot player segments, Bally's Park Place devotes significant managerial and
promotional resources to the maintenance and expansion of slot machine play,
including higher denomination slot business. Bally's Park Place Casino Hotel
also targets middle-market table game players.

3
<PAGE> 6

loyalty, Bally's Park Place Casino Hotel developed its "MVP Program," which
rewards players with a variety of complimentary services based on frequency of
play and amounts wagered. Bally's Park Place Casino Hotel is also increasing its
utilization of complimentary rooms in an effort to attract rated players from
its target markets and to encourage longer visits. In the latter part of 1993,
Bally's Park Place instituted a more aggressive marketing program including
additional promotional events and expanded media advertising. Bally's Park Place
expects this marketing strategy to continue in 1994 and to include additional
staff for hosts to support and service its casino patrons.

Bally's Park Place enjoys a share of total Atlantic City casino revenues in
excess of its proportionate share of total Atlantic City casino floor space due
to its emphasis on higher margin slot machine play. Slot revenues represented
70% of Bally's Park Place's casino revenues for the nine months ended September
30, 1993 as compared to 67% of total gaming revenues in the Atlantic City market
for this period, up from 69% for Bally's Park Place and 66% for the Atlantic
City market in 1992. Bally's Park Place has generated earnings before interest,
taxes, depreciation and amortization ("EBITDA"), an industry-wide measure of
performance, which has resulted in its ranking number one or two in the Atlantic
City market in both EBITDA margin and EBITDA for each of the last eight years.
For the years ended December 31, 1993 and 1992, management believes, based on
preliminary results for 1993, that Bally's Park Place led the Atlantic City
market in EBITDA margin (approximately 32% and 27.2%, respectively) and ranked
second in EBITDA (approximately $112 million and $90.1 million, respectively).
However, this data should not be considered as an alternative to any measure of
performance as promulgated under generally accepted accounting principles, such
as net income.

The Issuer was formed in June 1983 to serve solely as a financing
corporation to raise funds through the issuance of debt securities for the
benefit of the Operating Company. The Issuer is not authorized to conduct any
other business operations.

OWNERSHIP OF BALLY'S PARK PLACE AND THE ISSUER

The following chart illustrates the ownership of Bally's Park Place, the
Operating Company and the Issuer. The Notes offered hereby are securities of the
Issuer and fully and unconditionally guaranteed on a senior basis by Bally's
Park Place.

------------------------------------------------------

Bally Manufacturing Corporation ("Bally")

------------------------------------------------------
------------------------------------------------------

Bally's Casino Holdings, Inc.*

("Casino Holdings")

------------------------------------------------------
------------------------------------------------------

Bally's Park Place, Inc.

(a Delaware corporation)

("Bally's Park Place")

------------------------------------------------------
-------------------------------------------------------------

------------------------------------------------------

Bally's Park Place, Inc.

(a New Jersey corporation)

(the "Operating Company")

------------------------------------------------------

Bally's Park Place Funding, Inc.

(the "Issuer")

------------------------------------------------------

*Bally's Casino Holdings, Inc. is wholly owned by Bally Manufacturing
Corporation through wholly owned subsidiaries of Bally Manufacturing
Corporation.

4
<PAGE> 7

THE OFFERING

<TABLE>
<S> <C>
Securities Offered................... $425,000,000 principal amount of % First Mortgage
Notes due 2004 issued by the Issuer and fully and
unconditionally guaranteed on a senior basis by
Bally's Park Place.
Maturity Date........................ , 2004.
Interest Payment Dates............... and of each year commencing , 1994.
Optional Redemption.................. On or after , 1999, the Notes may be redeemed at
the option of the Issuer, in whole or in part, at any
time, at the redemption prices set forth herein
together with accrued and unpaid interest to the
redemption date. See "Description of the Notes --
Optional Redemption."
Optional Redemption upon Public
Equity
Offerings.......................... On or before , 1997, up to 33 1/3% of the
principal amount of the Notes originally issued may be
redeemed at the option of the Issuer, at % of the
principal amount thereof together with accrued and
unpaid interest to the redemption date, out of the net
proceeds of one or more Public Equity Offerings (as
defined), provided that immediately following such
redemptions at least $100 million principal amount of
the Notes remains outstanding. See "Description of the
Notes -- Optional Redemption."
Change in Control.................... In the event of a Change in Control (as defined), each
holder of Notes may require the Issuer to repurchase
such holder's Notes at 101% of the principal amount
thereof together with accrued and unpaid interest to
the repurchase date. See "Description of the Notes --
Change in Control."
Guaranty............................. The Notes will be fully and unconditionally guaranteed
by Bally's Park Place on a senior basis.
Security............................. The Notes will be secured by a first mortgage on
certain fee and leasehold interests comprising the
Bally's Park Place Casino Hotel and by a security
interest in certain property located at the Bally's
Park Place Casino Hotel. In addition, the Notes will
be secured by the assignment of a $425 million
promissory note issued by the Operating Company to the
Issuer. See "Description of the Notes -- Security."
Ranking
Principal and Interest............. The Notes will rank pari passu with all existing and
future Senior Debt (as defined) of the Issuer. The
Guaranty will rank pari passu with all existing and
future senior debt of Bally's Park Place, including
the guarantee of bank indebtedness under a new credit
facility (the "New Credit Facility") of the Operating
Company which will replace the existing credit
facility.
Security Interest in the The mortgage and security interests securing the Notes
Collateral...................... will rank pari passu with the mortgage and security
interests securing the New Credit Facility. See
"Description of the Notes -- Security."
</TABLE>

5
<PAGE> 8

<TABLE>
<S> <C>
Certain Covenants.................... The Indenture contains certain covenants, including,
but not limited to, covenants with respect to the
following matters: (i) limitation on indebtedness;
(ii) limitation on restricted payments; (iii)
limitation on transactions with affiliates; (iv)
limitation on encumbrances; (v) restriction on
preferred stock of subsidiaries; (vi) limitation on
dividends and other payment restrictions affecting
subsidiaries; (vii) limitations on issuance of
guarantees by subsidiaries; (viii) limitations on
business activities other than the ownership of casino
hotels; and (ix) restrictions on merger and sale of
assets. See "Description of the Notes -- Certain
Covenants."
Use of Proceeds...................... The net proceeds to the Issuer from the sale of the
Notes are estimated to be approximately $412.5
million. The net proceeds will be immediately loaned
by the Issuer to the Operating Company. Thereafter,
the Operating Company will immediately use
approximately $380.1 million of the proceeds to repay
a promissory note issued by the Operating Company to
the Issuer in connection with the Issuer's 11 7/8%
First Mortgage Notes due 1999 (the "Existing Notes")
and will declare and pay a dividend of approximately
$32.4 million to Bally's Park Place. The Issuer will
thereafter use approximately $380.1 million of the
proceeds to purchase and retire certain Existing Notes
at the Closing and redeem the remaining Existing Notes
in connection with a defeasance with respect to the
Existing Notes. Bally's Park Place will then pay a
dividend of approximately $32.4 million to Casino
Holdings. See "Use of Proceeds" and "Underwriting."
</TABLE>

FOR MORE DETAILED INFORMATION REGARDING THE TERMS OF THE NOTES AND FOR
DEFINITIONS OF CAPITALIZED TERMS NOT OTHERWISE DEFINED, SEE "DESCRIPTION OF THE
NOTES."

6
<PAGE> 9

SUMMARY FINANCIAL DATA

The following table sets forth summary historical and pro forma
consolidated financial and other data of Bally's Park Place for and at the
periods reflected. Bally's Park Place's business is seasonal, with casino and
other revenues peaking during the summer months. Therefore, the summary
financial data for the nine-month periods presented is not necessarily
indicative of the results of operations for the full year. The summary
historical financial data for the nine months ended September 30, 1993 and 1992
and for the years ended December 31, 1992, 1991 and 1990 should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the consolidated financial statements of Bally's
Park Place and related notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER
30, YEARS ENDED DECEMBER 31,
----------------- ------------------------------------------------------
1993 1992 1992 1991 1990 1989 1988
------ ------ ------ ------ ------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues(a)................. $267.1 $253.5 $331.1 $322.8 $324.6 $329.5 $305.5
Operating costs and
expenses.................. 195.7(b) 203.1(b) 268.4(b) 268.4(b)(c) 264.0 258.9 231.9(d)
Operating income............ 71.4 50.4 62.7 54.4 60.6 70.6 73.6
Interest expense(e)......... 33.9 36.2 48.0 48.9 46.3 22.3(f) 8.4
Income before income
taxes..................... 37.5 14.2 14.7 5.5 14.3 48.3 65.2
Income before extraordinary
item and cumulative effect
on prior years of change
in accounting for income
taxes--
Historical.............. 21.4(g) 7.3 7.9 1.8 8.1 28.6 38.4
Pro forma(h)............ 23.4 10.7
Net income.................. 10.0(g) 7.3 7.9 1.8 8.1 20.2(f) 38.4
Ratio of earnings to fixed
charges (i)--
Historical.............. 2.1x 1.4x 1.3x 1.1x 1.3x 2.4x 4.1x
Pro forma(h)............ 2.4x 1.5x
OTHER DATA:
Capital expenditures........ $ 8.3 $ 9.1 $ 10.3 $ 10.9 $ 55.6(j) $ 71.1(j) $ 70.1(j)
Depreciation and
amortization.............. 19.9 20.7 27.4 28.1 25.9 25.0 22.0
EBITDA(k)................... 91.3 71.1 90.1 82.5 86.5 95.6 95.6
Ratio of EBITDA to interest
expense (k)--
Historical.............. 2.7x 2.0x 1.9x 1.7x 1.9x 4.3x 11.4x
Pro forma(h)............ 3.0x 2.1x
EBITDA margin (k)........... 34.2% 28.0% 27.2% 25.6% 26.6% 29.0% 31.3%
</TABLE>

(See following page for notes)

7
<PAGE> 10

<TABLE>
<CAPTION>
SEPTEMBER 30, 1993
---------------------
PRO
HISTORICAL FORMA(H)
---------- --------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and equivalents................................................... $ 9.6 $ 9.6
Property and equipment, net............................................ 487.3 487.3
Total assets........................................................... 531.7 545.2
Advances from affiliate payable on demand.............................. 7.0 7.0
Long-term debt, less current maturities................................ 352.7 427.7
Stockholder's equity................................................... 89.8 36.5
</TABLE>

<TABLE>
<S> <C>
(a) Includes interest income of $0.7 million and $1.6 million for the nine months ended
September 30, 1993 and 1992, respectively, and $1.9 million, $5.7 million, $5.1
million, $1.8 million and $1.1 million for the years ended December 31, 1992, 1991,
1990, 1989 and 1988, respectively.
(b) Includes charges allocated by Bally of $3.0 million and $2.9 million for the nine
months ended September 30, 1993 and 1992, respectively, and $3.7 million and $1.0
million for the years ended December 31, 1992 and 1991, respectively. Bally is a
holding company without significant operations of its own. The allocation of costs for
1993, 1992 and 1991 reflects an allocation of Bally's corporate overhead, including
executive salaries and benefits, public company reporting costs and other corporate
headquarter costs for which Bally's Park Place does not obtain a measurable direct
benefit. No allocation of such costs was made by Bally prior to 1991.
(c) Includes charges of $3.5 million related to the closing and demolition of an ancillary
motel operated by Bally's Park Place and $2.0 million for the estimated cost of
settling certain non-recurring liabilities.
(d) Net of costs totaling $6.4 million allocated to other casinos owned by Bally, which
management believes was reasonable. The allocation of such costs ceased after 1988
since these Bally casino hotel subsidiaries, by the start of 1989, had established
separate management teams and implemented management information, budgeting and
accounting systems.
(e) Includes amortization of debt issuance costs and discounts.
(f) In September 1989, Bally's Park Place issued $350.0 million principal amount of the
Existing Notes and used a portion of the proceeds to retire $100.0 million principal
amount of its 13 7/8% Mortgage-Backed Bonds, which resulted in an extraordinary loss of
$8.4 million, net of income taxes of $5.6 million.
(g) Effective January 1, 1993, Bally's Park Place changed its method of accounting for
income taxes as required by Statement of Financial Accounting Standards ("SFAS") No.
109, "Accounting for Income Taxes." The cumulative effect on prior years of this change
in accounting for income taxes was a charge of $11.4 million. In addition, the income
tax provision for the nine months ended September 30, 1993 was increased by $0.4
million as a result of applying the change in the U.S. statutory tax rate from 34% to
35% to deferred tax balances as of January 1, 1993.
(h) Assumes issuance of the Notes and application of net proceeds as described in "Use of
Proceeds", as if each had occurred at January 1, 1993 and 1992 for Statement of
Operations Data and for Other Data and at September 30, 1993 for Balance Sheet Data.
</TABLE>

8
<PAGE> 11

<TABLE>
<S> <C>
(i) The ratio of earnings to fixed charges has been computed by dividing (i) income before
income taxes, extraordinary item and cumulative effect on prior years of change in
accounting for income taxes plus amortization of capitalized interest and fixed charges
(excluding capitalized interest) by (ii) fixed charges. Fixed charges consist of
interest incurred (expensed or capitalized), including amortization of debt issuance
costs and discount.
(j) Includes capital expenditures for the construction of an 800-room hotel tower, a
parking garage and public area improvements during the three years ended December 31,
1990.
(k) EBITDA, which is an industry-wide measure of performance, represents earnings before
interest, taxes, depreciation and amortization and is intended to facilitate a more
complete analysis of Bally's Park Place's financial condition. The ratio of EBITDA to
interest expense represents the number of times EBITDA exceeds interest expense and is
intended to illustrate the ability of Bally's Park Place to pay interest. The EBITDA
margin represents EBITDA divided by revenues and is intended to indicate the operating
efficiency of Bally's Park Place. This data should not be considered as an alternative
to any measure of performance as promulgated under generally accepted accounting
principles (such as net income) nor should it be considered as an indicator of Bally's
Park Place's overall financial performance.
</TABLE>

9
<PAGE> 12

INVESTMENT CONSIDERATIONS

In addition to the other information contained in this Prospectus,
prospective investors should carefully consider the following factors before
purchasing the Notes offered hereby.

RELATIONSHIP WITH BALLY, CASINO HOLDINGS AND BALLY'S GRAND

Bally, through subsidiaries, owns 100% of the capital stock of Casino
Holdings and Casino Holdings owns 100% of the capital stock of Bally's Park
Place. Consequently, Bally has the ability to exercise control over the business
and affairs of Bally's Park Place by virtue of its ability to elect all the
members of the Board of Directors of Bally's Park Place and its voting power
with respect to actions requiring stockholder approval. In the event of a Change
in Control, which includes a Change in Control of Bally's Park Place, the
Issuer, the Operating Company, Casino Holdings or Bally, the Issuer will be
required to make an offer to purchase all outstanding Notes at a purchase price
of 101% of the principal amount of the Notes plus accrued and unpaid interest to
the repurchase date. There can be no assurance that in the event a Change in
Control occurs the Issuer will have sufficient funds to purchase all Notes that
are delivered to the Issuer for repurchase. See "Description of the
Notes -- Change in Control", "Management" and "Certain Transactions."

In October 1990, Bally's Board of Directors decided to conduct a complete
review of Bally's financial condition and operations with a view toward
restructuring Bally. Bally completed its restructuring during 1992, resulting in
reduced indebtedness, elimination of defaults on its indebtedness and
elimination of preferred stock dividend arrearages. Bally is a holding company
without separate operations of its own. Nevertheless, Bally has certain cash
obligations, including significant income tax obligations, that must be
satisfied by obtaining cash from its subsidiaries or disposing of or leveraging
certain assets. On December 15, 1993, Bally's Park Place declared and paid a
$5.7 million dividend to Casino Holdings which declared and paid a similar
dividend to Bally. Bally may be required to borrow additional funds or sell
assets in order to satisfy its cash flow requirements. At September 30, 1993,
Bally's consolidated total assets, debt and stockholders' equity were $2,093.2
million, $1,197.1 million and $386.4 million, respectively. For the nine months
ended September 30, 1993, Bally's consolidated revenues and income from
continuing operations were $995.3 million and $5.9 million, respectively.
Management of the Issuer and Bally's Park Place believes that Bally's financial
condition will not have any material adverse effect on the financial condition
or operations of Bally's Park Place or its subsidiaries, or its or its
subsidiaries' respective abilities to fund their operations. Bally's Park Place
is a party to a tax sharing agreement with Bally pursuant to which income taxes
are allocated based on amounts Bally's Park Place would pay or receive if it
filed a separate consolidated federal income tax return, except that Bally's
Park Place will receive credit from Bally for the tax benefit of Bally's Park
Place's net operating losses and tax credits, if any, that can be utilized in
Bally's consolidated federal income tax return, regardless of whether these
losses or credits could be utilized by Bally's Park Place and its subsidiaries
on a separate consolidated federal income tax return basis. Casino Holdings has
entered into a similar tax sharing agreement with Bally (which generally
excludes Bally's Park Place from its stand-alone computation). If there was an
event of default and, as a result thereof, an acceleration under the
$220,000,000 Senior Discount Notes due 1998 (the "Casino Holdings Notes") issued
by Casino Holdings, while Casino Holdings is a member of the Bally consolidated
group, payments to Bally, in the aggregate, under these two tax sharing
agreements would be decreased (retroactively to the date of the Casino Holdings
tax sharing agreement and refunded to the extent paid) to the extent that Casino
Holdings would have owed less, in the aggregate, if there had been a single tax
sharing agreement with Casino Holdings which included Bally's Park Place in its
stand alone computation. See "Certain Transactions -- Transactions with Bally"
and the notes to the consolidated financial statements included elsewhere in
this Prospectus.

Casino Holdings was formed in April 1993 to serve as a holding company for
Bally's Park Place and for acquiring and developing gaming operations and
expanding into newly emerging gaming jurisdictions. Casino Holdings owns and
operates a dockside casino in Tunica, Mississippi and a subsidiary of Casino
Holdings owns and operates Bally's Las Vegas, a first class casino resort and
convention center in Las Vegas. Casino Holdings is dependent upon dividends and
distributions from Bally's Park Place and other subsidiaries in order to satisfy
its obligations, including its obligations on the Casino Holdings Notes. Casino
Holdings' subsidiaries, including Bally's Park Place, have, or may have in the
future, limitations on their ability to pay dividends or

10
<PAGE> 13

otherwise distribute funds to Casino Holdings. The future performance of Casino
Holdings and its subsidiaries and their ability to satisfy or refinance their
obligations is affected by prevailing economic conditions and is subject to
financial, business and other factors, including factors beyond the control of
Casino Holdings and its subsidiaries. There can be no assurance that Casino
Holdings will receive distributions and payments from its subsidiaries
(including Bally's Park Place) in an amount sufficient to repay the Casino
Holdings Notes prior to their maturity. Consequently, Casino Holdings may have
to refinance all or a portion of the Casino Holdings Notes prior to their
maturity. There can be no assurance that, if required, Casino Holdings could
refinance all or a portion of the Casino Holdings Notes on satisfactory terms or
that refinancing would be permitted by the terms of debt instruments of Casino
Holdings' subsidiaries or under restrictions imposed by regulatory bodies.
Consequently, when the Casino Holdings Notes become due in 1998, Casino Holdings
may be required to sell assets (including the stock of Bally's Park Place) in
order to satisfy its obligations under the Casino Holdings Notes. See "Certain
Transactions."

Bally, through subsidiaries, owns and operates another casino hotel in
Atlantic City known as "The Grand" ("Bally's Grand"), which competes with
Bally's Park Place. Certain senior executive officers and other management
personnel of Bally's Park Place function in similar capacities at Bally's Grand
and exercise decision making and operational authority over both entities.
Bally's Park Place Casino Hotel and Bally's Grand also share certain
administrative and support operations, a portion of the costs of which are
allocated between Bally's Park Place and Bally's Grand. Although the sharing of
management and administrative services reduces operating expenses, Bally's Park
Place from time to time does not have unfettered use of management or certain
administrative resources. Casino Holdings has entered into an intercorporate
agreement with Bally and Bally's Park Place. See "Certain
Transactions -- Transactions with Bally's Grand" and "-- Transactions With
Bally" and "Management." Additionally, because Bally, Bally's Grand and Bally's
Park Place are all active participants in the gaming industry, these companies
may compete for opportunities to expand their respective businesses.

LIMITATIONS ON ABILITY TO REALIZE ON COLLATERAL

The Notes and the New Credit Facility will be secured by first mortgages on
certain fee and leasehold interests comprising Bally's Park Place Casino Hotel
and by security interests in certain personal property of the Operating Company.
The rights of the Trustee for the Notes and the New Credit Facility lenders to
exercise their remedies with respect to the Collateral under their respective
agreements will be governed by an intercreditor agreement (the "Intercreditor
Agreement"). The Intercreditor Agreement limits the rights of the Trustee for
the Notes to control actions or pursue remedies with respect to the Collateral
upon an event of default. Any delays in the foreclosure of the Collateral could
adversely impact the ability of the Issuer and the Operating Company to repay
the Notes and the New Credit Facility (as the case may be) upon a liquidation of
the Collateral. If an acceleration were to occur with respect to the Notes or
the New Credit Facility and the Trustee were to foreclose on the Collateral
securing the Notes, there can be no assurance that the liquidation of the
Collateral would produce proceeds in an amount sufficient to pay the principal
of and accrued interest on the Notes and the New Credit Facility. In certain
limited circumstances, the Operating Company may be permitted to grant
additional pari passu security interests in the Collateral securing the Notes.
See "Description of the Notes -- Security," "-- Limitations on Ability to
Realize on Collateral" and "-- Certain Covenants -- Limitation on Encumbrances."
Bally's Park Place and the Issuer have obtained a preliminary appraisal, dated
as of January 31, 1994, of the Property (as defined) from American Appraisal
Capital Services, Inc. This appraisal places an aggregate market value, as of
January 1, 1994, of $745 million on the Collateral. There can be no assurances
that the Collateral, if sold, will be sold for this amount.

In any foreclosure sale, the Trustee could bid the amount of the
outstanding Notes. The Trustee's ability to foreclose upon collateral
representing casino assets is limited by the New Jersey Casino Control Act (the
"New Jersey Act"), which requires that persons who own or manage a casino hotel
hold a casino license. No person can hold a casino license in the State of New
Jersey unless the person is found qualified to do so by the New Jersey Casino
Control Commission ("CCC"). If the Trustee were to acquire collateral
representing casino assets in a foreclosure sale and were unable or chose not to
qualify under the New Jersey Act to operate

11
<PAGE> 14

such assets, it would have to either sell such assets or retain an entity
licensed under the New Jersey Act to operate such assets. In addition, in any
foreclosure sale or subsequent resale by the Trustee, licensing requirements
under the New Jersey Act would limit the number of potential bidders, may delay
any sale and may adversely affect the sale price of such collateral. See
"Business -- Gaming Regulation," and "Description of the Notes -- Limitations on
Ability to Realize on Collateral."

The ability to take possession and dispose of the Collateral securing the
Notes upon acceleration or foreclosure is likely to be significantly impaired or
delayed by applicable bankruptcy law if a bankruptcy case were to be commenced
by or against Bally, Bally's Park Place, the Operating Company or the Issuer.
See "Description of the Notes -- Limitation on Ability to Realize on
Collateral."

LEVERAGED FINANCIAL POSITION

On September 30, 1993, Bally's Park Place had total indebtedness of $359.8
million, stockholder's equity of $89.8 million and a debt-to-total
capitalization ratio of 80%. As of September 30, 1993, after giving effect to
the sale of the Notes and the expected use of the estimated net proceeds
therefrom, Bally's Park Place would have had total indebtedness of $434.7
million, stockholder's equity of $36.5 million and a debt-to-total
capitalization ratio of 92%. Bally's Park Place will depend primarily on cash
flow from operations generated by the Operating Company, and, to a lesser
extent, on funds available under the New Credit Facility to meet its debt
service and other operating obligations. The future operating results of Bally's
Park Place are subject to significant business, economic, regulatory and
competitive uncertainties and contingencies, many of which are beyond its
control, including seasonal fluctuations and dependence on summer operating
results which management believes are typical of casino hotel operations in
Atlantic City. If Bally's Park Place is unable to meet these obligations, it may
be required to refinance all or a portion of its existing debt or to obtain
additional financing. There can be no assurance that any such refinancing or
additional financing would be available or that such other measures could be
completed. Bally's Park Place's leverage may have the effect generally of
reducing Bally's Park Place's flexibility in responding to changing business and
economic conditions. See "Management's Discussion and Analysis of Results of
Operations and Financial Condition." In addition, the indenture relating to the
Casino Holdings Notes (the "Casino Holdings Notes Indenture") contains certain
restrictions on the ability of Bally's Park Place to incur additional
indebtedness, make restricted payments and contains limitations on dividends and
other payments affecting subsidiaries, which limit the operating and financial
flexibility of Bally's Park Place. The New Credit Facility will contain similar
restrictions.

COMPETITION

Bally's Park Place faces intense competition in the Atlantic City market
from other companies in the gaming industry, some of which have significantly
greater financial resources than Bally's Park Place. Since April 1990, there
have been 11 other casino hotel facilities operating in Atlantic City in
competition with Bally's Park Place Casino Hotel, including Bally's Grand.
Although no new casinos have been opened in Atlantic City since April 1990 and
there have been no public announcements concerning new casino openings, the
addition of new casino hotels in the Atlantic City market would increase
competition. Several Atlantic City casinos have announced plans for expansion,
which will increase competition in the Atlantic City market, particularly as
those facilities add additional slot machines in connection with their
expansions. Bally's Park Place also competes with longer established casinos in
Las Vegas and elsewhere for customers prepared to travel significant distances.

Bally's Park Place faces significant competition from both established and
newly emerging gaming operations. Bally's Park Place believes that the recent
legalization of casino gambling in jurisdictions such as Mississippi, Louisiana,
South Dakota, Indiana, Iowa, Illinois, Missouri and Colorado, and Indian gaming
in Connecticut and elsewhere, has not, to date, had a material adverse impact on
the operations of Bally's Park Place Casino Hotel. There can be no assurance
that the opening of gaming facilities in such jurisdictions or additional gaming
facilities of such type will not have a material adverse effect on future
operations. Bally's Park Place, however, believes that the adoption of
legislation approving casino gaming in any jurisdiction near New Jersey,
particularly Delaware, Maryland, New York or Pennsylvania, could have a material
adverse

12
<PAGE> 15

effect on the operations of Bally's Park Place Casino Hotel. There have been
proposals made for casinos in a number of other jurisdictions, including New
York and Pennsylvania, and several large metropolitan areas, including Chicago,
where Bally is headquartered. Bally's Park Place also competes with other forms
of legalized gaming, including state-sponsored lotteries in many jurisdictions,
including New Jersey, Delaware, Maryland, Pennsylvania and New York. See
"Business -- Competition."

GAMING REGULATION

Gaming is regulated in every jurisdiction in which it is currently
legalized, and regulations generally require receipt of a license prior to
commencement of gaming operations. The regulatory frameworks may impose
restrictions or costs, including additional taxes, that materially detract from
the feasibility or profitability of gaming ventures, including those of Bally's
Park Place. Gaming regulations and their enforcement are within the discretion
of the regulating jurisdictions, and Bally's Park Place cannot predict what
these regulations will be, how they will be enforced or what effect, if any,
these regulations will have on Bally's Park Place or the Issuer.

Gaming activities in Atlantic City are subject to the New Jersey Act,
regulations of the CCC and other applicable laws. The casino license of Bally's
Park Place was last renewed in September 1992 for a period ending September 30,
1994. The loss, suspension or non-renewal of casino licenses would have a
material adverse impact on Bally's Park Place and its ability to meet its
obligations under the Notes. In addition, any beneficial holder of the Notes may
be subject to investigation by the New Jersey gaming authorities if those
authorities have reason to believe that such ownership may be inconsistent with
New Jersey gaming policies. Persons who acquire beneficial ownership of 15% or
more of, or institutional investors who acquire 20% or more of, a publicly
traded debt issue of an affiliate of a New Jersey casino licensee may be subject
to certain reporting and qualification procedures established by New Jersey
gaming authorities if the use of proceeds of the debt issue is related to the
financing of a New Jersey casino licensee. The CCC may require divestiture of
the Notes held by any such holder who is disqualified and may limit the proceeds
therefrom to the holder's actual cost. In addition, the Issuer has the absolute
right to repurchase the Notes in the event the CCC disapproves of any transfer
at the lesser of market price or the holder's purchase price. See "Business --
Gaming Regulation."

ABSENCE OF A PUBLIC MARKET FOR THE NOTES

There is no public market for the Notes and the Issuer does not intend to
apply for listing of the Notes on any national securities exchange or for
quotation of the Notes through The NASDAQ Stock Market. The Issuer has been
advised by the Underwriters that, following the completion of the Offering of
the Notes, they presently intend to make a market in the Notes. However, the
Underwriters are under no obligation to do so and any market-making activities
with respect to the Notes may be discontinued at any time without notice. There
can be no assurance as to the liquidity of the public market for the Notes or
that an active public market will develop or, if developed, will continue. If an
active public market does not develop or is not maintained, the market price and
the liquidity of the Notes may be adversely affected. See "Underwriting."

13
<PAGE> 16

THE COMPANY

BALLY'S PARK PLACE

The marketing strategy of Bally's Park Place Casino Hotel is to generate a
high volume of play from casino customers from New York, Philadelphia and other
northeastern metropolitan areas, as well as to develop its position in all
segments of the Atlantic City hotel and convention market. To foster casino
patron loyalty, Bally's Park Place Casino Hotel developed its "MVP Program,"
which rewards players with a variety of complimentary services based on
frequency of play and amounts wagered. Bally's Park Place Casino Hotel is also
increasing its utilization of complimentary rooms in an effort to attract rated
players from its target markets and to encourage longer visits. In the latter
part of 1993, Bally's Park Place instituted a more aggressive marketing program
including additional promotional events and expanded media advertising.

14
<PAGE> 17

Bally's Park Place expects this marketing strategy to continue in 1994 and to
include additional staff for hosts to support and service its casino patrons.

The principal executive offices of Bally's Park Place and the Issuer are
located at Park Place and the Boardwalk, Atlantic City, New Jersey 08401. The
telephone number is (609) 340-2000.

OWNERSHIP OF BALLY'S PARK PLACE AND THE ISSUER

------------------------------------------------------

Bally Manufacturing Corporation ("Bally")

------------------------------------------------------
------------------------------------------------------

Bally's Casino Holdings, Inc.*

("Casino Holdings")

------------------------------------------------------
------------------------------------------------------

Bally's Park Place, Inc.

(a Delaware corporation)

("Bally's Park Place")

------------------------------------------------------
-------------------------------------------------------------

------------------------------------------------------

Bally's Park Place, Inc.

(a New Jersey corporation)

(the "Operating Company")

------------------------------------------------------

Bally's Park Place Funding, Inc.

(the "Issuer")

------------------------------------------------------

*Bally's Casino Holdings, Inc. is wholly owned by Bally Manufacturing
Corporation through wholly owned subsidiaries of Bally Manufacturing
Corporation.

15
<PAGE> 18

USE OF PROCEEDS

The Issuer and Bally's Park Place intend to consummate a series of
transactions (the "Refinancing") designed to reduce the average interest rate of
borrowings, extend the maturity date of certain indebtedness and provide the
Issuer and Bally's Park Place with additional financial and operating
flexibility. The Refinancing is expected to consist of:

(i) the Offering;

(ii) the use of the net proceeds from the sale of the Notes to
terminate the obligations of the Issuer and Bally's Park Place under the
Existing Note Indenture by purchasing and retiring certain Existing Notes
at the Closing and depositing sufficient proceeds with the trustee under
the Existing Note Indenture to be used in connection with the Issuer's
subsequent call for redemption of all the remaining outstanding Existing
Notes (the "Defeasance"); and

(iii) the replacement of the existing credit facility with the New
Credit Facility of Bally's Park Place.

The Issuer does not intend to consummate the Defeasance or purchase
Existing Notes unless the Offering is consummated and the New Credit Facility
has been entered into. Consummation of the Offering is conditioned on, among
other things, the closing of the New Credit Facility and consummation of the
Defeasance and purchase of the Notes.

The net proceeds to the Issuer from the sale of the Notes are estimated to
be approximately $412.5 million and will be used by the Issuer to effect the
Refinancing. The net proceeds will be immediately loaned by the Issuer to the
Operating Company in exchange for a promissory note from the Operating Company
to the Issuer (the "Operating Company Note"). The Operating Company will
immediately use approximately $380.1 million of the proceeds to repay a
promissory note issued by the Operating Company to the Issuer and approximately
$32.4 million to declare and pay a dividend to Bally's Park Place. The Issuer
will thereafter use approximately $380.1 million of the proceeds to purchase and
retire certain Existing Notes at the Closing and defease the Existing Note
Indenture and redeem the remaining outstanding Existing Notes (which bear
interest at the rate of 11 7/8% per annum) and to pay accrued and unpaid
interest to the redemption date on the Existing Notes so redeemed in connection
with the Defeasance. Bally's Park Place will then declare and pay a dividend of
approximately $32.4 million to Casino Holdings. See "Underwriting."

The following table sets forth, on a summary basis, the estimated sources
of funds to be used by the Issuer to effect the Refinancing and the application
of the funds by the Issuer and Bally's Park Place, assuming (i) the consummation
of the Refinancing occurs on March 1, 1994, (ii) the Offering provides gross
proceeds totalling $425.0 million and (iii) $380.1 million is used in connection
with the Defeasance.

<TABLE>
<CAPTION>
AMOUNT
---------------------
(IN MILLIONS)
<S> <C>
Sources of Funds:
Total proceeds of the Offering..................................... $ 425.0
-------
-------
Uses of Funds:
Aggregate purchase and redemption consideration on Existing Notes
including accrued interest through August 15, 1994................ $ 380.1
Dividend to Casino Holdings........................................ 32.4
Estimated transaction fees and expenses............................ 12.5
-------
$ 425.0
-------
-------
</TABLE>

16
<PAGE> 19

CONSOLIDATED CAPITALIZATION

The following table sets forth the unaudited historical consolidated
capitalization of Bally's Park Place as of September 30, 1993 and the
capitalization of Bally's Park Place as adjusted to give effect to the Offering
and the expected use of the estimated proceeds therefrom. See "Use of Proceeds."
This table should be read in conjunction with the Bally's Park Place unaudited
condensed consolidated financial statements and related notes thereto included
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
1993
-----------------------
AS
HISTORICAL ADJUSTED
---------- --------
(IN MILLIONS)
<S> <C> <C>
Short-term debt (advances from affiliate payable on demand)..... $ 7.0 $ 7.0
---------- --------
---------- --------
Long-term debt (excluding current maturities)(a):
Existing Notes............................................. $350.0 $
Notes offered hereby....................................... 425.0
Other...................................................... 2.7 2.7
---------- --------
Total long-term debt.................................. 352.7 427.7
Stockholder's equity (b)........................................ 89.8 36.5
---------- --------
Total capitalization............................................ $442.5 $464.2
---------- --------
---------- --------
</TABLE>

(a) See the Bally's Park Place consolidated financial statements and related
notes thereto for the nine months ended September 30, 1993 and the year
ended December 31, 1992 for additional information with respect to existing
long-term debt.

(b) As adjusted, stockholder's equity reflects a $32.4 million dividend to
Casino Holdings and an extraordinary loss (net of tax benefit) of $20.9
million relating to the redemption and purchase of the Existing Notes. The
extraordinary loss is the result of the payment of the redemption and
purchase premiums, the net cost of interest during the period between
Defeasance and redemption of the Existing Notes and the write off of
unamortized debt issuance costs.

17
<PAGE> 20

SELECTED FINANCIAL DATA

The selected historical financial data for Bally's Park Place for each of
the five years ended December 31, 1992, with the exception of the ratio of
earnings to fixed charges, are derived from the audited consolidated financial
statements of Bally's Park Place. The selected financial data for the nine
months ended September 30, 1993 and 1992 are unaudited; however, in the opinion
of management, such data includes all adjustments (which were of a normal
recurring nature except for those required to apply the provisions of SFAS No.
109) necessary for a fair presentation of the information set forth therein.
Bally's Park Place's business is seasonal, with casino and other revenues
peaking during the summer months. Therefore, the selected financial data for the
nine-month periods presented are not necessarily indicative of the results of
operations for the full year. The selected historical financial data for the
nine months ended September 30, 1993 and 1992 and for the years ended December
31, 1992, 1991 and 1990 should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements of Bally's Park Place and related notes
thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------- -------------------------------------------------------------
1993 1992 1992 1991 1990 1989 1988
------ ------ ------ ------ ------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues(a)........................ $267.1 $253.5 $331.1 $322.8 $324.6 $329.5 $305.5
Operating costs and expenses....... 195.7(b) 203.1(b) 268.4(b) 268.4(b)(c) 264.0 258.9 231.9(d)
Operating income................... 71.4 50.4 62.7 54.4 60.6 70.6 73.6
Interest expense(e)................ 33.9 36.2 48.0 48.9 46.3 22.3(f) 8.4
Income before income taxes......... 37.5 14.2 14.7 5.5 14.3 48.3 65.2
Income before extraordinary item
and cumulative effect on prior
years of change in accounting for
income taxes..................... 21.4(g) 7.3 7.9 1.8 8.1 28.6 38.4
Net income......................... 10.0(g) 7.3 7.9 1.8 8.1 20.2(f) 38.4
Ratio of earnings to fixed
charges(h)....................... 2.1x 1.4x 1.3x 1.1x 1.3x 2.4x 4.1x
BALANCE SHEET DATA (AT END OF
PERIOD):
Cash and equivalents............... $ 9.6 $ 8.2 $ 12.3 $ 12.5 $ 11.1 $ 15.6 $ 9.8
Property and equipment, net........ 487.3 505.1 499.4 515.9 533.9 503.8 455.5
Total assets....................... 531.7 551.7 550.7 618.2 640.4 559.6 495.3
Advances from affiliate payable on
demand........................... 7.0 28.0 16.0 17.0
Long-term debt, less current
maturities....................... 352.7 355.8 355.8 372.6 431.1 357.6(f) 159.7
Stockholder's equity............... 89.8(i) 90.2 90.8(i) 132.9 131.1(i) 127.0(i) 265.8(i)
OTHER DATA:
Capital expenditures............... $ 8.3 $ 9.1 $ 10.3 $ 10.9 $ 55.6(j) $ 71.1(j) $ 70.1(j)
Depreciation and amortization...... 19.9 20.7 27.4 28.1 25.9 25.0 22.0
EBITDA(k).......................... 91.3 71.1 90.1 82.5 86.5 95.6 95.6
Ratio of EBITDA to interest
expense(k)....................... 2.7x 2.0x 1.9x 1.7x 1.9x 4.3x 11.4x
EBITDA margin (k).................. 34.2% 28.0% 27.2% 25.6% 26.6% 29.0% 31.3%
</TABLE>

(See following page for notes)

18
<PAGE> 21

- ---------------

(a) Includes interest income of $0.7 million and $1.6 million for the nine
months ended September 30, 1993 and 1992, respectively, and $1.9 million,
$5.7 million, $5.1 million, $1.8 million and $1.1 million for the years
ended December 31, 1992, 1991, 1990, 1989 and 1988, respectively.

(b) Includes charges allocated by Bally of $3.0 million and $2.9 million for the
nine months ended September 30, 1993 and 1992, respectively, and $3.7
million and $1.0 million for the years ended December 31, 1992 and 1991,
respectively. Bally is a holding company without significant operations of
its own. The allocation of costs for 1993, 1992 and 1991 reflects an
allocation of Bally's corporate overhead, including executive salaries and
benefits, public company reporting costs and other corporate headquarter
costs for which Bally's Park Place does not obtain a measurable direct
benefit. No allocation of such costs was made by Bally prior to 1991.

(c) Includes charges of $3.5 million related to the closing and demolition of an
ancillary motel operated by Bally's Park Place and $2.0 million for the
estimated cost of settling certain non-recurring liabilities.

(d) Net of costs totaling $6.4 million allocated to other casinos owned by
Bally, which management believes was reasonable. The allocation of such
costs ceased after 1988 since these Bally casino hotel subsidiaries, by the
start of 1989, had established separate management teams and implemented
management information, budgeting and accounting systems.

(e) Includes amortization of debt issuance costs and discounts.

(f) In September 1989, Bally's Park Place issued $350.0 million principal amount
of the Existing Notes and used a portion of the proceeds to retire $100.0
million principal amount of its 13 7/8% Mortgage-Backed Bonds, which
resulted in an extraordinary loss of $8.4 million, net of income taxes of
$5.6 million.

(g) Effective January 1, 1993, Bally's Park Place changed its method of
accounting for income taxes as required by SFAS No. 109. The cumulative
effect on prior years of this change in accounting for income taxes was a
charge of $11.4 million. In addition, the income tax provision for the nine
months ended September 30, 1993 was increased by $0.4 million as a result of
applying the change in the U.S. statutory tax rate from 34% to 35% to
deferred tax balances as of January 1, 1993.

(h) The ratio of earnings to fixed charges has been computed by dividing (i)
income before income taxes, extraordinary item and cumulative effect on
prior years of change in accounting for income taxes plus amortization of
capitalized interest and fixed charges (excluding capitalized interest) by
(ii) fixed charges. Fixed charges consist of interest incurred (expensed or
capitalized), including amortization of debt issuance costs and discounts.

(i) In September 1993, an $11.0 million dividend was paid to Casino Holdings. In
December 1992, a $50.0 million receivable due from Bally was cancelled and a
dividend in that amount declared to Bally. In addition, dividends of $3.9
million, $159.0 million and $17.0 million were paid to Bally in the years
ended December 31, 1990, 1989 and 1988, respectively.

(j) Includes capital expenditures for the construction of an 800-room hotel
tower, a parking garage and public area improvements during the three years
ended December 31, 1990.

(k) EBITDA, which is an industry-wide measure of performance, represents
earnings before interest, taxes, depreciation and amortization and is
intended to facilitate a more complete analysis of Bally's Park Place's
financial condition. The ratio of EBITDA to interest expense represents the
number of times EBITDA exceeds interest expense and is intended to
illustrate the ability of Bally's Park Place to pay interest. The EBITDA
margin represents EBITDA divided by revenues and is intended to indicate the
operating efficiency of Bally's Park Place. This data should not be
considered as an alternative to any measure of performance as promulgated
under generally accepted accounting principles (such as net income) nor
should it be considered as an indicator of Bally's Park Place's overall
financial performance.

19
<PAGE> 22

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The Issuer is a wholly owned subsidiary of Bally's Park Place. The Issuer
was formed in June 1983 to serve solely as a financing corporation to raise
funds through the issuance of debt securities for the benefit of the Operating
Company. The Issuer is not authorized to conduct any other business operations.
This section presents management's discussion and analysis of financial
condition and results of operations of Bally's Park Place (on a consolidated
basis, including the Operating Company and the Issuer) for the nine months ended
September 30, 1993 and 1992 and the years ended December 31, 1992, 1991 and
1990. Management's discussion and analysis should be read in conjunction with
the consolidated financial statements of Bally's Park Place and the related
notes thereto included elsewhere in this Prospectus.

RESULTS OF OPERATIONS

Comparison of Nine Months Ended September 30, 1993 and September 30, 1992

Revenues of Bally's Park Place for the nine months ended September 30, 1993
were $267.1 million compared to $253.5 million for 1992, an increase of $13.6
million (5%). Casino revenues increased $13.4 million (6%) as a result of a
$12.0 million (8%) increase in slot revenues (which includes the discontinuation
of certain progressive slot jackpots), $1.3 million of poker revenues (commenced
in July 1993) and $0.1 million increase in other table game revenues. The slot
revenue increase was primarily attributable to a 10% increase in the slot handle
(volume), partially offset by a 2% reduction in the slot win percentage from
9.9% in the 1992 period to 9.7% in 1993. Slot revenues represented 70% of
Bally's Park Place's casino revenues in the nine months ended September 30, 1993
compared to 69% in the same period of 1992. As of September 30, 1993, Bally's
Park Place increased its number of slot machines by 103 machines (5%) from
September 30, 1992. The table game revenue increase, excluding poker, was due to
an increase in the amount wagered (drop) of 4% offset by a 4% decline in the
hold percentage from 16.8% in the 1992 period to 16.2% in 1993.

Rooms revenue of Bally's Park Place increased $0.9 million (5%) due to an
increase in rooms occupied in 1993 compared to 1992, partially offset by a
reduction in the average room rate. Food and beverage revenue remained
essentially unchanged. For the nine months ended September 30, 1993, interest
income from affiliates declined $0.9 million from the same period in 1992 due to
the elimination of an intercompany loan.

Atlantic City city-wide casino revenues, excluding poker and horse race
simulcasting, for the nine months ended September 30, 1993 increased
approximately 2% from the 1992 period, which was primarily attributable to a 5%
increase in slot revenues offset, in part, by a 4% decrease in table game
revenues. The 1993 period was negatively impacted by severe weather conditions
that hampered attendance on several weekends in the first quarter of 1993. The
number of slot machines in Atlantic City has increased approximately 8% since
September 1992, while the number of Atlantic City table game units, excluding
poker tables, has declined approximately 5%. City-wide slot revenues for the
1993 period represented 67% of total gaming revenues in Atlantic City compared
to 66% in 1992. Changes in gaming regulations, including modifications allowing
more slot machines on existing casino floor space and permitting unrestricted
24-hour gaming effective July 1992, have aided Atlantic City slot revenue
growth. In addition to the ongoing slot revenue trend, the introduction in the
second quarter of 1993 of poker and horse race simulcasting has also improved
the Atlantic City business climate. Bally's Park Place's competitors in Atlantic
City intensified their promotional slot marketing efforts during 1992 to expand
their share of slot revenues and this trend has continued into 1993. Bally's
Park Place believes it is well-positioned to compete for its share of casino
revenues by continuing to offer promotional slot and table game programs and
special events. However, Bally's Park Place anticipates that as a result of the
continued aggressive competition for slot patrons, the slot win percentage may
decline further.

Operating income of Bally's Park Place for the nine months ended September
30, 1993 was $71.4 million compared to $50.4 million in 1992, an increase of
$21.0 million (42%), due to the increase in revenues described above and to a
decrease in operating expenses. Operating expenses for the nine months ended
September 30, 1993 were $195.8 million as compared to $203.1 million for the
same period in 1992, a decrease

20
<PAGE> 23

of $7.3 million (4%). Casino operating expenses decreased $1.9 million (2%)
principally due to a $1.8 million decline in the cost of providing complimentary
services and promotional marketing events. Rooms expense increased $1.2 million
(19%) mainly due to increased operating costs associated with higher room
occupancy. Food and beverage and other operating expenses were essentially
unchanged. Selling, general and administrative expenses decreased $5.9 million
(18%) due primarily to a $3.3 million reduction in costs associated with a
management restructuring (including a $1.5 million gain realized pursuant to the
terms of a Retirement and Separation Agreement with a former executive), a $1.0
million reduction in employee benefit expenses, and a $1.6 million reduction in
legal and other expenses. Depreciation and amortization expense decreased $0.8
million (4%) due primarily to the elimination of certain assets that were
previously being amortized.

Interest expense of Bally's Park Place was $33.9 million for the nine
months ended September 30, 1993 compared to $36.2 million for the same period in
1992. The decrease of $2.3 million (6%) reflects lower average line of credit
and intercompany borrowings and, to a lesser extent, lower average interest
rates charged on these borrowings.

For the nine months ended September 30, 1993 and 1992, the effective rate
of the income tax provision differed from the U.S. statutory tax rate due
principally to state income taxes, net of the related federal income tax
benefit. In addition, the income tax provision for the nine months ended
September 30, 1993 was increased by $0.4 million as a result of applying the
change in the U.S. statutory tax rate from 34% to 35% to deferred tax balances
as of January 1, 1993.

Effective January 1, 1993, Bally's Park Place changed its method of
accounting for income taxes as required by SFAS No. 109. SFAS No. 109 retains
the requirement to record deferred income taxes for temporary differences that
are reported in different years for financial reporting and for tax purposes;
however, the methodology for calculating and recording deferred income taxes has
changed. Under the liability method adopted by SFAS No. 109, deferred tax
liabilities or assets are computed using the tax rates that will be in effect
when the temporary differences reverse. Also, requirements for recognition of
deferred tax assets and operating loss and tax credit carryforwards have been
liberalized by requiring their recognition when and to the extent that their
realization is deemed to be more likely than not. As permitted by SFAS No. 109,
Bally's Park Place elected to use the cumulative effect approach rather than to
restate the consolidated financial statements of any prior periods to apply the
provisions of SFAS No. 109. The cumulative effect on prior years of this change
in accounting for income taxes as of January 1, 1993 was a charge of $11.4
million. The effect of this change in accounting for income taxes on the
provision of income taxes for the nine months ended September 30, 1993 was not
material.

Comparison of Years Ended December 31, 1992 and December 31, 1991

Revenues of Bally's Park Place for 1992 were $331.1 million compared to
$322.8 million for 1991, an increase of $8.3 million (3%). Casino revenues
increased $12.3 million (5%), with slot revenues increasing $15.0 million (9%)
as a result of a 13% increase in the slot handle, partially offset by a 4%
decline in the win percentage from 10.3% in 1991 to 9.9% in 1992. Bally's Park
Place added 119 slot machines (7%) during 1992. Table game revenues decreased
$2.7 million (3%) as a result of a decline in the table game drop of $21.6
million (4%), partially offset by an improvement in the win percentage from
16.8% in 1991 to 17.0% in 1992. Bally's Park Place's 1992 casino revenues
generally reflect the trend in the revenue mix of the Atlantic City market. Slot
revenues represented 68% of Bally's Park Place's casino revenues in 1992
compared to 66% in 1991.

Rooms and food and beverage revenues were essentially unchanged. Interest
income from Bally in 1992 was $0.8 million compared to $4.2 million in 1991.
This decrease was primarily due to the declaration as a dividend to Bally by
Bally's Park Place of an amount totaling $50.0 million formerly classified as a
demand note receivable and discontinued interest payments on the note effective
April 1, 1992.

Atlantic City city-wide casino revenues for 1992 increased approximately 8%
from 1991, which management believes was negatively impacted in the first
quarter by the Persian Gulf War. The increase was also due to a 14% increase in
slot revenues partially offset by a 3% decrease in table game revenues. Slot
revenues for 1992 represented 66% of total gaming win in Atlantic City compared
to 62% in 1991. During

21
<PAGE> 24

1992, Bally's Park Place's competition in Atlantic City intensified their
promotional slot marketing efforts to expand their share of slot revenues.
Additionally, changes in gaming regulations, including modifications allowing
more slot machines in existing casino floor space and permitting unrestricted
24-hour gaming effective July 1992, have aided Atlantic City slot revenue
growth.

Operating income for 1992 was $62.7 million as compared to $54.4 million
for 1991, an increase of $8.3 million (15%), which was primarily due to the
increase in revenues discussed earlier, while total operating expenses remained
essentially unchanged. Casino operating expenses increased $4.7 million (4%)
principally due to an increase in payroll and related costs and the cost of
providing complimentary services in conjunction with intensified slot marketing
efforts, offset, in part, by a decrease in the provision for doubtful
receivables of $0.7 million (52%) due to lower credit play in 1992 as compared
to 1991. Rooms and food and beverage operating expenses decreased $1.2 million
(4%) due primarily to an increase in allocated costs of $3.0 million (16%) for
providing complimentary services to the casino offset, in part, by a $1.9
million (7%) increase in payroll and related costs. Other operating expenses
increased $2.0 million (4%) due to an increase in maintenance costs. Selling,
general and administrative expenses decreased $4.7 million (10%). Selling,
general and administrative expenses in 1992 and 1991 include charges for Bally's
overhead expenses allocated to Bally's Park Place of $3.7 million and $1.0
million, respectively. Selling, general and administrative expenses for 1991
also include charges of $3.5 million related to the closing and demolition of an
ancillary motel operated by Bally's Park Place and $2.0 million for the
estimated cost of settling certain non-recurring liabilities. Depreciation and
amortization expenses decreased $0.8 million (3%) due to the reduction in
amortization of a non-current asset.

Interest expenses, net of capitalized interest, declined $0.9 million (2%)
to $48.0 million in 1992 from $48.9 million in 1991, reflecting lower average
existing credit facility and intercompany borrowings and lower average interest
rates.

Effective income tax rates were 46% and 68% in 1992 and 1991, respectively.
The 1992 income tax rate differed from the U.S. statutory tax rate (34%) due
principally to state income taxes, net of the related federal income tax
benefit. The 1991 income tax variance was due principally to a nondeductible
write-off of property and equipment and to state income taxes, net of the
related federal income tax benefit. A reconciliation of the income tax provision
with amounts determined by applying the U.S. statutory tax rate to income before
income taxes is included in the notes to consolidated financial statements for
the year ended December 31, 1992 included elsewhere in this Prospectus.

Comparison of Years Ended December 31, 1991 and December 31, 1990

Revenues of Bally's Park Place for 1991 were $322.8 million compared to
$324.6 million for 1990, a decrease of $1.8 million (1%). Bally's Park Place
casino revenues decreased $1.2 million (less than 1%), which reflects an
increase in slot revenue of $6.2 million (4%) offset by a decrease in table game
revenues of $7.4 million (8%). The slot revenue increase resulted from a 5%
increase in the slot handle. The table game decrease was attributable to a
reduction in the drop of 6% and to a decline in the win percentage from 17.1% in
1990 to 16.8% in 1991.

Bally's Park Place's casino revenues are dependent on its ability to both
sustain and increase its share of slot revenues. In 1991, slot revenues
represented 66% of Bally's Park Place's casino revenues as compared to 62% for
the Atlantic City industry. In 1990, slot revenues represented 63% of Bally's
Park Place's casino revenues as compared to 58% for the Atlantic City industry.

Rooms and food and beverage revenues decreased $0.9 million (2%) due
primarily to economic and competitive conditions. Interest income from Bally and
affiliates increased $0.8 million (21%) due to interest earned for the entire
year on Bally's Park Place's March 1990 $50.0 million advance to Bally and a
$2.7 million advance to Bally's Grand which was made in December 1990.

Atlantic City city-wide casino win for 1991 compared to 1990 increased only
1% which reflects an increase in slot revenues of 7% offset principally by a 7%
decline in table game revenues. A change in gaming regulations in July 1991 to
allow 24-hour gaming on weekends, holidays and for special events and the
introduction of two new table games improved the Atlantic City casino business
climate. While the

22
<PAGE> 25

aforementioned change in gaming regulations improved the Atlantic City casino
business climate, the weakened economy in the northeastern United States and the
opening of a twelfth casino hotel in April 1990 (which expanded the Atlantic
City casino capacity by 18%) had a negative impact upon many of the Atlantic
City casinos, including Bally's Park Place. In addition, 1991 results were
adversely impacted by the Persian Gulf War.

Operating income for 1991 was $54.4 million, as compared to $60.6 million
in 1990, a decrease of $6.2 million (10%). Rooms operating expenses decreased
$0.7 million (8%) principally due to a reduction in payroll related costs. Food
and beverage operating expenses declined $1.0 million (5%) primarily related to
an increase in allocated costs of $0.8 million (6%) for providing complimentary
services to the casino. Casino and other operating expenses remained essentially
unchanged. Selling, general and administrative expenses increased $4.1 million
(9%) primarily due to a charge of $3.5 million related to the planned closing
and demolition of an ancillary motel operated by Bally's Park Place and a $2.0
million charge for the estimated cost of settling certain non-recurring
liabilities. In addition, selling, general and administrative expenses for 1991
include a charge of $1.0 million for Bally's overhead expenses allocated to
Bally's Park Place. These increases in selling, general and administrative
expenses were partially offset by a lower provision for pension costs in 1991 as
compared to 1990. The $2.2 million (9%) increase in depreciation and
amortization is attributable to a full year's depreciation associated with
Bally's Park Place's 1990 opening of a new parking garage and hotel public area
improvements.

Interest expense, net of capitalized interest, was $48.9 million in 1991
compared to $46.3 million in 1990. The increase of $2.6 million (6%) was
attributable to lower capitalized interest in 1991, resulting from completion of
the garage in 1990.

Effective income tax rates were 68% and 43% in 1991 and 1990, respectively.
The 1991 income tax rate differed from the U.S. statutory tax rate (34%) due
principally to a nondeductible write-off of property and equipment and to state
income taxes, net of the related federal income tax benefit. The 1990 income tax
rate variance was caused principally by state income taxes, net of the related
federal income tax benefit. A reconciliation of the income tax provision with
amounts determined by applying the U.S. statutory tax rate to income before
taxes is included in the notes to consolidated financial statements for the year
ended December 31, 1992 included elsewhere in this Prospectus.

LIQUIDITY AND CAPITAL RESOURCES

Bally's Park Place anticipates that its primary source of cash will be its
cash flow from operating activities. Historically, Bally's Park Place's cash
flow from operations has been substantially in excess of its consolidated debt
service obligations. Management of Bally's Park Place believes that such cash
flow, cash on hand and amounts available under its New Credit Facility will be
adequate to fund its near-term capital expenditure, working capital and debt
service requirements.

Bally's Park Place currently anticipates making capital expenditures of
approximately $18.0 million and $13.0 million in 1994 and 1995, respectively.
Anticipated capital expenditures include completion of suite rooms in the hotel
tower, casino expansion, casino slot renovations, the purchase of data
processing equipment, construction of a new players lounge, restaurant and
kitchen renovations, expansion of the casino floor by approximately 3,000 square
feet in 1994, the construction of a poker, horse race simulcasting and keno area
and other public area improvements necessary to maintain the facility in a first
class condition. Bally's Park Place expects to fund all such capital
expenditures out of its cash from operations.

Bally's Park Place's existing credit facility expires June 30, 1994, at
which time Bally's Park Place has the option to repay the outstanding balance or
convert the outstanding balance to a term loan payable in four semi-annual
installments beginning December 31, 1994. The existing credit facility provides
for maximum borrowings of $75.0 million. At September 30, 1993, Bally Park
Place's entire existing credit facility of $75.0 million was available. Bally's
Park Place intends to replace the existing credit facility with the New Credit
Facility as part of the Refinancing. The New Credit Facility is a $50 million
revolving credit facility which will mature on June 30, 1997. The interest rate
is, at the Company's option, at the agent bank's base rate or a

23
<PAGE> 26

LIBOR-based rate. In addition, the New Credit Facility will provide for an
annual fee of 1/2 of 1% on the unused portion of the facility.

The Existing Note Indenture and the existing credit facility restrict,
among other things, the ability of Bally's Park Place to incur debt, pay
dividends, make acquisitions, create liens, sell assets and make certain
investments. Payments of dividends by Bally's Park Place are restricted in
amount and are generally limited to 50% of its aggregate consolidated net income
(as defined) earned since December 31, 1988. On September 20, 1993, an $11.0
million dividend was paid by Bally's Park Place to Casino Holdings and by Casino
Holdings to Bally. At September 30, 1993, approximately $5.8 million was
available under the Existing Note Indenture and existing credit facility to pay
dividends. On December 15, 1993, Bally's Park Place declared and paid a $5.7
million dividend to Casino Holdings which declared and paid a similar dividend
to Bally. The Existing Note Indenture and the existing credit facility will be
discharged in connection with the Refinancing. The terms of the Indenture and
the New Credit Facility will impose restrictions on Bally's Park Place's ability
to incur debt and issue preferred stock, make acquisitions and certain
restricted payments, create liens, sell assets or enter into transactions with
affiliates. See "Description of the Notes -- Certain Covenants." The Casino
Holdings Notes Indenture contains certain restrictions on the ability of Bally's
Park Place to incur additional indebtedness and make restricted payments and
contains limitations on other payments effecting subsidiaries. The amount of
future dividends payable to Casino Holdings, if any, will depend on many
factors, including Bally's Park Place's ability to generate earnings, its
financial condition and its capital expenditure and other cash requirements, as
well as restrictive debt covenants and possibly the approval of regulators.

Cash flows of Bally's Park Place for the nine months ended September 30,
1993 and 1992 and the years ended December 31, 1992, 1991 and 1990 are
summarized as follows:

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
--------------- -------------------------
1993 1992 1992 1991 1990
----- ----- ----- ----- -----
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Operating:
Income before cumulative effect on prior
years of change in accounting for income
taxes..................................... $21.4 $ 7.3 $ 7.9 $ 1.8 $ 8.1
Depreciation and amortization................ 19.9 20.7 27.4 28.1 25.9
Deferred income taxes........................ 8.0 2.6 1.0 (1.5) (.8)
Changes in operating assets and
liabilities............................... (20.0) (13.3) (5.1) 13.7 (3.2)
Other adjustments to reconcile to cash
provided.................................. 1.2 1.8 4.1 5.9 4.2
----- ----- ----- ----- -----
Cash provided by operating activities..... 30.5 19.1 35.3 48.0 34.2
Investing:
Purchases of property and equipment.......... (8.3) (9.1) (10.3) (10.9) (55.6)
Other, net................................... (.9) (2.3) (2.3) (2.1)
----- ----- ----- ----- -----
Cash used in investing activities......... (9.2) (11.4) (12.6) (13.0) (55.6)
Financing:
Debt transactions (including financing
transactions with affiliates and debt
issuance costs)........................... (13.0) (12.0) (22.9) (33.6) 20.8
Dividends paid................................. (11.0) -- (3.9)
----- ----- ----- ----- -----
Cash provided by (used in) financing
activities................................ (24.0) (12.0) (22.9) (33.6) 16.9
----- ----- ----- ----- -----
Increase (decrease) in cash and equivalents.... (2.7) (4.3) (.2) 1.4 (4.5)
Cash and equivalents, beginning of period...... 12.3 12.5 12.5 11.1 15.6
----- ----- ----- ----- -----
Cash and equivalents, end of period............ $ 9.6 $ 8.2 $12.3 $12.5 $11.1
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>

24
<PAGE> 27

Bally's Park Place generated cash flow from operating activities of $30.5
million and $19.1 million in the nine months ended September 30, 1993 and 1992,
respectively. For the nine months ended September 30, 1993, "Changes in
operating assets and liabilities" includes the effect of the settlement of
amounts owed to a former executive who retired in January 1993, partially offset
by a $3.2 million decrease in other assets related to the surrender of an
insurance policy on this former executive for cash by Bally's Park Place. For
the nine months ended September 30, 1992, "Changes in operating assets and
liabilities" includes deferred compensation payments to a former executive.

For the nine months ended September 30, 1993 and 1992 expenditures for
property and equipment include refurbishment of hotel rooms in the original
structure, renovations of one of Bally's Park Place's specialty restaurants and
suites and the purchase of slot machines.

During the nine months ended September 30, 1993, Bally's Park Place repaid
the outstanding borrowings under the existing credit facility. In addition,
Bally's Park Place repaid $9.0 million of amounts advanced by Bally's Grand.
Bally's Grand and Bally's Park Place have a cash management arrangement whereby
Bally's Grand loans excess funds to Bally's Park Place. See "Certain
Transactions -- Transactions with Bally's Grand" and the notes to consolidated
financial statements included elsewhere in this Prospectus.

Bally's Park Place generated cash flow from operating activities of $35.3
million, $48.0 million and $34.2 million in 1992, 1991 and 1990, respectively.
The 1992 "Changes in operating assets and liabilities" principally reflect the
effect of deferred compensation payments to a former executive. The 1991
"Changes in operating assets and liabilities" represent the cumulative effect of
several financial events. Receivables declined $2.8 million as a result of a
reduced issuance of casino credit. Inventories declined $2.8 million as a result
of a reduced level of general inventories and retail merchandise. A $5.1 million
increase in accounts payable and accrued liabilities resulted from a $1.1
million accrual for the cost of demolishing a subsidiary's motel, $0.9 million
accrual related to Bally's Park Place's guarantee of certain guaranteed interest
contracts from an insolvent insurance company in Bally's Park Place's 401(k)
plan and other increases in accounts payable and accruals.

The 1992 and 1991 expenditures for property and equipment related to the
refurbishment of hotel rooms, casino slot renovations, other public area
improvements and the purchase and upgrade of various data processing equipment.
Expenditures in 1990 primarily related to the construction of a parking garage,
which opened in November 1990, and public area and restaurant renovations.

In 1992 and 1991, Bally's Park Place reduced borrowings under its existing
credit facility with its excess cash flows from operations and advances from
Bally's Grand. Financing transactions in 1990 are net of a $50.0 million advance
to Bally, which Bally's Park Place declared as a dividend to Bally in December
1992. In 1990, Bally's Park Place paid Bally a dividend of $3.9 million. In 1992
and 1991, no cash dividends were paid to Bally, although in 1992, as described
previously, the $50.0 million receivable from Bally was declared as a dividend.

YEAR ENDED DECEMBER 31, 1993

As discussed above, revenues for the nine months ended September 30, 1993
increased as compared to 1992. Preliminary year end results indicate that
revenues for 1993 were approximately $352 million, an increase of 6% from the
prior year and EBITDA for 1993 was approximately $112 million, an increase of
24% over the prior year.

ISSUER

The Issuer serves solely as a financing corporation to raise funds through
the issuance of debt securities. In August 1989, the Issuer issued and sold the
Existing Notes in the principal amount of $350,000,000 and immediately loaned
the proceeds of the sale to the Operating Company, for which the Issuer received
the Operating Company's $350,000,000 promissory note (the "$350,000,000 Note").
The $350,000,000 Note bears interest at the rate of 11 7/8% per annum and
principal and interest repayments are identical to those in the Existing Notes.
The issuance of the Notes will be structured in the same manner as the issuance
of the Existing Notes. The proceeds from the sale of the Notes will be loaned to
the Operating Company, which will

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<PAGE> 28

in turn deliver the Operating Company Note to the Issuer. The amount of each
principal and interest payment made by the Operating Company will be equal to
the amount of each principal and interest payment required to be paid by the
Issuer on the Notes. In connection with the Defeasance, the Operating Company
will repay all of the outstanding principal and interest on the $350,000,000
Note and the Issuer will defease and redeem all of the Existing Notes and pay
accrued and unpaid interest thereon through August 15, 1994 with the proceeds
from the sale of the Notes. See "Use of Proceeds." The Issuer has no sources of
income or cash other than payments on the Operating Company Note and the
$350,000,000 Note.

BUSINESS

Bally's Park Place owns and operates Bally's Park Place Casino Hotel, which
is situated on an eight-acre site with ocean frontage at the well-known
intersection of Park Place and the Boardwalk in Atlantic City, New Jersey. The
casino hotel complex is centrally located among the nine other casino hotels
adjacent to the Boardwalk and is within four blocks of Atlantic City's
Convention Hall and the new convention corridor, currently under development,
which will include a new convention facility. Bally's Park Place Casino Hotel's
central location on the Boardwalk contributes to its success in attracting
significant walk-in casino business, including strong crossover business from
competing casinos located nearby. Equipped with two multi-story parking garages
and surface valet parking lots, management believes that Bally's Park Place
Casino Hotel is also strongly positioned to attract the desirable drive-in
business.

Bally's Park Place Casino Hotel is one of the largest casino hotel
facilities in Atlantic City, currently encompassing approximately 2.2 million
square feet of space, including approximately 68,000 square feet of casino floor
space, a 30-story hotel tower, a 12-story hotel facility and two multi-story
parking garages providing over 2,000 parking spaces. The casino features
approximately 2,000 slot machines and 115 table games. Bally's Park Place Casino
Hotel employs the latest slot machine technology and places particular emphasis
on the location, design and lighting of its slot machine areas in its efforts to
further develop, expand and compete for slot machine play, which generates
higher margins than table game play. In addition, Bally's Park Place Casino
Hotel offers a full selection of table games, including baccarat, blackjack,
craps, roulette, and poker, among others. Management believes that recent
actions of the CCC have benefited Bally's Park Place Casino Hotel, as well as
other casino hotels in the Atlantic City market. The implementation of 24-hour
gaming, seven days per week has increased total gaming hours, providing
additional convenience for gaming patrons. In addition, the CCC has approved new
table games and modified its rules to permit an increase in the number of slot
machines in Atlantic City casinos and to permit poker and horse race
simulcasting. Under the New Jersey Act and the regulations of the CCC, because
of its hotel space, Bally's Park Place Casino Hotel is permitted to expand its
casino space substantially.

Bally's Park Place Casino Hotel has produced consistently high net
operating cash flows, even during the recent recessionary period, which has had
a particularly adverse effect on the economy of the northeastern United States.
Revenues from casino and other operations were $331.1 million in 1992, $322.8
million in 1991 and $324.6 million in 1990. EBITDA for Bally's Park Place was
$90.1 million in 1992, $82.5 million in 1991 and $86.5 million in 1990. EBITDA,
which is an industry-wide measure of performance, should not be considered as an
alternative to any measure of performance as promulgated under generally
accepted accounting principles, such as net income. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

Bally's Park Place Casino Hotel enjoys a share of total Atlantic City
casino revenues in excess of its proportionate share of total Atlantic City
casino floor space. Bally's Park Place has generated EBITDA which

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<PAGE> 29

has ranked among the highest in both EBITDA margin and EBITDA of the Atlantic
City casinos for each of the last eight years. For the years ended December 31,
1993 and 1992, management believes, based on preliminary results for 1993, that
Bally's Park Place led the Atlantic City market in EBITDA margin (approximately
32% and 27.2%, respectively) and ranked second in EBITDA (approximately $112
million and $90.1 million, respectively). However, this data should not be
considered as an alternative to any measure of performance as promulgated under
generally accepted accounting principles, such as net income. Bally's Park
Place's consistently high performance is a product of Bally's Park Place's focus
on slot machines, effective and efficient promotional programs and control of
expenses. Recent expense control measures include outsourcing design and
construction projects, controls on labor and payroll matters, budget and
departmental operation review procedures, reevaluation of administrative support
services and review of the cost-effectiveness of marketing strategy.

OPERATING STRATEGY

Bally's Park Place Casino Hotel has been a leader in the Atlantic City
market with respect to recognizing and responding to the shifting balance of
table games and slot machines in favor of increased slot machine play and
intends to continue to focus efforts on increasing slot machine revenue. Slot
machine play, with its higher operating margins, represents the fastest growing
and most profitable segment of the Atlantic City gaming industry, while table
game play has declined in Atlantic City. For the nine months ended September 30,
1993, slot machine play represented 70% of Bally's Park Place's gaming revenues
for this period, as compared to 67% of total gaming revenues in the Atlantic
City market for this period, up from 69% for Bally's Park Place and 66% for the
Atlantic City market in 1992. Bally's Park Place's gaming revenues derived from
slot machine play represented 69% of its total gaming revenues for the year
ended December 31, 1993. Bally's Park Place Casino Hotel believes it has had
success in obtaining market share of higher denomination slot players ($1, $5
and $25) and intends to utilize its marketing data bases to pursue and cultivate
these premium players. Bally's Park Place Casino Hotel also offers a full
selection of table games, which continue to constitute an important part of its
gaming business, and is taking steps to increase its share of Atlantic City
table game revenues. In addition, Bally's Park Place has plans for the
construction of a larger poker, horse race simulcasting and keno area in 1994 to
offer more variety in its gaming activities.

MARKETING STRATEGY

Bally's Park Place Casino Hotel's marketing strategy capitalizes on the
casino hotel's central location and quality facilities to generate a high volume
of play from casino customers from New York, Philadelphia and other northeastern
metropolitan areas. It targets gaming customers from many segments of the
Atlantic City casino market, focusing primarily on middle-market patrons,
including drive-in, walk-in, bus and convention business. In the latter part of
1993, Bally's Park Place instituted a more aggressive marketing program
including additional promotional events and expanded media advertising. Bally's
Park Place expects this marketing strategy to continue in 1994 and to include
additional staff of hosts to support and service its casino patrons.

The middle-market patron includes drive-in patrons, who typically have
higher gaming budgets than the average walk-in patron and may stay at the hotel
overnight. The middle-market drive-in patron is targeted through direct mail and
promotional programs based on frequency and dollar amount of play. Additionally,
Bally's Park Place Casino Hotel's two large parking garages offer over 2,000
parking spaces, 1,500 of which are included in Bally's Parking Place, a
self-park garage connected to the casino hotel by a people-mover and
glass-enclosed, climate-controlled skywalk. Bally's Park Place Casino Hotel's
proximity to the main highway leading into Atlantic City also enables it to
attract drive-in traffic entering Atlantic City.

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<PAGE> 30

Management believes that targeted walk-in patrons, many of whom visit more
than one casino on each visit to Atlantic City, are attracted both by Bally's
Park Place Casino Hotel's central location on the Boardwalk and its quality
facilities. Such patrons include those traveling to Atlantic City as part of the
various bus programs serving the city's casinos, including those sponsored by
Bally's Park Place Casino Hotel. While bus customers enhance casino activity
Sunday through Thursday of each week, management believes that Bally's Park
Place Casino Hotel is less dependent on bus patrons than other Atlantic City
casinos, since its central location and quality facilities make it more
attractive to more profitable drive-in patrons.

Bally's Park Place Casino Hotel is located four blocks from Atlantic City's
Convention Hall and the new convention corridor currently under development,
which will include a new convention facility. Bally's Park Place Casino Hotel
has sales representatives responsible for convention business, and recent
initiatives of its sales and marketing department focus on marketing Bally's
Park Place Casino Hotel's convention facilities. Bally's Park Place Casino Hotel
offers the second largest amount of convention space of all casino hotels in the
Atlantic City market. As Atlantic City International Airport continues to
develop, and as construction of the new Atlantic City convention center
progresses, Bally's Park Place Casino Hotel believes it will be well-positioned
to benefit from increased patronage because of its proximity to the convention
facilities.

The MVP Program contributes to Bally's Park Place's Casino Hotel's strategy
to develop and retain a loyal following of players who return specifically to
Bally's Park Place Casino Hotel. Participation in this program is available to
any slot machine or table game player who wishes to have his or her play
tracked. Each player is issued an MVP card that may be inserted into card
readers that are attached to the slot machines or, in the case of table game
players, given to casino personnel to rate the player and keep track of the
frequency of play and the amounts wagered. Participating slot machine and table
game players receive complimentary services and earn opportunities to
participate in various promotional events. Bally's Park Place Casino Hotel has
recently increased its utilization of complimentary rooms in an effort to
attract rated players and to encourage longer visits to the facility. The MVP
Program also enables Bally's Park Place Casino Hotel to track, through a data
base system, the level and frequency of play of its gaming patrons, the type of
games played and other valuable marketing information. Bally's Park Place Casino
Hotel utilizes this data to tailor certain promotions, activities and special
events to certain gaming patrons, based on their level and type of play, to
identify new players, to foster loyalty among gaming patrons and to optimize
profit per customer.

Bally's Park Place Casino Hotel provides personalized service to its gaming
patrons through the employment of its casino host and customer development
programs. The casino host program, which is conducted on-site, is based on
developing relationships with gaming patrons at the facility and providing
various accommodations for them, such as dinner and show reservations and
providing them with certain complimentary services. The customer development
program includes both on-site efforts, such as in-house parties, a first time
player intercept program, special services to high-end players and telemarketing
to solicit repeat business from high-end slot players.

Most of Bally's Park Place Casino Hotel advertising is conducted through
direct mail and promotional campaigns which target participants in the MVP
Program, and billboard advertising. In addition, in 1993 Bally's Park Place
expanded its media advertising and expects this to continue in 1994.

CREDIT POLICY AND CONTROL PROCEDURES

Credit policies vary widely from one casino hotel to another and are
largely dependent on the profile of the targeted customers. Table game players,
for example, are typically extended more credit than slot players, and high-end
players are typically extended more credit than patrons who tend to wager lower
amounts. Gaming debts are legally enforceable under the current laws of New
Jersey; however, not all states and foreign countries will honor these policies
or enforce a judgment on a gaming debt entered in New Jersey.

Historically, Bally's Park Place Casino Hotel has extended credit to
selected gaming patrons in order to compete with other casino hotels which also
extend credit to customers. During 1992, Bally's Park Place extended gaming
credit of $71.2 million, or 13.8% of its table game drop, as compared to credit
of $78.7 million, or 14.7% of its table game drop in 1991. Since commencing
operations in 1979, approximately 99% of

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gaming receivables have been collected. There can be no assurance, however, that
Bally's Park Place Casino Hotel will continue to maintain a satisfactory level
of collections on gaming receivables.

If not controlled, gaming operations at Bally's Park Place Casino Hotel are
subject to risk of substantial loss as a result of employee or patron
dishonesty, credit fraud or illegal slot machine manipulation. Bally's Park
Place has in place control procedures to minimize such risks; however, there can
be no assurance that losses will not occur. Current controls include supervision
of employees, monitoring by electronic surveillance equipment and use of two-way
mirrors and overhead catwalks. Bally's Park Place Casino Hotel's activities are
observed and monitored on an ongoing basis by agents of both the CCC and the New
Jersey Division of Gaming Enforcement, each of which maintains a staff on the
premises of Bally's Park Place Casino Hotel.

EMPLOYEES

As of September 30, 1993, Bally's Park Place Casino Hotel employed
approximately 4,155 persons. At that date, Bally's Park Place had five
collective bargaining contracts with unions covering approximately 1,540 of its
employees. Of these collective bargaining agreements, one expires in September
1994, three expire in April 1996 and one expires in June 1996. Management
believes that its employee relations are good.

PROPERTIES

Bally's Park Place also owns properties in Atlantic City, some of which are
leased to Bally's Grand. Properties leased to Bally's Grand include
approximately 237,000 square feet of surface parking space located across the
street from Bally's Grand, which are leased pursuant to month-to-month lease
arrangements with monthly payments of approximately $20,500. Bally's Park Place
also leases to Bally's Grand approximately 191,000 square feet of surface
parking space and an approximately 26,000-square foot building, which contains
offices and a garage in Ventnor, New Jersey for employee parking, shuttle
service and limousine staging and servicing, pursuant to a five-year lease
expiring August 1995 and providing for monthly payments of $37,500. Bally's Park
Place received approximately $700,000 in lease revenues for these properties in
each of 1992 and 1991. See "Certain Transactions -- Transactions with Bally's
Grand."

Substantially all of the properties of Bally's Park Place are subject to
first priority mortgage liens and security interests securing the Existing Notes
and the existing credit facility.

SEASONALITY

Bally's Park Place's operations are seasonal, with casino revenues peaking
during the summer season. Accordingly, Bally's Park Place's operations are
likely to be less profitable, or losses may be incurred, in the first and fourth
quarters of its fiscal year.

ISSUER

The Issuer serves solely as a financing corporation to raise funds through
the issuance of debt securities so that the Issuer and Bally's Park Place can
refinance a portion of their outstanding indebtedness. The Issuer is not
authorized to conduct any other business operations.

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<PAGE> 32

COMPETITION

Bally's Park Place faces intense competition in the Atlantic City market
from other companies in the gaming industry, some of which may have greater
financial resources than Bally's Park Place. Since April 1990, there have been
11 other casino hotel facilities operating in Atlantic City in competition with
Bally's Park Place, including Bally's Grand. Although no new casinos have been
opened in Atlantic City since April 1990 and there have been no public
announcements concerning new casino openings, the addition of new casino hotels
in the Atlantic City market would increase competition. Several Atlantic City
casinos have announced plans for expansion, which will increase competition in
the Atlantic City market, particularly as those facilities add additional slot
machines in connection with their expansions.

Bally's Park Place faces significant competition from both established
casinos, including those in Las Vegas and the Caribbean and newly emerging
gaming operations. Bally's Park Place believes that the recent legalization of
casino gaming in jurisdictions such as Mississippi, Louisiana, South Dakota,
Indiana, Iowa, Illinois, Missouri and Colorado, and Indian gaming in Connecticut
and elsewhere, has not, to date, had a material adverse impact on the operations
of Bally's Park Place Casino Hotel. Bally's Park Place, however, believes that
the adoption of legislation approving casino gaming in any jurisdiction near New
Jersey, particularly Delaware, Maryland, New York or Pennsylvania, could have a
material adverse effect on the operations of Bally's Park Place Casino Hotel.
The legalization of gaming in new jurisdictions, likely will increase
competition affecting the Company's new gaming ventures. There have been
proposals made for significant land-based casinos in a number of other
jurisdictions, including New York and Pennsylvania and several large
metropolitan areas, including Chicago, where Bally is headquartered. Bally's
Park Place also competes with other forms of legalized gaming, including
state-sponsored lotteries in many jurisdictions, including New Jersey, Delaware,
Maryland, Pennsylvania and New York.

Bally's Park Place believes that casino hotel competition in Atlantic City
is based primarily on the location and physical design of the casino hotel, the
extent and quality of personalized service offered to guests and casino
customers, the price and quality of rooms and food and beverage, the number and
quality of its restaurants, convention and other public facilities, promotional
allowances, the entertainment offered, the variety of games, table limits,
casino credit granted to customers and parking capacity. Management believes
that Bally's Park Place Casino Hotel's reputation as a first class facility
helps it compete in the Atlantic City market. Bally's Park Place Casino Hotel
also has a central location among the Atlantic City casinos, which management
believes has a positive effect on its competitive position.

GAMING REGULATION

Gaming is regulated in every jurisdiction in which it is currently
legalized, and regulations generally require receipt of a license prior to
commencement of gaming operations. The regulatory frameworks may impose
restrictions or costs, including additional taxes, that materially detract from
the feasibility or profitability of gaming ventures, including those
contemplated by Bally's Park Place. Gaming regulations and their enforcement are
within the discretion of the regulating jurisdictions, and Bally's Park Place
cannot predict what these regulations will be, how they will be enforced or what
effect, if any, these regulations will have on Bally's Park Place.

Gaming activities in Atlantic City are subject to the New Jersey Act,
regulations of the CCC and other applicable laws. No casino may operate unless
the required permits or licenses and approvals are obtained from the CCC. The
CCC is authorized under the New Jersey Act to adopt regulations covering a broad
spectrum of gaming and gaming-related activities and to prescribe the methods
and forms of applications from all classes of licensees. These laws and
regulations concern primarily (i) the financial stability, integrity,
responsibility, good character, honesty and business ability of casino service
suppliers and casino operators, their directors, officers and employees, their
security holders and others financially interested in casino operations, (ii)
the nature of casino hotel facilities, and (iii) the operating methods and
financial and accounting practices used in connection with the casino
operations. Taxes are imposed by the State of New Jersey on gaming operations at
the rate of eight percent of gross gaming revenues. In addition, the New Jersey
Act provides for an investment alternative tax of 2.5% of gross gaming revenues.
This investment alternative

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tax may be offset by investment tax credits, which are obtained by purchasing
bonds issued by or investing in housing or other development projects approved
by the New Jersey Casino Reinvestment Development Authority, a state agency. See
the "Casino Reinvestment Development Authority investments" note in the Notes to
the Consolidated Financial Statements. New laws and regulations, as well as
amendments to existing laws and regulations, relating to gaming activities in
Atlantic City are periodically introduced or proposed and sometimes adopted.

The CCC has broad discretion with regard to the issuance, renewal and
revocation or suspension of casino licenses. A casino license is not
transferable, is issued for a term of up to one year for the first two renewals
and thereafter for a term of up to two years (subject to discretionary reopening
of the licensing hearing by the CCC at any time), and must be renewed by filing
an application which must be acted on by the CCC prior to the expiration of the
license in force. At any time, upon a finding of disqualification or
noncompliance, the CCC may revoke or suspend a license or impose fines.

The New Jersey Act imposes certain restrictions on the ownership and
transfer of securities issued by a corporation that holds a casino license or is
deemed a holding company, intermediary company, subsidiary or entity qualifier
(each, an "affiliate") of a casino licensee. "Security" is defined by the New
Jersey Act to include instruments that evidence either a beneficial ownership in
an entity (such as common and preferred stock) or a creditor interest in an
entity (such as a bond, note or mortgage). Pursuant to the New Jersey Act, the
corporate charter of a publicly traded affiliate of a casino licensee must
require that a holder of the company's securities dispose of such securities if
the holder's continued holding would result in the company or any affiliate
being no longer qualified to continue as a casino licensee under the New Jersey
Act. The corporate charter of a casino licensee or any privately held affiliate
of the licensee must (i) establish the right of prior approval by the CCC with
regard to a transfer of any privately held security in the company and (ii)
create the absolute right of the company to repurchase at the market price or
purchase price, whichever is less, any security in the company in the event the
CCC disapproves a transfer of such security under the New Jersey Act. The
corporate charters of Bally's Park Place and the Issuer conform with the New
Jersey Act's requirements described above for privately held companies.

If the CCC finds that an individual owner or holder of securities of a
corporate licensee or an affiliate of such corporate licensee is not qualified
under the New Jersey Act, the CCC may propose remedial action. The CCC may
require divestiture of the securities held by any disqualified holder who is
required to be qualified under the New Jersey Act (e.g., officers, directors,
security holders and key casino and other employees). In the event that
disqualified persons fail to divest themselves of the securities, the CCC may
revoke or suspend the license. However, if an affiliate of a casino licensee is
a publicly traded company and the CCC finds disqualified any holder of any
security thereof who is required to be qualified, and the CCC also finds that
(i) such company has complied with the aforesaid charter provisions; (ii) such
company has made a good faith effort, including the prosecution of all legal
remedies, to comply with any order of the CCC requiring the divestiture of the
security interest held by the disqualified holder; and (iii) such disqualified
holder does not have the ability to control the corporate licensee or any
affiliate thereof, or to elect one or more members of the board of directors of
such affiliate, the CCC will not take action against the casino licensee or its
affiliate with respect to the continued ownership of the security interest by
the disqualified holder.

For purposes of the New Jersey Act, a security holder is presumed to have
the ability to control a publicly traded corporation, or to elect one or more
members of its board of directors, if such holder owns or beneficially holds 5%
or more of the equity securities of such corporation, unless such presumption of
control or ability to elect is rebutted by clear and convincing evidence. An
"institutional investor," as that term is defined under the New Jersey Act, is
entitled to a waiver of qualification if it holds less than 10% of the equity
securities of a publicly traded holding or intermediary company of a casino
licensee and (i) the holdings were purchased for investment purposes only, (ii)
there is no cause to believe the institutional investor may be found
unqualified, and (iii) upon request by the CCC, the institutional investor files
a certified statement to the effect that it has no intention of influencing or
affecting the affairs of the issuer, the casino licensee or its other
affiliates. The CCC may grant a waiver of qualification to an institutional
investor holding 10% or more of such securities upon a showing of good cause and
if the conditions specified above are met.

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<PAGE> 34

With respect to debt securities, the CCC generally requires a person
holding 15% or more of a debt issue of a publicly traded affiliate of a casino
licensee to qualify as a "financial source" where the use of the proceeds from
the debt issue is related in any way to the financing of the casino licensee.
There can be no assurance that the CCC will continue to apply the 15% threshold,
and the CCC could at any time establish a lower threshold for qualification. An
exception to the qualification requirement is made for institutional investors,
in which case the institutional holder is entitled to a waiver of qualification
if the holder's position in the aggregate is less than 20% of the total
outstanding debt of the affiliate and less than 50% of any outstanding publicly
traded issue of such debt, and if the conditions specified in the above
paragraph are met. As with equity securities, a waiver of qualification may be
granted to institutional investors holding larger positions upon a showing of
good cause and if all conditions specified in the above paragraph are met.

Generally, the CCC would require each institutional holder seeking a waiver
of qualification to execute a certificate to the effect that (i) the holder has
reviewed the definition of institutional investor under the New Jersey Act and
believes that it meets the definition of institutional investor; (ii) the holder
purchased the securities for investment purposes only and holds them in the
ordinary course of business; (iii) the holder has no involvement in the business
activities of, and no intention of influencing or affecting the affairs of, the
Issuer, the casino licensee or any affiliate; and (iv) if the holder
subsequently determines to influence or affect the affairs of the Issuer, the
casino licensee or any affiliate, it shall provide not less than 30 days' notice
of such intent and shall file with the CCC an application for qualification
before taking any such action.

Commencing on the date the CCC serves notice on the licensee or an
affiliate of such licensee that a security holder of such corporation has been
found disqualified, it will be unlawful for the security holder to (i) receive
any dividends or interest upon any such securities, (ii) exercise, directly or
through any trustee or nominee, any right conferred by such securities, or (iii)
receive any remuneration in any form from the corporate licensee for services
rendered or otherwise.

Persons who are required to qualify under the New Jersey Act by reason of
holding debt or equity securities are required to place the securities into an
Interim Casino Authorization ("ICA") trust pending qualification. Unless and
until the CCC has reason to believe that the investor may not qualify, the
investor will retain the ability to direct the trustee how to vote, or whether
to dispose of, the securities. If at any time the CCC finds reasonable cause to
believe that the investor may be found unqualified, it can order the trust to
become "operative," in which case the investor will lose voting power, if any,
over the securities but will retain the right to petition the CCC to order the
trustee to dispose of the securities.

Once an ICA trust is created and funded, and regardless of whether it
becomes operative, the investor has no right to receive a return on the
investment until the investor becomes qualified. Should an investor ultimately
be found unqualified, the trustee would dispose of the trust property, and the
proceeds would be distributed to the unqualified applicant only in an amount not
exceeding the actual cost of the trust property. Any excess proceeds would be
paid to the State of New Jersey. If the securities were sold by the trustee
pending qualification, the investor would receive only actual cost, with
disposition of the remainder of the proceeds, if any, to await the investor's
qualification hearing.

In the event it is determined that a licensee has violated the New Jersey
Act or its regulations, then under certain circumstances, the licensee could be
subject to fines or have its license suspended or revoked. In addition, if a
person required to qualify under the New Jersey Act fails to qualify, or if a
security holder who is required to qualify fails to qualify and does not dispose
of his securities in the licensee or in any affiliate of the licensee, as may be
required by the New Jersey Act, then, under certain circumstances, the licensee
could have its license suspended or revoked.

If a casino license were not renewed, were suspended for more than 120 days
or were revoked, the CCC could appoint a conservator. The conservator would be
charged with the duty of conserving and preserving the assets so acquired and
continuing the operation of the hotel and casino of a suspended licensee or with
operating and disposing of the casino hotel facilities of a former licensee.
Such suspended licensee or former licensee, however, would be entitled only to a
fair rate of return out of net earnings on its investment, to be determined
under New Jersey law, with any excess to go to the State of New Jersey, if so
directed by the

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CCC. Suspension or revocation of any licenses or the appointment of a
conservator by the CCC would have a material adverse effect on the business of
the Issuer.

In September 1992, the casino license of Bally's Park Place was renewed by
the CCC for a two-year period ending September 30, 1994.

OTHER

Bally's Park Place is required to annually file documents with the Attorney
General of the United States in connection with the operation of slot machines.
All requisite filings for the present year have been made.

LEGAL MATTERS

Bally's Park Place is involved in various claims and lawsuits incidental to
its business. In the opinion of management, Bally's Park Place is adequately
insured against such claims and lawsuits, and any ultimate liability arising out
of such claims and lawsuits will not have a material adverse effect on the
financial condition or operations of Bally's Park Place.

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MANAGEMENT

BALLY'S PARK PLACE

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information regarding the directors
and executive officers of Bally's Park Place:

<TABLE>
<CAPTION>
NAME AGE BALLY'S PARK PLACE POSITION
- --------------------- --- ---------------------------------------------------------
<S> <C> <C>
Arthur M. Goldberg 52 Chairman of the Board of Directors and Chief Executive
Officer
Wallace R. Barr 48 President, Chief Operating Officer and Director
C. Patrick McKoy 42 Senior Vice President, Operations of the Operating
Company
Robert G. Conover 48 Senior Vice President, Management Information Systems of
the Operating Company
Dennis P. Venuti 50 Senior Vice President, Secretary and General Counsel
Joseph A. D'Amato 45 Vice President and Treasurer
Lee S. Hillman 38 Director
J. Kenneth Looloian 71 Director
</TABLE>

The tenure of the directors and executive officers of Bally's Park Place
and other information concerning the directors and executive officers of Bally's
Park Place are set forth below.

Mr. Goldberg has been Chairman of the Board of Directors and Chief
Executive Officer of Bally's Park Place and the Issuer since January 1993. Mr.
Goldberg has also been Chairman of the Board of Directors and Chief Executive
Officer of GNAC, CORP. ("GNAC") and GNF, CORP. ("GNF") since January 1993 and a
director of GNAC and GNF since August 1992. GNAC is a wholly owned subsidiary of
Bally, and, through its wholly owned subsidiary GNOC, CORP. ("GNOC"), operates
Bally's Grand. GNF is a wholly owned subsidiary of GNAC created to serve as a
financing entity. Mr. Goldberg was elected Chairman of the Board of Directors
and Chief Executive Officer of Bally in October 1990 and President of Bally in
January 1993. Mr. Goldberg has also served as the Chairman of the Board,
President and Chief Executive Officer of Casino Holdings since June 1993. He has
also served, since 1990, as a director of Bally's Health and Tennis Corporation
("BHTC"), a subsidiary of Bally and an operator of fitness centers. Mr. Goldberg
is also Chairman of Bally's Executive Committee. Since 1990, he has been
Chairman of the Board of Directors, Chief Executive Officer and President of Di
Giorgio Corporation, a corporation engaged in food distribution. From 1985 to
1989, he was Chief Executive Officer, President and a director of International
Controls Corporation, a manufacturing and engineering company. Mr. Goldberg is
also a director of First Fidelity Bancorp. In August 1992, Mr. Goldberg was
elected Chairman of the Board of Directors, President and Chief Operating
Officer of Bally's Grand, Inc. ("BGI"). From November 1991 to August 20, 1993,
BGI operated its business and managed its properties as a debtor-in-possession
under chapter 11 of the United States Bankruptcy Code. BGI's chapter 11 plan of
reorganization was confirmed September 15, 1992, and became effective August 20,
1993 at which time BGI emerged from bankruptcy. See "Investment Considerations
- -- Relationship with Bally, Casino Holdings and Bally's Grand."

Mr. Barr has been President, Chief Operating Officer and a director of
Bally's Park Place and the Issuer since February 1993, and from January 1993 to
February 1993 he was Senior Vice President and Chief Operating Officer. He has
also served as the Executive Vice President, Chief Operating Officer and a
Director of Casino Holdings since June 1993. Mr. Barr was a Senior Vice
President of GNAC from June 1991 to February 1993, Chief Operating Officer of
GNAC since January 1993, and President and a director of GNAC and GNF since
February 1993. From March 1984 to June 1991, he served as Senior Vice President,
Operations of Bally's Park Place, from February 1981 to June 1982, he served as
its Treasurer, Corporate Controller and Chief Financial Officer, and, from June
1982 to March 1984, he was Senior Vice President and Chief Financial Officer.
From January 1987 to September 1992, Mr. Barr was Senior Vice President and
Treasurer of BGI.

34
<PAGE> 37

Mr. McKoy has been a Senior Vice President, Operations of the Operating
Company since March 1993. He served as Vice President and Treasurer of the
Operating Company from February 1984 to June 1988. From May 1991 to March 1993,
Mr. McKoy was employed by Resorts International (Bahamas) 1984 Ltd. as Senior
Vice President, Finance (Office of the President). From June 1988 to January
1991, he was employed by Trump's Castle Associates Limited Partnership as Senior
Vice President, Finance and Administration. In March 1992, Trump's Castle
Associates Limited Partnership filed a voluntary petition for protection under
chapter 11 of title 11 of the United States Code. The plan of reorganization in
connection with this chapter 11 proceeding was confirmed in August 1992.

Mr. Conover has been a Senior Vice President of the Operating Company since
January 1993 and Vice President since 1983. Mr. Conover was elected Vice
President, Management Information Systems and Chief Information Officer of Bally
in December 1992. Mr. Conover has been Senior Vice President of GNOC since 1987.
Mr. Conover has also been President of the Bally Systems division of Bally
Gaming International, Inc. ("BGII") since October 1990. BGII was formerly a
subsidiary of Bally. Mr. Conover was Vice President, Management Information
Systems of BGI from January 1987 to September 1992.

Mr. Venuti has been a Senior Vice President of Bally's Park Place, the
Issuer, GNAC and GNF since January 1993, and has been Secretary and General
Counsel of Bally's Park Place, the Issuer, GNAC and GNF since February 1987. In
addition, from February 1987 to January 1993, Mr. Venuti served as Vice
President of Bally's Park Place, the Issuer, GNAC and GNF. Mr. Venuti was also
Vice President, Secretary and General Counsel of BGI from January 1987 to
September 1992. Mr. Venuti has also served as Vice President and Assistant
Secretary of Casino Holdings since June 1993.

Mr. D'Amato has been Vice President and Treasurer of Bally's Park Place and
the Issuer since August 1988. From December 1984 to August 1988, Mr. D'Amato was
employed by GNAC, initially as its Corporate Controller and subsequently as
Assistant Vice President and Treasurer.

Mr. Hillman has been a director of Bally's Park Place since January 1993.
He has also served as the Executive Vice President, Chief Financial Officer and
a Director of Casino Holdings since June 1993. He has been Senior Vice
President, Chief Financial Officer and Treasurer of BHTC since April 1991, and a
director of BHTC since September 1992. He was elected Vice President, Chief
Financial Officer, Treasurer and Controller of Bally in November 1991 and was
elected Executive Vice President in August 1992. In August 1993, Mr. Hillman was
elected Vice President-Administration of BGI. Mr. Hillman has also been a
director of GNAC since February 1993. From October 1989 to April 1991, Mr.
Hillman was a partner in the accounting firm of Ernst & Young. From 1987 to
October 1989, he was a principal with the accounting firm of Arthur Young &
Company, a predecessor to Ernst & Young.

Mr. Looloian has been a director of Bally's Park Place since January 1993.
He has been a director of GNAC and GNF since August 1992 and Executive Vice
President of Di Giorgio Corporation, a corporation engaged in food distribution,
for more than five years. He is a former partner in Arveron Investments, L.P.
and former Executive Vice President of International Controls Corporation. Mr.
Looloian is also a director of Bally. Since June 1992, Mr. Looloian has been a
director of Science Management Corporation, an engineering and consulting
company. Mr. Looloian has also served as a Director of Casino Holdings since
June 1993.

Directors are elected annually to serve until their successors are elected
and qualified. Members of the Board of Directors do not receive any additional
compensation for service on the Board of Directors.

EXECUTIVE COMPENSATION

The following table sets forth the compensation paid by Bally's Park Place
to its Chief Executive Officer and the four most highly compensated executive
officers of Bally's Park Place whose cash compensation for 1993 for services
rendered in all capacities to Bally's Park Place exceeded $100,000. See "Certain
Transactions -- Transactions with Bally."

The executive officers named below participated in certain retirement plans
sponsored by Bally's Park Place or Bally that are intended to qualify for
tax-favored treatment under the Internal Revenue Code, including the Bally's
Park Place Supplemental Executive Retirement Plan (the "Bally's Park Place
SERP"),

35
<PAGE> 38

and the Bally's Park Place Profit-Sharing Plan and Trust (the "Bally's Park
Place Profit-Sharing Plan"). These executives also participated in the Bally
1989 Incentive Plan (the "Incentive Plan") and have received stock option grants
thereunder.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION($) ------------
NAME AND ------------------------ OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) (#)(A) COMPENSATION($)
- ------------------------- ---- ---------- --------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Arthur M. Goldberg(b) 1993 -- -- --(b) --
(Chairman of the Board 1992 -- -- -- --
and Chief Executive 1991 -- -- --(b) --
Officer)
Wallace R. Barr(c) 1993 704,566 (d) 100,000 16,239(e)
(President and 1992 -- -- -- --
Chief Operating Officer) 1991 117,779 -- 10,000 (f)
Robert G. Conover 1993 190,000(g) 50,000 20,000 14,229(e)
(Senior Vice President 1992 191,058(g) 60,000 0 10,259
of the Operating Company) 1991 173,943 50,000 5,000(h) (f)
C. Patrick McKoy(i) 1993 165,577 50,000 15,000 14,229(e)
(Senior Vice President, 1992 -- -- -- --
Operations of the 1991 -- -- -- --
Operating Company)
Dennis P. Venuti 1993 201,539 50,000 20,000 14,229(e)
(Senior Vice President 1992 176,731 35,000 0 9,860
and General Counsel) 1991 161,846 30,000 5,000 (f)
</TABLE>

- ---------------

(a) Represents grants of non-qualified Bally stock options pursuant to the
Incentive Plan.

(b) Mr. Goldberg is the Chairman of the Board of Directors, President and Chief
Executive Officer of Bally. For serving in such capacities, Mr. Goldberg
received from Bally in 1993, 1992 and 1991 aggregate compensation of
$7,021,997, $3,740,816 and $2,950,000, respectively. Mr. Goldberg was also
awarded non-qualified Bally stock options for 450,000 shares and 1,000,000
shares of Bally's common stock in 1993 and 1991, respectively. In addition,
Bally awarded Mr. Goldberg stock options for 300,000 shares of BGII's
common stock that is owned by Bally. Bally allocates portions of its
corporate overhead costs, which includes Mr. Goldberg's salary, to Bally's
Park Place. See "Certain Transactions -- Transactions with Bally."

(c) Mr. Barr served as Senior Vice President, Operations of Bally's Park Place
from March 1984 to June 1991. From June 1991 to February 1993, he served as
Senior Vice President of GNAC. Since February 1993, Mr. Barr has served as
President and Chief Operating Officer of Bally's Park Place.

(d) Mr. Barr's bonus has not been determined as of the date hereof.

(e) Represents matching contributions by Bally's Park Place pursuant to the
Bally's Park Place Profit-Sharing Plan and, in the case of Mr. Barr,
includes $2,010 for life insurance premiums paid by Bally's Park Place.

(f) Information omitted in accordance with the transition provisions of the
SEC.

(g) This amount represents approximately two-thirds of Mr. Conover's annual
salary. The remaining approximately one-third of his salary is paid by
Bally's Park Place but Bally's Park Place is reimbursed for that amount by
BGII pursuant to the terms of an agreement between Bally's Park Place and
BGII.

(h) Does not include options for 35,000 shares of BGII's common stock granted
by BGII to Mr. Conover.

(i) Mr. McKoy has been an executive officer of Bally's Park Place since March
1993.

36
<PAGE> 39

BALLY STOCK OPTIONS

During 1993, Bally granted options to purchase Bally's common stock to
certain executive officers of Bally's Park Place. The following table sets forth
information concerning grants of options to purchase Bally's common stock made
during 1993 to the executive officers of Bally's Park Place named in the Summary
Compensation Table.

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
- ----------------------------------------------------------------------------- ANNUAL RATES
NUMBER OF % OF TOTAL OF STOCK PRICE
SHARES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(A)
OPTIONS EMPLOYEES PRICE EXPIRATION -------------------------
NAME GRANTED(#) IN 1993 ($/SH.) DATE 5%($) 10%($)
- -------------------------------- ------------ -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Arthur M. Goldberg(b) -- -- -- -- -- --
Wallace R. Barr 50,000 18.5% 6.75 3/16/03 212,252 537,888
50,000(c) 18.5% 9.625 6/02/03 302,655 766,989
Robert G. Conover 10,000 3.7% 6.75 3/16/03 42,457 107,578
10,000(c) 3.7% 9.625 6/02/03 60,541 153,422
Dennis P. Venuti 10,000 3.7% 6.75 3/16/03 42,457 107,578
10,000(c) 3.7% 9.625 6/02/03 60,541 153,422
C. Patrick McKoy 15,000 5.6% 6.75 3/16/03 63,686 161,392
</TABLE>

- ---------------

(a) The potential realizable values represent future opportunity and have not
been reduced to present value in 1993 dollars. The dollar amounts included
in these columns are the result of calculations at assumed rates set by the
SEC for illustration purposes, and these rates are not intended to be a
forecast of Bally's common stock price and are not necessarily indicative of
the values that may be realized by the named executive officer.

(b) In 1993, Bally granted Mr. Goldberg, with regard to services for Bally,
options to purchase 450,000 shares of Bally common stock at an exercise
price of $9.625 per share, which options expire on September 30, 2003. The
potential realizable value of such options at assumed annual rates of stock
price appreciation for the option term of 5% and 10% would be $2,723,900 and
$6,902,897, respectively. The grant is subject to stockholder approval of an
amendment to the Incentive Plan.

37
<PAGE> 40

The following table discloses, for the named executives, information
regarding stock options exercised during, or held at the end of, 1993 pursuant
to the Incentive Plan.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND

FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY
ACQUIRED YEAR- OPTIONS/SARS
ON VALUE END (#) AT YEAR-END ($)
EXERCISE REALIZED (EXERCISABLE/ (EXERCISABLE/
NAME (#) ($) UNEXERCISABLE) UNEXERCISABLE)(A)
- --------------------- -------- --------- ------------- -----------------
<S> <C> <C> <C> <C>
Arthur M. Goldberg 0 0 1,520,000(E)/(b)(c) $ 10,120,000(E)/
450,000(U) 0(U)
Wallace R. Barr 0 0 9,167(E)/ 30,835(E)/
103,333(U) 102,915(U)
Robert G. Conover 0 0 27,668(E)/ 137,923(E)/(d)
33,332(U) 86,452(U)(e)
Dennis P. Venuti 0 0 4,334(E)/ 15,420(E)/
21,666(U) 25,205(U)
C. Patrick McKoy 0 0 0(E)/ 0(E)/
15,000(U) 26,250(U)
</TABLE>

- ---------------

(a) Value per share equals the closing price of Bally common stock on the New
York Stock Exchange or BGII common stock on the NASDAQ National Market
System as of December 31, 1993 ($8.50 and $17.25, respectively) minus the
applicable exercise or base price.

(b) Includes an award of options to purchase 500,000 shares of Bally's common
stock that can be deemed SARs at Mr. Goldberg's election. No other awards of
SARs were made to any of the other executive officers named in this table.

(d) Includes options to purchase 23,334 shares of BGII's common stock awarded by
BGII in 1991 and valued at $122,504.

(e) Includes options to purchase 11,666 shares of BGII's common stock awarded by
BGII in 1991 and valued at $61,247.

BALLY'S PARK PLACE SERP

In January 1987, Bally's Park Place established the Bally's Park Place
SERP.

An example of the benefits provided under the Bally's Park Place SERP
(assuming retirement at age 60) is set forth in the following table:

<TABLE>
<CAPTION>
SERP TABLE
ANNUAL BENEFIT FOR THE FOLLOWING YEARS OF
SERVICE
AVERAGE --------------------------------------------
COMPENSATION 7 10 15 OR MORE
- ------------ ------------ ------------ ----------
<S> <C> <C> <C>
$ 100,000 $ 23,310 $ 33,300 $ 50,000
250,000 58,275 83,250 125,000
500,000 116,550 166,500 250,000
750,000 174,825 249,750 375,000
1,000,000 233,100 333,000 500,000
</TABLE>

The Bally's Park Place SERP fixes a minimum level for retirement benefits
based upon a participant's years of service with Bally's Park Place (or Bally
and its subsidiaries) and the highest average compensation ("Average
Compensation") for any three years falling within the last 10 years of the
participant's employment (or total employment if less than 10 years).
Participants who are vested under the Bally's Park Place SERP are entitled to
receive an annual benefit equal to 3.33% of Average Compensation for each year
of service

38
<PAGE> 41

(subject to a maximum of 15 years of service to be credited to any participant),
but not more than 50% of the participant's Average Compensation. Benefits under
the Bally's Park Place SERP are not subject to any deduction for Social Security
or other offset amounts. A participant becomes vested under the Bally's Park
Place SERP only if such participant has at least seven years of service and has
either retired after attaining age 60 or both attained age 50 and participated
in the Bally's Park Place SERP for at least three years. Solely for purposes of
determining vesting, a participant who is disabled (as determined under the
Bally's Park Place SERP) and terminates employment after attaining age 50 is
credited with years of service and participation until the participant's death.
The Bally's Park Place SERP annual benefit is payable for the life of a vested
participant and normally commences after the participant has both terminated
employment and attained age 60. A reduced benefit is payable to a vested
participant who is eligible for early retirement (after attainment of at least
age 55) or who is disabled and begins to receive benefit payments at an earlier
date. Upon the death of a vested participant, a death benefit is payable to
either the participant's surviving spouse or the participant's beneficiaries.
Depending on circumstances described in the Bally's Park Place SERP, death
benefits are to be paid in the form of either a monthly payment equal to a
percentage of the benefit payable to the participant (either 50% to the
surviving spouse for life or 100% to the surviving spouse or the beneficiaries
for a period not exceeding 10 years) or a lump-sum cash payment equal to two
times the participant's compensation in such participant's last full calendar
year of employment. Participation in the Bally's Park Place SERP is limited to
certain key executives designated by the Board of Directors of Bally's Park
Place. Benefits payable under the Bally's Park Place SERP may generally be
cancelled in the event a participant is discharged for cause or enters into
competition with the gaming business of Bally's Park Place other than Bally's
Grand. As of December 31, 1993, Bally's Park Place SERP is unfunded and is not
qualified under the Internal Revenue Code. Messrs. Conover and Venuti have
credit for 14 and 12 years of service, respectively, under the Bally's Park
Place SERP. Mr. Barr is fully vested pursuant to the terms of his employment
agreement.

GOLDBERG EMPLOYMENT AGREEMENT

Bally and Mr. Goldberg entered into an employment agreement (the
"Employment Agreement") dated as of November 1, 1990 for a three-year term at an
annual base salary of $700,000, plus bonuses, payable at the discretion of the
Bally compensation committee. The Employment Agreement is guaranteed by Bally's
Park Place. The Employment Agreement was amended, effective November 1, 1991,
to, among other things, extend the term for an additional year and to increase
the base salary to $2,200,000. The Employment Agreement was further amended
September 29, 1993 to, among other things, extend the term of the Employment
Agreement through October 31, 1997, with automatic annual extensions for
additional one year periods unless either party gives written notice to the
other prior to October 1 of any year fixing the remainder of the term at three
years without automatic extension. In addition, the Employment Agreement calls
for Bally to contribute, each year during the term of Mr. Goldberg's employment,
amounts to provide Mr. Goldberg with annual retirement benefits, if he is
employed by Bally until age 62, equal to the excess, if any, of (i) 50% of the
average of his cash compensation for any of the three highest years preceding
the year in which he attains age 62, over (ii) the sum of $258,189 and the
retirement benefit payable to Mr. Goldberg under Bally's other retirement or
similar benefit programs in which Mr. Goldberg participates, except the Bally
401(k) program ("the Supplemental Retirement Benefit Arrangement"). The
contributions under the Supplemental Retirement Benefit Arrangement are to be
paid (i) directly to Mr. Goldberg, (ii) to the appropriate governmental taxing
authority on Mr. Goldberg's behalf, or (iii) to a supplemental retirement
benefit trust, together with a tax gross-up payment so that the net benefit
received by Mr. Goldberg, after payment of all taxes, is equal to the required
contribution by Bally. In 1993, the cost to Bally of the contributions and the
tax gross-up was $597,463 and $487,509, respectively. Upon termination of Mr.
Goldberg's employment without cause, in addition to other payments, Bally is
required to make an additional contribution, which would equal three times the
contribution most recently made prior thereto, provided that all retirement
benefits from the Supplemental Retirement Benefit Arrangement would not exceed
the benefits described in the third preceding sentence. Furthermore, in the
event there is a change in control of Bally (as defined in the Employment
Agreement) and within two years thereafter Mr. Goldberg's employment is
terminated by Bally or by him voluntarily following a constructive termination
without cause, Mr. Goldberg will be entitled to a lump sum payment equal to the
greater of (i) the sum of his base salary for the remainder

39
<PAGE> 42

of his employment term, plus the average of the semi-annual bonuses awarded to
him prior to his termination multiplied by two times the number of half-years
remaining in his employment term, or (ii) three times his base salary. In such
event, he shall also be entitled to any semi-annual bonuses awarded but not yet
paid, the value of his continued participation in certain employee benefit plans
of Bally (or continued participation in such plans until the end of the
employment term or the time Mr. Goldberg receives equivalent coverage from a
subsequent employer), certain retirement trust contributions and payment by
Bally of premiums on the split-dollar life insurance as if Mr. Goldberg had been
employed by Bally until age 62. Mr. Goldberg would also be entitled to a tax
gross-up payment with respect to any payment made after a change of control
subject to the excise tax. If a change of control of Bally occurred as of
December 31, 1993, Mr. Goldberg would be entitled to a payment of approximately
$29,600,000 under the Employment Agreement.

BARR EMPLOYMENT AGREEMENT

Bally and Mr. Barr entered into an employment agreement effective as of
January 1, 1993 for a term expiring December 31, 1995. The agreement provides
for an annual base salary of $700,000. Mr. Barr also received options to
purchase 50,000 shares of Bally common stock, subject to vesting. In the event
of an initial public offering of the common stock of either Bally's Park Place
or Bally's Grand during the term of the employment agreement, Mr. Barr will
receive stock options and/or stock awards in amounts consistent with the highest
grants of these types to other employees of Bally and its subsidiaries, other
than the Chairman of the Board or President of Bally. Upon execution of the
employment agreement, Mr. Barr became fully vested in the Bally's Park Place
SERP. In the event the employment agreement is terminated prior to its
expiration, except for cause, or the Bally's Park Place SERP is modified to
limit the credits Mr. Barr would have received for additional years of service,
Mr. Barr will be deemed to have an additional three years of service and credit
for compensation actually received or the base salary under the employment
agreement, whichever is greater. In the event of a change in control of Bally,
Mr. Barr may terminate the agreement and receive a lump sum payment equal to six
months of his base salary. In the event of a change in control of Bally, a
result of which Mr. Barr is asked to leave the employ of Bally, Mr. Barr is
entitled to receive a lump sum payment equal to either twenty-four months base
salary or an amount equal to his base salary for the balance of the term of his
employment agreement, whichever amount is greater. If a change of control of
Bally occurred as of December 31, 1993, and Mr. Barr was asked to leave the
employ of Bally, Mr. Barr would be entitled to a payment of $1,400,000.

CONOVER EMPLOYMENT AGREEMENT

Bally and Mr. Conover entered into an employment agreement effective as of
July 1, 1992 for a term expiring on December 31, 1994. The agreement provides
for an annual base salary of $285,000. Upon termination of Mr. Conover's
employment without cause, he will become fully vested in the Bally's Park Place
SERP regardless of his age. In the event of a change in control of Bally, Mr.
Conover may terminate the agreement and receive a lump sum payment equal to six
months of his base salary. In the event of a change in control of Bally, a
result of which Mr. Conover is asked to leave the employ of Bally, Mr. Conover
is entitled to receive a lump sum payment equal to 15 months of his base salary
or an amount equal to his base salary for the remainder of the term of his
agreement, whichever is greater. If a change of control of Bally occurred as of
December 31, 1993, and Mr. Conover was asked to leave the employ of Bally, Mr.
Conover would be entitled to a payment of $356,250 under his employment
agreement.

MCKOY SEVERANCE AGREEMENT

Bally's Park Place and Mr. McKoy entered into a severance agreement
effective as of March 15, 1993. The agreement provides that if Mr. McKoy's
employment is terminated within three years of the date of the agreement for any
reason other than Mr. McKoy's death, total disability, grossly negligent
performance of duties or voluntary resignation, then he is entitled to receive
from Bally's Park Place a lump-sum amount equal to 18 months of his then current
annual base salary. In addition, in such event, Mr. McKoy would continue to be
covered under Bally's Park Place's life, disability and health insurance for a
period of 18 months.

40
<PAGE> 43

GILLMAN EMPLOYMENT AND SEPARATION ARRANGEMENTS

On January 8, 1993, Bally, Bally's Park Place and Richard Gillman, formerly
the Chief Executive Officer, President and Chief Operating Officer of Bally's
Park Place, entered into a Retirement and Separation Agreement (the "Separation
Agreement") pursuant to which Mr. Gillman's employment agreement with Bally and
Bally's Park Place (the "Gillman Employment Agreement") was terminated and Mr.
Gillman resigned from all of his positions at Bally and its subsidiaries.

Prior to its termination, the Gillman Employment Agreement provided for a
three-year term at an annual base salary of $2,200,000, plus bonuses payable at
the discretion of Bally's compensation committee. In connection with entering
into the Gillman Employment Agreement, Mr. Gillman released all of his rights
under the Bally's Park Place SERP in exchange for Bally's Park Place agreeing to
pay a discounted value of the benefits under the Bally's Park Place SERP over
five years. Pursuant to this arrangement, Mr. Gillman received a payment of
$2,000,000 in 1991 and payments totalling $7,000,000 in 1992, leaving
approximately $18,600,000 unpaid at the date of the Separation Agreement.

Pursuant to the Separation Agreement, Mr. Gillman executed a covenant not
to compete, was paid $13,500,000 in lieu of the remaining aforementioned
$18,600,000 under the Gillman Employment Agreement, and $1,000,000 in exchange
for all other benefits and payments (including salary and bonus) otherwise
provided to Gillman under the Gillman Employment Agreement. In addition, Mr.
Gillman's options to purchase 666,666 shares of Bally common stock were
automatically vested.

TANNENBAUM SEPARATION AGREEMENT

Charles Tannenbaum, formerly Senior Vice President of Bally's Park Place,
and Bally's Park Place entered into a separation agreement, effective July 31,
1993, under which Mr. Tannenbaum will receive periodic payments in an amount
equal to his then existing base salary and a monthly car allowance until July
31, 1995 in lieu of certain retirement benefits under the Bally's Park Place
SERP. In addition, Mr. Tannenbaum is entitled to certain medical, insurance and
other benefits, and will be eligible for bonuses in 1993, 1994 and 1995 in
amounts generally consistent with previous awards. Mr. Tannenbaum also may
exercise all options to purchase Bally common stock currently held by him which
have vested or will vest prior to July 31, 1995. Effective August 1, 1995, Mr.
Tannenbaum will be entitled to receive benefits under the Bally's Park Place
SERP.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Neither Bally's Park Place nor the Issuer has a compensation committee or a
committee of the Board of Directors performing a similar function. During 1993,
Messrs. Goldberg and Barr participated in deliberations of the Bally's Park
Place Board of Directors concerning executive officer compensation. Since
January 8, 1993, Mr. Goldberg has been Chairman of the Board and Chief Executive
Officer and Mr. Barr has been President and Chief Operating Officer of Bally's
Park Place.

ISSUER

The By-laws of the Issuer provide, among other things, that the Board of
Directors of the Issuer consists of one member. Mr. Goldberg currently serves as
the sole director of the Issuer.

Mr. Goldberg serves as the Chairman of the Board and Chief Executive
Officer of the Issuer. Mr. Barr serves as President. Mr. D'Amato serves as Vice
President and Treasurer. Mr. Venuti serves as Senior Vice President and
Secretary. For additional information regarding Mr. Goldberg, Mr. Barr, Mr.
D'Amato and Mr. Venuti, see "Management -- Directors and Executive Officers."

The Issuer pays no compensation to its sole director or to its executive
officers.

41
<PAGE> 44

SECURITY OWNERSHIP

All of the issued and outstanding capital stock of the Issuer is owned
directly by Bally's Park Place, which is an indirect wholly owned subsidiary of
Bally.

The following table sets forth, as of February 1, 1994, certain information
concerning the Bally common stock beneficially owned by (i) each director of
Bally's Park Place, and (ii) the named executive officers in the Summary
Compensation Table and (iii) all directors and executive officers of Bally's
Park Place as a group.

<TABLE>
<CAPTION>
SHARES OF BALLY COMMON
STOCK BENEFICIALLY
OWNED(A)
-------------------------
PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER CLASS
- -------------------------------------------------------------------- ---------- ----------
<S> <C> <C>
Arthur M. Goldberg.................................................. 2,236,300(b) 4.61%
2 Executive Drive-Suite 400
Somerset, New Jersey 08873
Wallace Barr........................................................ 36,834(c) *
Park Place and Boardwalk
Atlantic City, New Jersey 08401
Lee S. Hillman...................................................... 41,667 *
8700 West Bryn Mawr
Chicago, Illinois 60631
J. Kenneth Looloian................................................. 10,000 *
2 Executive Drive-Suite 400
Somerset, New Jersey 08873
Robert G. Conover................................................... 8,168 *
Dennis P. Venuti.................................................... 7,668 *
C. Patrick McKoy.................................................... 8,500 *
All directors and executive officers as a group (8 persons)......... 2,349,137 4.84%
</TABLE>

- ---------------

<TABLE>
<S> <C>
* Less than 1%
(a) Includes stock options which are immediately exercisable or exercisable within 60 days.
(b) Includes shares held by Nugget Partners, L.P., a New Jersey limited partnership, whose
sole general partner is Mr. Goldberg.
(c) Includes 1,000 shares held by Mr. Barr's spouse, as to which Mr. Barr disclaims
beneficial ownership.
</TABLE>

CERTAIN TRANSACTIONS

TRANSACTIONS WITH BALLY

Bally is a holding company without significant operations of its own. The
Bally's Park Place consolidated financial statements included elsewhere in this
Prospectus reflect charges allocated by Bally of $3.7 million and $1.0 million
in 1992 and 1991, respectively. These costs reflect an allocation of Bally's
corporate overhead including executive salaries and benefits, public company
reporting costs and other corporate headquarter costs for which Bally's Park
Place does not obtain a measurable direct benefit. No allocation of such costs
was made by Bally in 1990. The allocation of these costs and expenses to Bally's
Park Place for the nine months ended September 30, 1993 was $3.0 million.

Pursuant to a tax sharing arrangement between Bally's Park Place and Bally,
income taxes were allocated to Bally's Park Place based on amounts Bally's Park
Place would pay or receive if it filed a separate consolidated federal income
tax return, except that Bally's Park Place received credit from Bally for the
tax

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<PAGE> 45

benefit of Bally's Park Place's net operating losses and tax credits, if any,
that were utilized in Bally's consolidated federal income tax return, regardless
of whether these losses or credits could have been utilized by Bally's Park
Place and its subsidiaries on a separate consolidated federal income tax return
basis. Payments were due to Bally when Bally filed the applicable consolidated
federal income tax return. Under this tax sharing arrangement, Bally's Park
Place had income taxes payable to Bally of $3.7 million and $1.7 million at
December 31, 1992 and 1991, respectively. Bally's Park Place is a party to a new
tax sharing agreement providing for a tax sharing arrangement on substantially
the same terms. Casino Holdings has entered into a similar tax sharing agreement
with Bally (which generally excludes Bally's Park Place from its stand-alone
computation). If there is an event of default under the indenture governing the
Casino Holdings Notes, and as a result thereof an acceleration, while Casino
Holdings is a member of the Bally consolidated group, payments to Bally, in the
aggregate, under these two tax sharing agreements will be decreased
(retroactively to the date of the Casino Holdings tax sharing agreement and
refunded to the extent paid) to the extent that Casino Holdings would have owed
less, in the aggregate, if there had been a single tax sharing agreement with
Casino Holdings which included Bally's Park Place in its stand alone
computation.

Bally's Park Place purchased slot machines and related services from BGII
at an aggregate cost of $3.2 million, $1.6 million and $1.2 million in 1992,
1991 and 1990, respectively. Bally's Park Place believes the terms of these
purchases are as favorable as those which could be obtained from unaffiliated
third parties. During 1992, Mr. Richard Gillman was an executive officer of each
of Bally's Park Place, the Issuer, GNAC, BGII and Bally. Mr. Gillman resigned
from his positions with all such companies other than BGII in January 1993.

In April 1990, Bally's Park Place advanced $50.0 million to Bally, secured
by a promissory note. In October 1992, Bally petitioned the CCC to allow Bally's
Park Place to declare the receivable due from Bally as a dividend. The CCC
approved this request in December 1992. No interest was paid to Bally's Park
Place on this advance subsequent to April 1, 1992. Through March 31, 1992,
Bally's Park Place earned interest at the prime rate of its agent bank.
Intercompany interest earned on this advance was $0.8 million, $4.2 million and
$3.7 million in 1992, 1991 and 1990, respectively.

Bally's Park Place participated in the Bally insurance program for general
liability in 1990, 1988 and 1987 through a captive insurance company of Bally
whose operation was discontinued in 1991. Under this program, general liability
insurance expense was allocated to Bally's Park Place based on claims
experience, which management believes was reasonable. General liability
insurance expense allocated to Bally's Park Place was $1.2 million for 1990.
Bally's Park Place charged $0.5 million to operations in 1992 for a retroactive
premium adjustment related to claim years ended December 31, 1990, 1988 and 1987
and paid this amount to Bally in January 1993.

TRANSACTIONS WITH BALLY'S GRAND

During 1992, Mr. Gillman was, and since January 8, 1993, Mr. Goldberg has
been, the Chairman of the Board of Directors and Chief Executive Officer of each
of GNAC and Bally's Park Place. Similarly, during 1992, Mr. Gillman was, and
since February 1993 and January 8, 1993, Mr. Barr has been, President and Chief
Operating Officer, respectively, of each company. Additionally, certain other
executive officers of Bally's Park Place serve in a similar capacity for Bally's
Grand and exercise decision making and operational authority over both entities.
Although certain of the named executive officers of Bally's Park Place were also
employed by Bally's Grand during 1993, 1992 and 1991, each received all of his
or her compensation relating to Bally's casino hotels in Atlantic City from
Bally's Park Place, except Mr. Barr, who, during the second half of 1991 and all
of 1992, was solely an officer of, and received his entire compensation from,
Bally's Grand. No allocation of cost was made between Bally's Park Place and
Bally's Grand for these executive officers as management believes these
allocable costs to be immaterial. See "Management--Executive Compensation."

Certain administrative and support operations of Bally's Park Place and
Bally's Grand are consolidated, including legal services, purchasing, limousine
services, and certain aspects of human resources and management information
systems. Costs of these operations are allocated to or from Bally's Park Place
either

43
<PAGE> 46

directly or using various formulas based on utilization estimates of such
services, which management believes is reasonable. See "Investment
Considerations--Relationship with Bally, Casino Holdings and Bally's Grand."

Bally's Park Place also leases surface area parking lots to Bally's Grand
located on Pacific Avenue across the street from Bally's Grand and in Ventnor,
New Jersey. Bally's Park Place recognized $0.7 million in rental income for
these properties in 1992 and 1991, and $0.4 million in 1990. Bally's Park Place
recognized $0.5 million in rental income for these properties in each of the
nine months ended September 30, 1993 and 1992. See "Business--Properties."
Bally's Park Place believes the terms of these leases are as favorable to
Bally's Park Place as those which could be obtained from unaffiliated third
parties.

Funds were advanced to Bally's Park Place by Bally's Grand in 1992, 1991
and 1990. The advances are payable on demand. As of September 30, 1993, Bally's
Park Place had outstanding advances due to Bally's Grand totalling $7.0 million,
which advances were used to reduce the outstanding balance under the existing
credit facility. The interest rate on such advances is at the prime rate of
Bally's Park Place's agent bank and is payable monthly. In 1992, 1991 and 1990,
intercompany interest expense on these advances was $1.2 million, $0.9 million
and $0.2 million, respectively. Intercompany interest expense was $0.4 million
and $0.9 million for the nine months ended September 30, 1993 and 1992,
respectively.

In December 1990, Bally's Park Place advanced $2.7 million to Bally's
Grand. The advance was repaid in full in June 1992. The interest rate was based
on the prime rate of Bally's Park Place's agent bank. Intercompany interest
income earned on funds advanced to Bally's Grand for 1992, 1991 and 1990 was
$0.1 million, $0.2 million and less than $0.1 million.

DESCRIPTION OF THE NOTES

GENERAL

The Notes will be direct obligations of the Issuer, secured by a mortgage
and security interests on certain real and personal property comprising Bally's
Park Place Casino Hotel in Atlantic City, New Jersey and by assignment of the
Operating Company Note. See "Security." The Notes will mature on , 2004
and will be limited to $425 million aggregate principal amount. Each Note will
bear interest at the rate set forth on the cover page hereof from , 1994,
or from the most recent interest payment date to which interest has been paid,
payable in cash semiannually on and each year, commencing
1994, to the Person in whose name the Note (or any predecessor Note) is
registered at the close of business on the or next preceding such
interest payment date. (Sections 202, 301 and 307)

Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes will be exchangeable and transferable, at the office or agency of
the Issuer in the City of New York maintained for such purposes; provided,
however, that payment of interest may be made at the option of the Issuer by
check mailed to the Person entitled thereto as shown on the security register.
(Sections 301, 305 and 1002) The Notes will be issued only in fully registered
form without coupons, in denominations of $1,000 and any integral multiple
thereof. (Section 302) No service charge will be made for any registration of
transfer, exchange or redemption of Notes, except in certain circumstances for
any tax or other governmental charge that may be imposed in connection
therewith. (Section 305)

DELIVERY AND FORM

The certificates representing the Notes will be issued in fully registered
form, without coupons. The Notes offered hereby will be issued under an
Indenture to be dated as of , 1994 (the "Indenture") between the Issuer,
Bally's Park Place, the Operating Company, Realty Co. and First Bank, as Trustee
(the "Trustee"), a copy of the form of which will be filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The Indenture is
subject to, and is governed by, the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"). The following summaries of the material provisions of
the Indenture do not purport to be complete, and are subject to, and are
qualified in their entirety by reference to, all of the provisions of the
Indenture, including the definitions of certain terms therein and those terms
made a part of the Indenture by the Trust Indenture Act.

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<PAGE> 47

GUARANTY

Bally's Park Place will fully and unconditionally guarantee the due and
punctual payment of the principal of and interest on the Notes. The obligations
of Bally's Park Place are unconditional, irrespective of the enforceability of
the Indenture and the Notes or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor. Bally's
Park Place waives all demands whatsoever against the Issuer prior to payment
under the Guaranty. In the event of acceleration of the Notes, the Notes will be
immediately due and payable by Bally's Park Place under the Guaranty,
notwithstanding any stay of such acceleration.

OPTIONAL REDEMPTION

Optional Redemption. The Notes will be subject to redemption at any time on
or after , 1999, at the option of the Issuer, in whole or in part, on not
less than 30 nor more than 60 days' prior notice in amounts of $1,000 or an
integral multiple of $1,000 at the following redemption prices (expressed as
percentages of the principal amount) (the "Redemption Price"), if redeemed
during the 12-month period beginning of the years indicated below:

<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ---- ----------
<S> <C>
1999 %
2000
2001
</TABLE>

and thereafter at 100% of the principal amount, in each case together with
accrued and unpaid interest to the redemption date (subject to the right of
Holders of record on relevant record dates to receive interest due on an
interest payment date).

Optional Redemption Upon Public Equity Offering. At any time, or from time
to time, on or prior to , 1997, the Issuer may, at its option, use all or a
portion of the net cash proceeds of one or more Public Equity Offerings (as
defined below) to redeem up to an aggregate of 33 1/3% of the principal amount
of the Notes originally issued, at a redemption price equal to % of the
principal amount thereof plus accrued and unpaid interest, if any, to the
redemption date, provided that immediately following such redemption, at least
$100 million principal amount of Notes remain outstanding. In order to effect
the foregoing redemption with the proceeds of any Public Equity Offering, the
Issuer shall send the redemption notice not later than 60 days after the
consummation of such Public Equity Offering.

As used in the preceding paragraph, "Public Equity Offering" means an
underwritten public offering of Capital Stock of Bally's Park Place (other than
Redeemable Capital Stock) or Casino Holdings pursuant to a registration
statement filed with the Commission in accordance with the Securities Act, which
public equity offering results in gross cash proceeds to Bally's Park Place or
Casino Holdings, as the case may be, of not less than $30 million.

If less than all of the Notes are to be redeemed, the Trustee shall select
the Notes or portions thereof to be redeemed pro rata, by lot or by any other
method the Trustee shall deem fair and reasonable.

SECURITY

General. The Notes will be secured by certain property and assets as
described below, referred to herein in this Prospectus as "Collateral."
References herein to the "Security Documents" include all documents to be
entered into to create or perfect the security interests in the Collateral,
including the Mortgage and the pledge agreement pursuant to which the Issuer
pledges as security for its obligations under the Indenture the Operating
Company Note.

The Mortgage. The Notes will be secured by a mortgage lien and security
interest evidenced by a mortgage and security agreement with assignment of rents
and an assignment of leases and rents (collectively,

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<PAGE> 48

the "Mortgage") by the Operating Company and Bally's Park Place Realty Co.
("Realty Co.") to the Trustee. The Mortgage will encumber the fee interest of
Realty Co. and the fee and leasehold interests of the Operating Company
comprising the Casino Hotel, the contiguous parking garage and property, any
additions or improvements constructed thereon and all furniture, fixtures,
machinery, equipment and supplies forming a part thereof or used in connection
therewith, but excludes all property leased by Bally's Grand (the "Property").
See "Business -- Properties" for a description of the Property. Pursuant to the
terms of an Intercreditor Agreement to be entered into by the Trustee and the
lenders under the New Credit Facility (the "Senior Lender"), the lien of the
Mortgage will be of equal priority for purposes of securing payment and
performance to the lien of the mortgage relating to the New Credit Facility. The
Trustee will hold the Mortgage and the Security Agreement for the benefit of the
Holders of the Notes. (Section 1201)

Bally's Park Place and the Issuer have obtained a preliminary appraisal
dated as of January 31, 1994 of the Property from American Appraisal Capital
Services, Inc. This appraisal places an aggregate market value as of January 1,
1994 of $745 million on the Collateral. There can be no assurances that the
Collateral, if sold, will be sold for this amount.

As described below under "Limitations on Encumbrances," the Operating
Company and Realty Co. may have or permit liens on the Collateral which rank
junior to or pari passu with the lien of the Mortgage up to an aggregate
principal amount not to exceed the sum (without duplication) of (A) the original
principal amount of the Notes (less the principal amount of the Notes
outstanding at the time of any calculation), (B) the amount available under the
revolving credit facility described in clause (i) of the definition of Permitted
Indebtedness, (C) $100 million and (D) 66 2/3% of the cost of the Casino Hotel
Improvements (as defined below).

The Indenture will require the Issuer to obtain and deliver to the Trustee
at least as frequently as every 24 months updated appraisals of the Collateral.
(Section 1207) The Indenture will require the Issuer to deliver to the Trustee
at its expense one or more A.L.T.A. form title insurance policies providing
title insurance in the aggregate amount equal to $425 million with respect to
the real property Collateral, which policies will name the Trustee as insured
for the benefit of the Holders of the Notes. (Section 1202)

INTERCREDITOR AGREEMENT

The rights of the Trustee for the Notes and the Senior Lender under the New
Credit Facility to exercise their remedies with respect to the Collateral under
their respective agreements will be governed by the Intercreditor Agreement. The
Intercreditor Agreement limits the rights of the Trustee for the Notes to
control actions or pursue remedies with respect to the Collateral upon an event
of default.

RELEASE AND SUBSTITUTION OF COLLATERAL

Collateral may be released upon substitution of other Collateral with a
fair value equal to the fair value of the Collateral released or the deposit of
Cash Collateral (less any amount paid over for the benefit of the holders of
other liens ranking pari passu with the Lien of the Mortgage) in the collateral
account; provided that no Collateral consisting of real property, other than
real property that is substitute collateral, may be released, except that the
Dennis Hotel (a 12-story hotel facility containing 479 of the Bally's Park Place
Casino Hotel's 1,250 rooms) may be released if real property collateral, or a
letter of credit (the "Letter of Credit"), or a combination thereof, with a fair
value equal to the fair value of the Dennis Hotel, is substituted. Collateral
sold, assigned, transferred, licensed or otherwise disposed of because it has
become worn out, obsolete or unserviceable (provided it is replaced with
Collateral of at least equal value and utility), or abandoned because it is no
longer necessary or desirable in, and is not material to, the conduct of the
business of Bally's Park Place, will be released, subject, in certain cases, to
receipt by the Trustee of certain reports and limitations on the fair value of
property so released. All Collateral will be released upon satisfaction and
discharge of the obligations of the Issuer under the Indenture in accordance
with the provisions under "Satisfaction and Discharge."

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<PAGE> 49

LIMITATIONS ON ABILITY TO REALIZE ON COLLATERAL

General. If there is a default under the Indenture or the Security
Documents, the Trustee will have rights, subject to the New Jersey Act, to
enforce the rights and remedies contained in the Security Documents. The net
amount realized in any foreclosure sale for the benefit of the Holders of the
Notes, the holders of the Existing Notes, the Senior Lender and the holders of
any other lien ranking pari passu with the Mortgage will be only that amount
which exceeds all amounts then due and owing to creditors having security
interests senior in right of payment to the Notes, if any, and certain costs,
taxes and other items. The net amount realized in such foreclosure sale will be
shared ratably among the Holders of the Notes, the holders of the Existing
Notes, the Senior Lender and holders of other Indebtedness secured by liens
ranking pari passu to the Mortgage, if any. There is currently no Indebtedness
secured by a lien ranking senior to or pari passu with the liens of the Mortgage
or the mortgage relating to the New Credit Facility (the "Credit Facility
Mortgage").

Certain Regulatory Considerations. In any foreclosure sale, the Trustee
could bid the amount of the outstanding Notes. The Trustee's ability to
foreclose upon Collateral representing casino assets is limited by the New
Jersey Act, which requires that persons who own or manage a casino hotel must
hold a casino license. No person can hold a casino license in the State of New
Jersey unless the person is found qualified to do so by the CCC. If the Trustee
acquires Collateral representing casino assets in a foreclosure sale and is
unable or chooses not to qualify under the New Jersey Act to operate such
assets, it would have to either sell such assets or retain an entity licensed
under the New Jersey Act to operate or sell such assets. In addition, in any
foreclosure sale or subsequent resale by the Trustee on behalf of the Holders of
the Notes, licensing requirements under such Act will limit the number of
potential bidders, may delay any sale and may adversely affect the sale price of
such Collateral. See "Business -- Gaming Regulation."

Certain Bankruptcy Limitations. The right of the Trustee to repossess and
dispose of the Collateral upon acceleration of the Notes is likely to be
significantly impaired by applicable bankruptcy law if a bankruptcy case were to
be commenced by or against the Issuer, Bally's Park Place and the Operating
Company prior to the Trustee having repossessed and disposed of the Collateral.
Under the Federal Bankruptcy Code, secured creditors, such as the Trustee on
behalf of the Holders of the Notes, are prohibited from repossessing their
security from a debtor in a bankruptcy case, or from disposing of security
repossessed from such debtor without bankruptcy court approval. Moreover, the
Federal Bankruptcy Code permits the debtor-in-possession to retain and to
continue to use the collateral even though the debtor is in default under the
applicable agreement, provided that the secured creditor, on its request,
generally is given "adequate protection" of its interest in the collateral.
Because "adequate protection" under the Federal Bankruptcy Code is based on the
value of the secured creditor's interest in the collateral and the Federal
Bankruptcy Code does not specify precisely how value is to be determined, there
is no hard and fast rule on the form and amount of "adequate protection."
Rather, the Federal Bankruptcy Code specifies three means of providing adequate
protection, which are neither exclusive nor exhaustive, namely: (a) a cash
payment or periodic cash payments by the estate to the extent of a decrease in
value of the secured creditor's interest in the collateral; (b) the provision of
an additional or replacement lien on other property to the extent of the
decrease in value of the collateral; or (c) any other relief that will result in
the realization by the secured creditor of the "indubitable equivalent" of its
interest in the collateral. In view of the lack of a precise definition of the
term "adequate protection" and the broad discretionary powers of a bankruptcy
court, it is impossible to predict how long payments under the Notes could be
delayed following commencement of a bankruptcy case, whether or when the Trustee
could repossess or dispose of the Collateral or whether or to what extent
Holders of the Notes would be compensated for any delay in payment or loss of
value of the Collateral through the requirement of "adequate protection."

CHANGE IN CONTROL

Following the occurrence of any Change in Control, the Issuer will be
required to make an offer to purchase, at the option of each Holder, all such
Holder's outstanding Notes at a purchase price equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest to the date of
purchase.

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<PAGE> 50

Within 30 days after any Change in Control, the Issuer (with notice to the
Trustee), or the Trustee at the Issuer's request, will mail or cause to be
mailed to all Holders on the date of the Change in Control a notice of the
occurrence of such Change in Control and of the Holders' rights arising as a
result thereof. Such notice will contain all instructions and materials
necessary to enable Holders to surrender their Notes to the Issuer. The Notes
will be purchased 20 Business Days from the date the notice is mailed. Offers to
purchase outstanding Notes following the occurrence of a Change in Control will
be conducted in compliance with Section 14 of the Exchange Act, if applicable.

The Issuer shall not be required to make an offer to purchase if a third
party makes the offer and purchases Notes in the manner, at the times and
otherwise in compliance with the requirements applicable to the Issuer. (Section
1015)

"Change in Control" means such time as (i) a "person" or "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of more
than 50% of the total voting power of the then outstanding Voting Stock of
Bally's Park Place, the Operating Company or the Issuer (other than Casino
Holdings, Bally or a subsidiary of Casino Holdings or Bally, of which Casino
Holdings or Bally, directly or indirectly, owns a majority of the total voting
power of the Voting Stock thereof) or Casino Holdings (other than Bally or a
majority-owned subsidiary of Bally) or Bally; (ii) the Issuer, Bally's Park
Place, the Operating Company or Realty Co. consolidates or merges with or into
another Person or conveys, transfers or leases all or substantially all of its
assets to any Person in one transaction or a series of related transactions, or
any Person consolidates or merges with or into the Issuer, Bally's Park Place,
the Operating Company or Realty Co., and in any such event the holders of the
Voting Stock of such company immediately prior to such transaction or series of
transactions shall beneficially own, directly or indirectly, less than 50% of
the Voting Stock of the surviving Person immediately after such transaction or
series of transactions, provided, however, that neither the merger or
consolidation or sale of any assets by any of the Issuer, Bally's Park Place,
the Operating Company or Realty Co. with or into any of the Issuer, Bally's Park
Place, the Operating Company or Realty Co. nor the liquidation or dissolution of
the non-surviving entity or transferor following any such transaction shall be
deemed a Change in Control; (iii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of any of the Issuer, Bally's Park Place, the Operating Company,
Realty Co., Casino Holdings or Bally (together with any directors whose election
by such Board of Directors or whose nomination for election by the shareholders
of the Issuer, Bally's Park Place, the Operating Company, Realty Co., Casino
Holdings or Bally, as the case may be, was approved by the vote of 66 2/3% of
the directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of the Issuer, Bally's Park Place, the Operating Company, Realty Co.,
Casino Holdings or Bally then in office; or (iv) other than as allowed in (ii)
above, the Issuer, Bally's Park Place, the Operating Company, Realty Co. or
Bally is liquidated or dissolved or adopts a plan of liquidation.

CERTAIN COVENANTS

The Indenture contains, among others, the following covenants:

Limitation on Indebtedness. Bally's Park Place will not, and will not
permit any of its Restricted Subsidiaries to, create, incur, assume, or directly
or (other than through Unrestricted Subsidiaries) indirectly guarantee or in any
other manner become directly or (other than through Unrestricted Subsidiaries)
indirectly liable for the payment of (collectively, "incur"), any Indebtedness
(excluding Permitted Indebtedness and including Acquired Indebtedness and
indebtedness which is a Guaranty permitted pursuant to clause (v) of the last
paragraph of "Limitations on Restricted Payments") unless, at the time of such
event and after giving effect thereto, on a pro forma basis Bally's Park Place's
Consolidated Fixed Charge Coverage Ratio for the four full fiscal quarters for
which financial information in respect thereof is available immediately
preceding such event, taken as one period, calculated on the assumption that (i)
such Indebtedness and any other Indebtedness incurred since the first day of
such four-quarter period had been incurred on the first day of such four-quarter
period, (ii) any acquisition or disposition by Bally's Park Place and its
Restricted Subsidiaries of any assets outside the ordinary course of business
since the first day of such last four full fiscal quarters had

48
<PAGE> 51

been consummated on the first day of such four-quarter period and (iii) any
prepayment of Indebtedness prior to the scheduled maturity thereof since the
first day of such last four fiscal quarters had been consummated on the first
day of such four-quarter period, is at least equal to the ratios set forth below
during the years indicated below:

<TABLE>
<CAPTION>
YEAR RATIO
- -------------------- ------
<S> <C>
1994 2.00:1
1995 and thereafter 2.25:1
</TABLE>

Any Indebtedness (other than Permitted Indebtedness or Acquired
Indebtedness or Indebtedness which is a Guaranty permitted pursuant to clause
(v) of the last paragraph of "Limitation on Restricted Payments") may be
incurred hereunder only if (i) such Indebtedness has an Average Life to Stated
Maturity (A) greater than the remaining Average Life to Stated Maturity of the
Notes, if such Indebtedness ranks junior to the Notes, or (B) equal to or
greater than the remaining Average Life to Stated Maturity of the Notes, if such
Indebtedness ranks pari passu to the Notes and (ii) such Indebtedness has a
final scheduled maturity which (A) exceeds the final Stated Maturity of the
Notes, if such Indebtedness ranks junior to the Notes, or (B) is equal to or
exceeds the final Stated Maturity of the Notes, if such Indebtedness ranks pari
passu to the Notes. (Section 1007)

Limitation on Restricted Payments. Bally's Park Place will not, and will
not permit any of its Restricted Subsidiaries to, directly or (other than
through an Unrestricted Subsidiary) indirectly, (i) declare or pay any dividend
on, or make any distribution to holders of, any shares of Bally's Park Place
Capital Stock (other than dividends or distributions payable in shares of its
Capital Stock or in options, warrants or other rights to purchase such Capital
Stock, but excluding dividends or distributions payable in Redeemable Capital
Stock or in options, warrants or other rights to purchase Redeemable Capital
Stock), (ii) purchase, redeem or acquire or retire for value, any Capital Stock
of Bally's Park Place or any Subsidiary or any options, warrants or other rights
to acquire such Capital Stock, (iii) declare or pay any dividend or distribution
on any Capital Stock of any Subsidiary to any Person (other than Bally's Park
Place or any of its wholly owned Subsidiaries), (iv) prepay, repay, redeem,
defease or otherwise acquire or retire, for value prior to stated maturity of
principal, scheduled repayment or scheduled sinking fund payment, any
Indebtedness of Bally's Park Place or the Issuer that ranks junior in right of
payment to the Notes, (v) incur, create or assume any Guaranty of Indebtedness
of any Affiliate (other than with respect to (a) Guarantees of Indebtedness of
any Wholly Owned Subsidiary by Bally's Park Place or by any Restricted
Subsidiary or (b) Guarantees of Indebtedness of Bally's Park Place by any
Restricted Subsidiary, in each case in accordance with the terms of the
Indenture), or (vi) make any Investment (other than any Permitted Investment) in
any Person (such payments or other actions described in the foregoing clauses
(i) through (vi), are collectively referred to as "Restricted Payments"), unless
at the time of and after giving effect to the proposed Restricted Payment (the
amount of any such Restricted Payment, if other than cash, shall be as
determined by the Board of Directors of Bally's Park Place, whose determination,
if reasonable and based on the good faith business judgment of the Board of
Directors, shall be conclusive, and evidenced by a Board Resolution), (1) no
default or Event of Default shall have occurred and be continuing or shall occur
as a result of such Restricted Payment, (2) immediately before and immediately
after giving effect to such transaction on a pro forma basis, Bally's Park Place
could incur $1.00 of additional Indebtedness (other than Permitted Indebtedness)
under the provisions of "Limitation on Indebtedness" and (3) the aggregate
amount of all Restricted Payments declared or made after the date the Notes are
issued shall not exceed the sum of:

(A) 50% of the Consolidated Net Income of Bally's Park Place accrued
on a cumulative basis during the period beginning on April 1, 1994 and
ending on the last day of Bally's Park Place's last fiscal quarter ending
prior to the date of such proposed Restricted Payment (or, if such
aggregate cumulative Consolidated Net Income shall be a loss, minus 100% of
such loss);

(B) the aggregate Net Cash Proceeds received after the date of the
Indenture by Bally's Park Place from the issuance or sale (other than to
any of its Subsidiaries) of shares of Capital Stock of Bally's Park

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<PAGE> 52

Place (other than Redeemable Capital Stock) or warrants, options or rights
to purchase such shares of Capital Stock of Bally's Park Place (other than
Redeemable Capital Stock);

(C) the aggregate cash proceeds received after the date of the
Indenture by Bally's Park Place as capital contributions to Bally's Park
Place;

(D) the aggregate Net Cash Proceeds received after the date of the
Indenture by Bally's Park Place (other than from any of its Subsidiaries)
upon the exercise of options, warrants or rights to purchase shares of
Capital Stock of Bally's Park Place (other than Redeemable Capital Stock);

(E) the aggregate Net Cash Proceeds received after the date of the
Indenture by Bally's Park Place from the issue or sale of debt securities
or Redeemable Capital Stock that have been converted into or exchanged for
Capital Stock of Bally's Park Place (other than Redeemable Capital Stock),
plus the aggregate Net Cash Proceeds received by Bally's Park Place at the
time of such conversion or exchange; and

(F) $50 million.

Notwithstanding the foregoing, in the event the Company's Consolidated
Fixed Charge Coverage Ratio for any period of four consecutive fiscal quarters
exceeds 3.0:1, then the amount of Consolidated Net Income of Bally's Park Place
included in clause (A) above shall be 66 2/3% of Consolidated Net Income of
Bally's Park Place since April 1, 1994. To the extent that at the end of any
succeeding fiscal quarter, the Company's Fixed Consolidated Charge Coverage
Ratio for the period of the preceding four consecutive fiscal quarters shall
equal or be less than 3.00:1, then the amount of Consolidated Net Income of
Bally's Park Place included in clause (A) above shall revert to 50% of
Consolidated Net Income of Bally's Park Place since April 1, 1994.

The foregoing provision will not be violated by reason of (i) the payment
of any dividend within 60 days after the date of declaration thereof, if at such
declaration date such declaration complied with the foregoing provision (in
which event such dividend shall be deemed to have been paid on such date of
declaration thereof for purposes of the foregoing provision); (ii) redemption of
any Capital Stock or Subordinated Indebtedness of Bally's Park Place or any
Subsidiary required by the CCC or the New Jersey Division of Gaming Enforcement;
(iii) the redemption, repurchase or other acquisition or retirement for value of
Subordinated Indebtedness of Bally's Park Place which is made at a time when
there is no default or Event of Default continuing and which is made in exchange
for, or out of proceeds of the substantially concurrent issue and sale (other
than to a Subsidiary) of (A) shares of Capital Stock (other than Redeemable
Capital Stock) of Bally's Park Place, provided, however, that any Net Cash
Proceeds from such issue are excluded from clause 3(B) of the preceding
paragraph or (B) new Indebtedness of Bally's Park Place, so long as (1) such
Indebtedness is expressly subordinated to the Notes at least to the same extent
as the Subordinated Indebtedness being so refinanced; (2) such Indebtedness has
an Average Life to Stated Maturity equal to or greater than the remaining
Average Life to Stated Maturity of the Notes; and (3) such Indebtedness has a
final scheduled maturity which exceeds the final Stated Maturity of the Notes,
provided, however, that any Net Cash Proceeds from such issue are excluded from
clause 3(E) of the preceding paragraph; (iv) redemption, repurchase or other
acquisition or retirement for value of Capital Stock of Bally's Park Place or
any options, warrants or rights to acquire such Capital Stock of Bally's Park
Place which is made at a time when there is no default or Event of Default
continuing and, which is made in exchange for, or out of proceeds of the
substantially concurrent issue and sale (other than to a Subsidiary) of shares
of Capital Stock (other than Redeemable Capital Stock) of Bally's Park Place,
provided, however, that any Net Cash Proceeds from such issue are excluded from
clause 3(B) of the preceding paragraph; (v) Guarantees of Indebtedness of
Affiliates of the Company in an amount not to exceed $20 million, provided,
however, that such Restricted Payment shall comply with clauses (1) and (2) of
the first paragraph of this covenant; and (vi) payments permitted pursuant to
clauses (iv) and (v) under the proviso contained in "Limitation on Transactions
with Affiliates". The Restricted Payments described in clauses (b)(i) and (ii)
shall be included in any computation of the aggregate amount of Restricted
Payments by Bally's Park Place and its Subsidiaries. Notwithstanding the
foregoing, neither (i) the payment of a dividend out of the net proceeds of the
Offering nor (ii) any payment in an amount equal to any amounts returned by the
trustee under the Existing Notes indenture to the Issuer in connection with the
Defeasance deposit shall be deemed a Restricted Payment for purposes of the
calculation

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of the aggregate amount of all Restricted Payments in clause (3) of the first
paragraph in this Section. (Section 1008)

Limitation on Transactions with Affiliates. Bally's Park Place will not,
and will not permit any of its Restricted Subsidiaries to, directly or (other
than through an Unrestricted Subsidiary) indirectly, enter into any transaction
or series of related transactions (including, without limitation, the sale,
purchase, exchange or lease of assets, property or services) with any Affiliate
of Bally's Park Place (other than Bally's Park Place or a Wholly Owned
Subsidiary of Bally's Park Place) unless (i) such transaction or series of
transactions is or are on terms that are no less favorable to Bally's Park Place
or such Restricted Subsidiary, as the case may be, than could have been obtained
at the time of such transaction or transactions in a comparable transaction in
arm's length dealings with an unaffiliated third party, (ii) with respect to any
transaction or series of transactions involving aggregate payments in excess of
$1 million, but less than $10 million, Bally's Park Place delivers an officers'
certificate to the Trustee certifying that such transaction or series of
transactions complies with clause (i) above and that such transaction or series
of transactions has received the approval of a majority of the Board of
Directors of Bally's Park Place and (iii) with respect to any transaction or
series of transactions involving aggregate payments in excess of $10 million,
Bally's Park Place delivers an officers' certificate to the Trustee certifying
that such transaction or series of transactions complies with clause (i) above
and that such transaction or series of transactions has received the approval of
a majority of the disinterested directors of the Board of Directors of Bally's
Park Place; provided, however, that the foregoing restrictions shall not apply
to (i) the payment of reasonable and customary fees to the directors of Bally's
Park Place and its Restricted Subsidiaries who are not employees of Bally's Park
Place or any such Restricted Subsidiary, (ii) loans and advances to and other
employment arrangements with any officer, director or employee of Bally's Park
Place or of any Restricted Subsidiary entered into in the ordinary course of
business and consistent with past practice, (iii) transactions pursuant to the
Lease Agreement relating to the lease by Bally's Park Place of surface parking
lots (located across Boston and Hartford Avenues from Bally's Grand) to GNAC,
(iv) transactions, including payments and reimbursements, in connection with
certain management and administrative services and insurance coverage provided
to Bally's Park Place by Bally, Casino Holdings and certain consolidated
GNAC/Bally's Park Place operations pursuant to the Intercorporate Agreement
dated as of June 24, 1993 among Casino Holdings, Bally and Bally's Park Place,
(v) payments to Bally pursuant to the Tax Sharing Agreement, (vi) Investments
that are Permitted Investments pursuant to clause (vi) of the definition of
Permitted Investments and (vii) Guaranties permitted pursuant to clause (v) of
the last paragraph of "Limitation on Restricted Payments." For purposes of this
provision, a director who is neither (i) an officer or an employee of the other
party to the transaction nor (ii) a person who has a personal interest directly
or indirectly in the transaction shall be deemed disinterested. (Section 1009)

Limitation on Encumbrances. Bally's Park Place will not, and will not
permit any Subsidiary to, directly or indirectly, create, incur, assume or
otherwise suffer to exist or cause or otherwise suffer to become effective any
Lien in or on any right, title or interest to the Mortgage or any Property (real
or personal) that constitutes all or any portion of the Collateral subject to
the Lien of the Mortgage (a "Restricted Encumbrance," which term excludes the
Lien created by the Mortgage and the Credit Facility Mortgage), unless (i) such
Restricted Encumbrance is a Permitted Encumbrance or (ii) such Restricted
Encumbrance ranks junior to or is pari passu with the Lien of the Mortgage and
is granted to secure Indebtedness which, together with all other Indebtedness
secured pursuant to this clause (ii), is in an aggregate principal amount not to
exceed the sum (without duplication) of (A) the original principal amount of the
Notes (less the principal amount of the Notes outstanding at the time of any
calculation), (B) the amount available under the revolving credit facility
described in clause (i) of the definition of Permitted Indebtedness, (C) $100
million and (D) 66 2/3% of the cost of all Casino Hotel Improvements reflected
on the consolidated balance sheet of Bally's Park Place since the date of the
Indenture.

Notwithstanding the foregoing, Bally's Park Place or any Restricted
Subsidiary may create or incur or permit to exist purchase money Restricted
Encumbrances upon any personal Property acquired by Bally's Park Place or any
Restricted Subsidiary, provided that no such purchase money Restricted
Encumbrance upon any personal Property acquired by Bally's Park Place or any
Restricted Subsidiary after the date of the Indenture shall extend to or cover
any other property or, at the time incurred, secure Indebtedness in excess of

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90% of the lesser of the cost or fair market value of the Property subject to
such purchase money Restricted Encumbrance, and provided, further, that the
aggregate principal amount of all Indebtedness at any time outstanding and
secured by Restricted Encumbrances permitted by this paragraph plus the
aggregate amount of all leases on personal Property comprising the Collateral
and secured by Restricted Encumbrances shall not, at any time, exceed $20
million. (Section 1010)

Limitation on Preferred Stock of Subsidiaries. Bally's Park Place will not
permit any Restricted Subsidiary to issue any Preferred Stock other than (i)
Preferred Stock issued to Bally's Park Place or a Wholly Owned Subsidiary, or
(ii) Preferred Stock (other than Redeemable Capital Stock) issued to any person
(other than Bally's Park Place or a Wholly Owned Subsidiary) provided that at
the time of such issuance, and after giving pro forma effect thereto, a
Restricted Subsidiary of Bally's Park Place would be entitled to issue
Indebtedness in an amount equal to the maximum liquidation preference of the
Preferred Stock under "Limitation on Indebtedness." Bally's Park Place will not
sell, transfer or otherwise dispose of Preferred Stock issued by a Restricted
Subsidiary of Bally's Park Place or permit a Wholly Owned Subsidiary to sell,
transfer or otherwise dispose of Preferred Stock issued by a Restricted
Subsidiary, other than (i) to Bally's Park Place or a Wholly Owned Subsidiary,
or (ii) to any person (other than Bally's Park Place or a Wholly Owned
Subsidiary) provided that such Preferred Stock is not Redeemable Capital Stock
and that at the time of such sale, transfer or disposition, and after giving pro
forma effect thereto, a Restricted Subsidiary of Bally's Park Place would be
entitled to issue Indebtedness in an amount equal to the maximum liquidation
preference of the Preferred Stock under "Limitation on Indebtedness."
Notwithstanding the foregoing, nothing in such covenant will prohibit the
ownership of Preferred Stock (other than Redeemable Capital Stock) issued by a
Person (other than an Unrestricted Subsidiary) prior to the time (A) such Person
becomes a Restricted Subsidiary of Bally's Park Place, (B) such Person merges
with or into a Restricted Subsidiary of Bally's Park Place or (C) a Restricted
Subsidiary of Bally's Park Place merges with or into such Person; provided,
further, that such Preferred Stock was not issued or incurred by such Person in
anticipation of a transaction contemplated by subclause (A), (B) or (C) above.
(Section 1011)

Limitation on Dividends and Other Payment Restrictions Affecting
Subsidiaries. Bally's Park Place will not, and will not permit any Restricted
Subsidiary to, create or otherwise cause or suffer to exist or become effective
any consensual encumbrance or restriction of any kind on the ability of any
Restricted Subsidiary to (a) pay dividends or make any other distribution on its
Capital Stock, (b) pay any Indebtedness owed to Bally's Park Place or any other
Restricted Subsidiary, (c) make any Investment in Bally's Park Place or any
other Restricted Subsidiary, (d) transfer any of its property or assets to
Bally's Park Place or any other Restricted Subsidiary or (e) guarantee any
Indebtedness of Bally's Park Place or any of its Restricted Subsidiaries, except
(i) any encumbrance or restriction pursuant to an agreement in effect at or
entered into on the date of the Indenture as scheduled in the Indenture; (ii)
any encumbrance or restriction with respect to a Subsidiary that is not a
Restricted Subsidiary of Bally's Park Place on the date of the Indenture, in
existence at the time such Person becomes a Subsidiary of Bally's Park Place or
created on the date it becomes a Subsidiary; and (iii) any encumbrance or
restriction pursuant to any agreement that extends, refinances, renews or
replaces any agreement containing any of the restrictions, taken as a whole,
described in the foregoing clauses (i) and (ii), provided that the terms and
conditions of any such restrictions, taken as a whole, are not less favorable to
the Holders of the Notes than those under or pursuant to the agreement extended,
refinanced, renewed or replaced. Notwithstanding the foregoing, this covenant
shall not be violated by any restriction required by the CCC or the New Jersey
Department of Gaming Enforcement, except where such restriction would affect the
ability of the Operating Company to make payments on the Promissory Note.
(Section 1012)

Limitation on Issuance of Guarantees by Subsidiaries.

(a) Bally's Park Place will not permit any Restricted Subsidiary, directly
or (other than through an Unrestricted Subsidiary) indirectly, to assume,
guarantee or in any other manner become liable with respect to any Indebtedness
of Bally's Park Place, the Operating Company, Realty Co. or any other Restricted
Subsidiary unless (i) such Restricted Subsidiary simultaneously executes and
delivers a supplemental indenture to the Indenture providing for a Guaranty of
payment of the Notes by such Restricted Subsidiary

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constituting senior Indebtedness of such Restricted Subsidiary, (ii) the
Guaranty of the Notes is on terms at least as favorable as the assumption,
Guaranty or other liability of such Restricted Subsidiary, (iii) such Restricted
Subsidiary does not create, incur, assume or suffer to exist any Lien securing
such assumption, Guaranty or other liability unless (A) it complies with
"Limitation on Encumbrances" and (B) the Guaranty of Notes is equally and
ratably secured and (iv) such Restricted Subsidiary waives and will not in any
manner whatsoever claim or take the benefit or advantage of, any rights of
reimbursement, indemnity or subrogation or any other rights against Bally's Park
Place, the Operating Company, Realty Co. or any other Restricted Subsidiary as a
result of any payment by such Restricted Subsidiary under its Guaranty.

(b) Notwithstanding the foregoing, any Guaranty by a Restricted Subsidiary
of the Notes shall provide by its terms that it shall be automatically and
unconditionally released and discharged upon any sale, exchange or transfer, to
any Person not an Affiliate of Bally's Park Place, of all of Bally's Park
Place's Capital Stock in, or all or substantially all the assets of, such
Restricted Subsidiary, which is in compliance with the Indenture.

Ownership of Bally's Park Place Casino Hotel; Other Businesses. Except as
permitted by the provisions of the Indenture limiting mergers and sale of assets
described below, the Operating Company will own and operate Bally's Park Place
Casino Hotel. In addition, neither Bally's Park Place nor the Operating Company
shall conduct or engage in any business other than the development, marketing,
ownership or management of casinos or casino hotels, including the hosting,
production or promotion of conventions, sporting events, amusements and other
entertainment or investments in entities conducting or engaged in the foregoing
to the extent otherwise permitted by the terms of the Indenture. (Section 1013)

Activities of the Issuer. The Issuer agrees that it will not conduct any
business (and will not incur any indebtedness) whatsoever other than to collect
principal and interest (and any interest on overdue principal of, premium, if
any, or interest) under the Operating Company Note, to preserve and enforce its
rights under the Operating Company Note, the Notes and the Security Documents,
to do or cause to be done all things necessary or appropriate to protect the
Collateral and to preserve its rights therein, and to otherwise comply with its
obligations under the Note Indenture and the Notes. The Issuer will not merge
into or consolidate or amalgamate with or transfer its properties and assets to
any person, except (a) as permitted by and in compliance with "Merger and Sale
of Assets, etc.," if required and (b) any transaction involving Bally's Park
Place or the Operating Company. (Section 1019)

Reporting Requirements. Bally's Park Place will file with the Commission
the annual reports, quarterly reports and other documents required to be filed
with the Commission pursuant to Sections 13 and 15 of the Exchange Act, in the
form required by the Exchange Act, whether or not Bally's Park Place has a class
of securities registered under the Exchange Act. Bally's Park Place will be
required to file with the Trustee and provide to each Holder of the Notes within
15 days after it files them with the Commission (or if any such filing is not
permitted under the Exchange Act, 15 days after Bally's Park Place would have
been required to make such filing) copies of such reports and documents.
(Section 1021)

MERGER AND SALE OF ASSETS, ETC.

Neither Bally's Park Place nor any Restricted Subsidiary shall consolidate
with or merge with or into any other Person or sell, assign, convey, transfer,
lease or otherwise dispose of all or substantially all of the properties and
assets of either (i) Bally's Park Place and its Subsidiaries taken as a whole,
(ii) the Operating Company, substantially as an entirety, or (iii) Realty Co. to
any Person or group of affiliated Persons unless at the time and after giving
effect thereto (i) either (a) Bally's Park Place or such Restricted Subsidiary
shall be the continuing corporation, or (b) the Person (if other than Bally's
Park Place or a Subsidiary) formed by such consolidation or merger, or to which
such sale, assignment, transfer, lease, conveyance or disposition shall have
been made (the "Surviving Entity"), is a corporation duly organized and validly
existing under the laws of the United States of America, any state thereof or
the District of Columbia and shall, in either case, expressly assume, by a
supplemental indenture, executed and delivered to the Trustee, in form
satisfactory to

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the Trustee, all the obligations of Bally's Park Place and the Issuer under the
Notes and the Indenture shall remain in full force and effect; (ii) immediately
prior to such transaction, and immediately after giving effect to such
transaction on a pro forma basis, no Default or Event of Default shall have
occurred and be continuing; (iii) immediately after giving effect to such
transaction on a pro forma basis, Bally's Park Place (or the Surviving Entity,
if Bally's Park Place is not the continuing obligor under the indenture) could
incur $1.00 of additional Indebtedness (other than Permitted Indebtedness) under
the "Limitation on Indebtedness" covenant described above; (iv) immediately
after giving effect to such transaction on a pro forma basis, the Consolidated
Net Worth of Bally's Park Place (or the Surviving Entity if Bally's Park Place
is not the continuing obligor under the Indenture) is at least equal to the
Consolidated Net Worth of Bally's Park Place immediately before such
transaction; (vi) the Lien of the Security Documents and the rights of the
Trustee and the Holders thereunder and under the Indenture have not been
impaired; and (vi) the Surviving Entity has all gaming licenses and other
permits and approvals required to operate the Bally's Park Place Casino Hotel
and any casino hotels then owned by such Surviving Entity and the Surviving
Entity or an Affiliate thereof has had prior experience in the operation and
management of casinos or casino hotels, or the Surviving Entity has retained
management with such prior experience. The merger or consolidation of, or sale
of assets by, any of Bally's Park Place, the Operating Company, the Issuer or
Realty Co. with or into or to any of Bally's Park Place, the Operating Company,
the Issuer or Realty Co. shall not be restricted by the foregoing if such
transaction complies with (i), (ii), (v) and (vi) above. (Section 801)

In connection with any consolidation, merger, transfer or lease
contemplated hereby, Bally's Park Place and the Issuer shall deliver, or cause
to be delivered, to the Trustee, in form and substance reasonably satisfactory
to the Trustee, an officers' certificate and an opinion of counsel, each stating
that such consolidation, merger or transfer and the supplemental indenture in
respect thereto comply with the provisions described herein and that all
conditions precedent herein provided for relating to such transaction have been
complied with and that the Lien of the Security Documents and the rights of the
Trustee and the Holders thereunder and under the Indenture have not been
impaired. (Section 801)

Upon any consolidation or merger or any transfer of all or substantially
all of the assets of Bally's Park Place and its Subsidiaries taken as a whole or
the Operating Company in accordance with the foregoing, the successor
corporation formed by such a consolidation or into which either Bally's Park
Place or a Subsidiary is merged or to which such transfer is made shall succeed
to, and be substituted for, and may exercise every right and power of, Bally's
Park Place and the Issuer under the Indenture with the same effect as if such
successor corporation had been named as Bally's Park Place or the Issuer
therein.

In the event of any transaction (other than a lease) described in and
complying with the conditions listed in the immediately preceding paragraphs in
which Bally's Park Place or the Issuer, as the case may be, is not the
continuing corporation, Bally's Park Place or the Issuer, as the case may be,
would be discharged from all obligations and covenants under the Indenture and
the Notes. (Section 802)

EVENTS OF DEFAULT

An Event of Default will occur under the Indenture upon:

(a) default in the payment of any interest on any Note when the same
becomes due and payable, and continuance of such default for a period of 30
days; or

(b) default in the payment of the principal of (or premium, if any,
on) any Note when the same becomes due and payable, whether at its Stated
Maturity, upon redemption or otherwise; or

(c) default in the performance, or breach, of any covenant or warranty
of Bally's Park Place, the Operating Company, Realty Co. or the Issuer
under the Indenture (other than a default in the performance, or breach, of
a covenant or warranty that is specifically dealt with elsewhere herein),
or default in the performance, or breach, of any covenant or warranty in
the Security Documents, and, in any such case, continuance of such default
or breach for a period of 30 days after written notice of such default
shall have been given to Bally's Park Place or the Issuer by the Trustee or
to Bally's Park Place or the Issuer by the Holders of at least 25% in
principal amount of the Notes then outstanding; or

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(d) an event or events of default as defined in any mortgage, bond,
indenture, loan agreement or other evidence of Indebtedness under which
there may be issued or by which there may be secured or evidenced any
Indebtedness of Bally's Park Place or the Issuer or any Subsidiary in
excess of $10 million in the aggregate, which default or defaults extend
beyond any period of grace provided with respect thereto and which default
or defaults relate to (i) the obligation to pay the principal of or
interest on any such Indebtedness, in either case, at final maturity or
(ii) any other obligation which shall result in such Indebtedness becoming
or being declared due and payable prior to the date on which it would
otherwise become due and payable; or

(e) final judgments or orders are rendered against Bally's Park Place,
the Issuer or any Subsidiary which require the payment of money, either
individually or in an aggregate amount, that is more than $10 million and
(i) an enforcement proceeding with respect thereto has been commenced or
(ii) such judgment or order remains unsatisfied or unstayed for 60 days; or

(f) the entry of a decree or order by a court having jurisdiction in
the premises (A) for relief in respect of Bally's Park Place, the Issuer or
any Material Subsidiary in an involuntary case or proceeding under the
Federal Bankruptcy Code or any other federal or state bankruptcy,
insolvency, reorganization or similar law or (B) adjudging Bally's Park
Place, the Issuer or any Material Subsidiary as bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of Bally's Park Place, the
Issuer or any Material Subsidiary under the Federal Bankruptcy Code or any
other applicable federal or state law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator (or similar official) of
Bally's Park Place, the Issuer or any Material Subsidiary or any
substantial part of any of their properties, or ordering the winding up or
liquidation of any of their affairs, and the continuance of any such decree
or order unstayed and in effect for a period of 60 consecutive days; or

(g) the institution by Bally's Park Place, the Issuer or any Material
Subsidiary of a voluntary case or proceeding under the Federal Bankruptcy
Code or any other applicable federal or state law or any other case or
proceeding to be adjudicated as bankrupt or insolvent, or the consent by
Bally's Park Place, the Issuer or any Material Subsidiary to the entry of a
decree or order for relief in respect of Bally's Park Place, the Issuer or
any Material Subsidiary in any involuntary case or proceeding under the
Federal Bankruptcy Code or any other applicable federal or state law or to
the institution of bankruptcy or insolvency proceedings against Bally's
Park Place or the Issuer or any Material Subsidiary, or the filing by
Bally's Park Place, the Issuer or any Material Subsidiary of a petition or
answer or consent seeking reorganization or relief under the Federal
Bankruptcy Code or any other applicable federal or state law, or the
consent by it to the filing of any such petition or to the appointment of
or taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of any of Bally's Park
Place, the Issuer or any Material Subsidiary or of any substantial part of
its property, or the making by it of an assignment for the benefit of
creditors, or it becoming insolvent, or it being unable to pay debts
generally as they come due, or the admission by it in writing of its
inability to pay its debts generally as they become due or taking of
corporate action by Bally's Park Place, the Issuer or any Material
Subsidiary in furtherance of any such action; or

(h) default in the performance or breach of the provisions of "Merger
and Sale of Assets, etc." or a failure by the Issuer to provide the notice
to Holders or to make the payment required by "Change in Control"; or

(i) the occurrence of an Event of Default under the Security
Documents; or

(j) the revocation, suspension or loss for a period of more than 90
consecutive days of any gaming license (other than a voluntary
relinquishment of a gaming license by a Subsidiary other than a Subsidiary
holding the license to operate Bally's Park Place Casino Hotel) under which
Bally's Park Place or any Material Subsidiary owns, leases or operates a
casino hotel. (Section 501)

If an Event of Default (other than as specified in clauses (f) and (g)
above) occurs and is continuing, the Trustee or the Holders of at least 25% of
the principal amount of the Notes then outstanding may declare the

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Notes due and payable immediately at their principal amount together with
accrued interest to the date the Notes become due and payable. Thereupon the
Trustee may, at its discretion, proceed to protect and enforce the rights of the
Holders of Notes by appropriate judicial proceeding. If an Event of Default
specified in clause (f) or (g) above occurs and is continuing, then the
principal of all Notes shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder. (Section 502)

After a declaration of acceleration, but before a judgment or decree for
payment of the money due has been obtained by the Trustee, the Holders of a
majority in aggregate principal amount of the Notes outstanding, by written
notice to the Issuer and the Trustee, may annul such declaration if (a) the
Issuer has paid or deposited with the Trustee a sum sufficient to pay (i) all
sums paid or advanced by the Trustee under the Indenture and the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, (ii) all overdue interest on all Notes, (iii) the principal of and
premium, if any, on any Notes which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate borne by the Notes,
and (iv) to the extent that payment of such interest is lawful, interest upon
overdue interest at the rate borne by the Notes; and (b) all Events of Default,
other than the nonpayment of principal of the Notes which have become due solely
by the declaration of acceleration, have been cured or waived.

The Holders of not less than a majority in principal amount of the Notes
then outstanding may on behalf of the Holders of all Notes waive any past
defaults under the Indenture, except a default in the payment of the principal
of, premium, if any, or interest on any Note, or in respect of a covenant or
provision which under the indenture cannot be modified or amended without the
consent of the Holder of each Note outstanding.

Bally's Park Place, the Operating Company and the Issuer are also required
to notify the Trustee within five business days of the occurrence of any
default.

DEFEASANCE OF INDENTURE

The Issuer may, at its option and at any time, elect to have the
obligations of Bally's Park Place, the Operating Company, Realty Co. and the
Issuer discharged with respect to the outstanding Notes ("legal defeasance").
Such legal defeasance means that the Issuer shall be deemed to have paid and
discharged the entire indebtedness represented by the outstanding Notes, except
for (i) the rights of Holders of outstanding Notes to receive solely out of the
trust described below payments in respect of the principal of, premium, if any,
and interest on such Notes when such payments are due, (ii) the obligations of
Bally's Park Place and the Issuer with respect to the Notes concerning issuing
temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen
Notes and the maintenance of an office or agency for payment and money for
security payments held in trust, (iii) the rights, powers, trusts, duties and
immunities of the Trustee, and (iv) the defeasance provisions of the Indenture.

Bally's Park Place, the Operating Company, Realty Co. and the Issuer may,
at their option and at any time, elect to have their obligations under the
provisions "Certain Covenants," "Merger and Sale of Assets, etc." and "Change of
Control" discharged with respect to the outstanding Notes ("covenant
defeasance"). Such covenant defeasance means that, with respect to the
outstanding Notes, Bally's Park Place, the Operating Company, Realty Co. and the
Issuer may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such provisions and such omission
to comply shall not constitute a default or an Event of Default. (Section 1301)

In order to exercise defeasance, (i) the Issuer must have irrevocably
deposited with the Trustee, in trust, for the benefit of the Holders of the
Notes, cash in U.S. dollars, U.S. Government Obligations (as defined in the
Indenture), or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, and interest on the outstanding Notes
on the Stated Maturity of such principal (and premium, if any) or installment of
interest or upon redemption; (ii) the Issuer shall have delivered to the Trustee
an opinion of counsel stating that the Holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such defeasance and will be subject to federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if such
defeasance had not occurred, which such opinion, in

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the case of legal defeasance, will state that (A) the Issuer has received from,
or there has been published by, the Internal Revenue Service a ruling or (B)
since the date of the Indenture, there has been a change in the applicable
federal income tax law, to such effect; (iii) no Default or Event of Default
shall have occurred and be continuing on the date of such deposit or insofar as
clauses (f) and (g) under the first paragraph under "Events of Default" are
concerned, at any time in the period ending the 91st day after the date of
deposit; (iv) such defeasance shall not result in a breach or violation of or
constitute a default under the Indenture or any other material agreement or
instrument to which Bally's Park Place, the Operating Company and the Issuer is
a party or by which it is bound; and (v) Bally's Park Place, the Operating
Company and the Issuer shall have delivered to the Trustee an officers'
certificate and an opinion of counsel, each stating that all conditions
precedent relating to the defeasance have been complied with. Upon the
occurrence of legal or covenant defeasance, the Lien of the Security Documents
will be released only if the Issuer delivers to the Trustee an opinion of
counsel as to certain matters, including the irrevocability of the trust. In
addition, the Lien of the Security Documents will remain in place for 91 days,
unless the Issuer delivers to the Trustee an appraisal of the Collateral and an
opinion of counsel as to certain bankruptcy matters, both as further described
in the Indenture. (Section 1302)

SATISFACTION AND DISCHARGE

The Indenture will cease to be of further effect (except as to surviving
rights of registration of transfer or exchange of the Notes, as expressly
provided for in the Indenture) as to all such outstanding Notes when (i) either
(a) all such Notes theretofore authenticated and delivered (except lost, stolen
or destroyed Notes which have been replaced or paid) have been delivered to the
Trustee for cancellation or (b) all such Notes not theretofore delivered to the
Trustee for cancellation have become due and payable or will become due and
payable within one year and the Issuer has irrevocably deposited or caused to be
deposited with the Trustee funds in an amount sufficient to pay and discharge
the entire indebtedness on the Notes not theretofore delivered to the Trustee
for cancellation, for principal of, premium, if any, and interest to the date of
deposit or Stated Maturity or redemption; (ii) the Issuer has paid all other
sums payable under the Indenture by the Issuer and (iii) the Issuer has
delivered to the Trustee an officers' certificate and an opinion of counsel each
stating that all conditions precedent under the Indenture relating to the
satisfaction and discharge of the Indenture have been complied with. On the
occurrence of (i)(a), the Lien of the Security Documents will be released. On
the occurrence of (i)(b), the Lien of the Security Documents will be released
only if the Issuer delivers to the Trustee an opinion of counsel as to certain
matters, including the irrevocability of the trust. In addition, the Lien of the
Security Documents will remain in place for 91 days, unless the Issuer delivers
to the Trustee an appraisal of the Collateral and an opinion of counsel as to
certain bankruptcy matters, both as further described in the Indenture. In such
case, holders of Notes must look to the deposited money for payment. (Section
401)

MODIFICATIONS AND AMENDMENTS

Modifications and amendments of the indenture may be made by Bally's Park
Place, the Issuer and the Trustee with the consent of the Holders of not less
than a majority in aggregate principal amount of the outstanding Notes;
provided, however, that no such modification or amendment may, without the
consent of the Holder of each outstanding Note affected thereby: (i) change the
Stated Maturity of the principal of, or any installment of interest on, any Note
or reduce the principal amount thereof or the rate of interest thereon or any
premium payable upon the redemption thereof, or change the coin or currency in
which the principal of any Note or any premium or the interest thereon is
payable, or impair the right to institute suit for the enforcement of any such
payment after the Stated Maturity thereof (or, in the case of redemption, on or
after the redemption date) or modify the obligations of the Issuer to purchase
Notes under the provisions of "Change of Control or (ii) reduce the percentage
in principal amount of outstanding Notes, the consent of whose Holders is
required for any such supplemental indenture or the consent of whose Holders is
required for any waiver; or (iii) modify any of the provisions relating to
supplemental indentures requiring the consent of Holders or relating to the
waiver of past defaults or relating to the waiver of certain covenants, except
to increase the percentage of outstanding Notes required for such actions or to
provide that certain other

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provisions of the Indenture cannot be modified or waived without the consent of
the Holder of each Note affected thereby. (Section 902)

The Holders of a majority in aggregate principal amount of the Notes
outstanding may waive compliance with certain restrictive covenants and
provisions of the Indenture. (Section 1022)

CERTAIN DEFINITIONS

"Acquired Indebtedness" means Indebtedness of a Person (i) existing at the
time such Person becomes a Subsidiary or (ii) assumed in connection with the
acquisition of assets from a Person, other than Indebtedness incurred in
connection with, or in contemplation of, such Person becoming a Subsidiary or
such acquisition, as the case may be. Acquired Indebtedness shall be deemed to
have been incurred on the date of the related acquisition of assets from any
Person or the date the acquired Person becomes a subsidiary.

"Affiliate" means, with respect to any specified Person, (i) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person, (ii) any spouse, immediate
family member or other relative who has the same principal residence of any
Person described in (i) above and (iii) any trust in which any such Person
described in clause (i) or (ii) above has a beneficial interest. For purposes of
this definition, control of a Person means the power, direct or indirect, to
direct or cause the direction of the management or policies of such Person,
otherwise; and the terms "controlling," "controlled" and "under common control"
have meanings correlative to the foregoing. For purposes of this definition,
beneficial ownership of ten percent or more of voting common equity (on a fully
diluted basis) or warrants to purchase such equity (whether or not currently
exercisable) of a Person shall be deemed to be control of such Person.

"Average Life to Stated Maturity" means, as of the date of determination,
with respect to any Indebtedness, the quotient obtained by dividing (i) the sum
of the products of (a) the number of years from the date of determination to the
date or dates of each successive scheduled principal payment of such
Indebtedness multiplied by (b) the amount of each such principal payment by (ii)
the sum of all such principal payments.

"Capital Lease Obligation" of any Person means any obligations of such
Person and its Subsidiaries on a consolidated basis under any capital lease of
real or personal property which, in accordance with GAAP, has been recorded as a
capitalized lease obligation, and the amount of Indebtedness represented by such
obligation shall be the capitalized amount of such obligations determined in
accordance with GAAP.

"Capital Stock" of any Person means any and all shares, interests,
participation, or other equivalents (however designated) of such Person's
capital stock whether now outstanding or issued after the date of the Indenture.

"Casino Hotel Improvements" means the acquisition of, or development and
construction of, an addition to or expansion of the existing Casino Hotel
facility by Bally's Park Place and any Restricted Subsidiary in connection with
any proposed increase of hotel rooms and expansion of casino floor space, and
any addition to or expansion of any gaming, parking, dining, entertainment,
retail, promotional, storage, patron services, transportation or similar
facilities related thereto, in each case, after the date of the Indenture.

"Consolidated Fixed Charge Coverage Ratio" of Bally's Park Place means, for
any period, the ratio of (a) the sum of Consolidated Net Income, Consolidated
Interest Expense, Consolidated Income Tax Expense and one-third of Consolidated
Rental Payments, plus, without duplication, all depreciation, amortization and
all other non-cash charges, of Bally's Park Place and its Restricted
Subsidiaries on a consolidated basis, as determined in accordance with GAAP to
(b) the sum of (i) Consolidated Interest Expense for such period and (ii)
one-third of Consolidated Rental Payments for such period; provided that in
making such computation, the Consolidated Interest Expense attributable to
interest on any Indebtedness computed on a pro forma basis and (A) bearing a
floating interest rate shall be computed as if the rate in effect on the date of
computation had been the applicable rate for the entire period and (B) which was
not outstanding during the period for which the computation is being made but
which bears, at the option of Bally's Park Place, a fixed or floating rate of
interest, Bally's Park Place shall apply, at its option, either the fixed or
floating rate for

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purposes of calculating the Consolidated Fixed Charge Coverage Ratio and
provided, further, that in making such computation, the Consolidated Interest
Expense attributable to interest on Indebtedness under any revolving credit
facility computed on a pro forma basis shall be computed assuming that the
amount of Indebtedness thereunder is equal to the weighted average balance
during the period for which the computation is being made.

"Consolidated Income Tax Expense" means for any period, as applied to any
Person and its Restricted Subsidiaries, the provision for federal, state, local
or foreign income taxes of such Person and its Restricted Subsidiaries for such
period as determined in accordance with GAAP.

"Consolidated Interest Expense" means, for any period, the aggregate amount
of interest that, in conformity with GAAP, would be set forth opposite the
caption "interest expense" or any like caption on a consolidated income
statement of Bally's Park Place and its Restricted Subsidiaries (including, but
not limited to, imputed interest on Capitalized Lease Obligations, all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing, the net costs associated with
hedging obligations, the interest portion of any deferred payment obligation,
amortization of discount or premium, if any, and all other non-cash interest
expense and excluding amortization of other financing fees and expenses) plus,
without duplication, all capitalized interest of Bally's Park Place and its
Restricted Subsidiaries for such period and all interest accrued or paid by
Bally's Park Place or any of its Restricted Subsidiaries under any Guaranty of
Indebtedness (including a Guaranty of principal, interest or any combination
thereof) of any Person for such period, plus any amounts payable as dividends
(whether or not paid) on Preferred Stock permitted to be outstanding pursuant to
the provisions of "Restriction on Preferred Stock of Subsidiaries," in each case
determined on a consolidated basis in accordance with GAAP.

"Consolidated Net Income" of Bally's Park Place means, for any period, the
consolidated net income (or loss) of Bally's Park Place and its Restricted
Subsidiaries for such periods as determined in accordance with GAAP, adjusted,
to the extent included in calculating such net income (or loss), by excluding
(i) all extraordinary gains or losses (less all fees and expenses relating
thereto), (ii) the portion of net income (or loss) of Bally's Park Place and its
Restricted Subsidiaries allocable to minority interests in unconsolidated
Persons to the extent that cash dividends or distributions have not actually
been received by Bally's Park Place or one of its Restricted Subsidiaries, (iii)
net income (or loss) of any Person combined with Bally's Park Place or any of
its Restricted Subsidiaries in a "pooling of interests" basis attributable to
any period prior to the date of combination, (iv) net income (or loss) of any
Unrestricted Subsidiary regardless of whether cash dividends or distributions
have been made, (v) any gain or loss, net of taxes, realized upon the
termination of any employee pension benefit plan, (vi) any gains or losses (less
all fees and expenses relating thereto) in respect of dispositions of assets
other than in the ordinary course of business, or (vii) the net income of any
Restricted Subsidiary to the extent that the declaration of dividends or similar
distributions by that Restricted Subsidiary of that income is not at the time
permitted, directly or indirectly, by operation of the terms of its charter or
any agreement or instrument, or any judgment, decree, order, statute, rule or
governmental regulations (other than those issued by or on behalf of the CCC or
the New Jersey Division of Gaming Enforcement or those to which either of them
is a party) applicable to that Restricted Subsidiary or its stockholders.

"Consolidated Net Worth" of any Person means the consolidated stockholders'
equity (excluding Redeemable Capital Stock) of such Person and its consolidated
subsidiaries, as set forth on the most recent consolidated balance sheet of such
Person and its consolidated subsidiaries determined in accordance with GAAP.

"Consolidated Rental Payments" of Bally's Park Place means, for any period,
the aggregate rental obligations of Bally's Park Place and its Restricted
Subsidiaries under operating leases (not including taxes, insurance, maintenance
and similar expenses that the lessee is obligated to pay under the terms of the
relevant leases), determined on a consolidated basis in accordance with GAAP.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Federal Bankruptcy Code" means the Bankruptcy Act of Title 11 of the
United States Code, as amended from time to time.

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"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, that
are in effect from time to time; provided, however, that with respect to the
obligations of any Person under the provisions "Merger and Sale of Assets, etc."
and "Certain Covenants -- Limitation on Indebtedness" and "-- Limitation on
Restricted Payments" described above and the definitions applicable thereto,
"GAAP" means generally accepted accounting principles on the date hereof.

"Guaranty" means, as applied to any obligation, (a) a guaranty (other than
by endorsement of negotiable instruments for collection in the ordinary course
of business), direct or indirect, in any manner, of any part or all of such
obligation and (b) an agreement, direct or indirect, contingent or otherwise,
the practical effect of which is to assure in any way the payment or performance
(or payment of damages in the event of nonperformance) of any part or all of
such obligation, including, without limiting the foregoing, the payment of
amounts drawn down by letters of credit.

"Indebtedness" means, with respect to any Person, any indebtedness,
contingent or otherwise, in respect of borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof and including any indebtedness issued in exchange for
indebtedness for borrowed money), or evidenced by bonds, notes, debentures or
similar instruments or representing the balance deferred and unpaid of the
purchase price of any property, if and to the extent any of the foregoing
indebtedness would appear as a liability upon a balance sheet of such Person
prepared on a consolidated basis in accordance with GAAP consistently applied
and letters of credit (or reimbursement obligations related thereto); provided,
however, that (a) "Indebtedness" shall not include accounts payable to trade
creditors or other indebtedness for goods or services created or assumed in the
ordinary course of business and Indebtedness incurred pursuant to the
Intercorporate Agreement or Tax Sharing Agreement referred to in the "Limitation
on Transactions with Affiliates" covenant and (b) Indebtedness shall include
only the principal component of any obligations described above. "Indebtedness"
shall also include the principal component of any Capital Lease Obligations; the
maximum liquidation preference of Redeemable Capital Stock, or Preferred Stock
issued in accordance with "Limitation on Preferred Stock of Subsidiaries";
obligations secured by a Lien to which any property or asset owned or held by
such Person is subject, whether or not the obligations secured thereby shall
have been assumed; and Guaranties of items that would be included within this
definition (regardless of whether such items would appear upon such balance
sheet); provided that for purposes of computing Indebtedness outstanding at any
time, such items shall be excluded to the extent that they would otherwise be
eliminated as intercompany items in consolidation. For purposes of the preceding
sentence, the maximum liquidation preference of any Redeemable Capital Stock
shall be the greatest amount payable in respect thereof on a liquidation,
whether voluntary or involuntary, including accrued and unpaid dividends. Any
reference in the Indenture to any Indebtedness shall be deemed to include any
renewals, extensions, refundings, amendments and modifications of any such
indebtedness.

"Interest Swap Obligations" means the obligations of any Person pursuant to
any arrangement with any other Person whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated by
applying either a fixed or floating rate of interest on a stated notional amount
in exchange for periodic payments made by such Person calculated by applying a
fixed or floating rate of interest on the same notional amount or pursuant to
any interest rate protection agreement, interest rate future, interest rate
option or other interest rate hedge arrangement.

"Investment" by any Person means, directly or indirectly, any advance, loan
or other extension of credit or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others) or any purchase or acquisition by
such Person of any stock, bonds, notes, debentures or other securities issued or
owned by, any other Person. Investments shall exclude extensions of trade credit
on commercially reasonable terms in accordance with normal trade practice.

"Lien" means any mortgage, charge, pledge, lien, privilege, security
interest or encumbrance of any kind.

"Material Subsidiary" means the Issuer, the Operating Company, Realty Co.
and, at the time of determination, any other Subsidiary of Bally's Park Place
that (a) accounted for more than ten percent of the consolidated net income of
Bally's Park Place for the most recently completed fiscal year of Bally's Park
Place

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or (b) was the owner of more than ten percent of the consolidated assets of
Bally's Park Place as at the end of such fiscal year, all as shown on the
consolidated financial statements of Bally's Park Place for such fiscal year.

"Net Cash Proceeds" means with respect to any issuance or sale of Capital
Stock or warrants, or any issuance or sale of debt securities or Redeemable
Capital Stock that have been converted into Capital Stock, or payments made upon
exercise thereof, all as referred to in "Certain Covenants -- Limitation on
Restricted Payments," the cash proceeds of such issuance or payment, net of
attorneys' fees, accountants' fees, brokerage, consultant, underwriting and
other fees and expenses actually incurred in connection with such issuance, sale
or payment and net of taxes paid or payable as a result thereof.

"Non-Recourse Indebtedness" means Indebtedness or that portion of
Indebtedness (a) as to which neither Bally's Park Place nor any of its
Restricted Subsidiaries (i) provides credit support pursuant to any undertaking,
agreement or instrument that would constitute Indebtedness, (ii) is directly or
indirectly liable, or (iii) constitutes the lender, and (b) no default with
respect to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of Bally's
Park Place or any of its Restricted Subsidiaries to declare a default on such
other Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity.

"Permitted Encumbrance" shall have the meaning provided in the Mortgage.

"Permitted Indebtedness" means, without duplication, any of the following
Indebtedness of Bally's Park Place or any Restricted Subsidiary, as the case may
be:

(i) Indebtedness (including letters of credit) outstanding at any time
under any revolving credit facility, or any successor thereto, in an
aggregate principal amount not to exceed $50 million;

(ii) Any Guaranty by a Restricted Subsidiary under subparagraph (i)
above;

(iii) Indebtedness and obligations under the Notes;

(iv) Any Indebtedness and obligations outstanding on the date of the
Indenture;

(v) Indebtedness of a Wholly Owned Subsidiary to Bally's Park Place or
another Wholly Owned Subsidiary of Bally's Park Place;

(vi) Indebtedness the proceeds of which are used, directly or
indirectly, to refinance outstanding Indebtedness of Bally's Park Place or
any Subsidiary in a principal amount (or, if such Indebtedness does not
require cash payments prior to maturity, with an original issue price of
such Indebtedness) not to exceed the principal amount of the Indebtedness
so refinanced, plus accrued and unpaid interest with respect to the
Indebtedness being refinanced through and to the date of repayment, plus
any premium or penalty provided for in the instrument governing such
Indebtedness or any premium or penalty reasonably determined by the Board
of Directors of Bally's Park Place as necessary to accomplish such
refinancing by means of a tender offer, defeasance or privately negotiated
purchase (or, if the Indebtedness being refinanced was issued with an
original issue discount, the original issue price plus the amortized
portion of the original issue discount to the date that such refinancing
Indebtedness was incurred and any premium provided for in the instrument
governing such Indebtedness or any premium or penalty reasonably determined
by the Board of Directors of Bally's Park Place as necessary to accomplish
such refinancing by means of a tender offer or privately negotiated
purchase) plus the amount of any fees, costs or expenses Bally's Park Place
incurred in connection with such refinancing; provided that if the
Indebtedness being refinanced is Indebtedness of Bally's Park Place, such
refinancing Indebtedness shall be Indebtedness of Bally's Park Place,
unless such refinancing Indebtedness is used in whole or in part to
refinance the entire principal amount of the Notes then outstanding;
provided further that Indebtedness the proceeds of which are used to
refinance indebtedness of Bally's Park Place that is expressly subordinated
in right of payment to the Notes will only be permitted if (x) such
Indebtedness is expressly subordinated in right of payment to the Notes at
least to the same extent that the Indebtedness to be refinanced is
subordinated to the Notes, (y) the Average Life to Stated Maturity of such

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indebtedness exceeds the Average Life to Stated Maturity of the Notes, and
(z) the final scheduled maturity of such Indebtedness exceeds the final
Stated Maturity of the Notes;

(vii) Indebtedness under Interest Swap Obligations and other
agreements between Bally's Park Place or a Subsidiary and one or more
financial institutions providing for "swap," "cap," "collar" or other
interest rate protection;

(viii) obligations in respect of performance bonds and surety bonds
provided by Bally's Park Place or any Subsidiary in the ordinary course of
business or related to Casino Hotel Improvements and any renewals,
extensions or amendments, modifications or supplements thereto;

(ix) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument drawn against
insufficient funds in the ordinary course of business, provided that such
Indebtedness is extinguished within two Business Days of its incurrence;

(x) Indebtedness pursuant to letters of credit in an amount not to
exceed $5 million at any one time; and

(xi) additional Indebtedness not to exceed $25 million in the
aggregate at any one time.

"Permitted Investment" means an Investment which consists of any one or
more of the following:

(i) Investment in a Subsidiary or another Person which, immediately
after such Investment, will be a Wholly Owned Subsidiary,provided in each
case such Restricted Subsidiary conducts a business which is substantially
identical to any business conducted by Bally's Park Place or its Restricted
Subsidiaries on the date of the Indenture or which is in the business of
the development, marketing, ownership or management of (i) casinos or
casino hotels and businesses related to the development, ownership,
marketing or management of casinos or casino hotels, including the hosting,
production or promotion of conventions, sporting events, amusements and
other entertainment;

(ii) Investments by Subsidiaries in Bally's Park Place;

(iii) (a) commercial paper rated P1 by Moody's Investor Service, Inc.
or A-1 by Standard & Poor's Corporation on the date of acquisition, (b)
certificates of deposit of United States commercial banks (having a
combined capital and surplus in excess of $300 million), (c) obligations
of, or guaranteed by, the United States government or any agency thereof,
(d) repurchase agreements with terms of not more than 30 days with United
States commercial banking or other financial institution (having a combined
capital and surplus in excess of $300 million, with respect to the types of
investments described in (a), (b) or (c) of this clause (iii)), (e) money
market funds organized under the laws of the United States or any state
thereof that invest substantially all their assets in any of the types of
investments described in subclause (a), (b), (c) or (d) of this clause
(iii), or (f) to the extent not comprehended by subclauses (a) through (e)
of this clause (iii), temporary investments of cash balances in investments
deemed to be cash equivalents under GAAP;

(iv) negotiable instruments held for collection; outstanding travel,
moving and other like advances to officers, employees and consultants;
lease, utility and other similar deposits; or stock, obligations or
securities received in settlement of debts owing to Bally's Park Place or a
subsidiary as a result of foreclosure, perfection or enforcement of any
Lien, in each of the foregoing cases in the ordinary course of business of
Bally's Park Place or a Subsidiary, as the case may be, and consistent with
past practice; and

(v) receivables for sales of goods or services on trade credit terms
consistent with Bally's Park Place's and its Subsidiaries' past practices
or as otherwise consistent with trade credit terms in common use in the
industry;

(vi) Investments in Affiliates of Bally's Park Place in gaming or
gaming related ventures in an amount not to exceed $25 million;

(vii) loans to any employee in an amount not to exceed $250,000 for
any individual and $1 million for all employees in the aggregate;

(viii) Investments in effect on the date of this Indenture;

(ix) Investments required under the New Jersey Act; and

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(x) purchases of Notes by the Operating Company or Bally's Park Place.

"Person" means any individual, corporation, or general partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.

"Preferred Stock," as applied to any Person, means Capital Stock of any
class or classes (however designated) which is preferred as to the payment of
dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such corporation, over
shares of Capital Stock of any other class of such corporation.

"Redeemable Capital Stock" means Capital Stock that, either by its terms,
by the terms of any security into which it is convertible or exchangeable or
otherwise, is or upon the happening of an event or passage of time would be
required to be redeemed prior to the final Stated Maturity of principal on the
Notes or is redeemable at the option of the holder thereof at any time prior to
such final Stated Maturity, or is convertible into or exchangeable for debt
securities at any time prior to such final Stated Maturity.

"Restricted Subsidiary" means any Subsidiary that is not an Unrestricted
Subsidiary.

"Stated Maturity", when used with respect to any Note or any installment of
interest thereon, means the date specified in such Note as the fixed date on
which the principal of such Note or such installment of interest is due and
payable.

"Subordinated Indebtedness" means all Indebtedness of Bally's Park Place
that is expressly subordinated in right of payment to any other Indebtedness of
Bally's Park Place.

"Subsidiary" means any Person a majority of the total voting power of the
Voting Stock of which is at the time owned, directly or indirectly, by Bally's
Park Place or by one or more such Subsidiaries, or by Bally's Park Place and one
or more such Subsidiaries.

"Unrestricted Subsidiary" means (i) any Subsidiary that at the time of
determination shall be designated an Unrestricted Subsidiary by the Board of
Directors of Bally's Park Place in the manner provided below and (ii) any
subsidiary of an Unrestricted Subsidiary. The Board of Directors of Bally's Park
Place may designate any newly-formed Subsidiary to be an Unrestricted Subsidiary
provided that such Subsidiary (A) has assets of less than $1,000 at designation,
(B) has no Indebtedness other than Non-Recourse Indebtedness and (C) does not
own any equity securities of any Subsidiary (other than an Unrestricted
Subsidiary). The Board of Directors of Bally's Park Place may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary of Bally's Park Place;
provided, however, that immediately after giving effect to such designation (x)
Bally's Park Place could incur $1.00 of additional Indebtedness under the
"Limitation on Indebtedness" covenant and (y) no Default shall have occurred and
be continuing. Any such designation by the Board of Directors of Bally's Park
Place shall be evidenced to the Trustee by promptly filing with the Trustee a
copy of the board resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions; provided, however, that the failure to so file such resolution
and/or Officers' Certificate with the Trustee shall not impair or affect the
validity of such designation.

"Voting Stock" means stock of the class or classes pursuant to which the
holders thereof have the general voting power under ordinary circumstances to
elect at least a majority of the board of directors, managers or trustees of a
corporation (irrespective of whether or not at the time stock of any other class
or classes shall have or might have voting power by reason of the happening of
any contingency).

"Wholly Owned Subsidiary" means any Restricted Subsidiary all of whose
outstanding Voting Stock (other than directors' qualifying shares, if any) is
owned directly or indirectly by Bally's Park Place.

63
<PAGE> 66

UNDERWRITING

Subject to the terms and conditions set forth in the Purchase Agreement
among Bally's Park Place, the Issuer, the Operating Company, Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJ"), Jefferies & Company, Inc. ("Jefferies")
and Libra Investments, Inc. ("Libra" and, together with Merrill Lynch, DLJ and
Jefferies, the "Underwriters"), dated , 1994 (the "Purchase
Agreement"), the Issuer has agreed to sell to the Underwriters, and the
Underwriters have agreed to purchase the principal amount of the Notes set forth
opposite its name below.

<TABLE>
<CAPTION>
UNDERWRITER PRINCIPAL AMOUNT
- --------------------------------------------------------------------------- ----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................................. $
Jefferies & Company, Inc...................................................
Donaldson, Lufkin & Jenrette Securities Corporation........................
Libra Investments, Inc.....................................................
----------------
Total................................................................. $425,000,000
----------------
----------------
</TABLE>

The Underwriters propose to offer the Notes directly to the public at the
offering price set forth on the cover page of this Prospectus and to certain
dealers at such price less a concession not in excess of % of the principal
amount at maturity of the Notes. The Underwriters may allow, and such dealers
may reallow, a discount not in excess of % of the principal amount at maturity
thereof to certain other dealers. After the initial public offering, the price
to public, concession and discount may be changed.

The Purchase Agreement provides that the obligations of the Underwriters to
pay for and accept delivery of the Notes are subject to certain conditions.
Under the terms and conditions of the Purchase Agreement, the Underwriters are
obligated to take and pay for all of the Notes if any are purchased. The
Purchase Agreement provides that Bally's Park Place and the Issuer will
indemnify the Underwriter against certain liabilities under the Securities Act
and will contribute to payments the Underwriters may be required to make in
respect thereof.

Bally's Park Place and the Issuer have agreed that they will not, without
prior written consent of the Underwriters, offer or sell debt securities, other
than commercial paper issued in the ordinary course of business, during the
90-day period immediately following the date of the price.

In the past, Merrill Lynch has acted as an underwriter or purchaser of
securities of, and has provided investment banking and other services to,
Bally's Park Place and the Issuer and certain of its affiliates. Merrill Lynch
currently holds approximately $ million principal amount of the Existing Notes
and DLJ currently holds approximately $ million principal amount of the
Existing Notes, which are expected to be repurchased by the Issuer. Because of
such ownership of Existing Notes by Merrill Lynch and DLJ, the Offering will be
conducted in accordance with Article III, Section 44 of the Rules of Fair
Practice of the National Association of Securities Dealers, Inc. (the "NASD")
and with Schedule E to the By-Laws ("Schedule E") of the NASD. Under the
provisions of Schedule E, the yield on the Notes must be no lower than that
recommended by a qualified independent underwriter meeting certain standards.
Jefferies has agreed to act as qualified independent underwriter in connection
with the Offering. Therefore, the yield on the Notes will be no lower

64
<PAGE> 67

than that recommended by Jefferies. In addition, no NASD member participating in
the distribution of the Notes will be permitted to confirm sales to accounts
over which it exercises discretionary authority without the prior specific
written consent of the customer.

LEGAL MATTERS

Legal matters in connection with the issue and sale of the Notes will be
passed upon for the Issuer by Benesch, Friedlander, Coplan & Aronoff, Cleveland,
Ohio, and for the Underwriters by Skadden, Arps, Slate, Meagher & Flom, New
York, New York. George N. Aronoff, a partner of Benesch, Friedlander, Coplan &
Aronoff, is a director of Bally.

EXPERTS

The consolidated financial statements of Bally's Park Place, Inc. at
December 31, 1992 and 1991 and for each of the three years in the period ended
December 31, 1992, appearing in this Prospectus and Registration Statement, have
been audited by Ernst & Young, independent auditors, as set forth in their
reports thereon appearing herein and in the Registration Statement, and are
included in reliance upon such reports given upon the authority of such firm as
experts in accounting and auditing.

65
<PAGE> 68

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of independent auditors F-2
Consolidated balance sheet at December 31, 1992 and 1991 F-3
Consolidated statement of income for the years ended December 31, 1992, 1991 and 1990 F-5
Consolidated statement of stockholder's equity for the years ended December 31, 1992,
1991 and 1990 F-6
Consolidated statement of cash flows for the years ended December 31, 1992, 1991 and
1990 F-7
Notes to consolidated financial statements for the years ended December 31, 1992, 1991
and 1990 F-9
Supplementary data: quarterly consolidated financial data (unaudited) F-17
Condensed consolidated balance sheet at September 30, 1993 (unaudited) F-18
Consolidated statement of operations for the nine months ended September 30, 1993 and
1992 (unaudited) F-19
Consolidated statement of cash flows for the nine months ended September 30, 1993 and
1992 (unaudited) F-20
Notes to condensed consolidated financial statements for the nine months ended
September 30, 1993 and 1992 (unaudited) F-21
</TABLE>

F-1
<PAGE> 69

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholder
Bally's Park Place, Inc.

We have audited the accompanying consolidated balance sheet of Bally's Park
Place, Inc. (an indirect wholly owned subsidiary of Bally Manufacturing
Corporation) as of December 31, 1992 and 1991, and the related consolidated
statements of income, stockholder's equity, and cash flows for each of the three
years in the period ended December 31, 1992. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Bally's Park Place, Inc. at December 31, 1992 and 1991, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1992, in conformity with generally accepted accounting
principles.

ERNST & YOUNG

Philadelphia, Pennsylvania
February 19, 1993, except for the "Summary of significant
accounting policies" and "Subsequent events" notes, as to which the date is
June 16, 1993

F-2
<PAGE> 70

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1992 1991
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents............................................... $ 12,275 $ 12,505
Receivables:
Hotel and casino, less allowances of $1,800 and $6,210.......... 2,346 3,173
Affiliates...................................................... 622 534
Notes and other................................................. 935 896
-------- --------
3,903 4,603
Inventories........................................................ 1,972 2,123
Deferred income taxes.............................................. 7,611 5,857
Other current assets............................................... 1,166 1,223
-------- --------
Total current assets.......................................... 26,927 26,311
Property and equipment, at cost:
Land............................................................... 83,845 83,845
Buildings and improvements......................................... 538,972 535,274
Furniture, fixtures and equipment.................................. 138,517 134,104
Construction in progress........................................... 906 3,672
-------- --------
762,240 756,895
Less accumulated depreciation...................................... 262,847 240,963
-------- --------
Net property and equipment.................................... 499,393 515,932
Deferred finance costs, less accumulated amortization of $5,676 and
$3,970............................................................. 9,214 10,545
Receivable from affiliates........................................... 52,700
Casino Reinvestment Development Authority investments................ 9,964 8,062
Other assets......................................................... 5,177 4,614
-------- --------
$550,675 $618,164
-------- --------
-------- --------
</TABLE>

See accompanying notes.

F-3
<PAGE> 71

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

CONSOLIDATED BALANCE SHEET (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1992 1991
-------- --------
<S> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Payable to affiliate............................................... $ 16,000 $ 17,000
Accounts payable................................................... 3,782 5,652
Income taxes payable............................................... 3,697 1,741
Accrued liabilities --
Compensation and payroll taxes.................................. 6,335 7,777
Interest........................................................ 15,649 15,940
Progressive slot jackpots....................................... 2,859 2,928
Other........................................................... 15,635 12,426
Current portion of deferred compensation........................... 7,000
Current maturities of long-term debt............................... 1,038 8,539
-------- --------
Total current liabilities..................................... 64,995 79,003
Long-term debt, less current maturities.............................. 355,779 372,574
Deferred income taxes................................................ 15,571 12,768
Pension liability.................................................... 6,197 4,961
Deferred compensation................................................ 16,042 14,539
Other long-term liabilities.......................................... 1,261 1,429
Stockholder's equity:
Common stock, no par value, at stated value, authorized 3,000
shares, issued and outstanding 100 shares....................... 1 1
Additional paid in capital......................................... 90,829 128,640
Retained earnings.................................................. 4,249
-------- --------
Total stockholder's equity.................................... 90,830 132,890
-------- --------
$550,675 $618,164
-------- --------
-------- --------
</TABLE>

See accompanying notes.

F-4
<PAGE> 72

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1992 1991 1990
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Casino................................................... $277,997 $265,698 $266,881
Rooms.................................................... 23,724 23,454 23,879
Food and beverage........................................ 20,515 21,150 21,656
Interest income from affiliates.......................... 881 4,471 3,695
Other.................................................... 8,015 8,030 8,470
-------- -------- --------
331,132 322,803 324,581
Operating costs and expenses:
Casino................................................... 119,012 114,317 114,840
Rooms.................................................... 8,049 8,327 9,076
Food and beverage........................................ 17,844 18,737 19,748
Other operating expenses................................. 52,021 49,985 49,681
Selling, general and administrative...................... 44,148 48,873 44,770
Depreciation and amortization............................ 27,358 28,147 25,876
-------- -------- --------
268,432 268,386 263,991
-------- -------- --------
Operating income........................................... 62,700 54,417 60,590
Interest expense........................................... 47,960 48,951 46,334
-------- -------- --------
Income before income taxes................................. 14,740 5,466 14,256
Provision for income taxes................................. 6,800 3,700 6,200
-------- -------- --------
Net income................................................. $ 7,940 $ 1,766 $ 8,056
-------- -------- --------
-------- -------- --------
</TABLE>

See accompanying notes.

F-5
<PAGE> 73

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
RETAINED TOTAL
NUMBER ADDITIONAL EARNINGS STOCK-
OF SHARES COMMON PAID IN (ACCUMULATED HOLDER'S
ISSUED STOCK CAPITAL DEFICIT) EQUITY
--------- ------ ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1989..... 100 $1 $128,640 $ (1,673) $126,968
Net income..................... 8,056 8,056
Dividend paid.................. (3,900) (3,900)
--- -- ---------- ------------ --------
Balance at December 31, 1990..... 100 1 128,640 2,483 131,124
Net income..................... 1,766 1,766
--- -- ---------- ------------ --------
Balance at December 31, 1991..... 100 1 128,640 4,249 132,890
Net income..................... 7,940 7,940
Receivable due from Bally
Manufacturing Corporation
declared as a dividend...... (37,811) (12,189) (50,000)
--- -- ---------- ------------ --------
Balance at December 31, 1992..... 100 $1 $ 90,829 $ -- $ 90,830
--- -- ---------- ------------ --------
--- -- ---------- ------------ --------
</TABLE>

See accompanying notes.

F-6
<PAGE> 74

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1992 1991 1990
-------- -------- --------
<S> <C> <C> <C>
Operating:
Net income................................... $ 7,940 $ 1,766 $ 8,056
Adjustments to reconcile to cash provided --
Depreciation and amortization............. 27,358 28,147 25,876
Deferred income taxes..................... 1,049 (1,461) (848)
Provision for doubtful receivables........ 889 1,846 2,754
Write-off of property and equipment....... 2,367
Changes in operating assets and
liabilities............................. (5,089) 13,720 (3,185)
Other, net................................ 3,209 1,524 1,524
-------- -------- --------
Cash provided by operating
activities......................... 35,356 47,909 34,177
Investing:
Purchases of property and equipment.......... (10,268) (10,922) (55,559)
Proceeds from disposal of property and
equipment................................. 345 191 1,461
Purchase of CRDA investments and credits..... (2,692) (2,235) (1,512)
-------- -------- --------
Cash used in investing activities.... (12,615) (12,966) (55,610)
Financing:
Debt transactions --
Increase (decrease) in revolving line of
credit, net............................. (22,000) (50,000) 72,500
Advances from (repayments to) affiliates,
net..................................... 1,700 17,000 (52,700)
Repayments of long-term debt.............. (2,296) (537) (560)
Proceeds from issuance of long-term
debt.................................... 1,626
Debt issuance costs....................... (375) (11)
-------- -------- --------
Cash provided by (used in) debt
transactions....................... (22,971) (33,537) 20,855
Dividend paid................................ (3,900)
-------- -------- --------
Cash provided by (used in) financing
activities......................... (22,971) (33,537) 16,955
-------- -------- --------
Increase (decrease) in cash and equivalents.... (230) 1,406 (4,478)
Cash and equivalents, beginning of year........ 12,505 11,099 15,577
-------- -------- --------
Cash and equivalents, end of year.............. $ 12,275 $ 12,505 $ 11,099
-------- -------- --------
-------- -------- --------
</TABLE>

See accompanying notes.

F-7
<PAGE> 75

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1992 1991 1990
-------- -------- --------
<S> <C> <C> <C>
SUPPLEMENTAL CASH FLOWS INFORMATION
Changes in operating assets and liabilities:
(Increase) decrease in receivables............... $ (189) $ 2,814 $ (2,637)
(Increase) decrease in inventories............... 151 2,805 (1,144)
Increase in other assets......................... (612) (629) (1,328)
Increase (decrease) in accounts payable and
accrued liabilities............................ (463) 5,125 (2,152)
Increase in income taxes payable................. 1,956 1,176 76
Increase (decrease) in pension liability and
deferred compensation.......................... (5,764) 1,000 4,000
Increase (decrease) in other long-term
liabilities.................................... (168) 1,429
-------- -------- --------
$ (5,089) $ 13,720 $ (3,185)
-------- -------- --------
-------- -------- --------
Operating activities include cash payments for
interest and income taxes as follows:
Interest paid.................................... $ 45,141 $ 47,635 $ 45,344
Interest capitalized............................. (74) (149) (2,558)
Income taxes paid................................ 3,795 3,985 6,972
Investing and financing activities exclude the
following non-cash activities:
Receivable due from Bally Manufacturing
Corporation declared as a dividend............. $ 50,000 $ -- $ --
Donation of CRDA funds, net...................... 15 450
</TABLE>

See accompanying notes.

F-8
<PAGE> 76

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABULAR AMOUNTS IN THOUSANDS)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying consolidated financial statements include the accounts of
Bally's Park Place, Inc., a Delaware corporation (the "Company") and an indirect
wholly owned subsidiary of Bally Manufacturing Corporation ("BMC"), and its
subsidiaries. BMC is a holding company without significant operations of its
own. Nevertheless, BMC has certain cash obligations that must be satisfied by
obtaining cash from its subsidiaries or disposing of or leveraging certain
assets. BMC may be required to borrow additional funds or sell assets in order
to satisfy its cash flow requirements. Unless otherwise specified in the text,
references to the Company include the Company and its subsidiaries.

The Company operates in one industry segment. All significant revenues
arise from its casino and supporting hotel operations.

Certain reclassifications have been made to prior years' financial
statements to conform with the 1992 presentation.

Cash equivalents

The Company considers all highly liquid investments with original
maturities of three months or less when purchased to be cash equivalents. The
carrying amount of cash equivalents approximates fair value because of the short
maturity of those instruments.

Revenue recognition

Casino revenues consist of the net win from gaming activities, which is the
difference between gaming wins and losses. Operating revenues exclude the retail
value of complimentary food, beverage and hotel services furnished to customers,
which were approximately $36,809,000, $36,654,000 and $32,564,000 for 1992, 1991
and 1990, respectively. The estimated costs of providing such complimentary
services, which are classified as casino expenses through interdepartment
allocations from the departments granting the services, are as follows:

<TABLE>
<CAPTION>
1992 1991 1990
-------- -------- --------
<S> <C> <C> <C>
Rooms.......................................... $ 5,592 $ 4,625 $ 4,690
Food and beverage.............................. 16,478 14,399 13,551
Other.......................................... 2,763 3,197 4,901
-------- -------- --------
$ 24,833 $ 22,221 $ 23,142
-------- -------- --------
-------- -------- --------
</TABLE>

Inventories

Inventories of provisions and supplies are stated at the lower of cost
(first-in, first-out basis) or market, which approximates replacement cost.

Property and equipment

Depreciation of property and equipment is provided principally on the
straight-line method over the estimated economic lives of the related assets and
the terms of the applicable leases for leasehold improvements. Depreciation
expense was $26,462,000, $26,306,000 and $24,037,000 for 1992, 1991 and 1990,
respectively.

F-9
<PAGE> 77

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Deferred finance costs

Deferred finance costs are amortized using the bonds outstanding method.
Amortization expense was $1,706,000, $1,702,000 and $1,701,000 in 1992, 1991 and
1990, respectively.

Income taxes

Taxable income or loss of the Company is included in the consolidated
federal income tax return of BMC. Under a tax sharing agreement between the
Company and BMC, income taxes are allocated to the Company based on amounts the
Company would pay or receive if it filed a separate federal income tax return,
except that the Company receives credit from BMC for the tax benefit of the
Company's net operating losses and tax credits, if any, that can be utilized in
BMC's consolidated federal income tax return, regardless of whether these losses
or credits could be utilized by the Company on a separate consolidated federal
income tax return basis. Payments to BMC are due at such time and in such
amounts as payments are required to be made for income tax purposes. Payments by
BMC for such tax benefits are due at the time BMC files the applicable
consolidated federal income tax return. Under the tax sharing agreement, the
Company had income taxes payable to BMC of $3,697,000 and $1,741,000 at December
31, 1992 and 1991, respectively, which are classified as income taxes payable on
the accompanying consolidated balance sheet.

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes." SFAS No.
109 retains the current requirement to record deferred income taxes for
temporary differences that are reported in different years for financial
reporting and for tax purposes; however, the methodology for calculating and
recording deferred income taxes has changed. Under the liability method adopted
by SFAS No. 109, deferred tax liabilities or assets are computed using the tax
rates that will be in effect when the temporary differences reverse. Also,
requirements for recognition of deferred tax assets and operating loss and tax
credit carryforwards have been liberalized by requiring their recognition when
and to the extent that their realization is deemed to be more likely than not.
The Company adopted SFAS No. 109 effective January 1, 1993 using the cumulative
effect approach, which resulted in a charge of $11,377,000.

Fair value of financial instruments

The fair value of the Company's financial instruments approximates their
recorded book values at December 31, 1992, excluding the 11 7/8% First Mortgage
Notes due 1999 (the "Mortgage Notes") whose fair value, based on a quoted market
price, is approximately $363,125,000.

CASINO LICENSING

In September 1992, the New Jersey Casino Control Commission (the "CCC")
renewed the Company's casino license to operate Bally's Park Place Casino Hotel
and Tower through September 30, 1994. A New Jersey casino license is not
transferable, is issued for a term of one or two years and must be renewed by
filing an application. The CCC requires that dividends and other payments to BMC
by the Company and its subsidiaries, other than specifically defined payments
made in the ordinary course of business, receive prior approval.

TRANSACTIONS WITH RELATED PARTIES

As described above, BMC is a holding company without significant operations
of its own. The accompanying consolidated financial statements reflect charges
allocated by BMC of $3,660,000 and $1,000,000 in 1992 and 1991, respectively.
These costs reflect an allocation of BMC's corporate overhead including
executive salaries and benefits, public company reporting costs and other
corporate headquarter

F-10
<PAGE> 78

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

costs for which the Company does not obtain a measurable direct benefit. No
allocation of such costs was made by BMC in 1990.

The Company purchased slot machines and related services from other BMC
affiliates on terms negotiated by the parties for aggregate amounts of
$3,181,000, $1,649,000 and $1,233,000 in 1992, 1991 and 1990, respectively.

Certain executive officers of the Company function in a similar capacity
for GNAC, CORP. ("GNAC"), a wholly owned subsidiary of BMC which owns and
operates the casino resort in Atlantic City known as "The Grand", and exercise
decision making and operational authority over both entities. No allocation of
cost is made from the Company to GNAC for these executive officers as management
deems the allocable cost to be immaterial. In addition, certain administrative
and support operations of the Company and GNAC are consolidated, including legal
services, purchasing, limousine services, and certain aspects of human resources
and management information systems. Costs of these operations are allocated to
or from the Company either directly or using various formulas based on
utilization estimates of such services and, on a net basis, totalled $2,568,000,
$2,486,000 and $1,806,000 in 1992, 1991 and 1990, respectively, which management
believes were reasonable. In addition, the Company leases surface area parking
lots to GNAC. Rental income was $696,000 in 1992 and 1991 and $399,000 in 1990.

In April 1990, the Company advanced BMC $50,000,000 secured by a promissory
note. In October 1992, BMC petitioned the CCC to allow the Company to declare
the receivable due from BMC as a dividend. The CCC approved this request in
December 1992. No interest was paid to the Company subsequent to April 1, 1992.
Through March 31, 1992, the Company earned interest at the prime rate of its
agent bank. Intercompany interest earned on this advance was $808,000,
$4,243,000 and $3,684,000 in 1992, 1991 and 1990, respectively.

In December 1990, the Company advanced GNAC $2,700,000. This advance was
repaid in June 1992. The Company earned interest monthly on this advance (at the
prime rate of its agent bank) which totalled $73,000, $228,000 and $11,000 in
1992, 1991 and 1990, respectively.

The Company and GNAC have a cash management arrangement whereby GNAC
advances excess funds to the Company which the Company uses to reduce the
outstanding balance under its revolving credit agreement. The Company pays
interest monthly on these advances (at the prime rate of its agent bank) which
totalled $1,249,000, $862,000 and $234,000 in 1992, 1991 and 1990, respectively.
These advances are payable on demand.

The Company participated in the BMC insurance program for general liability
in 1990, 1988 and 1987 through a captive insurance company of BMC, whose
operation was discontinued in 1991. Under this program, general liability
insurance expense was allocated to the Company based on claims experience, which
management believes was reasonable. General liability insurance expense
allocated to the Company was $1,188,000 for 1990. The Company charged to
operations $500,000 in 1992 for a retroactive premium adjustment related to
claim years ended December 31, 1990, 1988 and 1987 and paid this amount to BMC
in January 1993.

DISCONTINUED MOTEL OPERATION

In December 1991, the Company made a decision to close and demolish the
motel operation of one of its subsidiaries. In connection with this decision,
the Company recorded a $3,500,000 charge against operations in 1991 to write-off
the remaining net book value of the property and equipment of this motel and to
provide for the demolition cost and other related closing costs. The revenues
and operating income of this motel operation were immaterial.

F-11
<PAGE> 79

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

CASINO REINVESTMENT DEVELOPMENT AUTHORITY INVESTMENTS

The New Jersey Casino Control Act (the "New Jersey Act") provides, among
other things, for an assessment of licensees equal to 1 1/4% of their gross
casino revenues. This assessment may be satisfied by the Company investing in
qualified eligible direct investments, by depositing funds with the Casino
Reinvestment Development Authority (the "CRDA") (which will be used to purchase
bonds issued by the CRDA), by making qualified contributions or, under certain
circumstances, donating funds on deposit with the CRDA in exchange for credits
against future CRDA obligations. The Company's investment obligation for 1992
was met by purchasing CRDA bonds, utilizing CRDA credits and depositing funds
with the CRDA. CRDA bonds have terms up to fifty years and bear interest at
below market rates. The Company records a charge to operations when it deposits
funds with the CRDA to reflect the estimated realizable value of its CRDA
investments. Additionally, the Company paid $869,000, $2,557,000 and $2,614,000
to GNAC in 1992, 1991 and 1990, respectively, for CRDA credits which were used
by the Company in satisfaction of its CRDA obligations.

The Company charged to operations $1,438,000, $2,164,000 and $1,410,000 in
1992, 1991 and 1990, respectively, to reflect the estimated realizable value of
its CRDA investments.

In January 1991, the Company received an assessment from the New Jersey
Department of the Treasury (the "Treasury") alleging, pursuant to the New Jersey
Act, that the Company in 1983 failed to have sufficient qualified investments in
excess of casino revenues. The New Jersey Act in effect in 1983 required in this
situation that a casino pay an assessment to satisfy its investment obligation.
In January 1992, the Company and the Treasury settled this dispute, and the
Company agreed to invest an additional $2,250,000 with the CRDA as follows:
$600,000 in 1992; $300,000 in 1993; $300,000 in 1994; $300,000 in 1995 and
$750,000 in 1996, and to participate in certain CRDA approved low income
mortgage guarantee programs. The Company charged $1,100,000 to operations in
1991 as a result of the settlement, representing the Company's estimated net
cost of the settlement obligation.

LONG-TERM DEBT

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1992 1991
-------- --------
<S> <C> <C>
Mortgage Notes......................................................... $350,000 $350,000
Revolving credit agreement............................................. 3,000 25,000
Other secured and unsecured debt....................................... 3,817 6,113
-------- --------
356,817 381,113
Less current maturities................................................ 1,038 8,539
-------- --------
$355,779 $372,574
-------- --------
-------- --------
</TABLE>

In 1989, the Company issued $350,000,000 principal amount of the Mortgage
Notes. Beginning in August 1996, annual sinking fund payments are required which
will retire approximately 40 percent of the Mortgage Notes prior to maturity.
The Mortgage Notes may be redeemed beginning August 1994, in whole or in part,
with premiums ranging from 4.45 percent in 1994 to zero in 1997 and thereafter.
The Mortgage Notes are secured by certain property and equipment at Bally's Park
Place Casino Hotel and Tower, which had a net book value of $415,923,000 at
December 31, 1992.

The Mortgage Notes indenture and the revolving credit agreement contain
covenants restricting the Company's investment policies, total indebtedness,
encumbrances on property and equipment securing the Mortgage Notes and the
revolving credit agreement, sale, transfer or lease of assets, the amounts of
additional

F-12
<PAGE> 80

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

debt which may be incurred and minimum coverage of fixed charges. Payments of
dividends by the Company are generally limited to 50% of its aggregate
consolidated net income (as defined) earned since December 31, 1988. At December
31, 1992, approximately $6,100,000 was available under the Mortgage Notes
indenture and revolving credit agreement to pay dividends.

In June 1992, the Company's credit agreement was amended to reduce the
maximum availability under the agreement from $100,000,000 to $75,000,000 and to
extend the term of the agreement for two years. The new expiration date is June
30, 1994 at which time the Company has the option to repay the outstanding
balance or convert the outstanding balance to a term loan payable in four
semiannual installments beginning December 31, 1994. The rate of interest on the
borrowings (6.0% at December 31, 1992) is at the Company's option, based upon
the agent bank's prime rate or certain other short-term rates. The annual fee on
the unused commitment is 1/2 of 1 percent. In addition, at the signing of the
agreement the Company paid to the banks a fee of 1/2 of 1 percent ($375,000) of
the total permitted borrowings, which will be amortized over the two year
extension period. Two additional covenants, providing for minimum coverage of
current maturities of long-term debt and fixed charges, were included in the
extension agreement. The unused amount of the credit line at December 31, 1992
is $72,000,000. In June 1991, the Company granted to the banks a mortgage on and
security interest in all the property and equipment securing the Mortgage Notes.
The banks rank pari passu in right of payment with the holders of the Mortgage
Notes.

Aggregate annual maturities of long-term debt for the five years after
December 31, 1992 are $1,038,000, $790,000, $1,542,000, $47,794,000 and
$47,046,000.

INCOME TAXES

The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
1992 1991 1990
------ ------- ------
<S> <C> <C> <C>
Current:
Federal............................................ $4,539 $ 3,848 $5,222
State.............................................. 1,212 1,313 1,826
------ ------- ------
5,751 5,161 7,048
Deferred:
Federal............................................ 764 (1,012) (505)
State.............................................. 285 (449) (343)
------ ------- ------
1,049 (1,461) (848)
------ ------- ------
$6,800 $ 3,700 $6,200
------ ------- ------
------ ------- ------
</TABLE>

A reconciliation of the provision for income taxes with amounts determined
by applying the U.S. statutory tax rate to income before income taxes is as
follows:

<TABLE>
<CAPTION>
1992 1991 1990
------ ------- ------
<S> <C> <C> <C>
Tax at U.S. statutory tax rate....................... $5,012 $ 1,858 $4,847
State income taxes, net of related federal income tax
benefit............................................ 988 570 979
Write-off of property and equipment.................. 698
Other, net........................................... 800 574 374
------ ------- ------
Provision for income taxes........................... $6,800 $ 3,700 $6,200
------ ------- ------
------ ------- ------
</TABLE>

F-13
<PAGE> 81

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The deferred income tax provision (benefit) arises from the tax effect of
timing differences as follows:

<TABLE>
<CAPTION>
1992 1991 1990
------ ------- -------
<S> <C> <C> <C>
Deferred compensation and pension................... $1,713 $ (402) $(1,609)
Depreciation and amortization....................... 1,427 1,150 2,583
Provision for bad debts............................. 38 378 (1,282)
CRDA investments.................................... (320) (1,077) (543)
Accrued expenses.................................... (1,633) (1,384) (458)
Other, net.......................................... (176) (126) 461
------ ------- -------
$1,049 $(1,461) $ (848)
------ ------- -------
------ ------- -------
</TABLE>

The Internal Revenue Service ("IRS") has completed an audit of BMC's
consolidated federal income tax returns for the calendar years 1983 and 1984.
During the audit, the IRS raised certain significant issues principally related
to the tax accounting method used by a subsidiary that operates its health clubs
to report income from membership contracts which resulted in a substantial
assessment. In July 1992, BMC and the IRS reached a settlement (confirmed in May
1993 by the Joint Committee on Taxation) with respect to the tax accounting
method used to report income from membership contracts. The settlement of this
issue significantly reduces, but does not fully eliminate, previously disclosed
concerns regarding a material adverse effect on BMC's liquidity with respect to
the tax accounting method used to report income from membership contracts. Since
BMC believes it has adequately provided deferred and current taxes related to
this matter, the settlement will not have a material adverse effect on BMC's
consolidated financial position or results of operations.

To the extent that BMC is unable to pay any amounts owed to the IRS as a
result of the aforementioned tax matters or any other issues when due, because
the Company was included in BMC's consolidated federal tax returns since its
inception, the Company, along with other BMC subsidiaries included in the
returns, is contingently liable for any such liabilities. While the Company is
unable to estimate the impact of BMC's tax deficiencies, if any, upon its
financial condition, the Company believes such matters will not have any impact
on the Company's ability to fund its capital expenditure, working capital and
debt service requirements.

The IRS has also completed an audit of the federal income tax returns of
certain of BMC's fitness center subsidiaries for periods ending on the days
these subsidiaries were acquired by BMC. Since these audits relate to periods
prior to inclusion of these fitness center subsidiaries in BMC's consolidated
federal income tax return, the Company would not be contingently liable for any
such liabilities. Among other things, the IRS is asserting that these
subsidiaries owe approximately $32,000,000 of additional taxes and $54,000,000
of interest (estimated as of December 31, 1992) with respect to BMC's election
to treat the purchases of stock of these subsidiaries as if they were purchases
of assets. The Company has been advised that BMC intends to vigorously oppose
the IRS' assertions and has filed petitions in the United States Tax Court
contesting the IRS' proposed deficiencies with respect to these issues. BMC
estimates that if the issues are fully litigated, the ultimate resolution of
these issues is not likely to occur for approximately three years (although a
resolution may occur sooner if BMC and the IRS resolve all or some of these
issues by stipulation or otherwise). Based on the information presently
available, there can be no assurance of the outcome of this matter; however, in
the opinion of BMC's management, payment, if any, to the IRS will not have a
material adverse effect on BMC's consolidated financial position or results of
operations, since BMC believes that it has adequately provided deferred and
current taxes related to this matter, although it could have an adverse effect
on BMC's liquidity.

F-14
<PAGE> 82

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

BENEFIT PLANS

The Company has a noncontributory supplemental executive retirement plan
(the "SERP") covering certain key executives. The age for normal retirement
under the SERP is 60, and the participants receive benefits based on years of
service and compensation. Pension costs of the SERP are unfunded.

The net pension cost for the Company's noncontributory supplemental
executive retirement plans in effect for 1992, 1991 and 1990 consists of the
following:

<TABLE>
<CAPTION>
1992 1991 1990
------ ------ ------
<S> <C> <C> <C>
Amortization of transition costs...................... $ 126 $ 140 $ 142
Service cost-benefits earned during the period........ 412 312 1,380
Interest cost on projected benefit obligations........ 478 1,037 2,374
Other................................................. 220 104
------ ------ ------
Net pension cost................................. $1,236 $1,489 $4,000
------ ------ ------
------ ------ ------
</TABLE>

The following sets forth the plan's obligations and funded status as of
December 31 for the continuing noncontributory supplemental executive retirement
plan.

<TABLE>
<CAPTION>
1992 1991
------ -------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits............................................... $2,969 $ 2,762
Nonvested benefits............................................ 1,046 1,680
------ -------
Accumulated benefit obligations............................... 4,015 4,442
Effect of projected salary increases.......................... 3,038 1,720
------ -------
Projected benefit obligations................................. 7,053 6,162
Unrecognized transition obligation.............................. (856) (1,201)
------ -------
Accrued pension liability....................................... $6,197 $ 4,961
------ -------
------ -------
</TABLE>

The weighted average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligations was 8% and 6%, respectively, in 1992, 1991 and
1990.

In 1991, the Company and one of its executives entered into an agreement to
terminate the executive's participation in another noncontributory supplemental
executive retirement plan sponsored by the Company. Pursuant to this agreement,
the Company agreed to pay the executive $27,600,000 over five years. The Company
recorded the settlement in an amount equal to the net present value of the
required payments. No charge against operations in 1991 was required, as the
Company had fully accrued in prior years the value of this settlement as part of
its pension liability. The net present value of the remaining payments under
this termination agreement was $16,042,000 at December 31, 1992. On January 8,
1993, the Company and BMC entered into a Retirement and Separation Agreement
with this executive which, among other things, reduced the remaining amount
payable under the termination agreement to $13,500,000, which the Company paid
on such date. This payment, combined with additional amounts due this executive
under an employment contract, resulted in a gain of approximately $1,500,000
which was recorded in January 1993.

In addition to the defined benefit pension plans described above, the
Company has a defined contribution plan which covers certain non-union employees
and which is considered part of the Company's overall

F-15
<PAGE> 83

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

retirement program. The plan is a 401(k) plan to which the Company contributes
an amount allocable based on eligible participants' compensation and a percent
of eligible employees' contributions. The expense for the Company's defined
contribution plan was $2,608,000, $3,800,000 and $2,302,000 for 1992, 1991 and
1990, respectively.

Certain employees of the Company are covered by union-sponsored,
collectively bargained, multiemployer defined benefit pension plans. The
contributions and charges to expense for these plans were $562,000, $567,000 and
$486,000 in 1992, 1991 and 1990, respectively.

In April 1991, an insurance company that issued guaranteed interest
contracts ("GICs") that were purchased by both BMC's and the Company's qualified
401(k) plans was declared insolvent by the State of California's Insurance
Commissioner (the "Commissioner"). Operations of this insurance company were
assumed by the Commissioner. Approximately $7,400,000 of these GICs are held in
a Master Trust for BMC's and its subsidiaries' employee benefit plans, of which
approximately 42% is attributable to the Company's 401(k) plan. Although BMC and
the Company had no legal obligation to fund any 401(k) plan losses, BMC's Board
of Directors, in June 1991, authorized BMC, and therefore the Company, to ensure
that participants in the Company's 401(k) plan not suffer any loss in principal,
as determined on March 31, 1991, to their 401(k) account balances which might
otherwise occur due to this insolvency. The Company charged $900,000 to
operations for its estimated cost of reimbursing any shortfall in the
participants' 401(k) account balances, which was included in the $3,800,000
defined contribution plan expense for 1991.

SUBSEQUENT EVENTS

In April 1993, BMC formed Bally's Casino Holdings, Inc. ("Casino Holdings")
to serve as a holding company for the Company and for acquiring and developing
gaming operations, including dockside and riverboat gaming, and expanding into
newly emerging gaming jurisdictions. On June 16, 1993, BMC contributed all of
the capital stock of the Company to Casino Holdings.

Effective June 16, 1993, the CCC no longer requires that dividends and
other payments to BMC by the Company and its subsidiaries receive prior
approval.

F-16
<PAGE> 84

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

SUPPLEMENTARY DATA
QUARTERLY CONSOLIDATED FINANCIAL DATA
(UNAUDITED)

<TABLE>
<CAPTION>
QUARTERS ENDED
-------------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
------------------- ------------------- ------------------- -------------------
1992 1991 1992 1991 1992 1991 1992 1991
------- ------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues........................ $73,566 $71,710 $83,947 $84,399 $96,014 $94,500 $77,605 $72,194
Operating costs and expenses.... 63,631 62,401 68,077 66,196 71,415 70,499 65,309 69,290
Operating income................ 9,935 9,309 15,870 18,203 24,599 24,001 12,296 2,904
Net income (loss)............... (1,241) (2,102) 2,083 3,489 6,435 6,496 663 (6,117)
</TABLE>

- ---------------

NOTES:

(1) The Company's operations are subject to seasonal factors.

(2) Revenues for the quarters ended March 31, June 30 and September 30, 1992
include interest from affiliates of $.9 million, $.8 million and $(.8)
million, respectively. Revenues for the quarters ended March 31, June 30,
September 30 and December 31, 1991 include interest from affiliates of $1.2
million, $1.6 million, $1.1 million and $.6 million, respectively.

(3) Operating costs and expenses for the third quarter of 1991 include $1.7
million for the estimated cost of settling certain non-recurring
liabilities.

(4) Operating costs and expenses for the fourth quarter of 1991 include a charge
of $3.5 million related to the closing and demolition of an ancillary motel
operated by the Company.

(5) Operating costs and expenses include charges allocated by Bally of $.8
million, $1.0 million, $1.1 million and $.8 million for the quarters ended
March 31, June 30, September 30 and December 31, 1992, respectively, and
$1.0 million for the quarter ended December 31, 1991.

F-17
<PAGE> 85

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
SEPTEMBER 30,
1993
-------------
<S> <C>
ASSETS
Current assets:
Cash and equivalents.............................................. $ 9,564
Receivables, less allowance for doubtful accounts of $1,150....... 3,684
Inventories....................................................... 1,672
Deferred income taxes............................................. 7,018
Other current assets.............................................. 1,759
-------------
Total current assets...................................... 23,697
Property and equipment, less accumulated depreciation of $278,402... 487,329
Deferred finance costs, less accumulated amortization of $6,960..... 7,930
Casino Reinvestment Development Authority investments............... 11,286
Other assets........................................................ 1,473
-------------
$ 531,715
-------------
-------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Payable to affiliate.............................................. $ 7,000
Accounts payable.................................................. 2,818
Income taxes payable.............................................. 6,410
Accrued liabilities............................................... 30,904
Current maturities of long-term debt.............................. 43
-------------
Total current liabilities................................. 47,175
Long-term debt, less current maturities............................. 352,738
Pension liability................................................... 6,770
Deferred income taxes............................................... 33,853
Other long-term liabilities......................................... 1,343
Stockholder's equity:
Common stock...................................................... 1
Additional paid in capital........................................ 89,835
Retained earnings.................................................
-------------
Total stockholder's equity................................ 89,836
-------------
$ 531,715
-------------
-------------
</TABLE>

See accompanying notes.

F-18
<PAGE> 86

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
1993 1992
-------- --------
<S> <C> <C>
Revenues:
Casino............................................................. $225,951 $212,596
Rooms.............................................................. 18,948 18,030
Food and beverage.................................................. 15,683 15,827
Interest income from affiliates.................................... 881
Other.............................................................. 6,540 6,193
-------- --------
267,122 253,527
Operating costs and expenses:
Casino............................................................. 87,555 89,457
Rooms.............................................................. 7,332 6,144
Food and beverage.................................................. 14,273 13,751
Other operating expenses........................................... 39,541 40,063
Selling, general and administrative................................ 27,121 33,003
Depreciation and amortization...................................... 19,928 20,705
-------- --------
195,750 203,123
-------- --------
Operating income..................................................... 71,372 50,404
Interest expense..................................................... 33,891 36,227
-------- --------
Income before income taxes and cumulative effect on prior years of
change in accounting for income taxes.............................. 37,481 14,177
Provision for income taxes........................................... 16,098 6,900
-------- --------
Income before cumulative effect on prior years of change in
accounting for income taxes........................................ 21,383 7,277
Cumulative effect on prior years of change in accounting for income
taxes.............................................................. (11,377)
-------- --------
Net income........................................................... $ 10,006 $ 7,277
-------- --------
-------- --------
</TABLE>

See accompanying notes.

F-19
<PAGE> 87

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
1993 1992
-------- --------
<S> <C> <C>
Operating:
Income before cumulative effect on prior years of change in
accounting for income taxes..................................... $ 21,383 $ 7,277
Adjustments to reconcile to cash provided --
Depreciation and amortization................................... 19,928 20,705
Deferred income taxes........................................... 7,988 2,635
Provision for doubtful receivables.............................. (90) 564
Changes in operating assets and liabilities..................... (19,982) (13,361)
Other, net...................................................... 1,284 1,279
-------- --------
Cash provided by operating activities...................... 30,511 19,099
Investing:
Purchases of property and equipment................................ (8,270) (9,132)
Proceeds from disposal of property and equipment................... 406 113
Purchase of CRDA investments and credits........................... (1,322) (2,378)
-------- --------
Cash used in investing activities.......................... (9,186) (11,397)
Financing:
Debt transactions --
Decrease in revolving line of credit, net....................... (3,000) (23,000)
Advances from (repayments to) affiliate, net.................... (9,000) 13,700
Repayment of long-term debt..................................... (1,036) (2,284)
Debt issuance costs............................................. (375)
-------- --------
Cash used in debt transactions............................. (13,036) (11,959)
Equity transaction --
Dividend paid to Bally's Casino Holdings, Inc................... (11,000)
-------- --------
Cash used in financing activities.......................... (24,036) (11,959)
-------- --------
Decrease in cash and equivalents..................................... (2,711) (4,257)
Cash and equivalents, beginning of period............................ 12,275 12,505
-------- --------
Cash and equivalents, end of period.................................. $ 9,564 $ 8,248
-------- --------
-------- --------
SUPPLEMENTAL CASH FLOWS INFORMATION
Changes in operating assets and liabilities:
Decrease in receivables............................................ $ 309 $ 288
Decrease in inventories............................................ 300 28
(Increase) decrease in other assets................................ 3,111 (1,625)
Decrease in accounts payable and accrued liabilities............... (10,538) (8,890)
Increase in income taxes payable................................... 2,223 645
Decrease in pension liability and deferred compensation............ (15,469) (3,906)
Increase in other long-term liabilities............................ 82 99
-------- --------
$(19,982) $(13,361)
-------- --------
-------- --------
Operating activities include cash payments for interest and
income taxes as follows:
Interest paid................................................... $ 43,100 $ 44,553
Income taxes paid............................................... 5,887 3,620
</TABLE>

See accompanying notes.

F-20
<PAGE> 88

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements include the
accounts of Bally's Park Place, Inc., a Delaware corporation (the "Company") and
its subsidiaries. The Company was a direct wholly owned subsidiary of Bally
Manufacturing Corporation ("BMC") until June 16, 1993, when BMC contributed all
of the capital stock of the Company to Bally's Casino Holdings, Inc. ("Casino
Holdings"). Casino Holdings was formed as a wholly owned subsidiary of BMC in
April 1993 to serve as a holding company for the Company and for acquiring and
developing gaming operations, including dockside and riverboat gaming, and
expanding into newly emerging gaming jurisdictions. Unless otherwise specified
in the text, references to the Company include the Company and its subsidiaries.
The accompanying condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements of the Company for each
of the three years in the period ended December 31, 1992 included elsewhere in
this Prospectus.

Effective January 1, 1993, the Company changed its method of accounting for
income taxes as required by Statement of Financial Accounting Standards ("SFAS")
No. 109, "Accounting for Income Taxes." SFAS No. 109 retains the requirement to
record deferred income taxes for temporary differences that are reported in
different years for financial reporting and for tax purposes; however, the
methodology for calculating and recording deferred income taxes has changed.
Under the liability method adopted by SFAS No. 109, deferred tax liabilities or
assets are computed using the tax rates that will be in effect when the
temporary differences reverse. Also, requirements for recognition of deferred
tax assets and operating loss and tax credit carryforwards have been liberalized
by requiring their recognition when and to the extent that their realization is
deemed to be more likely than not. As permitted by SFAS No. 109, the Company
elected to use the cumulative effect approach rather than to restate the
consolidated financial statements of any prior periods to apply the provisions
of SFAS No. 109. The cumulative effect on prior years of this change in
accounting for income taxes as of January 1, 1993 was a charge of $11,377,000.
The effect of this change in accounting for income taxes on the provision for
income taxes for the nine months ended September 30, 1993 was not material.

All adjustments have been recorded which are, in the opinion of management,
necessary for a fair presentation of the condensed consolidated balance sheet of
the Company at September 30, 1993 and its consolidated statements of operations
and cash flows for the nine months ended September 30, 1993 and 1992. All such
adjustments were of a normal recurring nature, except for those adjustments
required to apply the provisions of SFAS No. 109.

Certain reclassifications have been made to prior period financial
statements to conform with the 1993 presentation.

SEASONAL FACTORS

The Company's operations are subject to seasonal factors and, therefore,
the results of operations for the nine months ended September 30, 1993 and 1992
are not necessarily indicative of the results of operations for the full year.

TRANSACTIONS WITH RELATED PARTIES

BMC is a holding company without significant operations of its own. The
accompanying condensed consolidated financial statements reflect charges
allocated by BMC of $3,024,000 and $2,852,000 for the nine months ended
September 30, 1993 and 1992, respectively. These costs reflect an allocation of
BMC's

F-21
<PAGE> 89

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

corporate overhead including executive salaries and benefits, public company
reporting costs and other corporate headquarter costs for which the Company does
not obtain a measurable direct benefit.

Certain executive officers of the Company function in a similar capacity
for GNAC, CORP. (a wholly owned subsidiary of BMC which owns and operates the
casino resort in Atlantic City known as "The Grand"), and exercise decision
making and operational authority over both entities. No allocation of cost is
made from the Company to The Grand for these executive officers as management
believes the allocable cost to be immaterial. In addition, certain
administrative and support operations of the Company and The Grand are
consolidated, including legal services, purchasing, limousine services, and
certain aspects of human resources and management information systems. Costs of
these operations are allocated to or from the Company either directly or using
various formulas based on utilization estimates of such services and, on a net
basis, totalled $996,000 and $1,888,000 for the nine months ended September 30,
1993 and 1992, respectively, which management believes were reasonable.

The Company leases surface area parking lots to The Grand. Rental income
was $522,000 for each of the nine months ended September 30, 1993 and 1992. In
addition, the Company paid $869,000 to The Grand during the nine months ended
September 30, 1992 for Casino Reinvestment Development Authority ("CRDA")
credits which were used by the Company in satisfaction of a portion of its CRDA
obligations.

In April 1990, the Company advanced BMC $50,000,000 (secured by a
promissory note), with interest earned at the prime rate of its agent bank. In
October 1992, BMC petitioned the CCC to allow the Company to declare the
receivable due from BMC as a dividend. The CCC approved this request in December
1992. No interest was paid to the Company subsequent to April 1, 1992. The
Company recognized interest on this advance of $808,000 for the nine months
ended September 30, 1992.

In December 1990, the Company advanced The Grand $2,700,000. This advance
was repaid in June 1992. The Company earned interest monthly on this advance (at
the prime rate of its agent bank) which totalled $73,000 for the nine months
ended September 30, 1992.

The Company and The Grand have a cash management arrangement whereby The
Grand advances excess funds to the Company which the Company uses to reduce the
outstanding balance under its revolving credit agreement. As of September 30,
1993, the Company owed The Grand $7,000,000. These advances are payable on
demand. The Company pays interest monthly on these advances (at the prime rate
of its agent bank) which totalled $431,000 and $947,000 for the nine months
ended September 30, 1993 and 1992, respectively.

EXECUTIVE RETIREMENT AND SEPARATION AGREEMENT

On January 8, 1993, the Company and BMC entered into a Retirement and
Separation Agreement with a former executive of the Company and BMC. The Company
paid this executive $14,500,000 on such date in full settlement of the remaining
amounts due under his employment contract and for the liability under a previous
settlement of his supplemental executive retirement plan (present value at
December 31, 1992 was $16,042,000), which resulted in a gain of approximately
$1,500,000 for the nine months ended September 30, 1993.

LONG-TERM DEBT

The indenture relating to the Company's 11 7/8% First Mortgage Notes (the
"Mortgage Notes") and the Company's revolving credit agreement contain covenants
restricting the Company's investment policies, total indebtedness, encumbrances
on property and equipment securing the Mortgage Notes and the revolving credit
agreement, payment of dividends, sale, transfer or lease of assets, the amounts
of additional debt which may be

F-22
<PAGE> 90

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

incurred and minimum coverage of current maturities of long-term debt and fixed
charges. In June 1993, Casino Holdings completed a private placement of
$220,000,000 principal amount of Senior Discount Notes and that indenture also
places certain restrictions on the Company's ability to incur additional debt.

Payments of dividends by the Company are generally limited to 50% of its
aggregate consolidated net income (as defined) earned since December 31, 1988.
On September 20, 1993, a dividend of $11,000,000 was paid to Casino Holdings. At
September 30, 1993, approximately $5,800,000 was available to pay dividends.

The revolving credit agreement expires on June 30, 1994 at which time the
Company has the option to pay the outstanding balance or convert the outstanding
balance to a term loan payable in four semiannual installments beginning
December 31, 1994. The agreement provides for maximum borrowings up to
$75,000,000. The rate of interest on the borrowings (prime rate of 6% at
September 30, 1993) is at the Company's option, based upon the agent bank's
prime rate or certain other short-term rates. The Company pays an annual fee of
1/2 of 1 percent on the unused commitment. The entire credit line was available
at September 30, 1993.

INCOME TAXES

Taxable income or loss of the Company is included in the consolidated
federal income tax return of BMC. Under agreements between the Company, BMC and
Casino Holdings, income taxes are allocated to the Company based on amounts the
Company would pay or receive if it filed a separate consolidated federal income
tax return, except that the Company receives credit from BMC for the tax benefit
of the Company's net operating losses and tax credits, if any, that can be
utilized in BMC's consolidated federal income tax return, regardless of whether
these losses or credits could be utilized by the Company on a separate
consolidated federal income tax return basis.

Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
and income tax purposes. Significant components of the Company's deferred tax
assets and liabilities as of January 1, 1993, along with their classification,
are as follows:

<TABLE>
<CAPTION>
ASSETS LIABILITIES
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Expenses which are not currently deductible for tax purposes:
Bad debts.................................................. $ 706 $
Deferred compensation and pension.......................... 8,937
Other...................................................... 9,857
Depreciation and capitalized costs........................... 38,437
Tax loss carryforwards....................................... 83
Other........................................................ 14
------- -----------
19,597 $38,437
-----------
-----------
Valuation allowance.......................................... (7)
-------
$19,590
-------
-------
Current...................................................... $ 6,888 $
Long-term.................................................... 12,702 38,437
------- -----------
$19,590 $38,437
------- -----------
------- -----------
</TABLE>

F-23
<PAGE> 91

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

For the nine months ended September 30, 1993 and 1992, the effective rate
of the income tax provision differed from the U.S. statutory tax rate due
principally to state income taxes, net of the related federal income tax
benefit. In addition, the income tax provision for the nine months ended
September 30, 1993 was increased by $427,000 as a result of applying the change
in the U.S. statutory tax rate from 34% to 35% to deferred tax balances as of
January 1, 1993.

F-24
<PAGE> 92

- ------------------------------------------------------
- ------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY BALLY'S PARK PLACE, THE ISSUER OR THE UNDERWRITERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, THE NOTES IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS NOT BEEN A CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS OR IN THE AFFAIRS OF BALLY'S PARK PLACE OR THE ISSUER SINCE THE DATE
HEREOF.

------------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................... 2
Prospectus Summary...................... 3
Investment Considerations............... 10
The Company............................. 14
Use of Proceeds......................... 16
Consolidated Capitalization............. 17
Selected Financial Data................. 18
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 20
Business................................ 26
Management.............................. 34
Security Ownership...................... 42
Certain Transactions.................... 42
Description of the Notes................ 44
Underwriting............................ 64
Legal Matters........................... 65
Experts................................. 65
Index to Financial Statements........... F-1
</TABLE>

- ------------------------------------------------------
- ------------------------------------------------------

$425,000,000

BALLY'S PARK
PLACE FUNDING, INC.

% FIRST MORTGAGE NOTES

DUE 2004

PAYMENT OF PRINCIPAL AND INTEREST
FULLY AND UNCONDITIONALLY
GUARANTEED BY

BALLY'S
PARK PLACE, INC.

---------------------------

PROSPECTUS
---------------------------

MERRILL LYNCH & CO.

JEFFERIES & COMPANY, INC.

DONALDSON, LUFKIN & JENRETTE

SECURITIES CORPORATION

LIBRA INVESTMENTS, INC.

, 1994

- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 93

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth expenses in connection with the issuance of
the Notes being registered, other than discounts and commissions payable by the
Registrants. All of the amounts shown are estimates, except the registration fee
and the NASD fee:

<TABLE>
<S> <C>
SEC registration fee.............................................. $146,552
NASD fee.......................................................... $ 30,500
Accounting fees and expenses...................................... $ *
Legal fees and expenses........................................... $ *
Blue Sky fees and expenses........................................ $ *
Trustee's fees and expenses....................................... $ *
Printing expenses................................................. $ *
Miscellaneous expenses............................................ $ *
--------
Total expenses.......................................... $ *
--------
--------
</TABLE>

*To be completed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law ("DGCL") permits the
Indemnification of the directors and officers of the Issuer. The By-laws of the
Issuer and Bally's Park Place provide it will indemnify the officers, directors,
employees and agents of the Issuer and Bally's Park Place to the extent
permitted by the DGCL.

Bally's Restated Certificate of Incorporation provides for the
indemnification of directors and officers of Bally, and persons who serve or
served at the request of Bally as a director, officer, employee or agent of
another corporation, including the Issuer, the Operating Company and Bally's
Park Place, including service with respect to employee benefit plans, against
all expense, liability and loss (including attorneys' fees, judgments, fines,
ERISA excise taxes or penalties in amounts paid or to be paid in settlement)
reasonably incurred with respect to any action, suit or proceeding, whether
civil, criminal, administrative or investigative, provided, however, Bally shall
indemnify any such person seeking indemnification in connection with a
proceeding initiated by such person only if such proceeding was authorized by
Bally's Board. In the event a claim for indemnification by any person has not
been paid in full by Bally after written request has been received by Bally, the
claimant may at any time thereafter bring suit against Bally to recover the
unpaid amount of the claim and, if successful in whole or in part, the claimant
shall be entitled to be paid also the expense of prosecuting such claim. The
right to indemnification conferred in the Restated Certificate of Incorporation
is a contract right and shall include the right to be paid by Bally the expenses
incurred in defending any such proceeding in advance of its final disposition.
Bally maintains insurance, at its expense, to protect itself and any director,
officer, employee or agent of Bally or another corporation, including the Issuer
and Bally's Park Place, against any such expense, liability or loss, whether or
not Bally would have the power to indemnify such person against such expense,
liability or loss under state law.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Not applicable.

II-1
<PAGE> 94

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

<TABLE>
<S> <C> <C>
**** 1 Form of Purchase Agreement.
** 3(i) Certificate of Incorporation of the Issuer, as amended to date.
** 3(ii) Amended and Restated By-laws of the Issuer, as amended to date.
** 3(iii) Restated Certificate of Incorporation of Bally's Park Place.
** 3(iv) Amended and Restated By-laws of Bally's Park Place.
** 3(v) Amended and Restated Certificate of Incorporation of the Operating Company.
** 3(vi) Amended and Restated By-laws of the Operating Company.
4(i) Form of Indenture governing the Notes.
4(ii) Form of Note (included as part of Article II of the Indenture).
4(iii) Form of Guaranty of Bally's Park Place of the Notes (included as part of
Article II of the Indenture).
** 4(iv) Indenture governing 11 7/8% First Mortgage Notes due 1999 of the Issuer (the
"Existing Note Indenture").
** 4(v) Form of Existing Note (included as Exhibit A to the Existing Note
Indenture).
** 4(vi) Guaranty of Bally's Park Place of Existing Notes.
*** 5 Opinion of Benesch, Friedlander, Coplan & Aronoff.
* 10(i).1 Intercorporate Agreement dated as of June 24, 1993 among Casino Holdings,
Bally's Park Place and Bally.
* 10(i).2 Tax Sharing Agreement dated as of June 17, 1993 between Bally and Casino
Holdings.
* 10(i).3 Tax Sharing Agreement dated as of June 17, 1993 between Bally and Bally's
Park Place.
* 10(i).4 Amended and Restated Loan Agreement dated as of June 30, 1992 among Bally's
Park Place, the Operating Company, Bally's Park Place Realty Co. ("Realty
Co."), and the Senior Lender, as agent and the other banks named therein
governing the existing credit facility (filed as an exhibit to the Annual
Report on Form 10-K for Bally's Park Place for the year ended December 31,
1992).
*** 10(i).5 Form of Mortgage and Security Agreement with Assignment of Rents among the
Operating Company, Realty Co., the Issuer and First Bank.
*** 10(i).6 Form of Assignment of Leases and Rents among the Operating Company, Realty
Co. and First Bank.
*** 10(i).7 Form of Note Pledge Agreement among the Operating Company, the Issuer and
First Bank.
*** 10(i).8 Form of Operating Company Note.
*** 10(i).9 Form of Intercreditor Agreement.
** 10(i).10 Mortgage and Security Agreement with Assignment of Rents dated August 31,
1989 among the Operating Company, Realty Co., the Issuer and First Fidelity
Bank.
** 10.(i).11 Assignment of Leases and Rents dated August 31, 1989 among the Operating
Company, Realty Co. and First Fidelity Bank.
** 10.(i).12 Note Pledge Agreement dated August 31, 1989 among the Operating Company,
Realty Co. and First Fidelity Bank.
** 10.(i).13 $350,000,000 Note dated August 31, 1989.
*** 10.(i).14 Intercreditor Agreement dated among First Fidelity Bank,
the Senior Lender, the Operating Company and Realty Co.
** 10(ii).1 Lease Agreement dated June 8, 1977, between the Operating Company and the
Palley Blatt Company respecting the Marlborough-Blenheim Hotel Property
(filed as an exhibit to Bally's Park Place's Registration Statement on Form
S-1, Registration No. 2-65017).
</TABLE>

II-2
<PAGE> 95

<TABLE>
<S> <C> <C>
** 10(ii).2 Letter dated April 27, 1979, from the Operating Company to Alexander K.
Blatt and Norman Palley, as Trustees, agreeing to the purchase and
modification of the First Peoples National Bank of New Jersey's $4,000,000
mortgage loan to the Pally Blatt Company (filed as an exhibit to Bally's
Park Place's Registration Statement on Form S-1, Registration No. 2-65017).
** 10(iii).1.3 Retirement and Separation Agreement dated January 8, 1993 between Bally, the
Operating Company and Richard Gillman (filed as an exhibit to Bally's Park
Place's Annual Report on Form 10-K for the year ended December 31, 1992).
** 10(iii).4 Employment Agreement dated as of November 1, 1990, as amended, between Bally
and Arthur Goldberg (filed as an exhibit to Bally's Park Place's Annual
Report on Form 10-K for the year ended December 31, 1992).
** 10(iii).4.1 First Amendment to Employment Agreement effective as of November 1, 1991,
between Bally and Arthur Goldberg (filed as an exhibit to Bally's Park
Place's Annual Report on Form 10-K for the year ended December 31, 1992).
10(iii).4.2 Second Amendment to Employment Agreement effective September 29, 1993
between Bally and Arthur Goldberg.
* 10(iii).5 Employment Agreement effective as of January 1, 1993 between Bally and
Wallace R. Barr.
* 10(iii).6 Employment Agreement effective as of January 1, 1993 between Bally and
Robert G. Conover.
10(iii).7 Severance Agreement effective as of March 15, 1993 between Bally's Park
Place and C. Patrick McKoy.
* 10(iii).8 Settlement Agreement and Release dated July 30, 1993 between the Operating
Company and Charles Tannenbaum (filed as an exhibit to Bally's Casino
Holdings, Inc's. Amendment No. 1 to Registration Statement on Form S-1,
Registration No. 33-65438).
** 10(iii).9 Supplemental Executive Retirement Plan of the Operating Company effective as
of January 1, 1987.
** 10(iii).10 Amended and Restated Profit Sharing Plan and Trust Agreement of the
Operating Company effective as of January 1, 1984.
12 Calculations of Historical and Pro Forma Ratios of Earnings to Fixed
Charges.
*** 21 List of Subsidiaries of Bally's Park Place.
23.1 Consent of Ernst & Young.
*** 23.2 Consent of Benesch, Friedlander, Coplan & Aronoff (contained in its Opinion
filed as Exhibit 5 hereto).
23.3 Consent of American Appraisal Capital Services, Inc.
**** 24(i) Powers of Attorney for Bally's Park Place (set forth on page II-9).
**** 24(ii) Powers of Attorney for the Issuer (set forth on page II-8).
25 Statement of Eligibility and Qualification of Trustee relative to the Notes
(bound separately).
</TABLE>

- ---------------

* Incorporated herein by reference and filed as an exhibit to Bally's Casino
Holdings, Inc.'s Registration Statement on Form S-1, Registration No.
33-65438, unless otherwise indicated.

** Incorporated herein by reference and filed as an exhibit to Bally's Park
Place Funding, Inc.'s Registration Statement on Form S-1, Registration No.
33-26464, unless otherwise indicated.

*** To be filed by amendment.

**** Previously filed.

(b) Financial Statement Schedules --

Report of Independent Auditors on Financial Statement Schedules

II-3
<PAGE> 96

<TABLE>
<S> <C>
Schedule II Amounts Receivable from Related Parties and Underwriters, Promoters, and
Employees Other Than Related Parties for the Years Ended December 31, 1992,
1991 and 1990.
Schedule V Property and Equipment for the Years Ended December 31, 1992, 1991 and 1990.
Schedule VI Accumulated Depreciation and Amortization of Property and Equipment for the
Years Ended December 31, 1992, 1991 and 1990.
Schedule VIII Valuation and Qualifying Accounts for the Years Ended December 31, 1992, 1991
and 1990.
Schedule X Supplementary Income Statement Information for the Years Ended December 31,
1992, 1991 and 1990.
</TABLE>

All other schedules specified under Regulation S-X for Bally's Park Place,
Inc. have been omitted because they are either not applicable, not required or
because the information required is included in the consolidated financial
statement or notes thereto.

ITEM 17. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions or otherwise, the registrants
have been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrants will,
unless in the opinion of their counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by them is against public policy as
expressed in the Securities Act and will be governed by the lineal adjudication
of such.

The Registrants thereby undertake that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as
a part of this Registration Statement in reliance upon Rule 430A
and contained in a form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or Rule 497(h) under the
Securities Act shall be deemed to be part of this Registration
Statement as at the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.

II-4
<PAGE> 97

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED IN THE CITY OF ATLANTIC
CITY, STATE OF NEW JERSEY, ON FEBRUARY 11, 1994.

BALLY'S PARK PLACE FUNDING, INC.

By: /s/ JOSEPH A. D'AMATO

Joseph A. D'Amato
Its: Vice President and
Treasurer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Joseph A. D'Amato, or any of them, his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Registration Statement, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact, agent or
their substitutes may lawfully do or cause to be done by virtue hereof.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ----------------------------------- ------------------
<S> <C> <C>
* Chairman of the Board and Chief February 11, 1994
Arthur M. Goldberg Executive Officer
/s/ JOSEPH A. D'AMATO Vice President and Treasurer February 11, 1994
Joseph A. D'Amato (Chief Financial Officer and Chief
Accounting Officer)
</TABLE>

*By: /s/ JOSEPH A. D'AMATO

Joseph A. D'Amato, attorney in
fact

II-5
<PAGE> 98

SIGNATURES

BALLY'S PARK PLACE, INC.

By: /s/ JOSEPH A. D'AMATO

Joseph A. D'Amato

Its: Vice President and
Treasurer

POWER OF ATTORNEY

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ----------------------------------- ------------------
<S> <C> <C>
* Chairman of the Board and Chief February 11, 1994
Arthur M. Goldberg Executive Officer
* President, Chief Operating Officer February 11, 1994
Wallace R. Barr and Director
* Director February 11, 1994
Lee S. Hillman
/s/ JOSEPH A. D'AMATO Vice President and Treasurer February 11, 1994
Joseph A. D'Amato (Chief Financial Officer and
Chief Accounting Officer)
* Director February 11, 1994
J. Kenneth Looloian
</TABLE>

*By: /s/ JOSEPH A. D'AMATO

Joseph A. D'Amato, attorney
in fact

II-6
<PAGE> 99

INDEX TO FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Report of Independent Auditors on Financial Statement Schedules......................... S-2
Schedule II Amounts Receivable from Related Parties and Underwriters, Promoters,
and Employees Other Than Related Parties for the Years Ended December
31, 1992, 1991 and 1990................................................ S-3
Schedule V Property and Equipment for the Years Ended December 31, 1992, 1991 and
1990................................................................... S-4
Schedule VI Accumulated Depreciation and Amortization of Property and Equipment for
the Years Ended December 31, 1992, 1991 and 1990....................... S-5
Schedule VIII Valuation and Qualifying Accounts for the Years Ended December 31,
1992, 1991 and 1990.................................................... S-6
Schedule X Supplementary Income Statement Information for the Years Ended December
31, 1992, 1991 and 1990................................................ S-7
</TABLE>

All other schedules specified under Regulation S-X for Bally's Park Place, Inc.
have been omitted because they are either not applicable, not required or
because the information required is included in the consolidated financial
statements or notes thereto.

S-1
<PAGE> 100

REPORT OF INDEPENDENT AUDITORS
ON FINANCIAL STATEMENT SCHEDULES

We have audited the consolidated financial statements of Bally's Park
Place, Inc. (an indirect wholly owned subsidiary of Bally Manufacturing
Corporation) as of December 31, 1992 and 1991, and for each of the three years
in the period ended December 31, 1992, and have issued our report thereon dated
February 19, 1993, except for the "Summary of significant accounting policies"
and "Subsequent events" notes, as to which the date is June 16, 1993 (included
elsewhere in this Registration Statement). Our audits also included the
financial statement schedules listed in Item 16(b) of this Registration
Statement. These schedules are the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audits.

In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.

ERNST & YOUNG

Philadelphia, Pennsylvania
February 19, 1993

S-2
<PAGE> 101

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

SCHEDULE II -- AMOUNTS RECEIVABLE FROM RELATED PARTIES
AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES
OTHER THAN RELATED PARTIES

YEARS ENDED DECEMBER 31, 1992, 1991 AND 1990

<TABLE>
<CAPTION>
BALANCE AT END OF
BALANCE AT AMOUNT PERIOD
BEGINNING COLLECTED -----------------------
NAME OF DEBTOR OF PERIOD ADDITIONS AND OTHER CURRENT NON-CURRENT
- ------------------------------- ---------- --------- --------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1992:
Bally Manufacturing
Corporation............... $ 50,000 $ $50,000 $ $
GNAC, CORP................... 2,700 2,700
---------- --------- --------- ------- -----------
$ 52,700 $ -- $52,700 $ -- $ --
---------- --------- --------- ------- -----------
---------- --------- --------- ------- -----------
1991:
Bally Manufacturing
Corporation............... $ 50,000 $ $ $ $50,000
GNAC, CORP................... 2,700 2,700
---------- --------- --------- ------- -----------
$ 52,700 $ -- $ -- $ -- $52,700
---------- --------- --------- ------- -----------
---------- --------- --------- ------- -----------
1990:
Bally Manufacturing
Corporation............... $ $50,000 $ $ $50,000
GNAC, CORP................... 2,700 2,700
---------- --------- --------- ------- -----------
$ -- $52,700 $ -- $ -- $52,700
---------- --------- --------- ------- -----------
---------- --------- --------- ------- -----------
</TABLE>

- ---------------

Notes:

(a) All amounts are exclusive of accrued interest.

(b) All amounts are secured by promissory notes, requiring payment on demand.
The notes bear interest at the prime rate of Bally's Park Place, Inc.'s
agent bank.

S-3
<PAGE> 102

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

SCHEDULE V -- PROPERTY AND EQUIPMENT

YEARS ENDED DECEMBER 31, 1992, 1991 AND 1990

<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING OF ADDITIONS AT OTHER END OF
CLASSIFICATION PERIOD COST RETIREMENTS CHANGES(C) PERIOD
- ----------------------- ------------ ------------ ----------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1992:
Land................. $ 83,845 $ $ $ $ 83,845
Buildings and
improvements...... 535,274 122 261 3,837 538,972
Furniture, fixtures
and equipment..... 134,104 4,849 4,662 4,226 138,517
Construction in
progress.......... 3,672 5,297 (8,063) 906
------------ ------------ ----------- ---------- ----------
$756,895 $ 10,268 $ 4,923 $ -- $762,240
------------ ------------ ----------- ---------- ----------
------------ ------------ ----------- ---------- ----------
1991:
Land................. $ 83,739 $ 5 $ 5 $ 106 $ 83,845
Buildings and
improvements...... 537,101 565 5,534 3,142 535,274
Furniture, fixtures
and equipment..... 130,580 5,278 3,256 1,502 134,104
Construction in
progress.......... 3,348 5,074 (4,750) 3,672
------------ ------------ ----------- ---------- ----------
$754,768 $ 10,922 $ 8,795 $ -- $756,895
------------ ------------ ----------- ---------- ----------
------------ ------------ ----------- ---------- ----------
1990:
Land................. $ 81,759 $ 1,991 $ 11 $ $ 83,739
Buildings and
improvements...... 473,353 1,681 111 62,178 537,101
Furniture, fixtures
and equipment..... 122,703 10,165 2,579 291 130,580
Construction in
progress.......... 24,095 41,722 (62,469) 3,348
------------ ------------ ----------- ---------- ----------
$701,910 $ 55,559 $ 2,701 $ -- $754,768
------------ ------------ ----------- ---------- ----------
------------ ------------ ----------- ---------- ----------
</TABLE>

- ---------------

Notes:

(a) Property and equipment is depreciated principally on the straight-line
method, over lives ranging from 3 to 40 years.

(b) Retirements in 1991 include $6,288,000 relating to the closing and
demolition of a subsidiary's motel operations.

(c) Other changes represent principally amounts transferred from construction in
progress to buildings and improvements and furniture, fixtures and equipment
classifications.

S-4
<PAGE> 103

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

SCHEDULE VI -- ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY AND EQUIPMENT

YEARS ENDED DECEMBER 31, 1992, 1991 AND 1990

<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
CLASSIFICATION OF PERIOD EXPENSES RETIREMENTS PERIOD
- ----------------------------------------- ---------- ---------- ----------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
1992:
Buildings and improvements............. $137,532 $ 17,555 $ 177 $154,910
Furniture, fixtures and equipment...... 103,431 8,907 4,401 107,937
---------- ---------- ----------- ----------
$240,963 $ 26,462 $ 4,578 $262,847
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
1991:
Buildings and improvements............. $123,276 $ 17,432 $ 3,176 $137,532
Furniture, fixtures and equipment...... 97,618 8,874 3,061 103,431
---------- ---------- ----------- ----------
$220,894 $ 26,306 $ 6,237 $240,963
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
1990:
Buildings and improvements............. $108,292 $ 15,027 $ 43 $123,276
Furniture, fixtures and equipment...... 89,805 9,010 1,197 97,618
---------- ---------- ----------- ----------
$198,097 $ 24,037 $ 1,240 $220,894
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
</TABLE>

- ---------------

Note:
Retirements in 1991 include $3,921,000 relating to the closing and
demolition of a subsidiary's motel operations.

S-5
<PAGE> 104

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS

YEARS ENDED DECEMBER 31, 1992, 1991 AND 1990

<TABLE>
<CAPTION>
ADDITIONS
----------------------
CHARGED
BALANCE AT TO COSTS CHARGED BALANCE
BEGINNING AND TO OTHER AT END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- --------------------------------- ---------- --------- -------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Allowance for doubtful
receivables:
1992............................. $6,210 $ 889 $ -- $5,299 $ 1,800
---------- --------- -------- ---------- ---------
---------- --------- -------- ---------- ---------
1991............................. $7,150 $ 1,846 $ -- $2,786 $ 6,210
---------- --------- -------- ---------- ---------
---------- --------- -------- ---------- ---------
1990............................. $5,400 $ 2,754 $ -- $1,004 $ 7,150
---------- --------- -------- ---------- ---------
---------- --------- -------- ---------- ---------
</TABLE>

- ---------------

Note: Deductions consist of write-offs of uncollectible amounts, net of
recoveries.

S-6
<PAGE> 105

BALLY'S PARK PLACE, INC.
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF BALLY MANUFACTURING CORPORATION)

SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION

YEARS ENDED DECEMBER 31, 1992, 1991 AND 1990

<TABLE>
<CAPTION>
CHARGED TO COSTS AND EXPENSES
-------------------------------
ITEM 1992 1991 1990
- -------------------------------------------------------------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Maintenance and repairs....................................... $17,548 $16,536 $16,102
------- ------- -------
------- ------- -------
Amortization:
CRDA credits............................................. $ 790 $ 1,661 $ 1,659
Other.................................................... 106 180 180
------- ------- -------
$ 896 $ 1,841 $ 1,839
------- ------- -------
------- ------- -------
Taxes other than payroll and income taxes:
State gaming taxes....................................... $22,396 $21,248 $21,155
Real estate and personal property taxes.................. 12,196 11,474 10,226
------- ------- -------
$34,592 $32,722 $31,381
------- ------- -------
------- ------- -------
Advertising................................................... $ 9,032 $ 8,863 $ 9,974
------- ------- -------
------- ------- -------
</TABLE>

S-7

<PAGE> 1

BALLY'S PARK PLACE FUNDING, INC.
(a Delaware corporation),
as Obligor,

BALLY'S PARK PLACE, INC.
(a Delaware corporation),
as Guarantor,

BALLY'S PARK PLACE, INC.
(a New Jersey corporation),

BALLY'S PARK PLACE REALTY CO.
(a New Jersey corporation)

and

FIRST BANK,
as Trustee

-----------------------------------------

INDENTURE

Dated as of , 1994

-----------------------------------------

% First Mortgage Notes

due 2004

<PAGE> 2
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture dated as of , 1994*

Trust Indenture Indenture
Act Section Section
- --------------- ---------
<S> <C> <C>
Section 310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 608
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 608
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 607, 609
Section 312(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701
Section 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1018
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1202
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103, 1204
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103, 1204
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1204
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
Section 316(a)(last
sentence) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 ("Outstanding")
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502, 512
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 508
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504
Section 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
</TABLE>

___________________________

* This reconciliation and tie shall not, for any purpose, be deemed to be part
of the Indenture.

<PAGE> 3
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

<CAPTION>
ARTICLE I

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

<S> <C> <C>
Section 101. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Acquired Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
A.L.T.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Appraised Fair Market Value . . . . . . . . . . . . . . . . . . . . . . . 3
Assignment of Leases . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Average Life to Stated Maturity . . . . . . . . . . . . . . . . . . . . . 3
Bally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Capital Lease Obligation . . . . . . . . . . . . . . . . . . . . . . . . 4
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Cash Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Casino Control Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Casino Control Commission . . . . . . . . . . . . . . . . . . . . . . . . 4
Casino Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Casino Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Casino Hotel Improvements . . . . . . . . . . . . . . . . . . . . . . . . 5
Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Collateral Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Company Request or Company Order . . . . . . . . . . . . . . . . . . . . . 7
Consolidated Fixed Charge Coverage
Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Consolidated Income Tax Expense . . . . . . . . . . . . . . . . . . . . . 8
* 1 moved from here; text not shown

Consolidated Interest Expense . . . . . . . . . . . . . . . . . . . . . . 8
Consolidated Net Income . . . . . . . . . . . . . . . . . . . . . . . . . 8

__________________
</TABLE>

<PAGE> 4

** 1 Note: This table of contents shall not, for any purpose, be deemed to be
part of this Indenture.

<TABLE>
PAGE

<S> <C>
Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Consolidated Rental Payments . . . . . . . . . . . . . . . . . . . . . . . . 9
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Credit Facility Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Current Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Dennis Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Division of Gaming Enforcement . . . . . . . . . . . . . . . . . . . . . . . 10
Eligible Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Federal Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Finance Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Gaming License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Generally Accepted Accounting
Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
GNAC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Indenture Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Intercorporate Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Intercreditor Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Interest Swap Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Material Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Moody's . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Net Cash Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Non-Recourse Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>

<PAGE> 5
<TABLE>
<CAPTION> PAGE
----
<S> <C>
Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Note Pledge Agreement . . . . . . . . . . . . . . . . . . . . . . 16
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . 16
Operating Company . . . . . . . . . . . . . . . . . . . . . . . . 16
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . 16
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Pari Passu Mortgage . . . . . . . . . . . . . . . . . . . . . . . 18
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Permitted Encumbrances . . . . . . . . . . . . . . . . . . . . . 18
Permitted Indebtedness . . . . . . . . . . . . . . . . . . . . . 18
Permitted Investment . . . . . . . . . . . . . . . . . . . . . . 21
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Predecessor Security . . . . . . . . . . . . . . . . . . . . . . 22
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . 23
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Pro Rata Share . . . . . . . . . . . . . . . . . . . . . . . . . 23
Public Equity Offering . . . . . . . . . . . . . . . . . . . . . 23
Realty Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Redeemable Capital Stock . . . . . . . . . . . . . . . . . . . . 24
Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . 24
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . 24
Regular Record Date . . . . . . . . . . . . . . . . . . . . . . . 24
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . 24
Restricted Subsidiary . . . . . . . . . . . . . . . . . . . . . . 25
Security and Securities . . . . . . . . . . . . . . . . . . . . . 25
Security Documents . . . . . . . . . . . . . . . . . . . . . . . 25
Security Interests . . . . . . . . . . . . . . . . . . . . . . . 25
Special Record Date . . . . . . . . . . . . . . . . . . . . . . . 25
Standard & Poor's . . . . . . . . . . . . . . . . . . . . . . . . 25
Stated Maturity . . . . . . . . . . . . . . . . . . . . . . . . . 25
Subordinated Indebtedness . . . . . . . . . . . . . . . . . . . . 25
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Subsidiary Casino Hotel . . . . . . . . . . . . . . . . . . . . . 25
Substitute Collateral . . . . . . . . . . . . . . . . . . . . . . 26
Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Tax Sharing Agreement . . . . . . . . . . . . . . . . . . . . . . 26
Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . 26
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Unrestricted Subsidiary . . . . . . . . . . . . . . . . . . . . . 26
Voting Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Wholly Owned Subsidiary . . . . . . . . . . . . . . . . . . . . . 27
Section 102. Other Definitions . . . . . . . . . . . . . . . . . . . . 27
Section 103. Compliance Certificates and Opinions . . . . . . . . . . 27
Section 104. Form of Documents Delivered to Trustee . . . . . . . . . 28
Section 105. Acts of Holders . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>

iii

<PAGE> 6
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Section 106. Notices, etc., to Trustee and Company . . . . . . . . . . . . . . . . . . . . . 31
Section 107. Notice to Holders; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 108. Conflict of Any Provision of Indenture
with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 109. Effect of Headings and Table of
Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 110. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 111. Separability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 112. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 113. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 114. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 115. No Recourse against Others . . . . . . . . . . . . . . . . . . . . . . . . . . 34

<CAPTION>
ARTICLE II

SECURITY FORMS
<S> <C> <C>
Section 201. Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 202. Form of Face of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 203. Form of Reverse of Security . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 204. Form of Trustee's Certificate of
Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 205. Form of Notation Relating to Guaranty . . . . . . . . . . . . . . . . . . . . . 42

<CAPTION>
ARTICLE III

THE SECURITIES
<S> <C> <C>
Section 301. Title and Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 302. Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 303. Execution, Authentication, Delivery
and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 304. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 305. Registration, Registration of Transfer
and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 306. Mutilated, Destroyed, Lost and Stolen
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 307. Payment of Interest; Interest Rights
Preserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 308. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 309. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 310. Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
</TABLE>

<PAGE> 7
<TABLE>
<CAPTION>
PAGE
----
ARTICLE IV

SATISFACTION AND DISCHARGE

<S> <C> <C>
Section 401. Satisfaction and Discharge of
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 402. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . 55

<CAPTION>
ARTICLE V

REMEDIES
<S> <C> <C>
Section 501. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 502. Acceleration of Maturity; Rescission . . . . . . . . . . . . . . . . . . . . . 59
Section 503. Collection of Indebtedness and Suits
for Enforcement by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 504. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . 61
Section 505. Trustee May Enforce Claims without
Possession of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 506. Application of Money Collected . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 507. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 508. Unconditional Right of Holders to
Receive Principal, Premium and
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 509. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . 64
Section 510. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 511. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 512. Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 513. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 514. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 515. Waiver of Stay, Extension or Usury
Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

<CAPTION>
ARTICLE VI

THE TRUSTEE
<S> <C> <C>
Section 601. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 602. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 603. Not Responsible for Recitals or
Issuance of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 604. May Hold Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 605. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
</TABLE>

<PAGE> 8
<TABLE>
<CAPTION>
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<S> <C> <C>
Section 606. Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . 70
Section 607. Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 608. Corporate Trustee Required;
Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 609. Resignation and Removal; Appointment
of Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 610. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . 73
Section 611. Merger, Conversion, Consolidation or
Succession to Business . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 612. Preferential Collection of Claims
against Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 613. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

<CAPTION>
ARTICLE VII

HOLDERS' LISTS AND REPORTS
BY TRUSTEE AND COMPANY
<S> <C> <C>
Section 701. Disclosure of Names and Addresses of
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 702. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 703. Reports by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

<CAPTION>
ARTICLE VIII

CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE

<S> <C> <C>
Section 801. Company May Consolidate, etc., Only on
Certain Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 802. Successor Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

<CAPTION>
ARTICLE IX

SUPPLEMENTAL INDENTURES

<S> <C> <C>
Section 901. Supplemental Indentures without
Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 902. Supplemental Indentures with Consent
of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 903. Execution of Amendments, Supplements
or Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
</TABLE>

<PAGE> 9
<TABLE>
<CAPTION>
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<S> <C> <C>
Section 904. Effect of Amendments, Supplements or
Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 905. Conformity with Trust Indenture Act . . . . . . . . . . . . . . . . . . . 84
Section 906. Reference in Securities to Amendments,
Supplements or Waivers . . . . . . . . . . . . . . . . . . . . . . . . 84

<CAPTION>
ARTICLE X

COVENANTS
<S> <C> <C>
Section 1001. Payment of Principal, Premium and
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 1002. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . 85
Section 1003. Money for Security Payments to Be Held
in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 1004. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 1005. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . 88
Section 1006. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . 89
Section 1007. Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . 89
Section 1008. Limitation on Restricted Payments . . . . . . . . . . . . . . . . . . . 90
Section 1009. Limitation on Transactions with
Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 1010. Limitation on Encumbrances . . . . . . . . . . . . . . . . . . . . . . . 96
Section 1011. Limitation on Preferred Stock of
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 1012. Limitation on Dividends and Other
Payment Restrictions Affecting
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 1013. Ownership of Casino Hotel; Other
Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 1014. Validity of Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 1015. Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 1016. Limitation on Issuance of Guaranties
by Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Section 1017. Compliance with Securities Laws upon
Purchase of Securities . . . . . . . . . . . . . . . . . . . . . . . 102
Section 1018. Limitation on Lease of Property as an
Entirety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 1019. Activities of Finance Company . . . . . . . . . . . . . . . . . . . . . 102
Section 1020. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 1021. Statement as to Compliance; Notice of
Default; Reporting Requirements . . . . . . . . . . . . . . . . . . . 103
Section 1022. Waiver of Certain Covenants . . . . . . . . . . . . . . . . . . . . . . 104
</TABLE>

vii

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ARTICLE XI

REDEMPTION OF SECURITIES

<S> <C> <C>
Section 1101. Right of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 1102. Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 1103. Election to Redeem; Notice to Trustee . . . . . . . . . . . . . . . . . . . . . 104
Section 1104. Selection by Trustee of Securities to
Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 1105. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 1106. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Section 1107. Securities Payable on Redemption Date . . . . . . . . . . . . . . . . . . . . . 106
Section 1108. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Section 1109. Redemption pursuant to the Casino
Control Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

ARTICLE XII

SECURITY

<S> <C> <C>
Section 1201. Security Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Section 1202. Recording; Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . 109
Section 1203. Disposition of Certain Collateral
without Requesting Release . . . . . . . . . . . . . . . . . . . . . . . . . 111
Section 1204. Requesting Release of Collateral . . . . . . . . . . . . . . . . . . . . . . . 113
Section 1205. Substitute Collateral Other Than Cash
Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Section 1206. Substitution of Cash Collateral . . . . . . . . . . . . . . . . . . . . . . . . 119
Section 1207. Appraisals of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Section 1208. Collateral Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Section 1209. Reliance on Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . 121
Section 1210. Purchaser May Rely . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Section 1211. Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Section 1212. Suits to Protect the Collateral . . . . . . . . . . . . . . . . . . . . . . . . 122
Section 1213. Trustee's Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122

ARTICLE XIII

DEFEASANCE
<S> <C> <C>
Section 1301. Defeasance and Discharge . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Section 1302. Conditions to Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
</TABLE>

viii

<PAGE> 11
<TABLE>
<CAPTION>
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<S> <C> <C>
Section 1303. Deposited Money and U.S. Government
Obligations to Be Held in Trust;
Other Miscellaneous Provisions . . . . . . . . . . . . . . . . 129
Section 1304. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . 130

<CAPTION>
ARTICLE XIV

GUARANTY
<S> <C> <C>
Section 1401. Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Section 1402. Execution and Delivery of Company
Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

<CAPTION>
ARTICLE XV

LETTER OF CREDIT
<S> <C> <C>
Section 1501. Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . 133
Section 1502. Acceptance of the Letter of Credit . . . . . . . . . . . . . . . 134
Section 1503. Notices and Certificates . . . . . . . . . . . . . . . . . . . . 134
Section 1504. Events of Payment . . . . . . . . . . . . . . . . . . . . . . . . 136
Section 1505. Application of Proceeds . . . . . . . . . . . . . . . . . . . . . 136

TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
SIGNATURE AND SEALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138

</TABLE>

ACKNOWLEDGMENTS

EXHIBIT A Form of Mortgage Securing Notes

EXHIBIT B Form of Assignment of Leases and Rents

EXHIBIT C Form of Note Pledge Agreement

EXHIBIT D Form of Intercreditor Agreement

EXHIBIT E Form of Pari Passu Certificate

EXHIBIT F Provisions for Letter of Credit

<PAGE> 12
Indenture dated as of , 1994, among BALLY'S PARK
PLACE FUNDING, INC., a Delaware corporation (the "Finance Company"), BALLY'S
PARK PLACE, INC., a Delaware corporation (the "Company"), BALLY'S PARK PLACE,
INC., a New Jersey corporation (the "Operating Company"), BALLY'S PARK PLACE
REALTY CO., a New Jersey corporation ("Realty Co."), and FIRST BANK, a ,
trustee (the "Trustee").

RECITALS OF THE COMPANY

The Finance Company, the Company, the Operating Company and
Realty Co. have each duly authorized the creation of an issue of the Finance
Company's % First Mortgage Notes due 2004 (the "Securities"), of
substantially the tenor and amount hereinafter set forth, and to provide
therefor the Finance Company, the Company, the Operating Company and Realty Co.
have duly authorized the execution and delivery of this Indenture;

This Indenture, upon qualification, shall be subject to and
governed by the provisions of the Trust Indenture Act that are required to be
part of and to govern indentures qualified under the Trust Indenture Act;

All acts and things necessary have been done to make the
Securities, when executed by the Finance Company and authenticated and
delivered hereunder and duly issued by the Finance Company, the valid, binding
and legal obligations of the Finance Company, and to make this Indenture a
valid agreement of the Finance Company, the Company, the Operating Company and
Realty Co. in accordance with its terms.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually covenanted and agreed,
for the equal and proportionate benefit of all Holders of the Securities, as
follows:

<PAGE> 13
ARTICLE I

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

Section 101. Definitions.

For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:

(a) the terms defined in this Article have the
meanings assigned to them in this Article and include the plural as well as the
singular;

(b) all other terms used herein which are defined in
the Trust Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;

(d) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.

Certain terms, used principally in Articles Five and Ten, are
defined in those Articles.

"Acquired Indebtedness" means Indebtedness of a Person (i)
existing at the time such Person becomes a Subsidiary or (ii) assumed in
connection with the acquisition of assets from a Person, other than
Indebtedness incurred in connection with, or in contemplation of, such Person
becoming a Subsidiary or such acquisition, as the case may be. Acquired
Indebtedness shall be deemed to have been incurred on the date of the related
acquisition of assets from any Person or the date the acquired Person becomes a
Subsidiary.

<PAGE> 14
"Affiliate" means, with respect to any specified Person, (i)
any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person, (ii) any spouse,
immediate family member or other relative who has the same principal residence
of any Person described in (i) above and (iii) any trust in which any such
Person described in clause (i) or (ii) above has a beneficial interest. For
purposes of this definition, control of a Person means the power, direct or
indirect, to direct or cause the direction of the management or policies of
such Person, whether by contract or otherwise; and the terms "controlling,"
"controlled" and "under common control" have meanings correlative to the
foregoing. For purposes of this definition, beneficial ownership of 10% or
more of voting common equity (on a fully diluted basis) or warrants to purchase
such equity (whether or not currently exercisable) of a Person shall be deemed
to be control of such Person.

"A.L.T.A." means the American Land Title Association.

"Appraised Fair Market Value" means, when used in connection
with the valuation of any property interest at any given date, the then current
fair market value of such property as set forth in the Current Appraisal
performed by a qualified and reputable independent appraiser, which appraisal
is, in the opinion of the independent appraiser, prepared in accordance with
the standards and reporting requirements of the Federal Home Loan Bank Board
and the Federal Savings and Loan Insurance Corporation, if then in effect.

"Assignment of Leases" means the Assignment of Leases and
Rents substantially in the form annexed hereto as Exhibit B and constituting a
part hereof for all purposes.

"Average Life to Stated Maturity" means, as of the date of
determination, with respect to any Indebtedness, the quotient obtained by
dividing (i) the sum of the products of (a) the number of years from the date
of determination to the date or dates of each successive scheduled principal
payment of such Indebtedness multiplied by (b) the amount of each such
principal payment by (ii) the sum of all such principal payments.

<PAGE> 15
"Bally" means Bally Manufacturing Corporation, a Delaware
corporation.

"Board of Directors" of any Person means the board of
directors of such Person or any duly authorized committee of such board.

"Board Resolution" of any Person means a copy of a resolution
certified by the Secretary or an Assistant Secretary of such Person to have
been duly adopted by the Board of Directors of such Person and to be in full
force and effect on the date of such certification and on the date delivered to
the Trustee.

"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday that is not a day on which banking institutions in The City of New
York are authorized or obligated by law, regulation or executive order to
close.

"Capital Lease Obligation" of any Person means any obligations
of such Person and its Subsidiaries on a consolidated basis under any capital
lease of real or personal property which, in accordance with GAAP, has been
recorded as a capitalized lease obligation, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligations determined in accordance with GAAP.

"Capital Stock" of any Person means any and all shares,
interests, participations, or other equivalents (however designated) of such
Person's capital stock whether now outstanding or issued after the date of this
Indenture.

"Cash Collateral" means U.S. Dollars or U.S. Government
Obligations, which is Collateral for the Securities under the Mortgage.

"Casino Control Act" means the New Jersey Casino Control Act,
as from time to time amended, or any successor provision of law.

"Casino Control Commission" means the New Jersey Casino
Control Commission or any successor agency appointed pursuant to the Casino
Control Act.

<PAGE> 16
"Casino Holdings" means Bally's Casino Holdings, Inc., a
Delaware corporation.

"Casino Hotel" means the casino hotel presently known as
Bally's Park Place Casino Hotel located in Atlantic City, New Jersey, the
contiguous parking garage and property and any additions thereto or
improvements thereof or any casino hotel operated on or forming part of the
Collateral.

"Casino Hotel Improvements" means the acquisition of, or
development and construction of, an addition to or expansion of the existing
Casino Hotel facility by the Company and any Restricted Subsidiary in
connection with any proposed increase of hotel rooms and expansion of casino
floor space, and any addition to or expansion of any gaming, parking, dining,
entertainment, retail, promotional, storage, patron services, transportation or
similar facilities related thereto, in each case, after the date of the
Indenture.

<PAGE> 17
series of transactions; provided, however, that neither the merger or
consolidation or sale of assets by any of the Company, the Finance Company, the
Operating Company or Realty Co. with or into or to any of the Company, the
Finance Company, the Operating Company or Realty Co. nor the liquidation or
dissolution of the non-surviving entity or transferor following any such
transaction shall be deemed a Change in Control; (iii) during or within any
period of two consecutive years, individuals who at the beginning of such
period constituted the Board of Directors of any of the Company, the Finance
Company, the Operating Company, Realty Co., Casino Holdings or Bally (together
with any directors whose election by such Board of Directors or whose
nomination for election by the shareholders of the Company, the Finance
Company, the Operating Company, Realty Co., Casino Holdings or Bally, as the
case may be, was approved by a vote of 66-2/3% of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the Company, the
Finance Company, the Operating Company, Realty Co., Casino Holdings or Bally
then in office; or (iv) other than as allowed in (ii) above, the Company, the
Operating Company, the Finance Company, Realty Co. or Bally is liquidated or
dissolved or adopts a plan of liquidation.

"Collateral" means the real property, buildings and
improvements and other real and personal property described in or from time to
time subject to the Mortgage and the Note pledged pursuant to the Note Pledge
Agreement.

"Collateral Account" means a separate custodial account or
accounts maintained by the Trustee pursuant to Section 1208 into which all cash
received by the Trustee as Substitute Collateral pursuant to Section 1206, and
as Insurance Proceeds pursuant to Articles 6 and 7 of the Mortgage, less any
Pro Rata Share to be paid over for the benefit of holders of Pari Passu
Mortgages pursuant to Section 1206 and Articles 6 and 7 of the Mortgage, shall
be deposited.

"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act or, if at any
time after the

<PAGE> 18
execution of this Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.

"Companies" means the Company and the Finance Company.

"Company" means the Person named as the "Company" in the first
paragraph of this instrument, until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.

"Company Request" or "Company Order" means a written request
or order signed in the name of the Finance Company, the Company, the Operating
Company or Realty Co. (i) by its Chairman, a Vice Chairman, its President or a
Vice President and (ii) by its Treasurer, an Assistant Treasurer, its Secretary
or an Assistant Secretary and delivered to the Trustee; provided, however, that
such written request or order may be signed by any two of the officers or
directors listed in clause (i) above in lieu of being signed by one of such
officers or directors listed in such clause (i) and one of the officers listed
in clause (ii) above.

"Consolidated Fixed Charge Coverage Ratio" of the Company
means, for any period, the ratio of (a) the sum of Consolidated Net Income,
Consolidated Interest Expense, Consolidated Income Tax Expense and one-third of
Consolidated Rental Payments, plus, without duplication, all depreciation,
amortization and all other non-cash charges, of the Company and its Restricted
Subsidiaries on a consolidated basis, as determined in accordance with GAAP to
(b) the sum of (i) Consolidated Interest Expense for such period and (ii)
one-third of Consolidated Rental Payments for such period; provided that in
making such computation, the Consolidated Interest Expense attributable to
interest on any Indebtedness computed on a pro forma basis and (A) bearing a
floating interest rate shall be computed as if the rate in effect on the date
of computation had been the applicable rate for the entire period and (B) which
was not outstanding during the period for which the computation is being made
but which bears, at the option of the Company, a fixed or floating rate of
interest, the Company shall apply, at its option,

<PAGE> 19
either the fixed or floating rate for purposes of calculating the Consolidated
Fixed Charge Coverage Ratio and provided, further, that in making such
computation, the Consolidated Interest Expense attributable to interest on
Indebtedness under any revolving credit facility computed assuming that the
amount of Indebtedness thereunder is equal to the weighted average balance
during the period for which the computation is being made.

"Consolidated Income Tax Expense" means for any period, as
applied to any Person and its Restricted Subsidiaries, the provision for
federal, state or local income taxes of such Person and its Restricted
Subsidiaries for such period as determined in accordance with GAAP.

"Consolidated Interest Expense" means, for any period, the
aggregate amount of interest that, in conformity with GAAP, would be set forth
opposite the caption "interest expense" or any like caption on a consolidated
income statement of the Company and its Restricted Subsidiaries (including, but
not limited to, imputed interest on Capital Lease Obligations, all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing, the net costs associated with hedging
obligations, the interest portion of any deferred payment obligation,
amortization of discount or premium, if any, and all other non-cash interest
expense and excluding amortization of other financing fees and expenses) plus,
without duplication, all capitalized interest of the Company and its Restricted
Subsidiaries for such period and all interest accrued or paid by the Company or
any of its Restricted Subsidiaries under any Guaranty of Indebtedness
(including a Guaranty of principal, interest or any combination thereof) of any
Person for such period, plus any amounts payable as dividends (whether or not
paid) on Preferred Stock permitted to be outstanding pursuant to the provisions
of Section 1011, in each case determined on a consolidated basis in accordance
with GAAP.

"Consolidated Net Income" of the Company means, for any
period, the consolidated net income (or loss) of the Company and its Restricted
Subsidiaries for such period as determined in accordance with GAAP, adjusted,
to the extent included in calculating such net income (or loss), by excluding
(i) all extraordinary gains or losses

<PAGE> 20
(less all fees and expenses relating thereto), (ii) the portion of net income
(or loss) of the Company and its Restricted Subsidiaries allocable to minority
interests in unconsolidated Persons to the extent that cash dividends or
distributions have not actually been received by the Company or one of its
Restricted Subsidiaries, (iii) net income (or loss) of any Person combined with
the Company or any of its Restricted Subsidiaries in a "pooling of interests"
basis attributable to any period prior to the date of combination, (iv) net
income (or loss) of any Unrestricted Subsidiary regardless of whether cash
dividends or distributions have been made, (v) any gain or loss, net of taxes,
realized upon the termination of any employee pension benefit plan, (vi) any
gains or losses (less all fees and expenses relating thereto) in respect of
dispositions of assets other than in the ordinary course of business, or (vii)
the net income of any Restricted Subsidiary to the extent that the declaration
of dividends or similar distributions by that Restricted Subsidiary of that
income is not at the time permitted, directly or indirectly, by operation of
the terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulations applicable to that Restricted
Subsidiary or its stockholders.

"Consolidated Net Worth" of any Person means the consolidated
stockholders' equity (excluding Redeemable Capital Stock) of such Person and
its consolidated subsidiaries, as set forth on the most recent consolidated
balance sheet of such Person and its consolidated subsidiaries determined in
accordance with GAAP.

"Consolidated Rental Payments" of the Company means, for any
period, the aggregate rental obligations of the Company and its Restricted
Subsidiaries under operating leases (not including taxes, insurance,
maintenance and similar expenses that the lessee is obligated to pay under the
terms of the relevant leases), determined on a consolidated basis in accordance
with GAAP.

"Corporate Trust Office" means the office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is
located at ; Attention: Corporate Trust
Department.

<PAGE> 21
"corporation" includes corporations, associations,
partnerships, companies and business trusts.

"Credit Facility" [to come].

"Credit Facility Mortgage" [to come].

"Current Appraisal" means the most recent appraisal of the
Appraised Fair Market Value of any property that is performed pursuant to
Section 1204 or otherwise.

"Default" means any event that is, or after notice or passage
of time or both would be, an Event of Default.

"Dennis Hotel" means that portion of the Casino Hotel formerly
known as the Dennis Hotel.

"Division of Gaming Enforcement" means the New Jersey Division
of Gaming Enforcement or any successor agency performing the duties thereof.

"Eligible Bank" shall mean, at any time, a domestic commercial
bank that has capital, surplus and undivided profits of at least $300,000,000
in the aggregate and a credit rating (or, if such domestic commercial bank has
no credit rating, the holding company of which has a credit rating) on its
lowest-rated unsecured public debt security of one of the two highest rating
categories used by Moody's or Standard & Poor's or such equivalent ratings by
another nationally recognized credit rating agency of similar standing if
neither of such corporations is in the business of rating unsecured bank
indebtedness.

"Event of Default" has the meaning specified in Article Five.

"Exchange Act" means the Securities Exchange Act of 1934, as
amended.

"Federal Bankruptcy Code" means the Bankruptcy Act of Title 11
of the United States Code, as amended from time to time.

<PAGE> 22
"Finance Company" means the Person named as such in this
Indenture until a successor replaces it pursuant to the Indenture and
thereafter means the successor. To the extent necessary to comply with the
requirements of the provisions of Sections 310 through 317 of the Trust
Indenture Act as they are applicable to the Finance Company, the term "Finance
Company" shall include any other obligor with respect to the Securities for the
purposes of complying with such provisions.

"Gaming License" means any license, franchise or other
authorization required to own, lease, operate or otherwise conduct casino
gaming at the Casino Hotel or any Subsidiary Casino Hotel required under the
Casino Control Act, the regulations of the Casino Control Commission and other
applicable gaming laws.

"Generally Accepted Accounting Principles" or "GAAP" means
generally accepted accounting principles in the United States, consistently
applied, that are in effect from time to time; provided, however, that with
respect to the obligations of any Person under Article Eight and Sections 1007
and 1008 and the definitions applicable thereto, "GAAP" means generally
accepted accounting principles on the date hereof.

"GNAC" means GNAC, CORP.

"Governmental Authority" means any agency, authority, board,
bureau, commission, department, office or instrumentality of any nature
whatsoever of any governmental or quasi-governmental unit, whether federal,
state, county, district, city or other political subdivision or otherwise and
whether now or hereafter in existence, or any officer or official of any
thereof, including, without limitation, the Casino Control Commission.

"Guarantor" means the Company until a successor replaces it
pursuant to this Indenture and thereafter means such successor.

<PAGE> 23
of which is to assure in any way the payment or performance (or payment of
damages in the event of nonperformance) of any part or all of such obligation,
including, without limiting the foregoing, the payment of amounts drawn down by
letters of credit.

"Holder" means a Person in whose name a Security is registered
in the Security Register.

"Indebtedness" means, with respect to any Person, any
indebtedness, contingent or otherwise, in respect of borrowed money (whether or
not the recourse of the lender is to the whole of the assets of such Person or
only to a portion thereof and including any indebtedness issued in exchange for
indebtedness for borrowed money), or evidenced by bonds, notes, debentures or
similar instruments or representing the balance deferred and unpaid of the
purchase price of any property, if and to the extent any of the foregoing
indebtedness would appear as a liability upon a balance sheet of such Person
prepared on a consolidated basis in accordance with GAAP consistently applied
and letters of credit (or reimbursement obligations related thereto); provided,
however, that (a) "Indebtedness" shall not include accounts payable to trade
creditors or other indebtedness for goods or services created or assumed in the
ordinary course of business and Indebtedness incurred pursuant to the
Intercorporate Agreement or Tax Sharing Agreement and (b) Indebtedness shall
include only the principal component of any obligations described above.
"Indebtedness" shall also include the principal component of any Capital Lease
Obligations; the maximum liquidation preference of Redeemable Capital Stock, or
Preferred Stock issued pursuant to Sections 1007 and 1011 hereof; obligations
secured by a Lien to which any property or asset owned or held by such Person
is subject, whether or not the obligations secured thereby shall have been
assumed; and Guaranties of items that would be included within this definition
(regardless of whether such items would appear upon such balance sheet);
provided that for purposes of computing Indebtedness outstanding at any time,
such items shall be excluded to the extent that they would otherwise be
eliminated as intercompany items in consolidation. For purposes of the
preceding sentence, the maximum liquidation preference of any Redeemable
Capital Stock shall be the greatest amount payable in respect thereof on a
liquidation, whether voluntary or involuntary, including

<PAGE> 24
accrued and unpaid dividends. Any reference in the Indenture to any
Indebtedness shall be deemed to include any renewals, extensions, refundings,
amendments and modifications of any such Indebtedness.

"Indenture" means this instrument as originally executed
(including all exhibits and schedules hereto) and as it may from time to time
be supplemented or amended by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof.

"Indenture Obligations" means the obligations of the Company,
the Operating Company, the Finance Company and Realty Co. (and any other
obligor hereunder or under the Securities) to pay principal of and interest on
the Securities when due and payable, whether at Maturity or an Interest Payment
Date, by acceleration, call for redemption, acceptance of an offer to purchase
on a Change in Control Payment Date or otherwise, and interest on the overdue
principal, if any (and premium, if any), of, and (to the extent lawful)
interest, if any, on the Securities and all other amounts due or to become due
under this Indenture and the Security Documents and to perform all other
obligations of the Company, the Operating Company, the Finance Company and
Realty Co. to the Trustee and the Holders under this Indenture, the Securities,
the Company Guaranty and the Security Documents, according to the terms
hereunder and thereunder.

"Insurance Proceeds" means Awards as defined in the Mortgage
and the Company's interest in and to all proceeds which now or hereafter may be
paid under any insurance policies now or hereafter obtained by or on behalf of
the Company, the Operating Company or Realty Co. in connection with the
conversion of the Property subject to the Security Interests or any portion
thereof into cash or liquidated claims, together with the interest payable
thereon and the right to collect and receive the same, including, but without
limiting the generality of the foregoing, proceeds of casualty insurance, title
insurance, business interruption insurance and any other insurance now or
hereafter maintained with respect to such Property.

"Intercorporate Agreement" means the Intercorporate Agreement
dated as of June 24, 1993 among Casino Holdings, Bally and the Company.

<PAGE> 25
"Intercreditor Agreement" means the Intercreditor Agreement
substantially in the form annexed as Exhibit D, with such changes thereto as
the Finance Company may reasonably request that would not affect the Trustee's
pari passu priority with respect to the Collateral or otherwise impair the
rights of the Trustee .

"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.

"Interest Swap Obligations" means the obligations of any
Person pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a fixed or floating rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or floating rate of interest on the same
notional amount or pursuant to any interest rate protection agreement, interest
rate future, interest rate option or other interest rate hedge arrangement.

"Investment" by any Person means, directly or indirectly, any
advance, loan or other extension of credit or capital contribution to (by means
of any transfer of cash or other property to others or any payment for property
or services for the account or use of others) or any purchase or acquisition by
such Person of any stock, bonds, notes, debentures or other securities issued
or owned by, any other Person. Investments shall exclude extensions of trade
credit on commercially reasonable terms in accordance with normal trade
practices.

"Letter of Credit" means a standby letter of credit accepted
by the Trustee in accordance with Section 1502 and containing in substance, but
not necessarily in the same format, the provisions set forth in Exhibit F to
this Indenture, and containing no materially contrary terms and no other
provisions materially limiting the availability of payment, issued to the
Trustee, at the request of the Finance Company, for the benefit of Holders by
an Eligible Bank, in an amount as provided for by Section 1205.

"Lien" means any mortgage, charge, pledge, lien, privilege,
security interest or encumbrance of any kind.

<PAGE> 26
"Material Subsidiary" means the Finance Company, the Operating
Company, Realty Co. and, at the time of determination, any other Subsidiary of
the Company that (a) accounted for more than 10 percent of the consolidated net
income of the Company for the most recently completed fiscal year of the
Company or (b) was the owner of more than 10 percent of the consolidated assets
of the Company as at the end of such fiscal year, all as shown on the
consolidated financial statements of the Company for such fiscal year.

"Maturity" when used with respect to any Security means the
date on which the principal of (and premium, if any) and interest on such
Security becomes due and payable as therein or herein provided, whether at
Stated Maturity, the Change in Control Payment Date, any Redemption Date and
whether by declaration of acceleration, call for redemption or otherwise.

"Moody's" means Moody's Investors Service, Inc.

"Mortgage" means the Mortgage and Security Agreement with
Assignment of Rents dated as of , 1994 given by the
Operating Company and Realty Co., as mortgagors, to the Trustee, as mortgagee,
a copy of which is attached hereto as Exhibit A, the Assignment of Leases, and
any other security document, to which either of them is a party, which is
executed and delivered pursuant to such Mortgage or Assignment of Leases.

"Net Cash Proceeds" means with respect to any issuance or sale
of Capital Stock or warrants, or any issuance or sale of debt securities or
Redeemable Capital Stock that have been converted into Capital Stock, or
payments made upon exercise thereof, all as referred to in Section 1008, the
cash proceeds of such issuance or payment, net of attorneys' fees, accountants'
fees, brokerage, consultant, underwriting and other fees and expenses actually
incurred in connection with such issuance, sale or payment and net of taxes
paid or estimated to be payable as a result thereof.

"Non-Recourse Indebtedness" means Indebtedness or that portion
of Indebtedness (a) as to which neither the Company nor any of its Restricted
Subsidiaries (i) provides credit support pursuant to any undertaking,

<PAGE> 27
agreement or instrument that would constitute Indebtedness, (ii) is directly or
indirectly liable or (iii) constitutes the lender and (b) no default with
respect to which (including any rights that the holders thereof may have to
take enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such
other Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity.

"Note" means the promissory note dated , 1994,
made by the Operating Company in the principal amount of $425,000,000 payable
to the order of the Finance Company.

"Note Pledge Agreement" means the Note Pledge Agreement dated
as of , 1994, among the Finance Company and the Trustee, a form of
which is attached hereto as Exhibit C, as the same may be amended or
supplemented from time to time in accordance with the terms thereof.

"Officers' Certificate" of any Person means a certificate
signed by (i) the Chairman, a Vice Chairman, the President, a Vice President or
the Treasurer of such person and (ii) the Secretary or an Assistant Secretary
of such Person and delivered to the Trustee; provided, however, that such
certificate may be signed by two of the officers or directors listed in clause
(i) above in lieu of being signed by one of such officers or directors listed
in such clause (i) and one of the officers listed in clause (ii) above.

"Operating Company" means Bally's Park Place, Inc., a New
Jersey corporation, until a successor replaces it pursuant to this Indenture
and thereafter means the successor.

"Opinion of Counsel" means a written opinion of counsel, who
may be internal counsel for the Company, the Finance Company or the Operating
Company and who shall be acceptable to the Trustee. Each such opinion shall
include the statements provided for in Trust Indenture Act Section 314(e) to
the extent applicable.

<PAGE> 28
"Outstanding" when used with respect to the Securities means,
as of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:

(a) Securities theretofore cancelled by the
Trustee or delivered to the Trustee for cancellation;

(b) Securities, or portions thereof, for whose
payment, redemption or purchase money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent (other than the
Company, the Finance Company, another Subsidiary of the Company or one of their
Affiliates) in trust or set aside and segregated in trust by the Company, the
Finance Company or such other Subsidiary (if the Company, the Finance Company
or another Subsidiary shall act as Paying Agent) for the Holders of such
Securities; provided that, if such Securities are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made;

(c) Securities, except to the extent provided in
Section 1301, with respect to which the Companies, the Operating Company and
Realty Co. have effected defeasance as provided in Article Thirteen; and

(d) Securities in exchange for or in lieu of which
other Securities have been authenticated and delivered pursuant to this
Indenture, other than any such Securities in respect of which there shall have
been presented to the Trustee proof satisfactory to it that such Securities are
held by a bona fide purchaser in whose hands the Securities are valid
obligations of the Companies;

provided, however, that, in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
direction, consent or waiver hereunder, Securities owned by the Company, the
Finance Company, the Operating Company or Realty Co., or any other obligor upon
the Securities or any Affiliate of the Company, the Finance Company, the
Operating Company or Realty Co., or any other obligor upon the Securities or
such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in

<PAGE> 29
relying upon any such request, demand, direction, consent or waiver, only
Securities which the Trustee knows to be so owned shall be so disregarded.
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities and that the pledgee
is not the Company, the Finance Company, the Operating Company or Realty Co. or
any other obligor upon the Securities or any Affiliate of the Company, the
Finance Company, the Operating Company or Realty Co. or such other obligor.

"Pari Passu Mortgage" means any Lien on the Collateral which
is pari passu to the Lien of the Mortgage and is permitted by clause (ii) of
Section 1010 of this Indenture, provided that the instrument creating such Lien
contains substantially the following statement: "Pursuant to the Mortgage and
Security Agreement with Assignment of Rents dated as of , 1994 given
by the Operating Company and Realty Co., as mortgagor, to , as
mortgagee, the lien created by this instrument ranks pari passu with the
lien created by said Mortgage recorded on in Mortgage Book at
page & c. in the Atlantic County, New Jersey, Clerk's Office."

"Paying Agent" means any Person authorized by the Finance
Company to pay the principal of (or premium, if any) or interest on any
Securities on behalf of the Finance Company.

"Permitted Encumbrances" shall have the meaning provided in
the form of Mortgage attached hereto as Exhibit A.

"Permitted Indebtedness" means, without duplication, any of
the following Indebtedness of the Company or any Restricted Subsidiary, as the
case may be:

(i) Indebtedness (including letters of
credit) outstanding at any time under any revolving credit facility,
or any successor thereto, in an aggregate principal amount not to
exceed $50,000,000;

(ii) Any Guaranty by a Subsidiary under
subparagraph (i) above;

<PAGE> 30

(iii) Indebtedness and obligations under the
Securities, including any Guaranty thereof and the Note;

(iv) Any Indebtedness and obligations
outstanding on the date hereof;

(v) Indebtedness of a Wholly Owned
Subsidiary to the Company or another Wholly Owned Subsidiary of the
Company;

(vi) Indebtedness the proceeds of which are
used, directly or indirectly, to refinance outstanding Indebtedness of
the Company or any Subsidiary in a principal amount (or, if such
Indebtedness does not require cash payments prior to maturity, with an
original issue price of such Indebtedness) not to exceed the principal
amount of the Indebtedness so refinanced, plus accrued and unpaid
interest with respect to the Indebtedness being refinanced through and
to the date of repayment, plus any premium or penalty provided for in
the instrument governing such Indebtedness or any premium reasonably
determined by the Board of Directors of the Company as necessary to
accomplish such refinancing by means of a tender offer, defeasance or
privately negotiated purchase (or, if the Indebtedness being
refinanced was issued with an original issue discount, the original
issue price plus the amortized portion of the original issue discount
to the date that such refinancing Indebtedness was incurred and any
premium or penalty provided for in the instrument governing such
Indebtedness or any premium reasonably determined by the Board of
Directors of the Company as necessary to accomplish such refinancing
by means of a tender offer or privately negotiated purchase) plus the
amount of any fees, costs or expenses the Company incurred in
connection with such refinancing; provided that if the Indebtedness
being refinanced is Indebtedness of the Company, such refinancing
Indebtedness shall be Indebtedness of the Company, unless such
refinancing Indebtedness is used in whole

<PAGE> 31
or in part to refinance the entire principal amount of the Notes then
outstanding; provided, further, that Indebtedness the proceeds of
which are used to refinance Indebtedness of the Company that is
expressly subordinated in right of payment to the Securities will only
be permitted if (x) such Indebtedness is expressly subordinated in
right of payment to the Securities at least to the same extent that
the Indebtedness to be refinanced is subordinated to the Securities,
(y) the Average Life to Stated Maturity of such Indebtedness exceeds
the Average Life to Stated Maturity of the Securities, and (z) the
final scheduled maturity of such Indebtedness exceeds the final Stated
Maturity of the Securities;

(vii) Indebtedness under Interest Swap
Obligations and other agreements between the Company or a Subsidiary
and one or more financial institutions providing for "swap," "cap,"
"collar" or other interest rate protection;

(viii) obligations in respect of performance
bonds and surety bonds provided by the Company or any Subsidiary in
the ordinary course of business or related to Casino Hotel
Improvements and any renewals, extensions or amendments, modifications
or supplements thereto;

(ix) Indebtedness arising from the honoring
by a bank or other financial institution of a check, draft or similar
instrument drawn against insufficient funds in the ordinary course of
business, provided that such Indebtedness is extinguished within two
Business Days of its incurrence;

(x) Indebtedness pursuant to letters of
credit in an amount not to exceed $5,000,000 at any one time; and

[(xi) additional Indebtedness not to exceed
$__,000,000 in the aggregate at any one time.]

<PAGE> 32
"Permitted Investment" means an Investment which
consists of any one or more of the following:

(i) Investment in a Restricted Subsidiary
or another Person which, immediately after such Investment, will be a
Wholly Owned Subsidiary, provided in each case that such Subsidiary
conducts a business which is substantially identical to any business
conducted by the Company or its Restricted Subsidiaries on the date
hereof or which is in the business of the development, marketing,
ownership or management of casinos or casino hotels and businesses
related to the development, ownership, marketing or management of
casinos or casino hotels, including the hosting, production or
promotion of conventions, sporting events, amusements and other
entertainment;

(ii) Investments by Subsidiaries in the
Company;

(iii) (a) commercial paper rated P-1 by
Moody's or A-1 by Standard & Poor's on the date of acquisition, (b)
certificates of deposit of United States commercial banks (having a
combined capital and surplus in excess of $300,000,000), (c)
obligations of, or guaranteed by, the United States government or any
agency thereof, (d) repurchase agreements with terms of not more than
30 days with United States commercial banking or other financial
institutions (having a combined capital and surplus in excess of
$300,000,000) with respect to the types of investments described in
subclauses (a), (b) and (c) of this clause (iii), (e) money market
funds organized under the laws of the United States or any state
thereof that invest substantially all their assets in any of the types
of investments described in subclauses (a), (b), (c) and (d) of this
clause (iii) or, (f) to the extent not comprehended by subclauses (a)
through (e) of this clause (iii), temporary investments of cash
balances in investments deemed to be cash equivalents under GAAP;

<PAGE> 33
(iv) negotiable instruments held for
collection except to the extent that they would constitute investments
in Affiliates; outstanding travel, moving and other like advances to
officers, employees and consultants; lease, utility and other similar
deposits; or stock, obligations or securities received in settlement
of debts owing to the Company or a Subsidiary as a result of
foreclosure, perfection or enforcement of any Lien, in each of the
foregoing cases in the ordinary course of business of the Company or a
Subsidiary, as the case may be, and consistent with past practice;

(v) receivables for sales of goods or
services on trade credit terms consistent with the Company's and its
Subsidiaries' past practices or as otherwise consistent with trade
credit terms in common use in the industry;

(vi) Investments in Affiliates of the
Company in gaming or gaming-related ventures, in an amount not to
exceed $25,000,000;

(vii) loans to any employee in an amount not
to exceed $250,000 for any individual and $1,000,000 for all
employees in the aggregate;

(viii) Investments in effect on the date of
this Indenture;

(ix) Investments required under the Casino
Control Act; and

(x) purchases of Notes by the Operating
Company and the Company.

"Person" means any individual, corporation, limited or general
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.

<PAGE> 34
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 306 in
exchange for a mutilated security or in lieu of a lost, destroyed or stolen
Security shall be deemed to evidence the same debt as the mutilated, lost,
destroyed or stolen Security.

"Preferred Stock" means, as applied to any Person, Capital
Stock of any class or classes (however designated) which is preferred as to the
payment of dividends or distributions, or as to the distribution of assets upon
any voluntary or involuntary liquidation or dissolution of such corporation,
over shares of Capital Stock of any other class of such corporation.

"Property" means any assets or property of any kind or nature
whatsoever, real, personal or mixed (including fixtures), whether tangible or
intangible.

"Pro Rata Share" means that portion of Substitute Collateral
under Section 1206 and Insurance Proceeds under Articles 6 and 7 of the
Mortgage (collectively, "Collateral Proceeds") equal to the total amount of
such Collateral Proceeds multiplied by a fraction, the denominator of which is
the sum of (i) total indebtedness then outstanding under the Securities and
(ii) the total indebtedness then outstanding and secured by any Pari Passu
Mortgages covering Collateral which is the subject of a substitution or
disposition under Section 1206 or Article 6 or 7 of the Mortgage, and the
numerator of which is the total indebtedness then outstanding and secured by
any Pari Passu Mortgages covering Collateral which is the subject of a
substitution or disposition under Section 1206 or Article 6 or 7 of the
Mortgage.

"Public Equity Offering" means an underwritten public offering
of Capital Stock of the Company (other than Redeemable Capital Stock) or Casino
Holdings pursuant to a registration statement filed with the Commission in
accordance with the Securities Act, which public equity offering results in
gross cash proceeds to the Company or Casino Holdings, as the case may be, of
not less than $30,000,000.

<PAGE> 35
"Realty Co." means Bally's Park Place Realty Co., a New Jersey
corporation, which owns a parcel of land upon which a part of the Casino Hotel
is situated, until a successor replaces it pursuant to this Indenture and
thereafter means its successor.

"Redeemable Capital Stock" means Capital Stock that, either by
its terms, by the terms of any security into which it is convertible or
exchangeable or otherwise, is or upon the happening of an event or passage of
time would be required to be redeemed prior to the final Stated Maturity of
principal on the Securities or is redeemable at the option of the holder
thereof at any time prior to such final Stated Maturity, or is convertible into
or exchangeable for debt securities at any time prior to such final Stated
Maturity.

"Redemption Date," when used with respect to any Securities to
be redeemed, means the date fixed for such redemption pursuant to this
Indenture.

"Redemption Price," when used with respect to any Security to
be redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.

"Regular Record Date" for the interest payable on any Interest
Payment Date means the or (whether or not a Business
Day), as the case may be, immediately preceding such Interest Payment Date.

"Responsible Officer," when used with respect to the Trustee,
means the Chairman or any Vice Chairman of the Board of Directors, the Chairman
or Vice Chairman of the Executive Committee of the Board of Directors, the
President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer, any Assistant Treasurer, the Cashier, any Assistant Cashier, any
Trust Officer or Assistant Trust Officer, the Controller and any Assistant
Controller or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers or assigned
by the Trustee to administer corporate trust matters at its Corporate Trust
Office and also means, with respect to a particular corporate trust matter, any
other officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.

<PAGE> 36
"Restricted Subsidiary" means any Subsidiary that is not an
Unrestricted Subsidiary.

"Security" and "Securities" have the meaning set forth in the
second paragraph of this Indenture.

"Security Documents" means the Mortgage, the Assignment of
Leases and the Note Pledge Agreement.

"Security Interests" means the Lien on the Collateral created
by the Security Documents in favor of the Trustee.

"Special Record Date" means a date fixed by the Trustee for
the payment of any Defaulted Interest pursuant to Section 307.

"Standard & Poor's" means Standard & Poor's Corporation.

"Stated Maturity," when used with respect to any Security or
any installment of interest thereon, means the date specified in such Security
as the fixed date on which the principal of such Security or such installment
of interest is due and payable.

"Subordinated Indebtedness" means all Indebtedness of the
Company that is expressly subordinated in right of payment to any other
Indebtedness of the Company.

"Subsidiary" means any Person a majority of the total voting
power of the Voting Stock of which is at the time owned, directly or
indirectly, by the Company or by one or more such Subsidiaries, or by the
Company and one or more such Subsidiaries.

"Subsidiary Casino Hotel" means any casino hotel owned or
controlled directly or indirectly by the Company or any Subsidiary, except the
Casino Hotel, including any furniture, furnishing, fixtures, machinery,
equipment or supplies or other tangible personal property contained therein and
owned directly or indirectly by the Company or any Subsidiary, and any
additions thereto or improvements thereof.

<PAGE> 37
"Substitute Collateral" means Property that may be substituted
for or added to the Collateral in accordance with Article Twelve hereof.

"Taking" means any taking by eminent domain, condemnation or
otherwise of all or substantially all of the Property subject to the Lien of
the Mortgage.

"Tax Sharing Agreement" means the tax sharing agreement
between Bally and the Company dated [June 17, 1993, as amended,] provided,
however, that any amendments thereto shall not change or alter the substantive
provisions thereof.

"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended, and as in force at the date as of which this Indenture was
executed, except as provided in Section 905.

"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument, until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.

"Unrestricted Subsidiary" means (i) any Subsidiary that at the
time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors of the Company in the manner provided below and (ii) any
subsidiary of an Unrestricted Subsidiary. The Board of Directors of the
Company may designate any newly formed Subsidiary to be an Unrestricted
Subsidiary, provided that such Subsidiary (A) has assets of less than $1,000 at
designation, (B) has no Indebtedness other than Non-Recourse Indebtedness and
(C) does not own any equity securities of any Subsidiary (other than an
Unrestricted Subsidiary). The Board of Directors of the Company may designate
any Unrestricted Subsidiary to be a Restricted Subsidiary of the Company;
provided, however, that immediately after giving effect to such designation (x)
the Company could incur $1.00 of additional Indebtedness under Section 1007 and
(y) no Default shall have occurred and be continuing. Any such designation by
the Board of Directors of the Company shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the Board Resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation

<PAGE> 38
complied with the foregoing provisions; provided, however, that the failure to
so file such resolution and/or Officers' Certificate with the Trustee shall not
impair or affect the validity of such designation.

"Voting Stock" means stock of the class or classes pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of a corporation (irrespective of whether or not at the time stock
of any other class or classes shall have or might have voting power by reason
of the happening of any contingency).

"Wholly Owned Subsidiary" means any Restricted Subsidiary all
of whose outstanding Voting Stock (other than directors' qualifying shares, if
any) is owned directly or indirectly by the Company.

Section 102. Other Definitions.

<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
"Bank" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1502
"Change in Control Payment Date" . . . . . . . . . . . . . . . . . . . . . . . . . . 1015
"Company Guaranty" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1401
"covenant defeasance" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1301
"defeasance" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1301
"Default Notice" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1202
"Defaulted Interest" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 307
"incorporated provision" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
"legal defeasance" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1301
"Pari Passu Certificate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613
"Restricted Encumbrance" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1010
"Restricted Payments" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1008
"Security Register" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305
"Security Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305
"U.S. Government Obligations" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1302
</TABLE>

Section 103. Compliance Certificates and Opinions.

Upon any application or request by the Companies to the
Trustee to take any action under any provision of this Indenture, the Companies
shall furnish to

<PAGE> 39
the Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture (including any covenant compliance with
which constitutes a condition precedent) relating to the proposed action have
been complied with and an Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent, if any, have been complied with,
except that, in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Indenture relating to such particular application or request, no additional
certificate or opinion need be furnished.

Every certificate or opinion (other than the certificates
required by Section 1021(a)) with respect to compliance with a condition or
covenant provided for in this Indenture shall include:

(a) a statement that each individual signing such
certificate or opinion has read such covenant or condition and the definitions
herein relating thereto;

(b) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;

(c) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and

(d) a statement as to whether, in the opinion of
each such individual, such condition or covenant has been complied with.

Section 104. Form of Documents Delivered to Trustee.

In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may

<PAGE> 40
certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.

Any certificate or opinion of an officer of the Companies may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or Opinion of Counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Companies
stating that the information with respect to such factual matters is in the
possession of the Companies, unless such counsel knows that the certificate or
opinion or representations with respect to such matters are erroneous.

Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.

Section 105. Acts of Holders.

(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Indenture to be given
or taken by Holders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Holders in person or by an agent
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly required, to the
Companies, the Operating Company or Realty Co. Such instrument or instruments
(and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Indenture and (subject to
Trust Indenture Act Section 315) conclusive in favor of the Trustee and

<PAGE> 41
the Company, if made in the manner provided in this Section.

(b) The fact and date of the execution by any Person
of any such instrument or writing may be proved in any reasonable manner which
the Trustee deems sufficient.

(d) If any of the Companies, the Operating Company
or Realty Co. shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, it may, at its
option, by or pursuant to a Board Resolution, fix in advance a record date for
the determination of such Holders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other Act, but the
Companies, the Operating Company or Realty Co., as the case may be, shall have
no obligation to do so. Notwithstanding Trust Indenture Act Section 316(c),
any such record date shall be the record date specified in or pursuant to such
Board Resolution, which shall be a date not more than 30 days prior to the
first solicitation of Holders generally in connection therewith and no later
than the date such solicitation is completed.

If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of record at the close
of business on such record date shall be deemed to be Holders for the purposes
of determining whether Holders of the requisite proportion of Securities then
Outstanding have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for this
purpose the Securities then Outstanding shall be computed as of such record
date; provided that no such request, demand, authorization, direction, notice,
consent, waiver or other Act by the Holders on such record date shall be deemed
effective unless it shall become effective pursuant to the provisions of this
Indenture not later than six months after the record date.

<PAGE> 42
(e) Any request, demand, authorization, direction,
notice, consent, waiver or other Act by the Holder of any Security shall bind
every future Holder of the same Security or the Holder of every Security issued
upon the registration of transfer thereof or in exchange therefor or in lieu
thereof, in respect of anything done, suffered or omitted to be done by the
Trustee, any Paying Agent or the Company in reliance thereon, whether or not
notation of such action is made upon such Security.

Section 106. Notices, etc., to Trustee and Company.

Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with,

(a) the Trustee by any Holder or the Companies, the
Operating Company or Realty Co. shall be sufficient for every purpose hereunder
if made, given, furnished or delivered, in writing, to or with the Trustee at
its Corporate Trust Office, Attention: Corporate Trust Department; or

(b) the Companies, the Operating Company or Realty
Co. by the Trustee or by any Holder shall be sufficient for every purpose
hereunder (unless otherwise herein expressly provided) if made, given,
furnished or delivered in writing to any of the Companies, the Operating
Company or Realty Co., addressed to it at Park Place and the Boardwalk,
Atlantic City, New Jersey 08401, Attention: President, or at any other address
furnished in writing to the Trustee by the Companies, the Operating Company or
Realty Co.

Section 107. Notice to Holders; Waiver.

Where this Indenture provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first class postage prepaid, to
each Holder affected by such event at his address as it appears in the Security
Register not later than the latest date and not earlier than the earliest date
prescribed for the giving of such notice. In any case where notice to Holders
is given by mail, neither the failure to mail

<PAGE> 43
such notice, nor any defect in any notice so mailed, to any particular Holder
shall affect the sufficiency of such notice with respect to other Holders. Any
notice when deposited for mailing to a Holder in the aforesaid manner shall be
conclusively deemed to have been received by such Holder whether or not
actually received by such Holder. Where this Indenture provides for notice in
any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed
with the Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.

In case by reason of the suspension of regular mail service by
reason of any other cause, it shall be impracticable to mail notice of any
event as required by any provision of this Indenture, then any method of giving
such notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.

Section 108. Conflict of Any Provision of Indenture with
Trust Indenture Act.

If and to the extent that any provision of this Indenture
limits, qualifies or conflicts with the duties imposed by Sections 310 to 318,
inclusive, of the Trust Indenture Act, or conflicts with any provision (an
"incorporated provision") required by or deemed to be included in this
Indenture by operation of such Trust Indenture Act Sections, such imposed
duties or incorporated provision shall control. If any provision of this
Indenture modifies or excludes any provision of the Trust Indenture Act that
may be so modified or excluded, the latter provision shall be deemed to apply
to this Indenture as so modified or excluded, as the case may be.

Section 109. Effect of Headings and Table of Contents.

The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.

<PAGE> 44
Section 110. Successors and Assigns.

All covenants and agreements in this Indenture by the
Companies, the Operating Company and Realty Co. shall bind their respective
successors and assigns, whether so expressed or not.

Section 111. Separability Clause.

In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

Section 112. Benefits of Indenture.

Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person (other than the parties hereto and their
successors hereunder, any Paying Agent and the Holders) any benefit or any
legal or equitable right, remedy or claim under this Indenture.

Section 113. Governing Law.

This Indenture and the Securities shall be governed by and
construed in accordance with the laws of the State of New York.

Section 114. Legal Holidays.

In any case where any Interest Payment Date, any date
established for payment of Defaulted Interest pursuant to Section 307, or any
Maturity with respect to any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of interest or principal (and premium, if any) need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the Interest Payment Date or date established for
payment of Defaulted Interest pursuant to Section 307 or Maturity, and no
interest shall accrue with respect to such payment for the period from and
after such Interest Payment Date or date established for payment of Defaulted
Interest pursuant to Section 307 or Maturity, as the case may be, to the next
succeeding Business Day.

<PAGE> 45
Section 115. No Recourse against Others.

A director, officer, employee or stockholder, as such, of the
Companies shall not have any liability for any obligations of the Companies
under the Securities, the Security Documents, the Note or this Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting any of the Securities waives and releases
all such liability.

ARTICLE II

SECURITY FORMS

Section 201. Forms Generally.

The Securities and the Trustee's certificate of authentication
shall be in substantially the forms set forth in this Article, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon
as may be required to comply with the rules of any securities exchange or as
may, consistently herewith, be determined by the officers executing such
Securities, as evidenced by their execution of the Securities. Any portion of
the text of any Security may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Security.

The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods or may be produced in
any other manner permitted by the rules of any securities exchange on which the
Securities may be listed, all as determined by the officers executing such
Securities, as evidenced by their execution of such Securities.

<PAGE> 46

Section 202. Form of Face of Security.

BALLY'S PARK PLACE FUNDING, INC.

% First Mortgage Note
due 2004

No. $

BALLY'S PARK PLACE FUNDING, INC., a Delaware corporation
(herein called the "Finance Company," which term includes any successor entity
under the Indenture hereinafter referred to), for value received, hereby
promises to pay to or registered assigns, the principal sum of
Dollars on , 2004, at the office or agency of the Finance Company
referred to below, and to pay interest thereon semiannually, on and
in each year, from , 1994 or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, at the
rate of % per annum, until the principal hereof is paid or duly
provided for. The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in such Indenture, be
paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the or (whether
or not a Business Day), as the case may be, next preceding such Interest
Payment Date. Any such interest not so punctually paid or duly provided
for, and interest on such defaulted interest rate at the same interest
rate borne by the Securities, to the extent lawful, shall forthwith
cease to be payable to the Holder on such Regular Record Date, and may
be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be
fixed by the Trustee, notice whereof shall be given to Holders of
Securities not less than 10 days prior to such Special Record Date, or
may be paid at any time in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the Securities may
be listed, and upon such notice as may be required by such exchange, all
as more fully provided in

<PAGE> 47
said Indenture. Payment of the principal of (and premium, if any) and interest
on this Security will be made at the office or agency of the Finance Company
maintained for that purpose in The City of New York, or at such other office or
agency of the Finance Company as may be maintained for such purpose, in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts; provided, however, that
payment of interest may be made at the option of the Finance Company by check
mailed to the address of the Person entitled thereto as such address shall
appear on the Security Register.

Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture, or be
valid or obligatory for any purpose.

IN WITNESS WHEREOF, the Finance Company has caused this
instrument to be duly executed under its corporate seal.

Dated: BALLY'S PARK PLACE
FUNDING, INC.

Attest:

Section 203. Form of Reverse of Security.

This security is one of a duly authorized issue of securities
of the Finance Company designated as its % First Mortgage Notes due
2004 (herein called the "Securities"), limited (except as otherwise provided in
the Indenture referred to below) in aggregate principal amount to
$425,000,000, which may be issued under an indenture (herein called the
"Indenture") dated as of

<PAGE> 48
, 1994, between the Finance Company, BALLY'S PARK PLACE, INC., a
Delaware corporation (the "Company"), BALLY'S PARK PLACE, INC., a New Jersey
corporation (the "Operating Company"), BALLY'S PARK PLACE REALTY CO., a New
Jersey corporation ("Realty Co."), and , trustee (herein
called the "Trustee," which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties, obligations and immunities thereunder of the Finance
Company, the Company, the Operating Company, Realty Co., the Trustee and the
Holders of the Securities, and of the terms upon which the Securities are, and
are to be, authenticated and delivered.

The Securities are subject to redemption upon not less than 30
nor more than 60 days' notice, in amounts of $1,000 or an integral multiple of
$1,000 at any time on or after , 1999, as a whole or in part, at
the election of the Finance Company, at a Redemption Price equal to the
percentage of the principal amount set forth below if redeemed during the
12-month period beginning , of the years indicated below:

<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
1999 %
-------
2000
-------
2001
-------
</TABLE>

and thereafter at 100% of principal amount together in the case of any such
redemption with accrued and unpaid interest to the Redemption Date (subject to
the right of Holders of record on relevant Regular Record Dates to receive
interest due on an Interest Payment Date), all as provided in the Indenture.

At any time, or from time to time, on or prior to
, 1997, the Finance Company may, at its option, use all or a
portion of the net cash proceeds of one or more public offerings of capital
stock of the Company or Bally's Casino Holdings, Inc. to redeem up to an
aggregate of 33-1/3% of the principal amount of the Securities originally
issued, at a redemption price equal to % of the principal amount thereof
plus accrued

<PAGE> 49
and unpaid interest, if any, to the redemption date, provided that immediately
following such redemption, at least $100,000,000 principal amount of Securities
remain outstanding. In order to effect the foregoing redemption with the
proceeds of any public equity offering, the Finance Company shall send the
redemption notice not later than 60 days after the consummation of such public
equity offering.

In the event that a Change in Control occurs, the Finance
Company shall make an offer to purchase, at the option of each Holder, such
Holder's Securities in whole or in part in integral multiples of $1,000 at a
purchase price in cash in an amount equal to 101% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date of purchase.

In the case of any redemption of Securities, interest
installments whose Stated Maturity is on or prior to the Redemption Date will
be payable to the Holders of such Securities, or one or more Predecessor
Securities, of record at the close of business on the relevant Regular Record
Date referred to on the face hereof. Securities (or portions thereof) for
whose redemption and payment provision is made in accordance with the Indenture
shall cease to bear interest from and after the Redemption Date.

In the event of redemption of this Security in part only, a
new Security or Securities for the unredeemed portion hereof shall be issued in
the name of the Holder hereof upon the cancellation hereof.

If an Event of Default shall occur and be continuing, the
principal of all the Securities may be declared due and payable in the manner
and with the effect provided in the Indenture.

The Indenture contains provisions for defeasance at any time
of the entire indebtedness of the Finance Company on this Security upon
compliance by the Finance Company with certain conditions set forth therein,
which provisions apply to this Security.

The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Finance

<PAGE> 50
Company, the Company, the Operating Company and Realty Co. and the rights of
the Holders under the Indenture at any time by the Finance Company, the
Company, the Operating Company and Realty Co. and the Trustee with the consent
of the Holders of a majority in aggregate principal amount of the Securities at
the time Outstanding. The Indenture also contains provisions permitting the
Holders of specified percentages in aggregate principal amount of the
Securities at the time Outstanding, on behalf of the Holders of all the
Securities, to waive compliance by the Finance Company, the Company, the
Operating Company and Realty Co. with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by or on behalf of the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange therefore or in lieu hereof whether or not notation of such consent
or waiver is made upon this Security.

The Company and the Finance Company are subject to the New
Jersey Casino Control Act (the "Casino Control Act"). If the New Jersey Casino
Control Commission (the "Casino Control Commission") finds that a Holder or
beneficial owner of Securities must be found qualified or suitable to hold or
own the Securities under the Casino Control Act, and if such Holder or such
beneficial owner does not become so licensed or is not found qualified or
suitable, within any time period specified by the Casino Control Commission or
the Casino Control Act, the Finance Company shall have the right, at its
option, (i) to require such Holder or beneficial owner to dispose of all or a
portion of such Holder's or beneficial owner's Securities within 120 days after
receipt of notice by such Holder or beneficial owner of its disqualification
under the Casino Control Act (or such different period as may be prescribed by
the Casino Control Commission), or (ii) to call for redemption the Securities
of such Holder or beneficial owner, on not less than 30 nor more than 60 days'
notice (or such different period as may be prescribed by the Casino Control
Commission). If such Holder or beneficial owner, having been given the
opportunity by the Finance Company to dispose of such Holder's or beneficial
owner's Securities, shall have failed to do so within the prescribed time
period, the Finance Company shall have the right to redeem such Holder's or
benefi-

<PAGE> 51
cial owner's Securities on five days' notice. On any redemption of
Securities pursuant to this provision, the Redemption Price shall be the lesser
of (i) the market value thereof on the date of such notice of redemption (as
determined in good faith by the Board of Directors of the Finance Company) and
(ii) the price at which such Holder or beneficial owner acquired the
Securities, together with (if permitted by the Casino Control Act or by the
orders of the Casino Control Commission) accrued interest to the Redemption
Date, unless a Redemption Price or other payment, remuneration or related terms
or restrictions are required by the Casino Control Commission, in which event
such price, terms and restrictions shall be the Redemption Price and terms of
redemption. Each Holder or beneficial owner, by accepting a Security, agrees
to the provisions set forth in this paragraph and in the Indenture and agrees
to inform the Finance Company upon request of the price at which such Holder or
beneficial owner acquired such Securities.

No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Finance Company, which is absolute and unconditional, to pay the principal of
(and premium, if any) and interest on this Security at the times, place, and
rate, and in the coin or currency, herein prescribed.

Payment of principal and interest (including interest on
overdue principal and overdue interest) is unconditionally guaranteed by the
Company. The Securities are secured by the pledge by the Finance Company of
the $425,000,000 Note of the Operating Company and by the Mortgage on the
property known as the Bally's Park Place Casino Hotel and the security interest
in certain personal property of the Bally's Park Place Casino Hotel granted by
Realty Co. and the Operating Company, which own or lease and operate Bally's
Park Place Casino Hotel.

As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable on
the Security Register of the Finance Company, upon surrender of this Security
for registration of transfer at the office or agency of the Finance Company
maintained for such purpose in The City of New York, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the

<PAGE> 52
Finance Company and the Security Registrar duly executed by, the Holder hereof
or his attorney duly authorized in writing, and thereupon one or more new
Securities, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.

The Securities are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
the Securities are exchangeable for a like aggregate principal amount of
Securities of a different authorized denomination, as requested by the Holder
surrendering the same.

No service charge shall be made for any registration of
transfer or exchange or redemption of Securities, but the Finance Company may
require payment of a sum sufficient to pay all documentary, stamp or similar
issue or transfer taxes or other governmental charges payable in connection
with any registration of transfer or exchange.

Prior to the time of due presentment of this Security for
registration of transfer, the Finance Company, the Trustee and any agent of the
Finance Company or the Trustee may treat the Person in whose name this Security
is registered as the owner hereof for all purposes, whether or not this
Security be overdue, and neither the Finance Company, the Trustee nor any agent
shall be affected by notice to the contrary.

All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.

<PAGE> 53
Section 204. Form of Trustee's Certificate of Authentication.

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Securities referred to in the
within-mentioned Indenture.

as Trustee

By
Authorized Signatory

Section 205. Form of Notation Relating to Guaranty.

GUARANTY

BALLY'S PARK PLACE, INC., a Delaware corporation (hereinafter
referred to as the "Company," which term includes any successor person under
the Indenture referred to in the Security upon which this notation is endorsed)
(capitalized terms herein being used as defined in the Indenture unless
otherwise indicated), (i) has unconditionally guaranteed on a senior basis (a)
the due and punctual payment of the principal of (premium, if any) and interest
on the Securities, whether at Maturity or Interest Payment Date, by
acceleration, call for redemption or otherwise, and the due and punctual
payment of interest on the overdue principal and interest, if any, of the
Securities and (b) the due and punctual performance of all other obligations of
the Finance Company to the Holders or the Trustee all in accordance with the
terms set forth in Article Fourteen of the Indenture, and (ii) in case of any
extension of time for payment or renewal of any Securities or any of such other
obligations, the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at Maturity, by
acceleration or otherwise.

No stockholder, officer, director or incorporator, as such,
past, present or future, of the Company shall have any personal liability under
this Guaranty by

<PAGE> 54
reason of his or its status as such stockholder, officer, director or
incorporator.

This Guaranty shall not be valid or obligatory for any purpose
until the certificate of authentication on the Security upon which this
Guaranty is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized signatories.

BALLY'S PARK PLACE, INC.

Attest:

ARTICLE III

THE SECURITIES

Section 301. Title and Terms.

The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $425,000,000,
except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Section
303, 304, 305, 306, 906, 1015 or 1108.

The Securities shall be known and designated as the " %
First Mortgage Notes due 2004" of the Finance Company. Their Stated Maturity
shall be , 2004, and they shall bear interest at the rate of
% per annum from , 1994, or the most recent Interest Payment Date
to which interest has been paid or duly provided for, as the case may be,
payable semiannually on and in each year and at said Stated
Maturity, until the principal thereof is paid or duly provided for.

<PAGE> 55
The principal of (and premium, if any) and interest on the
Securities shall be payable at the office or agency of the Finance Company
maintained for such purpose in The City of New York, or at such other office or
agency of the Finance Company as may be maintained for such purpose; provided,
however, that, at the option of the Finance Company, interest may be paid by
check mailed to addresses of the Persons entitled thereto as such addresses
shall appear on the Security Register.

The Securities shall be redeemable as provided in Article
Eleven.

If the Finance Company is served with notice of the
disqualification of any Holder under Section 105(d) of the Casino Control Act
by the Casino Control Commission, such Holder will be prohibited under Section
105(e) of the Casino Control Act from (a) receiving interest on the Securities
held by such Holder, (b) exercising, directly or through any trustee or
nominee, any right conferred on such Securities, and (c) receiving any
remuneration in any form from any Person licensed by the Casino Control
Commission (including the Company and the Trustee) for services rendered or
otherwise. Notwithstanding the foregoing, the Trustee shall be entitled to
exercise all rights with respect to the Securities held by such Holder
including, but not limited to, accelerating the Securities. If the Trustee
exercises voting rights with respect to such Securities, such votes shall be
cast in the same proportion as the votes of the other Outstanding Securities
are cast on such issue. A copy of any notice served upon the Finance Company
as described above shall be promptly delivered by the Company to the Trustee.
Any such notice to the Trustee shall be effective against the Trustee on the
Business Day after the receipt thereof.

Section 302. Denominations.

The Securities shall be issuable only in registered form
without coupons and only in denominations of $1,000 and any integral multiple
thereof.

<PAGE> 56
Section 303. Execution, Authentication, Delivery and Dating.

The Securities shall be executed on behalf of the Finance
Company by any two of the following: its Chairman, its President or one of its
Vice Presidents, under its corporate seal reproduced thereon and attested by
its Secretary or one of its Assistant Secretaries. The signature of any of
these officers on the Securities may be manual or facsimile.

Securities bearing the manual or facsimile signa tures of
individuals who were at any time the proper officers of the Finance Company
shall bind the Finance Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery
of such Securities or did not hold such offices at the date of such Securities.

The Trustee shall (upon Company Order) authenticate and
deliver Securities for original issue in an aggregate principal amount of up to
$425,000,000.

Each Security shall be dated the date of its authentication.

No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on
such Security a certificate of authentication substantially in the form
provided for herein duly executed by the Trustee by manual signature of one of
its duly authorized signatories, and such certificate upon any Security shall
be conclusive evidence, and the only evidence, that such Security has been duly
authenticated and delivered hereunder and is entitled to the benefits of this
Indenture.

In case the Finance Company, pursuant to Article Eight, shall
be consolidated or merged with or into any other Person or shall convey,
transfer, lease or otherwise dispose of substantially all of its properties and
assets to any Person, and the successor Person resulting from such
consolidation, or surviving such merger, or into which the Finance Company
shall have been merged, or the successor Person which shall have received a
conveyance, transfer, lease or other disposition as aforesaid, shall have
executed an indenture supplemental

<PAGE> 57
hereto with the Trustee pursuant to Article Eight, any of the Securities
authenticated or delivered prior to such consolidation, merger, conveyance,
transfer, lease or other disposition may, from time to time, at the request of
the successor Person, be exchanged for other Securities executed in the name of
the successor Person with such changes in phraseology and form as may be
appropriate, but otherwise in substance of like tenor as the Securities
surrendered for such exchange and of like principal amount; and the Trustee,
upon Company Order of the successor Person, shall authenticate and deliver
Securities as specified in such request for the purpose of such exchange. If
Securities shall at any time be authenticated and delivered in any new name of
a successor Person pursuant to this Section in exchange or substitution for or
upon registration of transfer of any Securities, such successor Person, at the
option of any Holder but without expense to such Holder, shall provide for the
exchange of all Securities at the time Outstanding held by such Holder for
Securities authenticated and delivered in such new name.

Section 304. Temporary Securities.

Pending the preparation of definitive Securities, the Finance
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
conclusively evidenced by their execution of such Securities.

If temporary Securities are issued, the Finance Company will
cause definitive Securities to be prepared without unreasonable delay. After
the preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Finance Company designated for such
purpose pursuant to Section 1002, without charge to the Holder. Upon surrender
for cancellation of any one or more temporary Securities, the Finance Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a

<PAGE> 58
like principal amount of definitive Securities of authorized denominations.
Until so exchanged, the temporary Securities shall in all respects be entitled
to the same benefits under this Indenture as definitive Securities.

Section 305. Registration, Registration of Transfer and
Exchange.

The Finance Company shall cause to be kept at the Corporate
Trust Office of the Trustee a register (the register maintained in such office
and in any other office or agency designated pursuant to Section 1002 being
herein sometimes referred to as the "Security Register") in which, subject to
such reasonable regulations as it may prescribe, the Finance Company shall
provide for the registration of Securities and of transfers of Securities.
Said office or agency is hereby initially appointed "Security Registrar" for
the purpose of registering Securities and transfers of Securities as herein
provided.

Upon surrender for registration of transfer of any Security at
the office or agency of the Finance Company designated pursuant to Section 1002
for such purpose, the Finance Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of any authorized denomination or
denominations and of a like aggregate principal amount.

At the option of the Holder, Securities may be exchanged for
other Securities of any authorized denomination or denominations and of a like
aggregate principal amount upon surrender of the Securities to be exchanged at
such office or agency. Whenever any Securities are so surrendered for
exchange, the Finance Company shall execute, and the Trustee shall authenticate
and deliver, the Securities which the Holder making the exchange is entitled to
receive.

All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Finance Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of transfer or
exchange.

<PAGE> 59
Every Security presented or surrendered for registration of
transfer, or for exchange or redemption, shall (if so required by the Finance
Company or the Security Registrar) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Finance Company and
the Security Registrar, duly executed by the Holder thereof or his attorney
duly authorized in writing.

No service charge shall be made for any registration of
transfer or exchange or redemption of Securities, but the Finance Company may
require payment of a sum sufficient to pay all documentary, stamp or similar
issue or transfer taxes or other governmental charges that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 303, 304, 306, 906, 1015 or 1108 not
involving any transfer.

The Finance Company shall not be required (a) to issue,
register the transfer of or exchange any Security during a period beginning at
the opening of business (i) 15 days before the mailing of a notice of
redemption of the Securities selected for redemption under Section 1104 and
ending at the close of business on the day of such mailing or (ii) 15 days
before an Interest Payment Date and ending on the close of business on the
Interest Payment Date, or (b) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except the unredeemed
portion of Securities being redeemed in part.

Section 306. Mutilated, Destroyed, Lost and Stolen
Securities.

If (a) any mutilated Security is surrendered to the Trustee,
or (b) the Finance Company and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of any Security, and there is
delivered to the Finance Company and the Trustee such security or indemnity as
may be required by them to save each of them and any agent of them harmless,
then, in the absence of notice to the Finance Company or the Trustee that such
Security has been acquired by a bona fide purchaser, the Finance Company shall
execute and upon Company Order the Trustee shall authenticate and deliver, in
exchange for any such mutilated Security or in lieu of any such de-

<PAGE> 60
stroyed, lost or stolen Security, a replacement Security of like tenor
and principal amount, and bearing a number not contemporaneously outstanding.

In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Finance Company in its
discretion may, instead of issuing a replacement Security, pay such Security.

Upon the issuance of any replacement Securities under this
Section 306, the Finance Company may require the payment of a sum sufficient to
pay all documentary, stamp or similar issue or transfer taxes or other
governmental charges that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.

Every replacement Security issued pursuant to this Section 306
in lieu of any destroyed, lost or stolen Security shall constitute a
contractual obligation of the Finance Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall
be entitled to all benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.

The provisions of this Section 306 are exclusive and shall
provide (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.

Section 307. Payment of Interest; Interest Rights Preserved.

Interest on any Security which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
Person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest.

Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date and interest
on such defaulted interest at the rate borne by the Securities (such de-

<PAGE> 61
faulted interest and interest thereon herein collectively called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder; and such
Defaulted Interest may be paid by the Finance Company, at its election in each
case, as provided in Subsection (a) or (b) below:

(a) The Finance Company may elect to make payment of
any Defaulted Interest to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Finance Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Security and the date of the proposed payment, and at the same time the Finance
Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit prior to
the date of the proposed payment, such money when deposited for the benefit of
the Persons entitled to such Defaulted Interest as in this Subsection provided.
Thereupon the Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest which shall be not more than 15 days and not less than 10
days prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Finance Company of such Special Record Date. In the
name and at the expense of the Finance Company, the Trustee shall cause notice
of the proposed payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first class postage prepaid, to each Holder at his
address as it appears in the Security Register, not less than 10 days prior to
such Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been so mailed, such
Defaulted Interest shall be paid to the Persons in whose names the Securities
(or their respective Predecessor Securities) are registered at the close of
business on such Special Record Date and shall no longer be payable pursuant to
the following Subsection (b).

<PAGE> 62
(b) The Finance Company may make payment of any
Defaulted Interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be listed,
and upon such notice as may be required by such exchange, if, after notice
given by the Finance Company to the Trustee of the proposed payment pursuant to
this Subsection, such payment shall be deemed practicable by the Trustee.

Subject to the foregoing provisions of this Section 307, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.

Section 308. Persons Deemed Owners.

Prior to the time of due presentment for registration of
transfer, the Finance Company, the Trustee and any agent of the Finance Company
or the Trustee may treat the Person in whose name any Security is registered as
the owner of such Security for the purpose of receiving payment of principal of
(and premium, if any) and (subject to Section 307) interest on such Security
and for all other purposes whatsoever, whether or not such Security be overdue,
and neither the Finance Company, the Trustee nor any agent of the Finance
Company or the Trustee shall be affected by notice to the contrary.

Section 309. Cancellation.

All Securities surrendered for payment, redemption,
registration of transfer or exchange shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be promptly cancelled
by it. The Finance Company shall deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Finance
Company may have acquired in any manner whatsoever, and all Securities so
delivered shall be promptly cancelled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as
provided in this Section, except as expressly permitted by this Indenture. All
cancelled Securities held by the Trustee shall be destroyed and certification
of their destruction delivered to the Finance Company unless by a Company

<PAGE> 63
Order the Finance Company shall direct that cancelled Securities be returned to
it.

Section 310. Computation of Interest.

Interest on the Securities shall be computed on the basis of a
year of twelve 30-day months.

ARTICLE IV

SATISFACTION AND DISCHARGE

Section 401. Satisfaction and Discharge of Indenture.

This Indenture shall, upon Company Request, cease to be of
further effect (except as to surviving rights of registration of transfer or
exchange of Securities herein expressly provided for) and the Trustee, on
demand of and at the expense of the Finance Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture, when

(a) either

(i) all Securities theretofore
authenticated and delivered (other than (1) Securities which have been
destroyed, lost or stolen and which have been replaced or paid as
provided in Section 306 and (2) Securities for whose payment money has
theretofore been deposited in trust or segregated and held in trust by
the Finance Company and thereafter repaid to the Finance Company or
discharged from such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or

(ii) all such Securities not theretofore
delivered to the Trustee for cancellation

(1) have become due and payable, or

<PAGE> 64
(2) will become due and payable at
their Stated Maturity within one year, or

(3) are to be called for redemption
within one year under arrangements satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the name, and at the
expense, of the Finance Company,

and the Finance Company, in the case of (1), (2) or (3) above, has irrevocably
deposited or caused to be deposited with the Trustee, under the terms of an
irrevocable trust agreement in form and substance satisfactory to the Trustee,
as trust funds in trust solely for the benefit of the Holders for that purpose
cash in U.S. Dollars or U.S. Government Obligations sufficient to pay and
discharge the entire indebtedness on such Securities not theretofore delivered
to the Trustee for cancellation, for principal of (and premium, if any) and
interest to the date of such deposit (in the case of Securities which have
become due and payable) or to the Stated Maturity or Redemption Date, as the
case may be;

(b) the Finance Company has paid or caused to be
paid all other sums payable hereunder by the Finance Company; and

(c) the Finance Company has delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.

Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Companies to the Trustee under Section 606
and, if money shall have been deposited with the Trustee pursuant to subclause
(ii) of Subsection (a) of this Section 401, the obligations of the Trustee
under Section 402 and the last paragraph of Section 1003 shall survive.

The Security Documents shall not be discharged as a result of
such irrevocable deposit under subclause (ii) of Subsection (a) of this Section
401 unless the Finance Company shall have delivered to the Trustee an

<PAGE> 65
Opinion of Counsel, subject to customary exclusions and exceptions reasonably
acceptable to the Trustee, to the effect that (i) the Finance Company has
authorization to establish such irrevocable trust in favor of the Trustee for
the benefit of the Holders under applicable law and the action in establishing
the irrevocable trust has been duly and properly authorized by the Finance
Company and such authorization has not been revoked, (ii) the Trustee is an
independent trustee with respect to the irrevocable trust, (iii) a valid trust
is created at the time of such irrevocable deposit and (iv) the Holders of the
Securities will have the sole beneficial ownership interest under applicable
law in the money or U.S. Government Obligations so deposited in such trust.
The Opinion of Counsel so referred to in this paragraph may contain a
qualification that in the event that a court of competent jurisdiction were to
determine that the trust funds remained owned by the Finance Company after such
deposit, the Holders of the Securities will have a non-avoidable first-priority
perfected security interest under applicable law in the money or U.S.
Government Obligations so deposited (for the limited purpose of the Opinion of
Counsel referred to in this paragraph, such opinion may contain an assumption
that the conclusions contained in a customary solvency letter by a nationally
recognized appraisal firm, dated as of the date of the deposit and taking into
account such deposit, or a customary alternative certificate reasonably
acceptable to the Trustee, are accurate, provided that such solvency letter or
certificate is also addressed and delivered to the Trustee).

It is the intention of the parties hereto that a valid trust
for the benefit of the Holders of the Securities be created at the time that
the Finance Company makes the deposit pursuant to this Section 401. The
security interest in such deposit that is provided for herein to the Holders of
the Securities is intended solely as protection for the Holders of the
Securities in the event that a court of competent jurisdiction were to
determine either that (i) such trust had not been validly created or (ii) such
trust is not enforceable.

The Company and the Finance Company shall take any and all
acts necessary to create and perfect, in favor of the Holders of the
Securities, a first-priority security interest in the money so deposited and
shall

<PAGE> 66
take any other action and execute and deliver any other documents that may
reasonably be requested by the Trustee to effectuate such security interest,
and shall do all of the above at such appropriate time so that such security
interest shall attach to the deposit at the time such deposit is made.

Notwithstanding the foregoing, prior to the end of the 91-day
period following the irrevocable deposit referred to above, none of the
obligations of the Company, the Operating Company, the Finance Company or
Realty Co. under this Indenture or the Security Documents shall be discharged,
unless and until the Finance Company shall have delivered to the Trustee a
Current Appraisal as of a date no more than 60 days prior to the date of such
irrevocable deposit reflecting the Appraised Fair Market Value of the
Collateral as a going concern in an amount not less than 120% of the amount of
such irrevocable deposit and an Opinion of Counsel, subject to customary
exclusions and exceptions, to the effect that based on such Current Appraisal,
the irrevocable deposit will not be subject to avoidance as a preferential
transfer under 11 U.S.C. Section 547, as it may be amended from time to time.

Section 402. Application of Trust Money.

Subject to the provisions of the last paragraph of Section
1003, all money deposited with the Trustee pursuant to Section 401 shall be
held in trust and applied by it, in accordance with the provisions of the
Securities and this Indenture, to the payment, either directly or through any
Paying Agent (including the Finance Company, the Company or another Subsidiary
acting as Paying Agent) as the Trustee may determine, to the Persons entitled
thereto, of the principal (and premium, if any) and interest for whose payment
such money has been deposited with the Trustee.

<PAGE> 67
ARTICLE V

REMEDIES

Section 501. Events of Default.

An "Event of Default" occurs if:

(a) the Finance Company defaults in the payment of
interest on any Security when the same becomes due and payable and such default
continues for a period of 30 days; or

(b) the Finance Company defaults in the payment of
the principal of (or premium, if any, on) any Security when the same becomes
due and payable, whether at its Stated Maturity, upon redemption, or otherwise;
or

(c) any of the Company, the Operating Company, the
Finance Company or Realty Co. default in the performance of, or breach, any
covenant or warranty of such company hereunder (other than a default in the
performance, or breach, of a covenant or warranty that is specifically dealt
with elsewhere in this Section) or default in the performance of, or breach,
any covenant or warranty of such company in the Security Documents and, in any
such case, continuance of such default or breach for the period and after the
notice specified below; or

(d) an event or events of default as defined in any
mortgage, bond, indenture, loan agreement or other evidence of Indebtedness
under which there may be issued or by which there may be secured or evidenced
any Indebtedness of either of the Companies or any Subsidiary in excess of
$10,000,000 in the aggregate, which default or defaults extend beyond any
period of grace provided with respect thereto and which default or defaults
relate to (i) the obligation to pay the principal of or interest on any such
Indebtedness, in either case at the final maturity set forth in the agreement
under which such Indebtedness is issued or (ii) any other obligation which
shall result in such Indebtedness becoming or being declared due and payable
prior to the date on which it would otherwise become due and payable; or

(e) final judgments or orders are rendered against
either of the Companies or any Subsidiary

<PAGE> 68
which require the payment of money, either individually or in an aggregate
amount, that is more than $10,000,000 and (i) an enforcement proceeding with
respect thereto has been commenced or (ii) such judgment or order shall remain
unsatisfied or unstayed, by reason of appeal or otherwise, for 60 days; or

(f) a decree or order is entered by a court having
jurisdiction in the premises (i) for relief in respect of either of the
Companies or any Material Subsidiary in an involuntary case or proceeding under
the Federal Bankruptcy Code or any other federal or state bankruptcy,
insolvency, reorganization or similar law or (ii) adjudging either of the
Companies or any Material Subsidiary as bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of either of the Companies or any Material
Subsidiary under the Federal Bankruptcy Code or any other applicable federal or
state law, or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of either of the Companies or any
Material Subsidiary or of any substantial part of any of their properties, or
ordering the winding up or liquidation of any of their affairs, and any such
decree or order remains unstayed and in effect for a period of 60 consecutive
days; or

(g) either of the Companies or any Material
Subsidiary institutes a voluntary case or proceeding under the Federal
Bankruptcy Code or any other applicable federal or state law or any other case
or proceeding to be adjudicated as bankrupt or insolvent, or either of the
Companies or any Material Subsidiary consents to the entry of a decree or order
for relief in respect of either of the Companies or any Material Subsidiary in
any involuntary case or proceeding under the Federal Bankruptcy Code or any
other applicable federal or state law or to the institution of bankruptcy or
insolvency proceedings against either of the Companies or any Material
Subsidiary, or either of the Companies or any Material Subsidiary files a
petition or answer or consent seeking reorganization or relief under the
Federal Bankruptcy Code or any other applicable federal or state law, or
consents to the filing of any such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator (or

<PAGE> 69
other similar official) of either of the Companies or any Material Subsidiary
or of any substantial part of its property, or makes an assignment for the
benefit of creditors, or becomes insolvent, or is unable to pay debts generally
as they come due, or admits in writing its inability to pay its debts generally
as they become due or takes corporate action in furtherance of any such action;
or

(h) there is a default in the performance or breach
of any of the provisions of Article Eight or a failure by the Finance Company
to provide the notice to Holders or to make the payments required by Section
1015; or

(i) an "Event of Default" under any of the Security
Documents occurs; or

(j) the revocation, suspension or loss for a period
of more than 90 consecutive days of any Gaming License (other than a voluntary
relinquishment of a Gaming License by a Subsidiary other than a Subsidiary
holding the license to operate the Casino Hotel) under which the Company or any
Material Subsidiary owns, leases or operates the Casino Hotel or any Subsidiary
Casino Hotel; or

(k) the Company Guaranty shall, at any time, cease
to be in full force and effect or shall be declared invalid or unenforceable;
or either of the Companies shall assert, in any pleading in a court of
competent jurisdiction, that such Company Guaranty is invalid or unenforceable.

A default under clause (c) is not an Event of Default until
the continuance of such default for a period of 30 days after there has been
given, by registered or certified mail, to either of the Companies by the
Trustee or to either of the Companies and the Trustee by the Holders of at
least 25% in principal amount of the Outstanding Securities a written notice
specifying such default and stating that such notice is a "Notice of Default"
hereunder.

<PAGE> 70
Section 502. Acceleration of Maturity; Rescission .

If an Event of Default (other than an Event of Default
specified in Section 501(f) or 501(g)) occurs and is continuing, the Trustee or
the Holders of at least 25% of the principal amount of the Securities then
Outstanding, by written notice to the Company and the Finance Company (and to
the Trustee if such notice is given by the Holders), may, and the Trustee at
the request of such Holders shall, declare all unpaid principal of, premium, if
any, and accrued interest on all the Securities to be due and payable
immediately, and upon any such declaration such principal, premium and accrued
interest shall become immediately due and payable. If an Event of Default
specified in Section 501(f) or 501(g) occurs and is continuing, the amounts
described above shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder.

After a declaration of acceleration, but before a judgment or
decree for payment of the money due has been obtained by the Trustee, the
Holders of a majority in aggregate principal amount of the Securities
Outstanding, by written notice to the Finance Company and the Trustee, may
annul such declaration if (a) the Finance Company has paid or deposited with
the Trustee a sum sufficient to pay (i) all sums paid or advanced by the
Trustee under this Indenture and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, (ii) all
overdue interest on all Securities, (iii) the principal of and premium, if any,
on any Securities which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Securities, and (iv)
to the extent that payment of such interest is lawful, interest upon overdue
interest at the rate borne by the Securities; and (b) all Events of Default,
other than the non-payment of principal of the Securities which have become due
solely by the declaration of acceleration, have been cured or waived.

<PAGE> 71
Section 503. Collection of Indebtedness and Suits for
Enforcement by Trustee.

The Finance Company covenants that if

(a) default is made in the payment of any interest
on any Securities when such interest becomes due and payable and such default
continues for a period of 30 days, or

(b) default is made in the payment of the principal
of (or premium, if any, on) any Security at the Maturity thereof,

the Finance Company will, upon demand of the Trustee, pay to it, for the
benefit of the Holders of such Securities, the whole amount then due and
payable on such Securities for principal (and premium, if any) and interest,
with interest upon the overdue principal (and premium, if any) and, to the
extent that payment of such interest shall be legally enforceable, upon overdue
installments of interest, at the rate borne by the Securities; and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.

If the Finance Company fails to pay such amounts forthwith
upon such demand, the Trustee, in its own name and as trustee of an express
trust, may institute a judicial proceeding for the collection of the sums so
due and unpaid and may prosecute such proceeding to judgment or final decree,
and may enforce the same against the Companies or any other obligor upon the
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Companies or any other
obligor upon the Securities, wherever situated.

If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders under this Indenture and may enforce any rights or remedies
available to it upon an Event of Default under the Security Documents by such
appropriate private or judicial proceedings as the Trustee shall deem most
effectual

<PAGE> 72
to protect and enforce such rights, including foreclosing upon the Cash
Collateral in the Collateral Account.

Section 504. Trustee May File Proofs of Claim.

In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition
or other judicial proceeding relative to the Company, the Finance Company, the
Operating Company or Realty Co. or any other obligor upon the Securities or the
property of either of the Companies or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Companies for the payment of overdue principal or interest) shall be
entitled and empowered, by intervention in such proceeding or otherwise,

(a) to file and prove a claim for the whole amount
of principal (and premium, if any) and interest owing and unpaid in respect of
the Securities and to file such other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee (including any claim
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders allowed in such judicial
proceeding, and

(b) to collect and receive any moneys or other
property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay
the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 606.

Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any proposal, plan of reorganization, arrangement, adjustment or compo-

<PAGE> 73
sition or other similar arrangement affecting the Securities or the
rights of any Holder thereof, or to authorize the Trustee to vote in respect of
the claim of any Holder in any such proceeding.

Section 505. Trustee May Enforce Claims without Possession of
Securities.

All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name and as trustee of an express trust, and any recovery of judgment
shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.

Section 506. Application of Money Collected.

Any money collected by the Trustee pursuant to this Article or
Collateral foreclosed on in the Collateral Account shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal (or premium, if any) or
interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:

FIRST: To the payment of all amounts due the Trustee under
Section 606;

SECOND: To the payment of the amounts then due and unpaid
upon the Securities for principal (and premium, if any) and interest, in
respect of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the amounts
due and payable on such Securities for principal (and premium, if any) and
interest; and

THIRD: The balance, if any, to the Finance Company.

<PAGE> 74
Notwithstanding the foregoing, if the Trustee forecloses on
any real Property comprising the Collateral, it shall pay out the proceeds of
such foreclosure in accordance with the provisions of the Mortgage and the
Intercreditor Agreement if there are any Pari Passu Mortgages on such real
Property.

Section 507. Limitation on Suits.

No Holder of any Securities shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture or the
Securities, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless

(a) such Holder has previously given written notice
to the Trustee of a continuing Event of Default;

(b) the Holders of not less than 25% in principal
amount of the Outstanding Securities shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;

(c) such Holder or Holders have offered to the
Trustee reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;

(d) the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute any such
proceeding; and

(e) no direction inconsistent with such written
request has been given to the Trustee during such 60-day period by the Holders
of a majority in principal amount of the Outstanding Securities;

it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture, the Note or the Security Documents to affect, disturb or
prejudice the rights of any other Holders, or to obtain or to seek to obtain
priority or preference over any other Holders or to enforce any right under
this Indenture, the Note or the Security Documents except in

<PAGE> 75
the manner provided in this Indenture, the Note or the Security Documents and
for the equal and ratable benefit of all the Holders.

Section 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest.

Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of (and premium, if any) and
interest on such Security on the respective due dates expressed in such
Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.

Section 509. Restoration of Rights and Remedies.

If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case the Companies, the
Trustee and the Holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall
continue as though no such proceeding had been instituted.

Section 510. Rights and Remedies Cumulative.

Except as provided in Section 306, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.

<PAGE> 76
Section 511. Delay or Omission Not Waiver.

No delay or omission of the Trustee or of any Holder of any
Security to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be exercised from time
to time, and as often as may be deemed expedient, by the Trustee or by the
Holders, as the case may be.

Section 512. Control by Holders.

The Holders of a majority in principal amount of the
Outstanding Securities shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee; provided that

(a) such direction shall not be in conflict with any
rule of law or with this Indenture or expose the Trustee to personal liability,
and

(b) subject to the provisions of Trust Indenture Act
Section 315, the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.

Section 513. Waiver of Past Defaults.

The Holders of not less than a majority in principal amount of
the Outstanding Securities may on behalf of the Holders of all the Securities
waive any past Default or Event of Default hereunder and its consequences,
except a Default or Event of Default

(a) in the payment of the principal of (or premium,
if any) or interest on any Security, or

(b) in respect of a covenant or provision hereof
which under Article Nine cannot be modified or amended without the consent of
the Holder of each Outstanding Security affected.

<PAGE> 77
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.

Section 514. Undertaking for Costs.

All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, the Note or the Security Documents or in
any suit against the Trustee for any action taken, suffered or omitted by it as
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Holder, or group of Holders, holding in the aggregate more
than 10% in principal amount of the Outstanding Securities, or to any suit
instituted by any Holder for the enforcement of the payment of the principal of
(or premium, if any) or interest on any Security on or after the respective
Stated Maturities expressed in such Security (or, in the case of redemption, on
or after the Redemption Date).

Section 515. Waiver of Stay, Extension or Usury Laws.

The Companies covenant (to the extent that they may lawfully
do so) that they will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantages of, any stay, extension or
usury law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Companies
(to the extent that they may lawfully do so) hereby expressly waive all benefit
or advantage of any such law, and covenant that they will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer

<PAGE> 78
and permit the execution of every such power as though no such law had been
enacted.

ARTICLE VI

THE TRUSTEE

Section 601. Notice of Defaults.

Within 90 days after the occurrence of any Default that is
known to the Trustee, the Trustee shall transmit by mail to all Holders, as
their names and addresses appear in the Security Register, notice of such
Default; provided, however, that, except in the case of a default in the
payment of the principal of (or premium, if any) or interest on any Security,
the Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee or a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interest of the Holders.

Section 602. Certain Rights of Trustee.

Subject to the provisions of Trust Indenture Act Sections
315(a) through 315(d):

(a) the Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
delivered by it to be genuine and to have been signed or presented by the
proper party or parties;

(b) any request or direction of either of the
Companies mentioned herein shall be sufficiently evidenced by a Company Request
or Company Order and any resolution of the Board of Directors of either of the
Companies may be sufficiently evidenced by a Board Resolution;

(c) whenever in the administration of this Indenture
the Trustee shall deem it desirable that a matter be provided or established
prior to taking, suf-

<PAGE> 79
fering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate;

(d) the Trustee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon;

(e) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;

(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the Trustee
shall determine to make such further inquiry or investigation, it shall be
entitled to examine, upon reasonable notice, the books, records and premises of
the Companies, personally or by agent or attorney;

(g) the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed with
due care by it hereunder;

(h) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reason-

<PAGE> 80
able grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it; and

(i) the Trustee shall not be liable for any action
it takes or omits to take in good faith which it believes to be authorized or
within the rights or powers conferred upon it by this Indenture.

Section 603. Not Responsible for Recitals or Issuance of
Securities.

The recitals contained herein and in the Securities, except
the Trustee's certificates of authentication, shall be taken as the statements
of the Companies, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities. The Trustee shall not be
accountable for the use or application by the Finance Company of Securities or
the proceeds thereof, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Securities
and perform its obligations hereunder and that the statements made by it in a
Statement of Eligibility and Qualification on Form T-1 supplied or to be
supplied to the Finance Company are true and accurate, subject to the
qualifica- tions set forth therein.

Section 604. May Hold Securities.

The Trustee or any Paying Agent, Security Registrar or other
agent of the Companies or their Affiliates, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Trust
Indenture Act Sections 310(b) and 311, may otherwise deal with the Companies or
their Affiliates with the same rights it would have if it were not Trustee,
Paying Agent, Security Registrar or such other agent.

Section 605. Money Held in Trust.

Money or U.S. Government Obligations held by the Trustee in
trust hereunder need not be segregated from other funds except to the extent
required by law. The Trustee shall be under no liability for interest on

<PAGE> 81
any money received by it hereunder except as otherwise agreed with the Finance
Company.

Section 606. Compensation and Reimbursement.

The Companies agree jointly and severally:

(a) to pay to the Trustee from time to time
reasonable compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);

(b) except as otherwise expressly provided herein,
to reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith;
and

(c) to indemnify the Trustee for, and to hold it
harmless against, any loss, liability or expense incurred without negligence or
bad faith on its part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.

As security for the performance of the obligations of the
Companies under this Section, the Trustee shall have a claim prior to the
Securities upon all property and funds held or collected by the Trustee as
such, except funds held in trust for the benefit of Holders of particular
Securities.

If the Trustee incurs expenses or renders services after the
occurrence of an Event of Default specified in Section 501(f) or (g), the
expenses and compensation for such services are intended to constitute expenses
of administration under Title 11, U.S. Code or any similar federal or state law
for the relief of debtors.

<PAGE> 82
Section 607. Conflicting Interests.

The Trustee shall comply with the provisions of Section 310(b)
of the Trust Indenture Act.

Section 608. Corporate Trustee Required; Eligibility.

There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under Trust Indenture Act Section 310(a)(1) and
which shall have a combined capital and surplus of at least $50,000,000 and
have its Corporate Trust Office located in The City of New York (or if its
Corporate Trust Office shall not be located in The City of New York, which
shall maintain an office in The City of New York where the Securities may be
presented or surrendered and notices and demands hereunder may be made or
served) to the extent there is such an institution eligible and willing to
serve. If such corporation publishes reports of condition at least annually
pursuant to law or to the requirements of Federal, State, Territorial or
District of Columbia supervising or examining authority, then, for the purposes
of this Section, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article. The Trustee shall comply with the Casino Control Act to the extent
such requirements are applicable to the Trustee and are consistent with its
duties herein; provided, however, that to the extent the provisions of the
Casino Control Act conflict with the provisions of the Trust Indenture Act, the
Trust Indenture Act shall control; provided further, that this Section 608
shall not require the Trustee to assume any duties or obligations which are in
addition to those set forth herein.

Section 609. Resignation and Removal; Appointment of
Successor.

(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the

<PAGE> 83
acceptance of appointment by the successor Trustee under Section 610.

(b) The Trustee may resign at any time by giving
written notice thereof to the Companies. If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.

(c) The Trustee may be removed at any time by an Act
of the Holders of a majority in principal amount of the Outstanding Securities,
delivered to the Trustee and the Companies.

(d) If at any time:

(i) the Trustee fails to comply with the
provisions of Trust Indenture Act Section 310(b), or

(ii) the Trustee shall cease to be eligible
under Section 608, or

(iii) the Trustee shall become incapable of
acting or shall be adjudged a bankrupt or insolvent, or a receiver of
the Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Trustee or of its property
or affairs for the purpose of rehabilitation, conservation or
liquidation,

(iv) the Casino Control Commission
determines that the Trustee is required to be licensed or found
qualified or suitable and the Trustee does not become so licensed or
found qualified or suitable within such period as may be prescribed by
the Casino Control Commission,

then, in any case, (1) the Finance Company by a Board Resolution may remove the
Trustee, or (2), subject to Section 514, the Holder of any Security, on behalf
of himself and all others similarly situated, may petition

<PAGE> 84
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.

(e) If the Trustee shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause, the Company, by a Board Resolution, shall promptly, upon
approval of the Casino Control Commission, appoint a successor Trustee, which
Trustee shall be licensed or found qualified or suitable under the Casino
Control Act. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities delivered to the Company, upon approval of the Casino
Control Commission, and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in
accordance with Section 610, become the successor Trustee and supersede the
successor Trustee appointed by the Company. If no successor Trustee shall have
been so appointed by the Company or the Holders of the Securities and so
accepted appointment within 60 days, the Finance Company or the Holders of at
least 10% in principal amount of the Securities may petition any court of
competent jurisdiction for the appointment of a successor Trustee.

(f) The Finance Company shall give notice of each
resignation and each removal of the Trustee and each appointment of a successor
Trustee by mailing written notice of such event by first-class mail, postage
prepaid, to the Holders of Securities as their names and addresses appear in
the Security Register. Each notice shall include the name of the successor
Trustee and the address of its Corporate Trust Office.

Section 610. Acceptance of Appointment by Successor.

Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Companies and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; pro-

<PAGE> 85
vided, however, that the retiring Trustee shall continue to be entitled to
the benefit of Section 606(c). Such retiring Trustee shall, on request of the
Finance Company or the successor Trustee, upon payment of its charges, execute
and deliver an instrument transferring to such successor Trustee all such
rights, powers and trusts of the retiring Trustee, and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee,
the Finance Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.

No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.

Section 611. Merger, Conversion, Consolidation or Succession
to Business.

Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation shall be otherwise qualified and eligible
under this Article, without the execution or filing of any paper or any further
act on the part of any of the parties hereto. In case any Securities shall
have been authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such authentication and deliver the Securities so authenticated with
the same effect as if such successor Trustee had itself authenticated such
Securities.

Section 612. Preferential Collection of Claims against
Company.

If and when the Trustee shall be or become a creditor of the
Companies (or any other obligor under the Securities), the Trustee shall be
subject to the provisions of the Trust Indenture Act regarding the collection

<PAGE> 86
of claims against the Companies (or any such other obligor).

Section 613. Further Assurances.

At the request of the Company, the Operating Company, the
Finance Company or Realty Co., the Trustee will execute and deliver to any
holder of any Pari Passu Mortgage, the Lien of which is evidenced by an
instrument containing the Pari Passu statement referred to in the definition of
Pari Passu Mortgage in Section 101 hereof, a certificate in the form of Exhibit
E hereto (the "Pari Passu Certificate") and such other assurances or
instruments all in form recordable in the Atlantic County, New Jersey mortgage
records, as the Company, the Operating Company, the Finance Company or Realty
Co. may reasonably request to confirm that the Collateral is held for the
ratable benefit of the Holders and such holders of any Pari Passu Mortgage. The
Trustee shall deliver the Pari Passu Certificate and such other assurances or
instruments only upon receipt of, and shall be fully protected in relying upon,
(i) an Opinion of Counsel stating that the execution and delivery of such
assurances or other instruments is in compliance with this Section 613 based
upon the certificates referred to in clauses (ii) and (iii) below, (ii) an
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee stating
that the Indebtedness secured by such Pari Passu Mortgage is within the
limitations set forth in Sections 1007 and 1010 and (iii) an Officers'
Certificate stating that such Pari Passu Mortgage complies with the provisions
of this Indenture, that no Default has occurred and is continuing or would
occur as a result of giving effect to such Pari Passu Mortgage and that the
holder of such Pari Passu Mortgage has caused the Intercreditor Agreement to be
executed.

The delivery by the Trustee of a Pari Passu Certificate and
such other assurances or instruments that the Company, the Operating Company,
the Finance Company or Realty Co. may reasonably request as aforesaid shall
not, however, prevent or estop the Trustee or the Holders of Securities from
thereafter exercising its or their rights and remedies under this Indenture
(not including attempts to set aside or gain priority over those Liens or
mortgages the holders of which have relied on the Pari

<PAGE> 87
Passu Certificate) if the creation or incurrence of the Pari Passu Mortgage
referred to in such Pari Passu Certificate and other assurances or instruments
shall not have been permitted by Sections 1007 and 1010 of this Indenture or
does not otherwise comply with the provisions of this Indenture.

The filing for record in the Atlantic County, New Jersey
Clerk's Office of the Pari Passu Certificate and such other assurances or
instruments that the Company, the Operating Company or the Finance Company may
reasonably request, as provided above in this Section 613, shall conclusively
establish and confirm to all persons that the Lien of the holder of
Indebtedness referred to in the Pari Passu Certificate ranks pari passu with
the Lien of the Mortgage and that the Collateral is held for the ratable
benefit of the Holders and such holder of Pari Passu Mortgages.
Notwithstanding any other provision of this Section 613, the holder of any such
Pari Passu Mortgage, its successors and assigns, shall be entitled to rely on
the Pari Passu Certificate and such other assurances or instruments without
further investigation or other acts.

As used in this Section 613, "ratable benefit of the Holders
and such holder(s) of any Pari Passu Mortgage(s)" shall mean that the cash that
becomes available from the sources described in [Section 13] of the
Intercreditor Agreement for the redemption or repayment of the Securities and
any loan secured by the Pari Passu Mortgage shall be applied as set forth in
Section 12 of the Intercreditor Agreement.

ARTICLE VII

HOLDERS' LISTS AND REPORTS
BY TRUSTEE AND COMPANY

Section 701. Disclosure of Names and Addresses of Holders.

Every Holder of Securities, by receiving and holding the same,
agrees with the Companies and the Trustee that none of the Companies or the
Trustee or any agent of any of them shall be held accountable by reason of the
disclosure of any information as to the names and

<PAGE> 88
addresses of the Holders in accordance with Trust Indenture Act Section 312,
regardless of the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing any material
pursuant to a request made under Trust Indenture Act Section 312 at any time
following the date on which this Indenture is qualified under the Trust
Indenture Act.

Section 702. Reports by Trustee.

(a) Within 60 days after __________ of each year
commencing with the first __________ following the date on which this Indenture
is qualified under the Trust Indenture Act, the Trustee shall transmit by mail
to all Holders, as their names and addresses appear in the Security Register,
as provided in Trust Indenture Act Section 313(c), a brief report dated as of
such __________ if required by Trust Indenture Act Section 313(a).

A copy of each report at the time of its mailing to Holders
shall be mailed to the Finance Company and filed with the Commission and each
stock exchange, if any, on which the Securities are listed.

The Company shall notify the Trustee if the Securities become
listed on any stock exchange.

(b) The Trustee will provide to the Casino Control
Commission and the Division of Gaming Enforcement:

(i) copies of all notices, reports and
other written communications that the Trustee gives to Holders;

(ii) a list of Holders promptly after the
original issuance of the Securities and semiannually thereafter upon
the receipt of a Company Request;

(iii) notice of any Default or Event of
Default under this Indenture, any acceleration of the Indebtedness
evidenced or secured hereby, the institution of any legal actions or
proceedings before any court or governmental authority in respect of
this In-

<PAGE> 89
denture, including the Security Documents, the entering into or
taking possession of any Property constituting the Collateral and any
rescission, annulment or waiver in respect of an Event of Default under
any instruments described in this clause (iii);

(iv) notice of the removal or resignation
of the Trustee within five Business Days thereof;

(v) notice of any transfer or assignment
of rights under this Indenture, or any of the Security Documents
within five Business Days thereof; and

(vi) a copy of any amendment to the
Securities or this Indenture, including the Security Documents, within
five Business Days of the later of the effectiveness or execution
thereof.

The notice specified in clause (iii) above shall be in writing and, except as
set forth below, shall be given within five Business Days after the Trustee has
actual knowledge of any circumstances requiring such notice. In the case of
any notice in respect of any Default or Event of Default under any instrument
described in clause (iii), such notice shall be accompanied by a copy of any
notice from the holders of indebtedness evidenced or secured by such
instruments or a representative thereof or trustee therefor, to such defaulting
Person and, if accompanied by any such notice to the defaulting Person, shall
be given simultaneously with the giving of any such notice to the defaulting
Person. In the case of any legal actions or proceedings, such notice shall be
accompanied by a copy of the complaint or other initial pleading or document.
The Trustee shall advise the Casino Control Commission and the Division of
Gaming Enforcement of any further action taken by the Trustee or the Holders
relating to such Default or Event of Default.

The Trustee and its trust officers shall cooperate with the
Casino Control Commission and the Division of Gaming Enforcement in order to
provide the Casino Control Commission and the Division of Gaming Enforcement
with information and documentation relevant to compliance

<PAGE> 90
with clause (iii) above and as otherwise required by the Casino Control Act, or
Casino Control Commission or the Division of Gaming Enforcement.

Section 703. Reports by Company.

The Company shall file with the Commission the annual reports,
quarterly reports and other documents required to be filed with the Commission
pursuant to Sections 13 and 15 of the Exchange Act, whether or not the Company
has a class of securities registered under the Exchange Act; the Company shall
file with the Trustee and shall transmit by mail to each Holder of the
Securities (as its name and address appear on the Security Register) within 15
days after it files them with the Commission (or if any such filing is not
permitted under the Exchange Act, 15 days after the Company would have been
required to make such filing) copies of such reports and documents.

ARTICLE VIII

CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE

Section 801. Company May Consolidate, etc., Only on Certain
Terms.

Neither the Company nor any Restricted Subsidiary shall
consolidate with or merge with or into any other Person or sell, assign,
convey, transfer, lease or otherwise dispose of all or substantially all of the
Properties and assets of any of (a) the Company and its Subsidiaries taken as a
whole, (b) the Operating Company, substantially as an entirety or (c) Realty
Co. to any Person or group of affiliated Persons unless at the time and after
giving effect thereto:

(i) either (a) the Company or such
Restricted Subsidiary shall be the continuing corporation or (b) the
Person (if other than the Company or a Subsidiary) formed by such
consolidation or merger, or to which such sale, assignment, transfer,
lease, conveyance or disposition shall have been made (the "Surviving
Entity"), is a corporation duly orga-

<PAGE> 91
nized and validly existing under the laws of the United States of
America, any state thereof or the District of Columbia and shall, in
either case, expressly assume by supplemental indenture hereto,
executed and delivered to the Trustee, in form satisfactory to the
Trustee, all the obligations of the Companies under the Indenture and
the Securities and this Indenture shall remain in full force and
effect;

(ii) immediately prior to such transaction,
and immediately after giving effect to such transaction on a pro forma
basis, no default or Event of Default shall have occurred and be
continuing;

(iii) immediately after giving effect to
such transaction on a pro forma basis, the Company (or the Surviving
Entity, if the Company is not the continuing obligor under the
Indenture) could incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) under Section 1007 hereof;

(iv) immediately after giving effect to
such transaction on a pro forma basis, the Consolidated Net Worth of
the Company (or the Surviving Entity if the Company is not the
continuing obligor under the Indenture) is at least equal to the
Consolidated Net Worth of the Company immediately before such
transaction;

(v) the Lien of the Security Documents and
the rights of the Trustee and the Holders thereunder and under this
Indenture have not been impaired;

(vi) the Surviving Entity has all Gaming
Licenses and other permits and approvals required to operate the
Casino Hotel and any casino hotels then owned by such Surviving Entity
and the Surviving Entity or an Affiliate thereof has had prior
experience in the operation and management of casinos or casino
hotels, or the Surviving Entity has

<PAGE> 92
retained management with such prior experience; and

(vii) the Companies have delivered to the
Trustee, in form and substance reasonably satisfactory to the Trustee,
an Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer and such supplemental
indenture, if one is required by this Section 801, comply with this
Section 801 and that all conditions precedent herein provided for
relating to such transaction have been complied with and that the Lien
of the Security Documents and the rights of the Trustee and the
Holders thereunder and under the Indenture have not been impaired.

The merger or consolidation of, or sale of assets by, any of the Company, the
Finance Company, the Operating Company or Realty Co. with or into or to any of
the Company, the Finance Company, the Operating Company or Realty Co. shall not
be restricted by the foregoing if such transaction complies with clauses (i),
(ii), (v), (vi) and (vii) above.

Section 802. Successor Substituted.

Upon any consolidation or merger or any sale, assignment,
transfer, lease or conveyance or other disposition of all or substantially all
of the assets of the Company and its Subsidiaries taken as a whole, the
Operating Company or Realty Co., in accordance with Section 801, the successor
corporation formed by such consolidation or into which either the Company or a
Subsidiary is merged or to which such sale, assignment, transfer, lease,
conveyance or other disposition is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Companies under this
Indenture with the same effect as if such successor corporation had been named
as one of the Companies herein. When a successor assumes all the obligations
of its predecessor under this Indenture and the Securities, the predecessor
will be released from those obligations, provided that, in the case of a
transfer by lease, the predecessor corporation shall not be released from the
payment of principal of and interest on the Securities.

<PAGE> 93

ARTICLE IX

SUPPLEMENTAL INDENTURES

Section 901. Supplemental Indentures without Consent of
Holders.

Without the consent of any Holders, the Companies, the
Operating Company and Realty Co., when authorized by Board Resolution, and the
Trustee, at any time and from time to time, may enter into one or more
indentures, notes or security documents supplemental hereto or to the Note or
Security Documents, as the case may be, in form satisfactory to the Trustee,
for any of the following purposes:

(a) to evidence the succession of another Person to
either of the Companies and the assumption by any such successor of the
covenants of the Company or the Finance Company, as the case may be, herein and
in the Securities;

(b) to add to the covenants of the Companies for the
benefit of the Holders, or to surrender any right or power herein or in the
Securities conferred upon the Companies;

(c) to cure any ambiguity, to correct or supplement
any provision herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions with respect to matters or
questions arising under this Indenture; provided that, in each case, such
provisions shall not adversely affect the interests of the Holders; or

(d) to make any other change that does not adversely
affect the rights of any Holder.

Section 902. Supplemental Indentures with Consent of Holders.

With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by Act of such Holders
delivered to the Finance Company and the Trustee, the Companies, the Operating
Company and Realty Co., when authorized by

<PAGE> 94
Board Resolution, and the Trustee may enter into one or more indentures, notes
or security documents supplemental hereto or to the Note or Security Documents,
as the case may be, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture, the Note or
Security Documents or of waiving or modifying in any manner the rights of the
Holders under this Indenture, the Note or the Security Documents; provided,
however, that no such supplemental indenture, note or security documents,
amendment or waiver shall, without the consent of the Holder of each
Outstanding Security affected thereby:

(a) change the Stated Maturity of the principal of,
or any installment of interest on, any Security or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or change the coin or currency in which the principal of
any Security or any premium or the interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date) or modify the obligation of the Company to purchase Securities
under Section 1015 hereof;

(b) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is required for any
amendment, supplement or waiver; or

(c) modify any of the provisions of this Section or
Section 513 or Section 1022, except to increase any of the percentages set
forth in such Sections or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the Holder of
each Security affected thereby.

It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such Act shall approve the substance
thereof.

<PAGE> 95
Section 903. Execution of Amendments, Supplements or Waivers.

In executing, or accepting the additional trusts created by,
any amendments, supplements or waivers permitted by this Article Nine, the
Trustee shall be entitled to receive, and (subject to Trust Indenture Act
Section 315(a) through 315(d) and Section 602 hereof) shall be fully protected
in relying upon, an Opinion of Counsel stating that the execution of such
amendment, supplement or waiver is authorized or permitted by this Indenture.
The Trustee may, but shall not be obligated to, enter into any such amendment,
supplement or waiver that affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.

Section 904. Effect of Amendments, Supplements or Waivers.

Upon the execution of any amendment, supplement or waiver,
this Indenture, the Notes and the Security Documents shall be modified in
accordance therewith, and such supplemental indenture, note or security
documents shall form a part of this Indenture, the Notes or Security Documents,
as the case may be, for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.

Section 905. Conformity with Trust Indenture Act.

Every amendment, supplement or waiver executed pursuant to
this Article Nine shall conform to the requirements of the Trust Indenture Act
as then in effect.

Section 906. Reference in Securities to Amend ments,
Supplements or Waivers.

Securities authenticated and delivered after the execution of
any amendment, supplement or waiver pursuant to this Article Nine may, and
shall, if required by the Trustee, bear a notation in form approved by the
Trustee as to any matter provided for in such amendment, supplement or waiver.
If the Finance Company shall so determine, new Securities so modified as to
conform, in the opinion of the Trustee and the Finance Company, to

<PAGE> 96
any such amendment, supplement or waiver may be prepared and executed by the
Finance Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.

ARTICLE X

COVENANTS

Section 1001. Payment of Principal, Premium and Interest.

The Finance Company will duly and punctually pay the principal
of (and premium, if any) and interest on the Securities in accordance with the
terms of the Securities and this Indenture.

The Finance Company shall pay interest on overdue principal at
the rate borne by the Securities; it shall pay interest on overdue installments
of interest at the same rate to the extent lawful.

Section 1002. Maintenance of Office or Agency.

The Finance Company will maintain, in The City of New York, an
office or agency where Securities may be presented or surrendered for payment,
where Securities may be surrendered for registration of transfer or exchange
and where notices and demands to or upon the Finance Company in respect of the
Securities and this Indenture may be served. If the Corporate Trust Office is
located in New York City, then it shall be such office or agency of the Finance
Company, unless the Finance Company shall designate and maintain some other
office or agency for one or more of such purposes. The Finance Company will
give prompt written notice to the Trustee of any change in the location of any
such office or agency. If at any time the Finance Company shall fail to
maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office, and the Finance
Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.

<PAGE> 97
The Finance Company may from time to time designate one or
more other offices or agencies (in or outside of The City of New York) where
the Securities may be presented or surrendered for any or all such purposes,
and may from time to time rescind such designation; provided, however, that no
designation or recision shall in any manner relieve the Finance Company of its
obligation to maintain an office or agency in The City of New York for such
purposes. The Finance Company will give prompt written notice to the Trustee
of any such designation or rescission and any change in the location of any
such office or agency.

Section 1003. Money for Security Payments to Be Held in Trust.

If the Finance Company, the Company or another Subsidiary
shall at any time act as Paying Agent, it will, on or before each due date of
the principal of (and premium, if any) or interest on any of the Securities,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal (and premium, if any) or interest so
becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided, and will promptly notify the Trustee of its
action or failure so to act.

Whenever the Finance Company shall have one or more Paying
Agents for the Securities, it will, on or before each due date of the principal
of (and premium, if any) or interest on any Securities, deposit with a Paying
Agent a sum in same day funds (or New York Clearing House funds if such deposit
is made prior to the date on which such deposit is required to be made)
sufficient to pay the principal (and premium, if any) or interest so becoming
due, such sum to be held in trust for the benefit of the Persons entitled to
such principal, premium or interest and (unless such Paying Agent is the
Trustee) the Finance Company will promptly notify the Trustee of such action or
any failure so to act.

The Finance Company will cause each Paying Agent other than
the Trustee to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the provisions of this
Section, that such Paying Agent will:

<PAGE> 98
(a) hold all sums held by it for the payment of the
principal of (and premium, if any) or interest on Securities in trust for the
benefit of the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;

(b) give the Trustee notice of any default by the
Finance Company (or any other obligor upon the Securities) in the making of any
payment or principal (and premium, if any) or interest; and

(c) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.

The Finance Company, the Company or another Subsidiary may at
any time, for the purpose of obtaining the satisfaction and discharge of this
Indenture or for any other purpose, pay, or by Company Order, the Finance
Company may direct any Paying Agent to pay, to the Trustee all sums held in
trust by such company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts at those upon which such sums were held by such company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.

Any money deposited with the Trustee or any Paying Agent, or
then held by the Finance Company, the Company or another Subsidiary in trust
for the payment of the principal of (and premium, if any) or interest on any
Security and remaining unclaimed for two years after such principal (and
premium, if any) or interest has become due and payable shall be paid to the
Finance Company on Company Request or (if then held by the Finance Company, the
Company or another Subsidiary) shall be discharged from such trust; and the
Holder of such Security shall thereafter, as an unsecured general creditor,
look only to the Finance Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all
liability of the Finance Company as trustee thereof, shall thereupon cease.

<PAGE> 99
Section 1004. Corporate Existence.

Subject to Article Eight, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence and that of each Restricted Subsidiary of the Company and
the corporate rights (charter and statutory), corporate licenses and corporate
franchises of the Company and its Subsidiaries, except where a failure to do
so, singly or in the aggregate, is not likely to have a materially adverse
effect upon the business, assets, financial conditions or results of operations
of the Company and the Subsidiaries taken as a whole determined on a
consolidated basis in accordance with GAAP; provided that the Company shall
not be required to preserve any such existence (except of the Company), right,
license or franchise if the Board of Directors of the Company, or of the
Restricted Subsidiary concerned, shall determine that the preservation thereof
is no longer desirable in the conduct of the business of the Company or such
Restricted Subsidiary and that the loss thereof is not disadvantageous in any
material respect to the Holders.

Section 1005. Payment of Taxes and Other Claims.

The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all material taxes,
assessments and governmental charges levied or imposed upon it or any
Subsidiary or upon the income, profits or property of the Company or any of its
Subsidiaries and (b) all material lawful claims for labor, materials and
supplies, which, if unpaid, would by law become a lien upon the property of
the Company or any of its Subsidiaries that could produce a material adverse
effect on the consolidated financial condition of the Company; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings. The foregoing provision shall not apply to the Company's payment
or discharge of any taxes, assessments or governmental charges governed by the
Mortgage.

<PAGE> 100
Section 1006. Maintenance of Properties.

The Company shall cause all material properties owned by or
leased to it or any Subsidiary and necessary in the conduct of its business or
the business of such Subsidiary to be maintained and kept in all material
respects in normal condition, repair and working order, ordinary wear and tear
excepted.

The Company shall provide or cause to be provided, for itself
and any Subsidiaries of the Company, insurance (including appropriate
self-insurance) against loss or damage of the kinds customarily insured against
by corporations similarly situated and owning like properties in the same
general areas in which the Company or such Subsidiaries operate.

Section 1007. Limitation on Indebtedness.

The Company will not, and will not permit any of its
Restricted Subsidiaries to, create, incur, assume, or directly or (other than
through Unrestricted Subsidiaries) indirectly guaranty or in any other manner
become directly or (other than through Unrestricted Subsidiaries) indirectly
liable for the payment of (collectively, "incur"), any Indebtedness (excluding
Permitted Indebtedness and including Acquired Indebtedness and Indebtedness
which is a Guaranty permitted pursuant to clause (v) of Section 1008(b))
unless, at the time of such event and after giving effect thereto, on a pro
forma basis the Company's Consolidated Fixed Charge Coverage Ratio for the four
full fiscal quarters for which financial information in respect thereof is
available immediately preceding such event, taken as one period, calculated on
the assumption that (i) such Indebtedness and any other outstanding
Indebtedness incurred since the first day of such four-quarter period had been
incurred on the first day of such four-quarter period, (ii) any acquisition or
disposition by the Company and its Restricted Subsidiaries of any assets
outside the ordinary course of business since the first day of such last four
full fiscal quarters had been consummated on the first day of such four-quarter
period and (iii) any prepayment of Indebtedness prior to the scheduled maturity
thereof since the first day of such last four fiscal quarters had been
consummated on the first day of such four-quarter period, is at

<PAGE> 101
least equal to the ratios set forth below during the years indicated below:

<TABLE>
<CAPTION>
Year Ratio
---- -----
<S> <C>
1994 2:1
1995 and thereafter 2.25:1
</TABLE>

Any Indebtedness (other than Permitted Indebtedness or
Acquired Indebtedness or Indebtedness that is a Guaranty permitted pursuant to
clause (v) of Section 1008(b)) may be incurred hereunder only if (i) such
Indebtedness has an Average Life to Stated Maturity (A) greater than the
remaining Average Life to Stated Maturity of the Securities, if such
Indebtedness ranks junior to the Securities, or (B) equal to or greater than
the remaining Average Life to Stated Maturity of the Securities, if such
Indebtedness ranks pari passu to the Securities and (ii) such Indebtedness has
a final scheduled maturity which (A) exceeds the final Stated Maturity of the
Securities, if such Indebtedness ranks junior to the Securities, or (B) is
equal to or exceeds the final Stated Maturity of the Securities, if such
Indebtedness ranks pari passu to the Securities.

Section 1008. Limitation on Restricted Payments.

(a) The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or (other than through an Unrestricted
Subsidiary) indirectly,

(i) declare or pay any dividend on, or
make any distribution to holders of, any shares of the Company's
Capital Stock (other than dividends or distributions payable in shares
of its Capital Stock or in options, warrants or other rights to
purchase such Capital Stock, but excluding dividends or distributions
payable in Redeemable Capital Stock or in options, warrants or other
rights to purchase Redeemable Capital Stock),

(ii) purchase, redeem or acquire or retire
for value, any Capital Stock of the Company or any Subsidiary or any
options, war-

<PAGE> 102
rants or other rights to acquire such Capital Stock,

(iii) declare or pay any dividend or
distribution on any Capital Stock of any Subsidiary to any Person
(other than the Company or any of its Wholly Owned Subsidiaries),

(iv) prepay, repay, redeem, defease or
otherwise acquire or retire, for value prior to stated maturity of
principal, scheduled repayment or scheduled sinking fund payment, any
Indebtedness of the Company or the Finance Company that ranks junior
to or pari passu to the Securities in right of payment,

(v) incur, create or assume any Guaranty
of Indebtedness of any Affiliate (other than with respect to (a)
Guaranties of Indebtedness of any Wholly Owned Subsidiary by the
Company or by any Restricted Subsidiary or (b) Guaranties of
Indebtedness of the Company by any Restricted Subsidiary, in each case
in accordance with the terms of this Indenture), or

(vi) make any Investment (other than any
Permitted Investment) in any Person

(such payments or other actions described in the foregoing clauses (i) through
(vi), are collectively referred to as "Restricted Payments"), unless at the
time of and after giving effect to the proposed Restricted Payment (the amount
of any such Restricted Payment, if other than cash, shall be as determined by
the Board of Directors of the Company, whose determination, if reasonable and
based on the good-faith business judgment of the Board of Directors of the
Company, shall be conclusive, and evidenced by a Board Resolution), (1) no
Default or Event of Default shall have occurred and be continuing or shall
occur as a result of such Restricted Payment, (2) immediately before and
immediately after giving effect to such transaction on a pro forma basis, the
Company could incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) under the provisions of Section 1007 and (3) the aggregate amount
of all Restricted Payments

<PAGE> 103
declared or made after the date the Securities are issued shall not exceed the
sum of:

(A) 50% of the Consolidated Net Income of the Company
accrued on a cumulative basis during the period beginning on April 1,
1994, and ending on the last day of the Company's last fiscal quarter
ending prior to the date of such proposed Restricted Payment (or, if
such aggregate cumulative Consolidated Net Income shall be a loss,
minus 100% of such loss);

(B) the aggregate Net Cash Proceeds received after the
date hereof by the Company from the issuance or sale (other than to
any of its Subsidiaries) of shares of Capital Stock of the Company
(other than Redeemable Capital Stock) or warrants, options or rights
to purchase such shares of Capital Stock of the Company (other than
Redeemable Capital Stock);

(D) the aggregate Net Cash Proceeds received after the
date hereof by the Company (other than from any of its Subsidiaries)
upon the exercise of options, warrants or rights to purchase shares of
Capital Stock of the Company (other than Redeemable Capital Stock);

(E) the aggregate Net Cash Proceeds received after the
date hereof by the Company from the issuance or sale of debt
securities or Redeemable Capital Stock that have been converted into
or exchanged for Capital Stock of the Company (other than Redeemable
Capital Stock), plus the aggregate Net Cash Proceeds received by the
Company at the time of such conversion or exchange; and

(F) $50,000,000.

Notwithstanding the foregoing, in the event the Company's
Consolidated Fixed Charge Coverage Ratio for any period of four consecutive
fiscal quarters exceeds

<PAGE> 104
3.0:1, then the amount of Consolidated Net Income of Bally's Park Place
included in clause (A) above shall be 66 2/3% of Consolidated Net Income of
Bally's Park Place since April 1, 1994. In the event that at the end of any
succeeding fiscal quarter, the Company's Consolidated Fixed Charge Coverage
Ratio for the preceding four consecutive fiscal quarters shall equal or be less
than 3.0:1, then the amount of Consolidated Net Income of Bally's Park Place
included in clause (A) above shall revert to 50% of Consolidated Net Income of
Bally's Park Place.

(b) The foregoing provision will not be violated by reason of

(i) the payment of any dividend within 60
days after the date of declaration thereof, if at such declaration
date such declaration complied with the foregoing provision (in which
event such dividend shall be deemed to have been paid on such date of
declaration thereof for purposes of the foregoing provision);

(ii) redemption of any Capital Stock or
Subordinated Indebtedness of the Company or any Subsidiary required by
the Casino Control Commission or the Division of Gaming Enforcement;

(iii) the redemption, repurchase or other
acquisition or retirement for value of Subordinated Indebtedness of
the Company which is made at a time when there is no default or Event
of Default continuing and which is made in exchange for, or out of
proceeds of the substantially concurrent issue and sale (other than to
a Subsidiary) of (A) shares of Capital Stock (other than Redeemable
Capital Stock) of the Company, provided, however, that any net cash
proceeds from such issue are excluded from clause 3(B) of the
preceding paragraph or (B) new Indebtedness of the Company, so long as
(1) such Indebtedness is expressly subordinated to the Securities at
least to the same extent as the Subordinated Indebtedness being so
refinanced; (2) such Indebtedness has an Average

<PAGE> 105
Life to Stated Maturity equal to or greater than the remaining Average
Life to Stated Maturity of the Securities; and (3) such Indebtedness
has a final scheduled maturity which exceeds the final Stated Maturity
of the Securities, provided, however, that any Net Cash Proceeds from
such issue are excluded from clause 3(E) of the preceding paragraph;

(iv) redemption, repurchase or other
acquisition or retirement for value of Capital Stock of the Company or
any options, warrants or rights to acquire such Capital Stock of the
Company which is made at a time when there is no default or Event of
Default continuing and which is made in exchange for, or out of
proceeds of the substantially concurrent issue and sale (other than to
a Subsidiary) of shares of Capital Stock (other than Redeemable
Capital Stock) of the Company, provided, however, that any Net Cash
Proceeds from such issue are excluded from clause 3(B) of the
preceding paragraph;

(v) Guaranties of Indebtedness of
Affiliates of the Company in an amount not to exceed $20,000,000;
provided, however, that such Restricted Payment shall comply with
clauses (1) and (2) of paragraph (a) of this Section 1008;

(vi) payments permitted pursuant to clauses
(iv) and (v) under the proviso contained in Section 1009; and

(vii) Restricted Payments in an amount equal
to any interest paid by the trustee to the Finance Company under the
indenture relating to the Company's 11 7/8 First Mortgage Notes due
1999 on money deposited in connection with the defeasance thereof.

The Restricted Payments described in clauses (b)(i) and (ii) shall be included
in any computation of the aggregate amount of Restricted Payments by the
Company and its Subsidiaries. Notwithstanding the foregoing, the payment of a
dividend out of the net proceeds of the issuance of

<PAGE> 106
the Securities shall not be deemed a Restricted Payment for purposes of the
calculation of the aggregate amount of all Restricted Payments in clause (3) of
paragraph (a) of this Section 1008.

Section 1009. Limitation on Transactions with Affiliates.

The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or (other than through an Unrestricted
Subsidiary) indirectly, enter into any transaction or series of related
transactions (including, without limitation, the sale, purchase, exchange or
lease of assets, property or services) with any Affiliate of the Company (other
than the Company or a Wholly Owned Subsidiary of the Company) unless (i) such
transaction or series of transactions is or are on terms that are no less
favorable to the Company or such Restricted Subsidiary, as the case may be,
than could have been obtained at the time of such transaction or transactions
in a comparable transaction in arm's-length dealings with an unaffiliated third
party, (ii) with respect to any transaction or series of transac- tions
involving aggregate payments in excess of $1,000,000, but less than
$10,000,000, the Company delivers an Officers' Certificate to the Trustee
certifying that such transaction or series of transactions complies with clause
(i) above and that such transaction or series of transactions has received the
approval of a majority of the Board of Directors of the Company and (iii) with
respect to any transaction or series of transactions involving aggregate
payments equal to or in excess of $10,000,000, the Company delivers an
Officers' Certificate to the Trustee certifying that such transaction or series
of transactions complies with clause (i) above and that such transaction or
series of transactions has received the approval of a majority of the
disinterested directors of the Board of Directors of the Company; provided,
however, that the foregoing restrictions shall not apply to (i) the payment of
reasonable and customary fees to the directors of the Company and its
Restricted Subsidiaries who are not employees of the Company or any such
Restricted Subsidiary, (ii) loans and advances to and other employment
arrangements with any officer, director or employee of the Company or of any
Restricted Subsidiary entered into in the ordinary course of business and
consistent with past practice, (iii) transactions pursu-

<PAGE> 107
ant to the lease agreement [dated March 8, 1993,] relating to the lease
from the Company of surface parking lots (located across Boston Avenue and
Hartford Avenue from Bally's Grand Casino Hotel) to GNAC, (iv) transactions,
including payments and reimbursements, in connection with certain management
and administrative services and insurance coverage provided to the Company by
Bally and certain consolidated GNAC/Company operations pursuant to the
Intercorporate Agreement, (v) payments to Bally pursuant to the Tax Sharing
Agreement , (vi) Investments that are Permitted Investments pursuant to clause
(vi) of the definition of Permitted Investments and (vii) Guaranties permitted
pursuant to clause (v) of Section 1008(b). For purposes of this provision, a
director who is neither (i) an officer or an employee of the other party to
such transaction nor (ii) a person who has a personal interest directly or
indirectly in the transaction shall be deemed "disinterested."

Section 1010. Limitation on Encumbrances.

The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, create, incur, assume or otherwise
suffer to exist or cause or otherwise suffer to become effective any Lien in or
on any right, title or interest to the Mortgage or any Property (real or
personal) that constitutes all or any portion of the Collateral subject to the
Lien of the Mortgage (a "Restricted Encumbrance," which term excludes the Lien
created by the Mortgage and the Credit Facility Mortgage), unless (i) such
Restricted Encumbrance is a Permitted Encumbrance or (ii) such Restricted
Encumbrance secures Indebtedness that ranks junior to or is pari passu to the
Lien of the Mortgage and is granted to secure Indebtedness that, together with
all other indebtedness secured pursuant to this clause (ii), is in an aggregate
principal amount not to exceed the sum of (without duplication) (A) the
original principal amount of the Securities (less the principal amount of the
Securities outstanding at the time of any calculation), (B) the amount
available under the revolving credit facility described in clause (i) of the
definition of Permitted Indebtedness, (C) $100 million and (D) 66-2/3% of the
cost of all Casino Hotel Improvements reflected on the consolidated balance
sheet of the Company since the date hereof.

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If the Lien of a Restricted Encumbrance permitted under
clause (ii) of the preceding paragraph is created, the Trustee shall, at the
request of the Company, enter into the Intercreditor Agreement with the holder
or holders of the Indebtedness secured by such Restricted Encumbrance.

Notwithstanding the foregoing provisions of this Section 1010,
the Company or any Restricted Subsidiary may create or incur or permit to exist
purchase money Restricted Encumbrances upon any personal Property acquired by
the Company or any Restricted Subsidiary; provided that no such purchase money
Restricted Encumbrance upon any personal Property acquired by the Company or
any Restricted Subsidiary after the date hereof shall extend to or cover any
other Property or, at the time incurred, secure Indebtedness in excess of 90%
of the lesser of the cost or fair market value of the Property subject to such
purchase money Restricted Encumbrance; and provided further that the aggregate
principal amount of all Indebtedness at any time outstanding and secured by
Restricted Encumbrances permitted by this paragraph plus the aggregate amount
of all leases on personal Property comprising the Collateral and secured by
Restricted Encumbrances shall not, at any time, exceed $[20],000,000.

Section 1011. Limitation on Preferred Stock of Subsidiaries.

The Company will not permit any Restricted Subsidiary to issue
any Preferred Stock other than (i) Preferred Stock issued to the Company or a
Wholly Owned Subsidiary or (ii) Preferred Stock (other than Redeemable Capital
Stock) issued to any person (other than the Company or a Wholly Owned
Subsidiary), provided that at the time of such issuance, and after giving pro
forma effect thereto, a Restricted Subsidiary of the Company would be entitled
to issue Indebtedness in an amount equal to the maximum liquidation preference
of the Preferred Stock under Section 1007. The Company will not sell, transfer
or otherwise dispose of Preferred Stock issued by a Restricted Subsidiary of
the Company or permit a Wholly Owned Subsidiary to sell, transfer or otherwise
dispose of Preferred Stock issued by a Restricted Subsidiary other than (i) to
the Company or a Wholly Owned Subsidiary or (ii) to any Person (other than the

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Company or a Wholly Owned Subsidiary), provided that such Preferred Stock is
not Redeemable Capital Stock and that at the time of such sale, transfer or
disposition, and after giving pro forma effect thereto, a Restricted Subsidiary
of the Company would be entitled to issue Indebtedness in an amount equal to
the maximum liquidation preference of the Preferred Stock under Section 1007.
Notwithstanding the foregoing, nothing in this Section 1011 will prohibit the
ownership of Preferred Stock (other than Redeemable Capital Stock) issued by a
Person (other than an Unrestricted Subsidiary) prior to the time (A) such
Person becomes a Restricted Subsidiary of the Company, (B) such Person merges
with or into a Restricted Subsidiary of the Company or (C) a Restricted
Subsidiary of the Company merges with or into such Person; provided, further,
that such Preferred Stock was not issued or incurred by such Person in
anticipation of a transaction contemplated by subclause (A), (B) or (C) of this
Section 1011.

Section 1012. Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries.

The Company will not, and will not permit any Restricted
Subsidiary to, create or otherwise cause or suffer to exist or become effective
any consensual encumbrance or restriction of any kind, on the ability of any
Restricted Subsidiary to (a) pay dividends or make any other distribution on
its Capital Stock, (b) pay any Indebtedness owed to the Company or any other
Restricted Subsidiary, (c) make any Investment in the Company or any other
Restricted Subsidiary, (d) transfer any of its property or assets to the
Company or any other Restricted Subsidiary or (e) guarantee any Indebtedness of
the Company or any of its Restricted Subsidiaries, except (i) any encumbrance
or restriction pursuant to an agreement in effect at or entered into on the
date hereof; (ii) any encumbrance or restriction, with respect to a Restricted
Subsidiary that is not a Subsidiary of the Company on the date hereof, in
existence at the time such Person becomes a Subsidiary of the Company or
created on the date it becomes a Subsidiary; and (iii) any encumbrance or
restriction pursuant to any agreement that extends, refinances, renews or
replaces any agreement containing any of the restrictions described in the
foregoing clauses (i) and (ii), provided that the terms and conditions of any
such restrictions, taken as a whole, are not less

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favorable to the Holders of the Securities than those under or pursuant to the
agreement extended, refinanced, renewed or replaced. Notwithstanding the
foregoing, this covenant shall not be violated by any restriction required by
the Casino Control Commission or the Division of Gaming Enforcement, except
where such restriction would affect the ability of the Company to make payments
on the Promissory Note.

Section 1013. Ownership of Casino Hotel; Other Businesses.

Except as permitted by and in compliance with Article Eight,
if required, the Operating Company and Realty Co. will own and the Operating
Company will operate the Casino Hotel. In addition, neither the Company nor
the Operating Company shall conduct or engage in any business other than the
development, marketing, ownership or management of casinos or casino hotels and
businesses directly related to the development, marketing, ownership or
management of casinos or casino hotels, including the hosting, production or
promotion of conventions, sporting events, amusements and other entertainment
or investments in entities conducting or engaged in the foregoing to the extent
otherwise permitted by the terms of this Indenture.

Section 1014. Validity of Liens.

Each of the Company, the Operating Company, the Finance
Company and Realty Co. represents and warrants that it has, and covenants that
it shall continue to have, full power and lawful authority to grant, release,
convey, assign, transfer, mortgage, pledge, hypothecate and otherwise create
the Security Interests referred to in Article Twelve; and the Company shall
warrant, preserve and defend the interest of the Trustee in the Collateral
against the claims of all persons, except as permitted by the Security
Documents or by Section 1010 hereof, and will maintain and preserve the
Security Interests contemplated by Article Twelve.

Section 1015. Change in Control.

Subject to Section 1017, following the occurrence of any
Change in Control, the Finance Company shall make an offer to purchase, at the
option of each Holder,

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such Holder's Outstanding Securities at a purchase price equal to 101% of the
aggregate principal amount of such Outstanding Securities, plus accrued and
unpaid interest to the date of purchase. The Finance Company shall purchase
such Securities on a date (the "Change in Control Payment Date") 20 Business
Days after the mailing of the notice described in the next succeeding paragraph
by mailing or delivering payment for all Securities properly delivered to the
Finance Company pursuant hereto. If the Change in Control Payment Date is on
or after an interest payment record date and on or before the related Interest
Payment Date, any accrued interest will be paid to the person in whose name a
Security is registered at the close of business on such record date, and no
additional interest will be payable to Holders who deliver Securities pursuant
hereto.

Within 30 days after any Change in Control, the Finance
Company (with notice to the Trustee), or the Trustee at the Finance Company's
request and expense, will mail or cause to be mailed to all Holders on the date
of the Change in Control a notice of the occurrence of such Change in Control
and of the Holders' rights arising as a result thereof. Such notice will
contain all instructions and materials necessary to enable Holders to deliver
their Securities to the Finance Company for purchase. Such notice shall state:

(1) the events causing such Change in Control;

(2) the purchase price and the Change in Control Payment
Date;

(3) that any Security not purchased will continue to
accrue interest;

(4) that any Security purchased shall cease to accrue
interest on the Change in Control Payment Date; and

(5) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than
the day before the Change in Control Payment Date, or
such longer period as may be required by law, a
telegram, telex, facsimile transmission or letter
setting forth the name of the Hold-

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er, the certificate number and the principal
amount of the Security the Holder delivered for
purchase and a statement that such Holder is
withdrawing his election to have the Security
purchased.

On or before a Change in Control Payment Date, the Finance
Company shall (i) deposit with the Paying Agent money sufficient to pay the
purchase price of all Securities or portions thereof which are to be purchased
on such date and (ii) deliver to the Trustee such Securities together with an
Officers' Certificate stating the Securities or portions thereof are being
purchased by the Finance Company. The Paying Agent shall promptly mail or
deliver to Holders of Securities so purchased payment in an amount equal to the
purchase price. For purposes of this Section 1015, the Trustee shall act as
the Paying Agent.

The Finance Company shall not be required to make an offer to
purchase pursuant to this Section 1015 if a third party makes such an offer and
purchases Securities in the manner, at the times and otherwise in compliance
with the requirements applicable to the Finance Company pursuant to this
Indenture and the Securities.

Section 1016. Limitation on Issuance of Guaranties by
Subsidiaries.

(a) The Company will not permit any Restricted
Subsidiary, directly or (other than through an Unrestricted Subsidiary)
indirectly, to assume, Guaranty or in any other manner become liable with
respect to any Indebtedness of the Companies, the Operating Company, Realty Co.
or any other Restricted Subsidiary of the Company unless (i) such Restricted
Subsidiary simultaneously executes and delivers a supplemental indenture to
this Indenture providing for a Guaranty of payment of the Securities by such
Restricted Subsidiary constituting senior Indebtedness of such Restricted
Subsidiary, (ii) the Guaranty of the Securities is on terms, taken as a whole,
at least as favorable as the assumption, Guaranty or other liability of such
Restricted Subsidiary, (iii) such Restricted Subsidiary does not create, incur,
assume

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or suffer to exist any Lien securing such assumption, Guaranty or other
liability unless (A) it complies with Section 1010 hereof and (B) the Guaranty
of Securities is equally and ratably secured and (iv) such Restricted
Subsidiary waives and will not in any manner whatsoever claim or take the
benefit or advantage of, any rights of reimbursement, indemnity or subrogation
or any other rights against the Company, the Operating Company, Realty Co. or
any other Restricted Subsidiary of the Company or as a result of any payment by
such Restricted Subsidiary under its Guaranty.

(b) Notwithstanding the foregoing, any Guaranty by a
Restricted Subsidiary of the Securities shall provide by its terms that it
shall be automatically and unconditionally released and discharged upon any
sale, exchange or transfer, to any Person not an Affiliate of the Company, of
all of the Company's Capital Stock in, or all or substantially all the assets
of, such Restricted Subsidiary, which is in compliance with this Indenture.

Section 1017. Compliance with Securities Laws upon Purchase
of Securities.

In connection with any offer to purchase or purchase of
Securities under Section 1015 hereof, the Company shall (i) comply with Rule
14e-1 under the Exchange Act and (ii) otherwise comply with all federal and
state securities laws so as to permit the rights and obligations under Section
1015 to be exercised in the time and in the manner specified in Section 1015.

Section 1018. Limitation on Lease of Property as an Entirety.

The Company will not, and will not permit any Restricted
Subsidiary to, lease its Properties and assets substantially as an entirety to
any person, except as otherwise permitted by Article Eight.

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Section 1019. Activities of Finance Company.

The Finance Company agrees that it will not conduct any
business (and will not incur any Indebtedness) whatsoever other than to collect
principal and interest (and any interest on overdue principal of, premium, if
any, or interest) under the Note, to preserve and enforce its rights under the
Note, the Securities and the Security Documents , to do or cause to be done
all things necessary or appropriate to protect the Collateral and to preserve
its rights therein, and to otherwise comply with its obligations under this
Indenture and the Securities. The Finance Company will not merge into or
consolidate or amalgamate with or transfer its properties and assets to any
person, except (a) as permitted by and in compliance with Article Eight, if
required and (b) any transaction involving the Company or the Operating
Company.

Section 1020. Use of Proceeds.

The Finance Company shall loan all of the proceeds from the
sale of the Securities to the Operating Company immediately after receipt
thereof in exchange for which the Operating Company shall make and deliver the
Note to the Finance Company.

Section 1021. Statement as to Compliance; Notice of Default;
Reporting Requirements.

(a) The Company will deliver to the Trustee, within
120 days after the end of each fiscal year ending after the date hereof, a
brief certificate of its principal executive officer, principal financial
officer or principal accounting officer stating whether, to such officer's
knowledge, the Company and its Subsidiaries are in compliance with all
covenants and conditions to be complied with by any of them under this
Indenture. For purposes of this Section 1021, such compliance shall be
determined without regard to any period of grace or requirement of notice under
this Indenture.

(b) If a Default has occurred and is continuing, or
if the Trustee, any Holder or the trustee for or the holder of any other
evidence of Indebtedness of the Company or any Subsidiary (other than
Indebtedness in the aggregate principal amount of less than

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$25,000,000) gives any notice or takes any other action with respect to a
claimed default, the Company shall deliver to the Trustee an Officers'
Certificate specifying such Default, notice or other action within five
Business Days of its occurrence.

Section 1022. Waiver of Certain Covenants.

The Company may omit in any particular instance to comply with
any covenant or condition set forth in Sections 1007 through 1012 and Section
1016 if, before or after the time for such compliance, the Holders of a
majority in aggregate principal amount of the Securities at the time
outstanding shall, by Act of such Holders, waive such compliance in such
instance with such covenant or condition, but no such waiver shall extend to or
affect such covenant or condition except to the extent so expressly waived,
and, until such waiver shall become effective, the obligations of the Company
and the duties of the Trustee in respect of any such covenant or condition
shall remain in full force and effect.

ARTICLE XI

REDEMPTION OF SECURITIES

Section 1101. Right of Redemption.

The Securities may be redeemed, at the election of the Finance
Company, as a whole or from time to time in part subject to the conditions and
at the dates and Redemption Prices specified in the form of Security, together
with accrued interest to the Redemption Date.

Section 1102. Applicability of Article.

Redemption of Securities at the election of the Finance
Company, as permitted by any provision of this Indenture, shall be made in
accordance with such provision and this Article.

Section 1103. Election to Redeem; Notice to Trustee.

The election of the Finance Company to redeem any Securities
pursuant to Section 1101 shall be evi-

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denced by a Board Resolution. In case of any redemption at the election of
the Finance Company, the Finance Company shall, at least 5 days prior to
mailing of the notice of redemption referred to in Section 1105 (unless a
shorter notice period shall be satisfactory to the Trustee), notify the Trustee
of such Redemption Date and of the principal amount of Securities to be
redeemed.

Section 1104. Selection by Trustee of Securities to Be
Redeemed.

If less than all the Securities are to be redeemed, the
particular Securities or portions thereof to be redeemed shall be selected not
more than 60 days and not less than 30 days prior to the Redemption Date by the
Trustee, from the Outstanding Securities not previously called for redemption,
either pro rata or by lot, and the amounts to be redeemed may be equal to
$1,000 or any integral multiple thereof.

The Trustee shall promptly notify the Finance Company and the
Security Registrar in writing of the Securities selected for redemption and, in
the case of any Securities selected for partial redemption, the principal
amount thereof to be redeemed.

For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to redemption of Securities shall
relate, in the case of any Security redeemed or to be redeemed only in part, to
the portion of the principal amount of such Security which has been or is to be
redeemed.

Section 1105. Notice of Redemption.

Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 30 nor more than 60 days prior to the
Redemption Date, to each Holder of the Securities to be redeemed, at his
address appearing in the Security Register.

All notices of redemption shall state:

(a) the Redemption Date;

(b) the Redemption Price;

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(c) if less than all Outstanding Securities are to
be redeemed, the identification (and, in the case of a Security to be redeemed
in part, the principal amount) of the particular Securities to be redeemed;

(d) that on the Redemption Date the Redemption Price
will become due and payable upon each such Security or portion thereof, and
that interest thereon shall cease to accrue on and after said date; and

(e) the place or places where such Securities are to
be surrendered for payment of the Redemption Price.

Notice of redemption of Securities to be redeemed at the
election of the Finance Company shall be given by the Finance Company or, at
its request, by the Trustee in the name and at the expense of the Finance
Company.

Section 1106. Deposit of Redemption Price.

At or prior to 11:00 A.M. New York City time on any Redemption
Date, the Finance Company shall deposit with the Trustee or with a Paying Agent
(or, if the Finance Company is acting as its own Paying Agent, segregate and
hold in trust as provided in Section 1003) an amount of money in same day funds
(or New York Clearing House funds if such deposit is made prior to the
applicable Redemption Date) sufficient to pay the Redemption Price of, and
(except if the Redemption Date shall be an Interest Payment Date) accrued
interest on, all the Securities or portions thereof which are to be redeemed on
that date.

Section 1107. Securities Payable on Redemption Date.

Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified and from and after such date
(unless the Finance Company shall default in the payment of the Redemption
Price and accrued interest) such Securities shall cease to bear interest. Upon
surrender of any such Security for redemption in accordance with said notice,
such Security shall be paid by the Finance Compa-

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ny at the Redemption Price together with accrued interest to the
Redemption Date; provided, however, that installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such
on the relevant Regular Record Dates according to the terms and the provisions
of Section 307.

If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal thereof (and premium, if
any, thereon) shall, until paid, bear interest from the Redemption Date at the
rate borne by such Security.

Section 1108. Securities Redeemed in Part.

Any Security which is to be redeemed only in part shall be
surrendered at the office or agency of the Finance Company maintained for such
purpose pursuant to Section 1002 (with, if the Finance Company, the Security
Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Finance Company, the
Security Registrar or the Trustee duly executed by, the Holder thereof or his
attorney duly authorized in writing), and the Finance Company shall execute,
and the Trustee shall authenticate and deliver to the Holder of such Security
without service charge, a new Security or Securities, of any authorized
denomination as requested by such Holder in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal of the Security so
surrendered.

Section 1109. Redemption pursuant to the Casino Control Act.

(a) Notwithstanding the other provisions of this
Article Eleven, if the Casino Control Commission finds that a Holder or
beneficial owner of Securities must be found qualified or suitable to hold or
own the Securities under the Casino Control Act, and if such Holder or such
beneficial owner is not found qualified or suitable, within any time period
specified by the Casino Control Commission or the Casino Control Act, the
Finance Company shall have the right, at its option, (i) to require such Holder
or beneficial owner to dispose of all or a portion of such Holder's or
beneficial owner's

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Securities within 120 days after receipt of notice by such Holder or beneficial
owner of its disqualification under the Casino Control Act (or such different
period as may be prescribed by the Casino Control Commission), or (ii) to call
for redemption the Securities of either such Holder or beneficial owner, on not
less than 30 nor more than 60 days' notice (or such different period as may be
prescribed by the Casino Control Commission).

(b) If such Holder or beneficial owner, having been
given the opportunity by the Finance Company to dispose of such Holder's or
beneficial owner's Securities, shall have failed to do so within the prescribed
time period, the Finance Company shall have the right to redeem such Holder's
or beneficial owner's Securities on five days' notice.

(c) On any redemption of Securities pursuant to this
Section 1109, the Redemption Price shall be the lesser of (i) the market value
thereof on the date of such notice of redemption (as determined in good faith
by the Board of Directors of the Company) and (ii) the price at which such
Holder or beneficial owner acquired the Securities, together with (if permitted
by the Casino Control Act or by the orders of the Casino Control Commission)
accrued interest to the Redemption Date, unless a Redemption Price or other
payment, remuneration or related terms or restrictions are required by the
Casino Control Commission, in which event such price, terms and restrictions
shall be the Redemption Price and terms of redemption. Each Holder and
beneficial owner by accepting a Security agrees to the provisions of this
Section 1109 and Section 203 and agrees to inform the Finance Company upon
request made pursuant to this Section 1109 of the price at which such Holder or
beneficial owner acquired such Holder's or beneficial owner's Securities.

(d) Any redemption notice given by the Finance
Company under this Section 1109 shall state (i) that the Securities are being
called for redemption as a result of the Holder's or beneficial owner's status
under the Casino Control Act or with the Casino Control Commission, (ii)
whether accrued interest is payable to the Holder under the Casino Control Act
and, if so, the information required by subsection (d) of Section 1105 hereof,
and (iii) the information required by subsections (a), (b), (c) and (e) of such
Section 1105.

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ARTICLE XII

SECURITY

Section 1201. Security Interests.

(a) In order to secure the Indenture Obligations,
the Finance Company, the Operating Company and Realty Co. and the Trustee, as
applicable, have entered into the Security Documents in order to create the
Security Interests. Each Holder, by accepting a Security, agrees to all of the
terms and provisions of the Security Documents and the Trustee agrees to all of
the terms and provisions of the Security Documents signed by it.

(b) The Trustee and each Holder, by accepting a
Security, acknowledge that, as more fully set forth in the Intercreditor
Agreement, the holders of any Pari Passu Mortgage have certain rights in and to
the Collateral and the Trustee agrees to be bound by the Intercreditor
Agreement as it may be in effect from time to time.

(c) As amongst the Holders, the Collateral as now or
hereafter constituted shall be held for the equal and ratable benefit of the
Holders without preference, priority or distinction of any thereof over any
other by reason of difference in series or in time of issuance, sale or
otherwise, as security for the Indenture Obligations.

Section 1202. Recording; Opinions of Counsel.

(a) The Company, the Operating Company, the Finance
Company and Realty Co. will execute and deliver, file and record, all
instruments and documents, and have done and will do all such acts and other
things, at the Finance Company's expense, as are necessary to subject the
Collateral to the Security Interests. The Company, the Operating Company, the
Finance Company and Realty Co. will execute and deliver, file and record all
instruments and do all acts and other things as may be reasonably necessary or
advisable to perfect, maintain and protect the Security Interests.

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(b) The Company shall furnish to the Trustee
promptly after the execution and delivery of this Indenture and the Security
Documents and promptly after the execution and delivery of any amendment
thereto or any other instrument of further assurance, an Opinion of Counsel
stating that in the opinion of such counsel, subject to customary exclusions
and exceptions reasonably acceptable to the Trustee, either (i) this Indenture,
the Security Documents, any such amendment and all other instruments of further
assurance have been properly recorded, registered and filed and all such other
action has been taken to the extent necessary to make effective the Lien
intended to be created by the Indenture and the Security Documents, and
reciting the details of such action or referring to prior Opinions of Counsel
in which such details are given, or (ii) no such action is necessary to make
the Security Interests effective.

(c) The Company shall furnish to the Trustee within
60 days after in each year beginning , 199_, an Opinion
of Counsel, dated as of such date, (i) stating that, in the opinion of such
counsel, subject to customary exclusions and exceptions reasonably acceptable
to the Trustee, either (A) all such action has been taken with respect to the
recording, registering, filing, rerecording and refiling of the Indenture, all
supplemental indentures, the Security Documents, financing statements,
continuation statements and all other instruments of further assurance as is
necessary to maintain the Security Interests and reciting the details of such
action or referring to prior Opinions of Counsel in which such details are
given, and stating that all financing statements and continuation statements
have been executed and filed and such other actions have been taken that are
necessary fully to preserve and protect the rights of the Holders and the
Trustee hereunder and under the Security Documents, or (B) no such action is
necessary to maintain the Security Interests; and (ii) stating what, if any,
action of the foregoing character is necessary during the one-year period
commencing in the then current calendar year to so maintain the
Security Interests during such period.

(d) The Finance Company shall furnish to the Trustee
concurrently with execution and delivery of this Indenture a title insurance
policy issued by Lawyers

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Title Insurance Company or another title insurance company acceptable to the
Company and the Trustee in the amount of $425,000,000 containing such
affirmative coverage acceptable to the Trustee insuring that the Mortgage
creates a valid first lien on the Operating Company's and Realty Co.'s fee
title in the real property Collateral subject to the Operating Company's and
Realty Co.'s Permitted Encumbrances, and insuring the perfected first priority
interest of the Trustee, in and to the Mortgage; the Company and the Operating
Company shall also obtain such co-insurance or re-insurance as reasonably
requested by the Trustee.

(e) The Finance Company shall furnish to the Trustee
concurrently with execution and delivery of this Indenture a current A.L.T.A.
as-built land title survey (or form otherwise acceptable to the Trustee) and a
certificate from a professional licensed land surveyor with respect to the real
Property Collateral, certified to the title insurance companies participating
in the title policies and the Trustee, and showing the location, dimensions and
area of each parcel of the real Property Collateral, including all existing
buildings and improvements, utilities, parking areas and spaces, internal
streets, if any, external streets, rights-of-way, as well as any easements,
setback violations or encroachments on such real Property Collateral and
identifying each item with its corresponding exception, if any, in the title
policy relating thereto and otherwise reasonably acceptable to the Trustee.
Each survey shall contain the original signature and seal of the surveyor and
any additional matter reasonably required by the title companies. In addition,
the Finance Company shall provide with respect to the real Property Collateral
a certificate of a professional land surveyor to the effect that such real
Property Collateral is not located in a flood plain area, or, if such real
Property Collateral is in a flood plain area, the Finance Company shall deliver
upon execution of this Indenture evidence of flood insurance.

Section 1203. Disposition of Certain Collateral without
Requesting Release.

(a) Notwithstanding the provisions of Sections 1204,
1205 and 1206 hereof, the Operating Company may, without requesting the release
or consent of the Trustee:

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(i) sell, assign, transfer, license or
otherwise dispose of, free from the Security Interests, any machinery,
equipment, or other personal Property constituting Collateral that has
become worn out, obsolete or unserviceable, upon replacing the same
with or substituting for the same, machinery, equipment or other
Property constituting Collateral not necessarily of the same character
but being of at least equal value and utility as the Property so
disposed of, which Property shall without further action become
Collateral subject to the Security Interests;

(ii) (A) sell, assign, transfer, license or
otherwise dispose of, free from the Security Interests, inventory or
general intangibles that at any time are part of the Collateral in the
ordinary course of the Operating Company's business, (B) collect,
liquidate, sell, factor or otherwise dispose of, free from the
Security Interests, accounts receivable or notes receivable that at
any time are Collateral in the ordinary course of the Operating
Company's business or (C) make cash payments (including scheduled
repayments of Indebtedness permitted to be incurred hereby) from cash
that at any time is part of the Collateral other than cash in the
Collateral Account in the ordinary course of business that are not
otherwise prohibited by this Indenture; and

(iii) abandon, sell, assign, transfer,
license or otherwise dispose of any personal Property the use of which
is no longer necessary or desirable in the proper conduct of the
business of the Operating Company and the maintenance of its earnings
and is not material to the conduct of the business of the Operating
Company.

(b) Notwithstanding the provisions of Subsection (a)
above, (x) the Operating Company shall not dispose of or transfer (by lease,
assignment, sale or otherwise), or pledge, mortgage or otherwise encumber,
Collateral pursuant to the provisions of Section 1203(a)(ii) or (iii) with a
fair value to the obligor of

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10% or more of the aggregate fair value of all Collateral then existing (as
determined in the good faith judgment of the Company, the Operating Company,
the Finance Company and, if required by the Trust Indenture Act, an independent
appraiser), in any transaction or any series of related transactions without
complying with Section 1204; and (y) the right of the Operating Company to rely
upon the provisions of Section 1203(a)(ii) and (iii) from the date of this
Indenture to , 199 and for each quarter thereafter shall be
conditioned upon the Company, the Finance Company and the Operating Company
delivering to the Trustee, on or before , 199__ and thereafter within
60 days following the end of such quarter (except those quarters ending on
December 31, in which case within 105 days following the end of the quarter),
an Officers' Certificate to the effect that all of such dispositions by the
Operating Company were in the ordinary course of the Operating Company's
business and that the proceeds therefrom were used by the Operating Company in
connection with its business.

(c) Any disposition of Collateral made in compliance
with the provisions of this Section 1203 shall be deemed not to impair the
Security Interests in contravention of the provisions of this Indenture.

(d) Upon receipt of a Company Request, the Trustee
shall execute and deliver, within five business days from the receipt of the
Company Request pursuant to Section 1204, any instruments deemed by the Finance
Company or the Operating Company to be necessary or appropriate to dispose of
portions of the Collateral pursuant to this Section 1203 if the provisions of
this Section 1203 have been complied with.

Section 1204. Requesting Release of Collateral.

(a) Upon receipt of a Company Request, the Trustee
shall execute and deliver, within five business days from the receipt of such
Company Request pursuant to this Section 1204, any instruments deemed by the
Finance Company or the Operating Company to be necessary or appropriate to
release all or a part of the Collateral from the Security Interests, if the
provisions of this Section 1204 have been complied with. Any such Company
Request shall request the Trustee to execute one or more

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specifically described release instruments (which release instruments shall
accompany such Company Request) and shall certify that no Default or Event of
Default has occurred and is continuing and such Company Request shall also
certify that one of the following conditions of this Section 1204(a) set forth
below, and the conditions of Section 1205 or 1206, if applicable, have been, or
simultaneously with or immediately following the release will be, fulfilled:

(i) there is a substitution of Substitute
Collateral in accordance with Section 1205;

(ii) there is a deposit of Cash Collateral
in accordance with Section 1206;

(iii) the Collateral to be released is
Insurance Proceeds and such Collateral is used for purposes permitted
by, and in accordance with, Articles 6 and 7 of the Mortgage; or

(iv) the Finance Company or the Operating
Company represents in the Company Request that the Collateral to be
released is to be released in connection with acquisitions or
redemptions of all Securities then outstanding pursuant to the
redemption provisions of Section 203 or Section 1109 of this
Indenture.

(b) As a condition to any release of Collateral
under this Section 1204, the Finance Company shall deliver to the Trustee any
certificate or opinion required by Trust Indenture Act Section 314(d), as to
the fair value to the obligor of any Substitute Collateral and as to the fair
value of any Collateral to be released, and by Trust Indenture Act Section
314(c)(3), as to the fulfillment of any condition precedent to such release,
dated as of a date not more than 60 days prior to the date of substitution or
release. Such certificate or opinion shall state that the proposed release of
Collateral will not impair the Security Interests in contravention of the
provisions of this Indenture. In the case of an acquisition or redemption of
all of the Securities then Outstanding, such certificate or opinion shall state
that all of the Securities then Outstanding

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are to be redeemed and that all of the Collateral is to be released on or after
the Redemption Date provided that the Finance Company has not defaulted in
making the redemption payment. The person delivering such certificate or
opinion must be independent with respect to the Company, the Operating Company
and the Finance Company if required by Trust Indenture Act Section 314(d).
"Independent" means, for purposes of any certificate or opinion required by
Trust Indenture Act Section 314(d), with respect to any Person, that such
Person (1) is in fact independent, (2) does not have any direct financial
interest or any material indirect financial interest in the Finance Company,
the Operating Company, the Company or other obligor upon the Securities or in
any Affiliate of the Finance Company, the Operating Company, the Company or
such other obligor, and (3) is not connected with the Finance Company,
Operating Company, the Company or such other obligor, or with an Affiliate of
the Finance Company, the Operating Company, the Company or such other obligor
as an officer, employee, promoter, underwriter, trustee, partner, director or
Person performing similar functions.

(c) In addition to any certificates or opinions
required by Section 1204(b), as a condition to any release of Collateral
pursuant to Section 1205 or 1206, the Finance Company or the Operating Company
shall deliver to the Trustee:

(i) one or more Current Appraisals and an
Officers' Certificate stating that, based on such Current Appraisals,
the Appraised Fair Market Value of the Collateral to be released is
less than or equal to the Appraised Fair Market Value of the
Substitute Collateral to be substituted for such Collateral pursuant
to Section 1205 or of the Cash Collateral to be substituted pursuant
to Section 1206; and

(ii) an Opinion of Counsel stating that, in
the opinion of such counsel, subject to customary exclusions and
exceptions reasonably acceptable to the Trustee, either (A) all such
instruments and documents have been duly and validly executed and
delivered and have been properly recorded, registered and

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filed and all such other action has been taken, in each case to the
extent necessary to grant and perfect a first priority Security
Interest in the Substitute Collateral or to make effective the
Security Interest in Cash Collateral to be substituted for the
Collateral to be released, and reciting the details of such action or
referring to prior Opinions of Counsel in which such details are
given, or (B) no further action is necessary.

(d) Any release of Collateral made in compliance
with the provisions of this Section 1204 shall be deemed not to impair the
Security Interests in contravention of the provisions of this Indenture.

Section 1205. Substitute Collateral Other Than Cash
Collateral.

(a) The Finance Company or the Operating Company
may, at its option, obtain a release of Collateral (ex cept Cash Collateral and
the Note), by subjecting other proposed Collateral which is of the same type
currently covered by the Security Documents to the Security Interests in place
of and in exchange for the Collateral to be released, all in accordance with
the provision and conditions of Section 1204 and this Section 1205 (except that
the substitution of Cash Collateral is governed by Section 1206). Substitute
Collateral may include the proceeds of the Collateral to be released, and
Substitute Collateral may be substituted for other Substitute Collateral on the
terms set forth in this Section 1205. Notwithstanding the foregoing, real
Property Collateral may not be released pursuant to this Section 1205. Other
Collateral may be released pursuant to this Section 1205, if, after giving
effect to such release and all previous releases under this Section 1205,
substantially all furniture, fixtures, machinery and equipment affixed to,
located in, or used primarily in connection with or in the business being
conducted in, the Casino Hotel would be Collateral.

(b) The Finance Company or the Operating Company may
substitute Collateral pursuant to this Section 1205 if all of the following
conditions are met:

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(i) the Finance Company or the Operating
Company, as the case may be, complies with Section 1204(a) and
delivers a Company Request to the Trustee stating, in addition to the
other requirements of Section 1204, that the Finance Company or the
Operating Company, as the case may be, intends to substitute the
Property specifically described therein for the Collateral
specifically described therein;

(ii) the fair value of the proposed
Substitute Collateral (including any Cash Collateral) is at least
equal to the fair value of the Collateral to be released; and

(iii) the security interests in Substitute
Collateral are perfected pursuant to the Security Documents and
Section 1202.

(c) Notwithstanding the foregoing, the Dennis Hotel,
which comprises a portion of the real Property Collateral, may be released
pursuant to this Section 1205 if, in addition to the other applicable
requirements set forth in this Article Twelve, all of the following conditions
are met:

(i) the Finance Company, the Company or
the Operating Company shall deliver to the Trustee an appraisal of the
Appraised Fair Market Value of the Casino Hotel including the Dennis
Hotel (the "First Appraisal") and an appraisal of the Appraised Fair
Market Value of the Casino Hotel excluding the Dennis Hotel and taking
into account the effect on the Casino Hotel of destruction of the
Dennis Hotel (the "Second Appraisal"), such appraisals to be as of a
date not more than 90 days before the date that the Dennis Hotel is
released from the Collateral; and

(ii) the Finance Company, the Company or
the Operating Company shall substitute as Substitute Collateral (A)
real Property having an Appraised Fair Market Value, as of a date not
more than 90 days before the date that the Dennis Hotel is released
from the Collateral, or (B) a Letter of Credit, provided that

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the sum of the Appraised Fair Market Value of the real Property
substituted pursuant to clause (A) and the face value of the Letter of
Credit substituted pursuant to clause (B) is at least equal to the
greater of (x) the excess of the Appraised Fair Market Value of the
Casino Hotel in the First Appraisal over the Appraised Fair Market
Value of the Casino Hotel in the Second Appraisal and (y) the book
value of the Dennis Hotel as of the end of the most recent quarter
preceding the date that the Dennis Hotel is released from the
Collateral for which financial information is available. If the
Appraised Fair Market Value of the real Property substituted pursuant
to clause (A) is at least equal to the greater of clause (x) and
clause (y), there shall be no obligation to substitute as Substitute
Collateral a Letter of Credit.

(d) In addition to the other requirements set forth
above and those set forth in Section 1202(b), if the Substitute Collateral is
real Property, the Finance Company or the Operating Company shall deliver to
the Trustee:

(i) an A.L.T.A. form title insurance
policy or the local equivalent thereof or endorsement from a title
insurance company (or a specimen policy together with a commitment to
issue such title insurance on the basis of such policy or specimen) in
an amount equal to the fair value of the Substitute Collateral,
together with necessary coinsurance or reinsurance insuring that the
Substitute Collateral is owned by the Finance Company or the Operating
Company, as the case may be, free and clear of all defects and Liens,
other than Permitted Encumbrances, matters excepted from coverage by
the printed form of such title insurance policy (and not removable by
affidavit or indemnity) and other exceptions to title that do not
materially impair the value of the Substitute Collateral, and that
except for such exceptions or exclusions from such policies or
endorsements, the applicable document purporting to grant a security
interest in the Substi-

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tute Collateral constitutes a direct and valid Lien on such Substitute
Collateral; and

(ii) evidence of payment or a closing
statement indicating payments to be made by the Finance Company or the
Operating Company, as the case may be, of all title premiums, costs
and expenses, including any applicable taxes or governmental levies
and reasonable legal fees and disbursements of the attorneys for the
Trustee, that may be incurred to validly and effectively subject the
Substitute Collateral to the Security Interests.

Section 1206. Substitution of Cash Collateral.

(a) The Finance Company or the Operating Company
may, at its option, obtain the release of Collateral (other than the Note) upon
the substitution of Cash Collateral in accordance with the provisions and
conditions of Section 1204 and this Section 1206 as follows. The Finance
Company or the Operating Company may obtain the release of all or a portion of
the Collateral by delivering Cash Collateral to the Trustee for deposit in the
Collateral Account as Collateral in place of and in exchange for the released
Collateral, in an amount such that the fair value of the Cash Collateral so
delivered (together with the fair value of any other Substitute Collateral
(other than Cash Collateral) substituted for such released Collateral pursuant
to Section 1205) is at least equal to the fair value to the obligor of the
Collateral to be released; provided, however, that to the extent any Collateral
released is subject to the Credit Facility Mortgage or one or more Pari Passu
Mortgages, a Pro Rata Share of such Cash Collateral shall be paid over for the
benefit of the holders of the Credit Facility Mortgage and Pari Passu
Mortgages and shall not be deposited in the Collateral Account.

(b) The Finance Company or the Operating Company, as
the case may be, shall deliver a Company Request to the Trustee, stating, in
addition to the other requirements of Section 1204(a), that the Finance Company
intends to substitute Cash Collateral for all or a portion of the Collateral
specifically described therein.

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Section 1207. Appraisals of Collateral.

The Finance Company shall deliver to the Trustee on the date
of execution and delivery of this Indenture an appraisal of the Appraised Fair
Market Value of the Collateral, which appraisal is as of December 31, 1993.
On each of the 24-month intervals from the date hereof (collectively, the
"Appraisal Dates"), the Finance Company shall deliver to the Trustee an
appraisal of the Appraised Fair Market Value of the Collateral then existing;
provided, however, that in the event the Finance Company determines to have an
appraisal of the Appraised Fair Market Value of the Collateral performed prior
to the next Appraisal Date, the next appraisal that is required to be delivered
pursuant to this Section 1207 shall not be due until 24 months after the prior
appraisal was actually performed. Each subsequent Appraisal Date shall be
adjusted accordingly. The Finance Company shall comply with Trust Indenture
Act Section 314(d).

Section 1208. Collateral Account.

(a) The Trustee shall maintain and establish a
Collateral Account, which shall hold Cash Collateral for the equal and ratable
benefit of the Holders without preference, priority or distinction of any
thereof over any other by reason of difference in time of issuance, sale or
otherwise, as security for the Indenture Obligations. The Collateral Account
shall be entitled the "BALLY'S PARK PLACE FUNDING, INC. Cash Collateral
Account, First Bank, as trustee, secured party." The Trustee shall have sole
dominion and control over the Collateral Account and only the Trustee shall
have any right of withdrawal therefrom.

(b) All cash received by the Trustee as Substitute
Collateral pursuant to Section 1206 hereof, and as Insurance Proceeds pursuant
to Articles 6 and 7 of the Mortgage, less any Pro Rata Share paid over for
the benefit of holders of Pari Passu Mortgages pursuant to Section 1206 and
Articles 6 and 7 of the Mortgage, shall be deposited in the Collateral
Account.

(c) The Finance Company may request the Trustee in
writing to, and the Trustee may, in its discretion, invest any Cash Collateral
in the Collateral Account in U.S. Government Obligations. The Collateral

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Accounts and all credits thereto and investments therein shall be maintained in
such a manner in accordance with applicable law that the Trustee, for the
benefit of the Holders, shall at all times have a first priority perfected
security interest therein. The Finance Company shall deliver to the Trustee
and any bank where such Collateral Account is maintained all such notices and
other documents and shall otherwise make such filings and take such other
actions as may be required or deemed reasonably necessary by the Trustee to
create and maintain much first priority perfected security interest in the
Collateral Account and all credits thereto and investments therein.

(d) Interest and other amounts earned on the
Collateral Account shall be held in the Collateral Account for the benefit of
the Holders.

(e) As security for the Indenture Obligation, the
Company, the Finance Company, the Operating Company and Realty Co. hereby
grant a security interest to the Trustee in all of each of their right, title
and interest in the Collateral Account and all sums of money, funds,
securities, investments or other property from time to time held in or credited
to the Collateral Account, from any source whatsoever, now or hereafter
transferred or credited to and comprising the Collateral Account, including,
without limitation, all proceeds derived from the Collateral paid into the
Collateral Account, and any and all interest and dividends or other
distribution from any such amounts, and all statements, certificates and
instruments in or representing the Collateral Account.

Section 1209. Reliance on Opinion of Counsel.

The Trustee shall, before taking any action under this Article
Twelve, be entitled to receive an Opinion of Counsel, stating the legal effect
of such action, and that such action will not be in contravention of the
provisions hereof, and such opinion shall be full protection to the Trustee for
any action taken or omitted to be taken in reliance thereon; provided that the
Trustee's action under this Article Twelve shall at all times be and remain
subject to its duties under Trust Indenture Act Section 315.

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Section 1210. Purchaser May Rely.

A purchaser in good faith of the Collateral or any part
thereof or interest therein which is purported to be transferred, granted or
released by the Trustee as provided in this Article Twelve shall not be bound
(i) to ascertain, and may rely on the authority of the Trustee to execute, such
transfer, grant or release, or (ii) to inquire as to the satisfaction of any
conditions precedent to the exercise of such authority, or (iii) to determine
whether the application of the purchase price therefor complies with the terms
hereof.

Section 1211. Payment of Expenses.

On demand of the Trustee, the Finance Company forthwith shall
pay or satisfactorily provide for all reasonable expenditures incurred by the
Trustee under this Article Twelve, and all such sums shall be a Lien upon the
Collateral and shall be secured thereby.

Section 1212. Suits to Protect the Collateral.

Subject to Section 1201 of this Indenture and to the
provisions of the Security Documents, the Trustee shall have power to institute
and to maintain such suits and proceedings as it may deem expedient to prevent
any impairment of the Collateral by any acts that may be unlawful or in
violation of the Security Documents or this Indenture, including the power to
institute and maintain suits or proceedings to restrain the enforcement of or
compliance with any legislative or other governmental enactment, rule or order
that may be unconstitutional or otherwise invalid or if the enforcement of, or
compliance with, such enactment, rule or order would impair the Security
Interests in contraven- tion of this Indenture or be prejudicial to the
interests of the Holders or of the Trustee. The Trustee shall give notice to
the Companies promptly following the institution of any such suit or
proceeding.

Section 1213. Trustee's Duties.

The powers conferred upon the Trustee by this Article Twelve
are solely to protect the Security Interests and shall not impose any duty upon
the Trustee to exercise any such powers except as expressly provided in

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this Indenture. The Trustee shall be under no duty whatsoever to make or give
any presentment, demand for performance, notice of nonperformance, protest,
notice of protest, notice of dishonor, or other notice or demand in connection
with any Collateral, or to take any steps necessary to preserve any rights
against prior parties except as expressly provided in this Indenture. The
Trustee shall not be liable for failure to collect or realize upon any or all
of the Collateral, or for any delay in so doing, nor shall the Trustee be under
any duty to take any action whatsoever with regard thereto. The Trustee shall
have no duty to comply with any recording, filing or other legal requirements
necessary to establish or maintain the validity, priority or enforceability of
the Security Interests in, or the Trustee's rights in or to, any of the
Collateral.

ARTICLE XIII

DEFEASANCE

Section 1301. Defeasance and Discharge.

The Finance Company may, at its option by Board Resolution, at
any time, elect to have either paragraph (a) or (b) below applied to the
Outstanding Securities upon compliance with the conditions set forth in Section
1302 below.

(a) Upon exercise of the option applicable to this
paragraph (a), the Finance Company, the Company, the Operating Company and
Realty Co. shall be deemed to have been released and discharged from their
obligations with respect to the Outstanding Securities on the date the
conditions set forth below are satisfied (hereinafter, "legal defeasance").
For this purpose, the Finance Company shall be deemed to have paid and
discharged the entire indebtedness represented by the Outstanding Securities,
which shall thereafter be deemed to be "Outstanding" only for the purposes of
Section 1303 and the other Sections of this Indenture referred to in clauses
(i) and (ii) below, and the Finance Company, the Company, the Operating Company
and Realty Co. shall be deemed to have satisfied all their other obligations
under such Securities and this Indenture (and the Trustee, on demand of and at
the expense of the Finance Compa-

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ny, shall execute proper instruments acknowledging the same), except for the
following which shall survive until otherwise terminated or discharged
hereunder: (i) the rights of Holders of Outstanding Securities to receive
solely from the trust fund described in Section 1302 and as more fully set
forth in such Section, payments in respect of the principal of (and premium, if
any) and interest on such Securities when such payments are due, (ii) the
Finance Company's and the Company's obligations with respect to such Securities
under Sections 304, 305, 306, 1002 and 1003, (iii) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and the Companies' obligations
in connection therewith and (iv) this Article Thirteen.

(b) Upon exercise of the option applicable to this
paragraph (b), the Finance Company, the Company, the Operating Company and
Realty Co. shall be released and discharged from their obligations under any
covenant contained in Article Eight and in Sections 1004 through 1021 with
respect to the Outstanding Securities on and after the date the conditions set
forth below are satisfied (hereinafter, "covenant defeasance"), and the
Securities shall thereafter be deemed to be not "Outstanding" for the purpose
of any direction, waiver, consent or declaration or act of Holders of
Securities (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "Outstanding" for all other purposes
hereunder. For this purpose, such covenant defeasance means that, with respect
to the Outstanding Securities, the Finance Company, the Company, the Operating
Company and Realty Co. may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 501, but,
except as specified above, the remainder of this Indenture and such Securities
shall be unaffected thereby.

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Section 1302. Conditions to Defeasance.

The following shall be the conditions to application of either
paragraph (a) or (b) of Section 1301 to the Outstanding Securities:

(1) The Finance Company shall irrevocably have deposited or
caused to be deposited with the Trustee (or another trustee satisfying
the requirements of Section 608 who shall agree to comply with the
provisions of this Article Thirteen applicable to it) as trust funds
in trust for the purpose of making the following payments,
specifically pledged as security for, and dedicated solely to, the
benefit of the Holders of such Securities, (A) cash in U.S. Dollars in
an amount, (B) U.S. Government Obligations which through the
scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day
before the due date of any payment, cash in U.S. Dollars in an amount,
or (C) a combination thereof, in such amounts as will be sufficient,
in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to
the Trustee, to pay and discharge and which shall be applied by the
Trustee (or other qualifying trustee) to pay and discharge the
principal of (and premium, if any) and interest on the Outstanding
Securities on the Stated Maturity of such principal (and premium, if
any) or installment of interest or upon redemption on the day on which
such payments are due and payable in accordance with the terms of this
Indenture and of such Securities; provided that the Trustee shall have
been irrevocably instructed to apply such money or the proceeds of
such U.S. Government Obligations to said payments with respect to the
Securities. For this purpose, "U.S. Government Obligations" means
securities that are (x) direct obligations of the United States of
America for the timely payment of which its full faith and credit is
pledged or (y) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of

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the United States of America the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation by
the United States of America, which, in either case, are not callable
or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act of 1933, as amended), as custodian with
respect to any such U.S. Government Obligation or a specific payment
of principal of or interest on any such U.S. Government Obligation
held by such custodian for the account of the holder of such
depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount
received by the custodian in respect of the U.S. Government Obligation
or the specific payment of principal of or interest on the U.S.
Government Obligation evidenced by such depository receipt;

(2) In the case of an election under paragraph (a) of Section
1301 hereof, the Finance Company shall have delivered to the Trustee
an Opinion of Counsel stating that (x) the Finance Company has
received from, or there has been published by, the Internal Revenue
Service a ruling or (y) since the date hereof there has been a change
in the applicable federal income tax law, in either case to the effect
that, and based thereon such opinion shall confirm that, the Holders
of the Outstanding Securities will not recognize income, gain or loss
for federal income tax purposes as a result of such legal defeasance
and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
legal defeasance had not occurred;

(3) In the case of an election under paragraph (b) of Section
1301 above, the Finance Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of the outstanding
Securities

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will not recognize income, gain or loss for federal income tax
purposes as a result of such covenant defeasance and will be subject
to federal income tax on the same amounts in the same manner and at
the same times as would have been the case if such covenant defeasance
had not occurred;

(4) No Default or Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such
deposit or, insofar as Subsection 501(f) or 501(g) is concerned, at
any time during the period ending on the 91st day after the date of
such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period);

(5) Such defeasance shall not result in a breach or violation
of, or constitute a default under, this Indenture or any other
material agreement or instrument to which any of the Companies, the
Operating Company or Realty Co. is a party or by which they are bound;

(6) The Finance Company, the Company, the Operating Company
and Realty Co. shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent relating to the defeasance under Section 1301
have been complied with; and

(7) (a) The Security Documents shall not be discharged as a
result of such irrevocable deposit under Section 1302 unless the
Finance Company shall have delivered to the Trustee an Opinion of
Counsel, subject to customary exclusions and exceptions reasonably
acceptable to the Trustee, to the effect that (i) the Finance Company
has authorization to establish such irrevocable trust in favor of the
Trustee for the benefit of the Holders under applicable law and the
action in establishing the irrevocable trust has been duly and
properly authorized by the Finance Company and such authorization has
not been revoked, (ii) to their knowledge, the

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Trustee is an independent trustee with respect to the irrevocable
trust, (iii) a valid trust is created at the time of such irrevocable
deposit and (iv) the Holders of the Securities will have the sole
beneficial ownership interest under applicable law in the money or
U.S. Government Obligations so deposited in such trust. The Opinion
of Counsel so referred to in this paragraph may contain a
qualification that in the event that a court of competent jurisdiction
were to determine that the trust funds remained owned by the Finance
Company after such deposit, the Holders of the Securities will have a
non-avoidable first-priority perfected security interest under
applicable law in the money or U.S. Government Obligations so
deposited (for the limited purpose of the Opinion of Counsel referred
to in this paragraph, such opinion may contain an assumption that the
conclusions contained in a customary solvency letter by a nationally
recognized appraisal firm, dated as of the date of the deposit and
taking into account such deposit, or a customary alternative
certificate reasonably acceptable to the Trustee, are accurate,
provided that such solvency letter or certificate is also addressed
and delivered to the Trustee).

(b) It is the intention of the parties hereto that a valid
trust for the benefit of the Holders of the Securities be created at
the time that the Finance Company makes the deposit pursuant to
Section 1302. The security interest in such deposit that is granted
herein to the Trustee for the benefit of the Holders of the Securities
is intended solely as protection for the Holders of the Securities in
the event that a court of competent jurisdiction were to determine
either that (i) such trust had not been validly created or (ii) such
trust is not enforceable. The Finance Company hereby grants to the
Trustee for the benefit of the Holders a security interest in all
money, funds, investments or other property deposited with the Trustee
pursuant to Section 1302 to secure the Indenture Obligations.

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(c) The Company and the Finance Company shall take any and
all acts necessary to create, perfect and maintain, in favor of the
Holders of the Securities, a first-priority security interest in the
money and U.S. Government Obligations so deposited and shall take any
other action and execute and deliver any other documents that may
reasonably be requested by the Trustee to effectuate or evidence such
security interest, and shall do all of the above at such appropriate
time so that such security interest shall attach to the deposit at the
time such deposit is made and shall at all times be perfected.

(d) Notwithstanding the foregoing, prior to the end of the
91-day period following the irrevocable deposit referred to above,
none of the obligations of the Company, the Operating Company, the
Finance Company or Realty Co. under this Indenture or the Security
Documents shall be discharged, unless and until the Finance Company
shall have delivered to the Trustee a Current Appraisal as of a date
no more than 60 days prior to the date of such irrevocable deposit
reflecting the Appraised Fair Market Value of the Collateral in an
amount not less than 120% of the amount of such irrevocable deposit
and an Opinion of Counsel, subject to customary exclusions and
exceptions, to the effect that based on such Current Appraisal, the
irrevocable deposit will not be subject to avoidance as a preferential
transfer under 11 U.S.C. Section 547, as it may be amended from time
to time.

Section 1303. Deposited Money and U.S. Government Obligations
to Be Held in Trust; Other Miscellaneous Provisions.

Subject to the provisions of the last paragraph of Section
1003, all money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee, collectively
for purposes of this Section 1303, the "Trustee") pursuant to Section 1302 in
respect of the Outstanding Securities shall be held in trust and applied by the
Trustee, in

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accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company or
any of its Subsidiaries acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities of all sums due and to become due
thereon in respect of principal (and premium, if any) and interest, but such
money need not be segregated from other funds except to the extent required by
law.

The Finance Company shall pay and indemnify the Trustee
against any tax, fee or other charge imposed on or assessed against the cash or
U.S. Government Obligations deposited pursuant to Section 1302 or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the Outstanding
Securities.

Anything in this Article Thirteen to the contrary
notwithstanding, the Trustee shall deliver or pay to the Finance Company from
time to time upon Company Request any money or U.S. Government Obligations held
by it as provided in Section 1302 which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 1302(l)), are in excess of the amount thereof which
would then be required to be deposited to effect an equivalent defeasance or
covenant defeasance.

The Trustee and the Paying Agent shall pay to the Finance
Company upon request any money held by them for the payment of principal or
interest on the Securities that remains unclaimed for two years; provided that
the Finance Company shall have first caused notice of such payment to be
published one in a newspaper of general circulation in the City of New York or
mailed to each Holder entitled thereto no less than 30 days prior to such
repayment. After that, Holders entitled to the money must look to the Finance
Company for payment as general creditors unless otherwise provided by law.

Section 1304. Reinstatement.

If the Trustee or Paying Agent is unable to apply any money in
accordance with Section 1301 by reason of any order or judgment of any court or
governmental au-

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thority enjoining, restraining or otherwise prohibiting such application,
then the Companies' obligations under this Indenture and the Securities shall
be revived and reinstated as though no deposit had occurred pursuant to Section
1301 until such time as the Trustee or Paying Agent is permitted to apply all
such money in accordance with Section 1301; provided, however, that, if the
Finance Company makes any payment of principal of (or premium, if any) or
interest on any Security following the reinstatement of its obligations, the
Finance Company shall be subrogated to the rights of the Holders of such
Securities to receive such payment from the money held by the Trustee or Paying
Agent.

ARTICLE XIV

GUARANTY

Section 1401. Guaranty.

The Company hereby unconditionally guarantees on a senior
basis (such Guaranty to be referred to herein as the "Company Guaranty") to
each Holder of a Security authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of this Indenture, the Securities or the obligations of the
Finance Company hereunder or thereunder, that: (i) the principal of (and
premium, if any) and interest on the Securities will be promptly paid in full
when due, whether at the Maturity or Interest Payment Date, by acceleration,
call for redemption or otherwise, and interest on the overdue principal (and
premium, if any) and interest, if any, of the Securities, if lawful, and all
other obligations of the Finance Company to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and (ii) in case of any extension
of time of payment or renewal of any Securities or any of such other
obligations, the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at Maturity, by
acceleration or otherwise. Failing payment when due of any amount so
guaranteed for whatever reason, the Company will be obligated to pay the same
immediately. The Company hereby agrees that its obligations hereunder

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shall be unconditional, irrespective of the validity, regularity or
enforceability of the Securities or this Indenture, the absence of any action
to enforce the same, any waiver or consent by any Holder of the Securities with
respect to any provisions hereof or thereof, any releases of Collateral, any
delays in obtaining or realizing upon or failures to obtain or realize upon
Collateral, the recovery of any judgment against the Finance Company, any
action to enforce the same or any other circumstance that might otherwise
constitute a legal or equitable discharge or defense of a guarantor. The
Company hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Finance
Company, any right to require a proceeding first against the Finance Company,
protest, notice and all demands whatsoever and covenants that this Company
Guaranty will not be discharged except by complete performance of the
obligations contained in the Securities and this Indenture. If any Holder or
the Trustee is required by any court or otherwise to return to either of the
Companies, or any custodian, Trustee, liquidator or other similar official
acting in relation to either of the Companies, any amount paid by either of the
Companies to the Trustee or such Holder, this Company Guaranty, to the extent
theretofore discharged, shall be reinstated in full force and effect. The
Company agrees that it shall not be entitled to any right of subrogation in
relation to the Holders in respect of any obligations guaranteed hereby until
payment in full of all obligations guaranteed hereby. The Company further
agrees that as between the Company, on the one hand, and the Holders and the
Trustee, on the other hand, (i) the Maturity of the obligations guaranteed
hereby may be accelerated as provided in Section 502 for the purposes of this
Company Guaranty, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed hereby,
and (ii) in the event of any declaration of acceleration of such obligations as
provided in Section 502, such obligations (whether or not due and payable)
shall forthwith become due and payable by the Company for the purpose of this
Company Guaranty.

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Section 1402. Execution and Delivery of Company Guaranty.

To evidence its Company Guaranty set forth in Section 1401,
the Company hereby agrees that a notation of such Company Guaranty
substantially in the form set forth in Section 203 shall be endorsed on each
Security authenticated and delivered by the Trustee and that this Indenture
shall be executed on behalf of the Company by its Chairman of the Board, one of
its Vice Chairmen of the Board, its President, one of its Vice Presidents or
its Treasurer and attested to by another officer other than the officer
executing the Indenture, as the case may be.

The Company hereby agrees that its Company Guaranty set forth
in Section 1401 shall remain in full force and effect notwithstanding any
failure to endorse on each Security a notation of such Company Guaranty.

If an officer whose signature is on this Indenture no longer
holds that office at the time the Trustee authenticates the Security on which a
Company Guaranty is endorsed, the Company Guaranty shall be valid nevertheless.

The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Company
Guaranty set forth in this Indenture on behalf of the Company.

ARTICLE XV

LETTER OF CREDIT

Section 1501. Letter of Credit.

In order to permit the Operating Company to release the Dennis
Hotel from the Collateral in accordance with Section 1205 so that it may
demolish the Dennis Hotel and build a new multistory tower on the land upon
which the Dennis Hotel is currently situated, the Company, the Finance Company
or the Operating Company may cause the issuance and delivery of the Letter of
Credit to the Trustee at any time after the date hereof and may

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<PAGE> 145
at any time thereafter substitute a new Letter of Credit then held by the
Trustee. Each Holder, by accepting a Security, agrees to all of the terms of
each Letter of Credit.

Section 1502. Acceptance of the Letter of Credit.

The Letter of Credit shall not be effective for purposes of
this Indenture unless and until the Trustee shall accept delivery of the Letter
of Credit. The Trustee shall accept delivery of the Letter of Credit upon
receipt of the following: (i) an opinion of counsel to the bank that issued
the Letter of Credit (the "Bank") (such counsel to be reasonably acceptable to
the Trustee and may be an employee of the Bank, but not counsel to or an
employee of the Company or any of its Affiliates) stating that, in the opinion
of such counsel, the Letter of Credit has been duly authorized and executed
and, when delivered to and accepted by the Trustee, will constitute the legal,
valid and binding agreement of the Bank, enforceable against the Bank in
accordance with its terms; (ii) an Opinion of Counsel to the Finance Company
stating that, in the opinion of such counsel, the Letter of Credit is not
inconsistent with Exhibit F to this Indenture; and (iii) an Officers'
Certificate of the Finance Company stating that the Letter of Credit contains
substantially those terms and conditions set forth in such Exhibit F, no
materially contrary terms and no other provisions materially limiting the
availability of payment. The Trustee may also request other opinions pursuant
to Section 103.

Section 1503. Notices and Certificates.

Within five Business Days after the receipt by the Trustee of
written notice of any Event of Default or the giving by the Trustee of written
notice of any Event of Default in accordance with Section 501, the Trustee
shall (or, in the event that the Trustee otherwise has actual knowledge of an
Event of Default, the Trustee may) deliver written notice to the Bank, at the
Bank's office specified therefor in the Letter of Credit, stating that an Event
of Default has occurred under this Indenture.

In the event that the Bank delivers to the Trustee written
notice of termination of the Letter of

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<PAGE> 146
Credit (the Trustee to give prompt written notice thereof to the Finance
Company), the Company, the Operating Company or the Finance Company may cause
the issuance and delivery of a new Letter of Credit to the Trustee at least 20
Business Days prior to termination of the then outstanding Letter of Credit.
In the event that none of the Company, the Operating Company or the Finance
Company has caused the issuance and delivery of a new Letter of Credit at least
20 Business Days prior to termination of the then outstanding Letter of Credit,
then the Trustee shall deliver, within five Business Days after the
commencement of such 20 Business Day period, written notice to the Bank, along
with the Bank's notice of termination of the Letter of Credit, at the Bank's
office specified therefor in the Letter of Credit, stating that none of the
Company, the Operating Company or the Finance Company has caused the issuance
and delivery of a new Letter of Credit in accordance with this Article Fifteen.

After the Letter of Credit has been delivered to, and accepted
by, the Trustee, within ten Business Days of the end of each of the Finance
Company's fiscal quarters, the Finance Company shall deliver to the Trustee an
Officers' Certificate of the Finance Company stating that the Bank has not
ceased to be an Eligible Bank, and further stating that, as to each Officer
signing such certificate, that to the best of his or her knowledge, during the
preceding fiscal quarter, the Bank has not ceased to be an Eligible Bank. If
the Bank has ceased to be an Eligible Bank, such certificate shall notify the
Trustee of such event. Within ten Business Days of the last day of the Finance
Company's fiscal-quarter in which the Bank ceases to be an Eligible Bank, the
Finance Company shall deliver written notice of such event to the Trustee, and,
upon such delivery (or, if earlier, upon receipt by the Trustee of written
notice from a Holder or Holders that the Bank has ceased to be an Eligible
Bank, the Trustee to give prompt written notice thereof to the Finance
Company), the Company, Operating Company or Finance Company may cause the
issuance and delivery to the Trustee of a new Letter of Credit within ten
Business Days of notice to the Trustee that the Bank has ceased to be an
Eligible Bank. In the event that none of the Company, the Operating Company or
the Finance Company has caused the issuance and delivery of a new Letter of
Credit within ten Business Days after such notice, then the Trustee shall
deliver, within five Business Days

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after the expiration of such ten Business Day period, written notice to the
Bank, at the Bank's office specified therefor in the Letter of Credit, stating
that the Bank has ceased to be an Eligible Bank and that none of the Company,
the Operating Company or the Finance Company has caused the issuance and
delivery of a new Letter of Credit in accordance with this Article Fifteen.

The Trustee shall notify the Holders in writing of the
occurrence of an Event of Payment. Upon delivery to the Trustee of any new
Letter of Credit as provided herein, the Trustee shall surrender to the Finance
Company the then outstanding Letter of Credit.

Section 1504. Events of Payment.

The following events shall be "Events of Payment" under the
Letter of Credit: (i) written notice is delivered to the Bank by the Trustee
stating that an Event of Default has occurred and is continuing under this
Indenture; or (ii) written notice is delivered to the Bank by the Trustee,
along with the Bank's written notice of termination of the Letter of Credit,
stating that none of the Company, the Operating Company or the Finance Company
has caused the issuance and delivery of a new Letter of Credit in accordance
with this Article Fifteen; or (iii) written notice is delivered to the Bank by
the Trustee stating that the Trustee has received notice that the Bank has
ceased to be an Eligible Bank and that none of the Company, the Operating
Company or the Finance Company has caused the issuance and delivery of a new
Letter of Credit in accordance with this Article Fifteen.

Upon the occurrence of an Event of Payment, the Trustee shall
demand payment under the Letter of Credit from the Bank.

Section 1505. Application of Proceeds.

The proceeds of the Letter of Credit, if any, shall be applied
by the Trustee.

First: only after an acceleration pursuant to Section 502, to
the Trustee for amounts due under Section 606;

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<PAGE> 148
Second: to the Trustee to be deposited in the Collateral
Account, less any Pro Rata Share to be paid over for the benefit of
the holders of Pari Passu Mortgages to the extent that the Dennis
Hotel was subject to one or more Pari Passu Mortgages.

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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and arrested, all as of the day and year first above written.

BALLY'S PARK PLACE
FUNDING, INC.

By: _______________________
Title:

Attest:_______________________
Title:

BALLY'S PARK PLACE, INC., a
Delaware corporation

By: _______________________

Attest: _______________________
Title:

BALLY'S PARK PLACE, INC., a
New Jersey corporation

By: _______________________

Attest: _______________________
Title:

BALLY'S PARK PLACE
REALTY CO.

By: _______________________

Attest: _______________________
Title:

FIRST BANK

By: _______________________

Attest: _______________________
Title:

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<PAGE> 150
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)

On the day of ,1994, before me personally
came to me known, who, being by me duly sworn, did depose and
say that he resides at , that he is
of BALLY'S PARK PLACE FUNDING, INC., one of the corporations
described in and which executed the above instrument; that he knows the
corporate seal of such corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed pursuant to authority of the Board
of Directors of such corporation; and that he signed his name thereto pursuant
to like authority.

(NOTARIAL
SEAL)

<PAGE> 151
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)

On the day of , 1994, before me personally
came , to me known, who, being by me duly sworn, did depose and
say that he resides at , that he is
of BALLY'S PARK PLACE, INC., a Delaware corporation, one of the
corporations described in and which executed the above instrument; that he
knows the corporate seal of such corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed pursuant to authority
of the Board of Directors of such corporation; and that he signed his name
thereto pursuant to like authority.

(NOTARIAL
SEAL)

<PAGE> 152
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)

On the ____ day of ____________, 1994, before me personally
came _______________, to me known, who, being by me duly sworn, did depose and
say that he resides at ____________________________________________, that he is
_________ of BALLY'S PARK PLACE, INC., a New Jersey corporation, one of the
corporations described in and which executed the above instrument; that he
knows the corporate seal of such corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed pursuant to authority
of the Board of Directors of such corporation; and that he signed his name
thereto pursuant to like authority.

(NOTARIAL
SEAL)

<PAGE> 153
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)

On the day of ,1994, before me personally
came ,to me known, who, being by me duly sworn, did depose and
say that he resides at ,that he is
of BALLY'S PARK PLACE REALTY CO., one of the corporations described
in and which executed the above instrument; that he knows the corporate seal of
such corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed pursuant to authority of the Board of Directors of
such corporation; and that he signed his name thereto pursuant to like
authority.

(NOTARIAL
SEAL)

<PAGE> 154
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)

On the day of ,1994, before me personally
came ,to me known, who, being by me duly sworn, did depose and
say that he resides at ,that he is
of FIRST BANK, one of the corporations described in and which
executed the above instrument; that he knows the corporate seal of such
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed pursuant to authority of the Board of Directors of such
corporation; and that he signed his name thereto pursuant to like authority.

(NOTARIAL
SEAL)

<PAGE> 155
EXHIBIT E

This Instrument was prepared by the
below named attorney

Name:

PARI PASSU CERTIFICATE

First Bank ("Trustee"), as Trustee, under the Indenture dated
as of , 1994 (the "Indenture"), among BALLY'S PARK PLACE FUNDING,
INC., a Delaware corporation (the "Finance Company"), BALLY'S PARK PLACE, INC.,
a Delaware corporation (the "Company"), BALLY'S PARK PLACE, INC., a New Jersey
corporation (the "Operating Company"), BALLY'S PARK PLACE REALTY CO., a New
Jersey corporation ("Realty Co."), does hereby certify and confirm to [insert
name of a holder of Indebtedness secured by a Restricted Encumbrance] that the
Restricted Encumbrance described in the instrument from [insert name of maker
of Indebtedness secured by a Restricted Encumbrance] to [insert name of a
holder of Indebtedness secured by a Restricted Encumbrance] dated
ranks pari passu with the lien created by the Mortgage and Security Agreement
with Assignment of Rents dated as of , 1994 given by Operat
ing Company and Realty Co. to Trustee recorded on in Mortgage
Book at page in the Atlantic County, New Jersey Clerk's
Office and with the lien(s) created by the mortgage(s) from [insert name(s) of
maker(s) of Indebtedness secured by Restricted Encumbrance(s)] to [insert
name(s) of Holder(s) of Indebtedness secured by Restricted Encumbrance(s)]
recorded on in Mortgage Book at page in the Atlantic County,
New Jersey Clerk's Office. The term "pari passu" describes the relationship
set out in the Intercreditor Agreement appearing as Schedule I to the Mortgage.

E-1

<PAGE> 156
This Certificate is issued pursuant to Sections 613 and 1010
of the Indenture and with the effect stated in said Section 613. The terms
"Indebtedness," "Mortgage" and "Restricted Encumbrance" shall have the
respective meanings set forth in the Indenture.

First Bank,
as Trustee

By:
Name:
Title:

(SEAL)

E-2

<PAGE> 157
EXHIBIT F

PROVISIONS FOR LETTER OF CREDIT

Letters of Credit issued at the request of the Finance
Company, the Operating Company or the Company under Article Fifteen of the
Indenture, dated as of ____________, 1994, among the Finance Company, the
Company, the Operating Company, Realty Co. and First Bank, as Trustee (the
"Indenture"), shall contain the following terms and conditions in substance,
but not necessarily in the same format, no contrary terms and no other
provisions limiting the availability of payments:

1. The Letter of Credit shall be nontransferable (except to a
successor of the Trustee who replaces the Trustee in accordance with the
provisions of the Indenture) and irrevocable.

2. The Letter of Credit shall have a term of one year and
shall be automatically renewed on each expiration date for successive terms of
one year unless the bank that issued the Letter of Credit (the "Bank") delivers
to the Trustee and the Finance Company written notice of termination of the
Letter of Credit at least 30, but not more than 60, Business Days prior to the
expiration date of the Letter of Credit, such written notice being deemed to
have been delivered when received by the Trustee.

3. Funds under the Letter of Credit shall be made available
to the Trustee for the equal and ratable benefit of the Holders, in accordance
with paragraph 4 below and upon demand by the Trustee, on and after the
occurrence of the first of any of the following (each, an "Event of Payment" as
defined in Section 1504) of the Indenture):

(a) written notice is delivered to the Bank by the
Trustee stating that an Event of Default has occurred and is
continuing under the Indenture;

(b) written notice is delivered to the Bank by the
Trustee, along with the Bank's written notice of termination of the
Letter of Credit, stating that none of the Finance Company, the
Operating Company or the Company has caused the issuance and delivery

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<PAGE> 158
of a new Letter of Credit in accordance with Article Fifteen of the
Indenture.

(c) written notice is delivered to the Bank by the
Trustee stating that the Trustee has received notice that the Bank has
ceased to be an Eligible Bank and that none of the Finance Company,
the Operating Company or the Company has caused the issuance and
delivery of a new Letter of Credit in accordance with Article Fifteen
of the Indenture.

4. Upon demand for payment under the Letter of Credit by the
Trustee, funds under the Letter of Credit shall be made available immediately
by the Bank during the Bank's business hours at the main office of the Bank, in
immediately available funds; provided, however, that if demand for payment is
made after 11:00 a.m., payment shall be made no later than 10:00 a.m. on the
next succeeding Business Day.

5. Upon payment to the Trustee under the Letter of Credit,
the Bank shall be fully discharged of its obligation under the Letter of Credit
with respect to such demand for payment.

6. The Letter of Credit may also provide for procedures
setting forth the mechanics for notice, demand and payment including the office
of the Bank to which notices and demand for payment shall be made; provided,
however, that such procedures are customary and reasonable.

7. The Letter of Credit shall be subject to the Uniform
Customs and Practice for Documentary Credits, 1983 Revision, International
Chamber of Commerce Publication No. 400 (the "Uniform Customs").

8. The Letter of Credit shall be deemed to be a contract made
under the laws of the State of New York and shall, as to matters not governed
by the Uniform Customs, be governed by and construed in accordance with the
laws of such State.

Unless otherwise defined herein, capitalized terms used herein
shall have the meanings provided in the Indenture. References herein to the
time of an event shall be the local time in the jurisdiction wherein the

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<PAGE> 159
office of the Bank, upon which demand for payment has been made, is located.

F-3

<PAGE> 1

SECOND AMENDMENT TO EMPLOYMENT AGREEMENT

This Second Amendment ("Amendment") to the Employment Agreement is
made and entered into this 29th day of September, 1993 between Bally
Manufacturing Corporation, a Delaware corporation with its principal office
located at 8700 West Bryn Mawr Avenue, Chicago, Illinois 60631 (together with
successors and assigns permitted under this Agreement, the "Company"), and
Arthur M. Goldberg, who resides at 6 Kimball Circle, Westfield, New Jersey
07090 (the "Executive").

WITNESSETH

WHEREAS, the Company and the Executive have entered into an Employment
Agreement as of November 1, 1990; and

WHEREAS, the Employment Agreement has been previously amended and the
Company has determined that it is in the best interest of the Company and its
shareholders to further amend said Employment Agreement.

NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Amendment and the Employment Agreement and for other good and
valuable consideration, the receipt of which is mutually acknowledged, the
Company and the Executive agree to modify and amend the Employment Agreement as
follows:

1. Subsection (b) of Section 2, TERM OF EMPLOYMENT, POSITIONS AND
DUTIES SHALL BE ELIMINATED AND REPLACED WITH THE FOLLOWING:

(b) TERM. Subject to the provisions for termination otherwise
included in the Employment Agreement, the term of the employment of the
Executive under the Employment Agreement shall be extended from October 31,
1994 through and including October 31, 1997. Such term shall automatically be
extended for an additional one (1) year period commencing on November 1, 1995
and each November 1st thereafter unless: (i) the Employment Agreement is
terminated as a result of death or disability pursuant to Section 10(a) or (b)
of the Employment Agreement, by the Company for cause pursuant to Section 10(c)
of the Employment Agreement or voluntarily by the Executive pursuant to Section

<PAGE> 2
10(f) of the Employment Agreement; or (ii) either the Company or the Executive
shall give written notice to the other on or before October 1st of any year
during the term of this Agreement, that the term of the Executive's employment
shall be fixed for a three (3) year period commencing on the November 1st
immediately succeeding such written notice, and there shall be no further
automatic extensions. The term of the Employment Agreement, including the
extension through October 31, 1997 and any automatic extensions hereof pursuant
to this Letter Agreement is referred to as the "Term of Employment."

2. Section 6, EXPENSE REIMBURSEMENT shall be amended by adding
the following sentence to the end thereof:

"The Executive shall be entitled to prompt reimbursement by the
Company for all reasonable legal and related expenses incurred by him in
connection with the preparation and approval of the Second Amendment of this
Agreement.

3. Section 8, SUPPLEMENTAL RETIREMENT BENEFIT, shall be
eliminated and replaced with the following:

8. SUPPLEMENTAL RETIREMENT BENEFIT.

(a) AMENDMENT OF SUPPLEMENTAL RETIREMENT BENEFIT: ESTABLISHMENT OF
TRUST. Effective as of December 31, 1992, the Executive's supplemental
retirement benefit is amended by causing future Company contributions to be
made to a trust established by, and for, the Executive. The Executive shall
establish a trust (the "Trust") on or before June 15, 1993. The Trust shall be
a grantor trust, within the meaning of Sections 671 through 679 of the Code,
established by the Executive, which shall receive the Company contributions for
the supplemental retirement benefits provided under this Section 8.

(b) PAYMENT OF BENEFIT. Each year that Executive is employed by
the Company until age 62 and effective with the payment due for 1992, the
Company shall contribute for the Executive's supplemental retirement benefit,
the sum of the following amounts:

(i) the amount necessary to fund the Executive's
"Target Benefit" (determined in accordance with subsection 8(c) below)
shall be paid to the Trust;

(ii) the amount of the Tax Gross-Up Payment
(determined in accordance with subsection 8(e) below) shall be paid to
the Executive (or withheld for the payment of taxes on the Executive's
behalf);

(iii) The fees of the trustee of the Executive's Trust
shall be paid to the trustee of the Trust (or, if previously paid by
the Executive or from the assets of the Trust, to the Executive or to
the Trust to reimburse the Executive or the Trust for such expense.)

2
<PAGE> 3
Contributions under this subsection may be paid directly to the
Executive, forwarded to the appropriate governmental taxing authority on the
Executive's behalf, or paid to the Executive's Trust or the trustee of the
Executive's Trust. Amounts payable for any year under this subsection 8(b)
shall be calculated as of December 31, (the "Calculation Date") of such year
and shall be payable on or before March 15 of the calendar year following the
Calculation Date, provided, that the payment for 1992 shall be made on or
before the later of the date 75 days after the execution of this Second
Amendment or 30 days after the Trust is established. In addition, subsections
8(g)(ii), (iv), (v), and (vi) provide for certain additional contributions to
be made in the event of the Executive's death or the termination of the
Executive's employment with the Company. In such circumstances, the date of
such termination shall be deemed to be a Calculation Date. When the amount so
determined for any Calculation Date has been paid by the Company, the Company
shall have no further obligation to provide the Executive or any other person
benefits which have accrued under this Section 8 through Calculation Date.

(c) TARGET BENEFIT. The amount of the Executive's "Target Benefit"
shall be the amount calculated, as of the Calculation Date, actuarially using
the individual level aggregate method and based on the actuarial assumptions
contained in subsection 8(d), as necessary to provide funding for a retirement
benefit payable in the form of a single life annuity commencing on the January
1 following the Executive's 62nd birthday in an annual amount equal to the
excess, if any, of: (i) 50% of the average of the Executive's compensation
(determined as of such Calculation Date) for any of the three highest years
preceding the year in which he attains age 62 over (ii) the sum of $258,189
(relating to the supplemental retirement benefit assumed to be funded as of
December 31, 1992 by previous annuity purchases) and the retirement benefit,
payable in the form of a single life annuity commencing on the January 1
following the Executive's 62nd birthday, that can be provided by the value, if
any, of any other retirement or similar benefits under plans or programs of the
Company in which the Executive participates (but not including benefits
attributable to the Executive's contributions or contributions made on the
Executive's behalf pursuant to a qualified cash or deferred election under
Section 401(k) of the Internal Revenue Code and earnings thereon.) For purposes
of the preceding sentence, the Executive's compensation means Base Salary plus
the bonuses paid to him under Section 4 of this Agreement (both before and
after the First Amendment of this Agreement.)

(d) ACTUARY AND ACTUARIAL ASSUMPTIONS. The Company, with
Executive's concurrence, shall engage, at its expense, an actuary (the
"Actuary") to perform the calculations required under this Section 8. The
Actuary so engaged shall perform the necessary calculations in accordance with
the timetable set forth in subsection (f). The Actuary shall perform the
necessary calculations using the following assumptions:

(i) MORTALITY: no pre-retirement mortality and
post-retirement mortality based on the 1983 Individual Annuity
Mortality Table for Males.

3
<PAGE> 4
(ii) INTEREST: As of each Calculation Date, the
interest rate used in calculating the Executive's Target Benefit for
the period until the year of the Executive's 62nd birthday and the
Assumed Earnings (as defined in subsection 8(d)(iii), below) for the
period until the next Calculation Date shall be equal to the 7-year
Treasury bond rate in effect on such Date plus 0.5%, rounded to the
nearest 0.25%.

(iii) ASSUMED TRUST BALANCE AND ASSUMED EARNINGS:
As of each Calculation Date, the Actuary shall calculate the "Assumed
Trust Balance" and the "Assumed Earnings" for use in its actuarial
determination of the Target Benefit contribution of subsection 8(b)(i)
and the Tax Gross-Up Payment. The Assumed Trust Balance for the
December 31, 1992 Calculation Date is zero. For each Calculation Date
thereafter, the Assumed Trust Balance shall be equal to the sum of:
(A) the Assumed Trust Balance as of the immediately preceding
Calculation Date, (B) the Target Benefit contribution made under
subsection 8(b)(i) with respect to the immediately preceding
Calculation Date, and (C) the Assumed Earnings on the Assumed Trust
Balance since the immediately preceding Calculation Date and the
Target Benefit contribution made under subsection 8(b)(i) with respect
to the immediately preceding Calculation Date. The Assumed Earnings
between two consecutive Calculation Dates shall be determined by
applying for the period of time between such Calculation Dates,
interest at the rate in effect under subsection 8(d)(ii) above on the
first of such consecutive Calculation Dates to the sum of: (A) the
Assumed Trust Balance as of such first Calculation Date, and (B) the
Target Benefit contribution made under subsection 8(b)(i) with respect
to such first Calculation Date.

(e) TAX GROSS-UP. The Company agrees to pay to the Executive with
respect to each Calculation Date, an amount (the "Tax Gross-Up Payment") such
that the net benefit to the Executive after the calculation and deduction of
any federal, state and local income taxes due with respect to the Company
contributions required by this Section 8 and any federal excise taxes (as
defined in subsection 10(g) below occurring by reason of the Company
contributions described in subsection 8(g)(vi) below) will equal the required
Company Target Benefit contributions of subsection 8(b)(i). In addition, the
Tax Gross-Up Payment will include a gross-up for such taxes incurred by the
Executive due to the Company's payment of the trustee fees described in
subsection 8(b)(iii), his inclusion of the Assumed Earnings (as calculated
pursuant to subsection 8(d)(iii)) for the period ending on such Calculation
Date in gross income.

Further, the portion of the Tax Gross-Up Payment attributable to
federal income taxes shall be reduced by the maximum reduction in federal
income taxes that could be obtained by deduction of the portion of the Tax
Gross-Up payment attributable to state and local incomes taxes. Notwithstanding
anything in this Agreement to the contrary, the Tax Gross-Up payment
attributable to federal excise taxes shall be determined as provided in
subsection 10(g) below.

4
<PAGE> 5
The amount of the Tax Gross-Up Payments shall be determined by the
Company after consultation with the Executive's tax advisors and shall be paid
to the Executive on or before the due date provided in subsection 8(g) below,
in respect of which the Tax Gross-Up Payments shall be based upon tax rates and
laws in effect on the Calculation Date to which such payments relate
notwithstanding the fact that the payment may occur in the following calendar
year.

(f) FUNDING DETERMINATIONS AND TIMING. For each Calculation Date,
a contribution shall be determined for the Executive by the Actuary. With
respect to any Calculation Date corresponding to a December 31, following
December 31, 1992, on or before January 31 of each year, the Company shall
provide the Actuary with the data the Actuary deems necessary to calculate the
contribution for such preceding year. Such data shall, to the extent
necessary, include the Executive's compensation for the preceding year. The
Actuary shall supply his determination of the Company contribution required to
fund the Executive's benefit amount to the Company by February 28 of such year
and the Company shall pay the amounts required under subsection 8(b) to or on
behalf of the Executive on or prior to March 15 of such year. Contributions
for December 31, 1992 shall be made on a similar timetable within 75 days of
the execution of his Second Amendment. Additional contributions for Calculation
Dates not corresponding to December 31 required under subsection 8(g), shall be
made on a similar timetable within 75 days of such Calculation Date.

(g) EMPLOYMENT TERMINATION: ATTAINMENT OF AGE 62

(i) AGE 62. If the Executive remains in the
employ of the Company until the date he attains age 62, he will be
entitled to a final full contribution under subsection 8(b) with
respect to the Calculation Date immediately preceding such date. In
addition, with respect to the Calculation Date immediately following
his 62nd birthday, an additional contribution shall be made consisting
of the trustee's fees and Tax Gross-Up Payment (with respect to the
Assumed Earnings and trustee fees for the calendar year in which his
62nd birthday occurs) which shall be the Company's final payment on
the Executive's behalf under this Section 8.

(ii) DEATH. In the event the Executive's
employment is terminated by death prior to his 62nd birthday, the
Company shall make its final full contribution under Section 8 with
respect to the Calculation Date coincident with or immediately
preceding the date of the Executive's death. In addition, following
his death prior to his 62nd birthday, an additional contribution shall
be made consisting of the trustee's fees and Tax Gross-Up Payment
(with respect to the Assumed Earnings and the trustee fees for the
period from such Calculation Date until the date of the Executive's
death which shall be the Company's final payment on the Executive's
behalf under this Section 8).

5
<PAGE> 6
(iii) DISABILITY. In the event the Executive's
employment is terminated due to Disability prior to his 62nd birthday,
the Executive shall continue to be entitled to supplemental retirement
benefits under this Section 8 as if his employment had not terminated
as provided in subsections 10(b)(v) and (vii), below.

(iv) TERMINATION FOR CAUSE. In the event the
Executive's employment is terminated for Cause prior to his 62nd
birthday, the Company shall make no further contributions or payments
pursuant to this Section 8.

(v) TERMINATION WITHOUT CAUSE. Upon termination
of the Executive's employment pursuant to subsection 10(d) below, the
Company shall make its full contribution under this Section 8 with
respect to the Calculation Date immediately preceding such date of
termination. In addition, the Company shall immediately make an
additional contribution under subsection 8(b), which will equal the
sum of the following amounts:

(A) an amount equal to three times the amount of
the Target Benefit portion (under subsection 8(b)(i) above) of
the contribution provided as of the Calculation Date
immediately prior thereto; provided, however, that the sum of
the benefit provided by such additional contribution (under
this clause (A)) and the benefits provided by the Assumed
Trust Balance as of the date of such termination shall not
exceed the retirement benefit provided under subsection 8(c)
above.

(B) the amount of the trustee's fees (with
respect to the period from such Calculation Date until the
date of the Executive's termination of employment), and

(C) the amount of the Tax Gross-Up Payment (with
respect to the contribution described in clause (A), above,
the Assumed Earnings and the trustee fees for the period from
such Calculation Date until the date of the Executive's
termination of employment).

The contribution described in the preceding sentence shall be the
Company's final payment on the Executive's behalf under this Section
8.

(vi) TERMINATION WITHOUT CAUSE FOLLOWING A CHANGE
IN CONTROL. Upon termination of the Executive's employment pursuant to
subsection 10(e) below, the Company shall make its full contribution
under this Section 8 with respect to the Calculation Date immediately
preceding such date of termination. In addition, the Company shall
immediately make an additional contribution under subsection 8(b)
which shall equal the sum of the following amounts:

6
<PAGE> 7
(A) the amount which, together with the Assumed
Trust Value as of the date of termination (but not including
annuities purchased for the Executive under Section 8 of the
Agreement prior to this Second Amendment), shall provide the
Executive a retirement annuity equal to the Target Benefit
provided under subsection 8(c), above, commencing on the
January 1 following his 62nd birthday,

(B) the amount of the trustee's fees (with
respect to the period from such Calculation Date until the
date of the Executive's termination of employment), and

The contribution described in the preceding sentence shall be the
Company's final payment on the Executive's behalf under this Section
8.

(vii) VOLUNTARY TERMINATION. In the event of the
Executive's voluntary termination of employment prior to his 62nd
birthday (as described in subsection 10(f) below), the Company shall
make its final payment under this Section 8 with respect to the
Calculation Date coinciding with or immediately preceding the date of
his employment termination.

(h) FUNDING. All benefits paid under this Section 8 shall be paid
on an annual basis from the general assets of the Company either directly to
the Executive, forwarded to the appropriate governmental taxing authority on
the Executive's behalf, to the Executive's Trust or the trustee of the
Executive's Trust.

(i) INTERESTS NOT TRANSFERABLE. The interests of the Executive
under this Section 8 are not subject to the claims of his creditors and may not
be voluntarily or involuntarily transferred, assigned, alienated or encumbered.

(j) EFFECT ON OTHER BENEFIT PLANS. Amounts credited or paid under
this Section 8 shall not be considered to be compensation for the purposes of
calculating benefits under any other employee benefit plans maintained by the
Company. The treatment of such amounts under any other employee benefit plan
shall be determined pursuant to the provisions of such plan.

7
<PAGE> 8
4. Section 10, TERMINATION OF EMPLOYMENT shall be revised
effective December 31, 1992 in order to make it consistent with changes made to
Section 8, SUPPLEMENTAL RETIREMENT BENEFIT by this Second Amendment as follows:

A. By substituting the following for subsection
10(a)(vi):
"(vi) contributions required to be paid pursuant to
subsection 8(g)(ii), above; and"

B. By substituting the word "contributions" for
the phrase "annuity purchases" where it appears in subsection
10(b)(v).

C. By substituting the following for subsection
10(b)(vii):
"(vii) any contributions required to be made as of
any Calculation Date prior to the termination of the
Executive's employment due to Disability pursuant to
subsection 8(b), above, but not made at the time of his
termination of employment; and"

D. By substituting the phrase "supplemental
retirement program" for the phrase "annuity program" in
subsection 10(d)(iv).

E. By substituting the following for subsection
10(d)(vi):
"(vi) any contributions required to be made with
respect to any Calculation Date prior to termination of the
Executive's employment pursuant to subsection 8(b), above, but
not made at the time of his termination of employment, plus
the contributions required to be made pursuant to subsection
8(g)(v), above; and

F. By substituting the phrase "supplemental
retirement program" for the phrase "annuity program" in
subsection 10(e)(iii).

G. By substituting the following for subsection
10(e)(v):
"(v) any contributions required to be made with
respect to any Calculation Date prior to termination of the
Executive's employment pursuant to subsection 8(b), above, but
not made at the time of his termination of employment, plus
the contributions required to be made pursuant to subsection
8(g)(vi);"

H. By substituting the phrase "subsection
10(e)(iii)" for the phrase "subsection 8(e)(iii)" in both
places it appears in penultimate sentence of subsection 10(e).

8
<PAGE> 9
I. By substituting the following for subsection
10(f)(iv):
"(iv) any contributions required to be made with
respect to any Calculation Date prior to termination of the
Executive's employment pursuant to subsection 8(b), above but
not made at the time of his termination of employment; and"

5. Section 21, BENEFICIARIES/REFERENCES shall be amended by
substituting the phrase "the Trust specified in Section 8" for the phrase "the
annuity contract specified in Section 8".

All terms of the Employment Agreement, as amended through the First
Amendment thereto, not specifically amended herein shall remain in full force
and effect.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.

<TABLE>
<S> <C>
BALLY MANUFACTURING CORPORATION

Attest: /s/ Carol DePaul By: /s/ Lee Hillman
------------------ -------------------------------

/s/ Arthur M. Goldberg
-----------------------------------
Arthur M. Goldberg, as the Executive

Acknowledged and Approved by the
Compensation and Stock Option Committee of
the Board of Directors

Attest: /s/ Susan R. Rehorst By: /s/ Ted Halkyard
--------------------- ------------------------------
Chairman

Agreed to and guaranteed by Bally's Park Place:

Attest: /s/ Dennis P. Venuti By: /s/ Wallace R. Barr
--------------------- ------------------------------
Secretary President
</TABLE>

<PAGE> 1
Exhibit 10(iii).7

BALLY'S
park place
CASINO HOTEL & TOWER

March 15, 1993

Mr. C. Patrick McKoy
Bally's Park Place, Inc.
Park Place and the Boardwalk
Atlantic City, New Jersey 08401

Dear Pat:

This letter will confirm the agreement between Bally's Park Place, Inc.
("Bally's") and you with respect to severance compensation.

Although it is mutually understood that you will continue to serve as an
employee-at-will during the term of your employment and your employment is
subject to termination by Bally's for cause or no cause, Bally's and you have
agreed to the following provisions:

1. If your employment is terminated at any time within thirty-six (36)
months from the date of this letter due to your death, your total
disability for a period of at least six (6) consecutive months, your
intentional or grossly negligent refusal to perform the duties which
are reasonably assigned to you, your inability to so perform as a
result of a determination by any governmental or judicial body
(including any disqualification by a regulatory agency with
jurisdiction over gaming), your fraud, dishonesty or other deliberate
injury to Bally's, or your voluntary decision to leave its employ
(unless under circumstances where Bally's has substantially changed
the duties which you normally perform, has reduced your base salary
or has substantially reduced your other compensation exclusive of
discretionary bonus), you shall not be entitled to any severance
compensation.

2. If your employment is terminated for a reason other than stated above
or for no reason within thirty-six (36) months of the date of this
letter, you shall receive from Bally's a lump-sum amount equal to
eighteen (18) months of your then current annual base salary, less

<PAGE> 2
C. Patrick McKoy
Page - Two -
March 15, 1993
- ----------------

applicable payroll deductions. In addition, you will continue to be
covered under its life, disability and health insurance for the
period of eighteen (18) months after termination; provided, however,
that such disability and health benefits would be considered as being
in lieu of COBRA benefits and excess to any other coverage you or your
dependents may otherwise have under a benefit program of another
employer or under Medicaid or similar public program.

Kindly indicate your acceptance of the terms and conditions stated above by
signing the enclosed copy of this letter on the line provided and returning it
to my office.

Very truly yours,

/s/ Wallace R. Barr
-------------------------
Wallace R. Barr,
President and Chief
Operating Officer

Agreed:

/s/ C. Patrick McKoy
- -------------------------------
C. Patrick McKoy

<PAGE> 1

EXHIBIT 12

BALLY'S PARK PLACE, INC.

CALCULATIONS OF HISTORICAL AND PRO FORMA RATIOS
OF EARNINGS TO FIXED CHARGES

(DOLLAR AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
HISTORICAL
-------------------------------------------------------------------------------
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------- -------------------------------------------------------
1993 1992 1992 1991 1990 1989 1988
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Income before income taxes,
extraordinary item and
cumulative effect on prior
years of change in
accounting for income
taxes....................... $37,481 $14,177 $14,740 $ 5,466 $14,256 $48,296 $65,242
Add:
Interest expense (a)........ 33,891 36,227 47,960 48,951 46,334 22,294 8,400
Amortization of capitalized
interest.................. 624 620 829 817 635 374 122
------- ------- ------- ------- ------- ------- -------
Earnings available for fixed
charges..................... $71,996 $51,024 $63,529 $55,234 $61,225 $70,964 $73,764
------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- -------
Fixed charges:
Interest expense (a)........ $33,891 $36,227 $47,960 $48,951 $46,334 $22,294 $ 8,400
Capitalized interest........ 39 67 74 149 2,558 6,871 9,600
------- ------- ------- ------- ------- ------- -------
Total fixed charges........... $33,930 $36,294 $48,034 $49,100 $48,892 $29,165 $18,000
------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- -------
Ratio of earnings to fixed
charges..................... 2.1x 1.4x 1.3x 1.1x 1.3x 2.4x 4.1x
------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- -------
</TABLE>

<TABLE>
<CAPTION>
PRO FORMA
----------------------------------------
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1993 DECEMBER 31, 1992
------------------ -----------------
<S> <C> <C>
Income before income taxes,
extraordinary item and cumulative
effect on prior years of change in
accounting for income taxes........ $ 40,967 $19,389
Add:
Interest expense (a)............... 30,405 43,311
Amortization of capitalized
interest........................ 624 829
---------- -----------------
Earnings available for fixed
charges............................ $ 71,996 $63,529
---------- -----------------
---------- -----------------
Fixed charges:
Interest expense (a)............... $ 30,405 $43,311
Capitalized interest............... 39 74
---------- -----------------
Total fixed charges.................. $ 30,444 $43,385
---------- -----------------
---------- -----------------
Ratio of earnings to fixed charges... 2.4x 1.5x
---------- -----------------
---------- -----------------
</TABLE>

- ---------------

Note:
(a) Includes amortization of debt issuance costs and discount.

<PAGE> 1

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to
the use of our reports on (i) the consolidated financial statements of Bally's
Park Place, Inc. dated February 19, 1993, except for the "Summary of significant
accounting policies" and "Subsequent events" notes as to which the date is June
16, 1993 and (ii) the financial statement schedules for the years ended December
31, 1992, 1991 and 1990 dated February 19, 1993, all included in the Amendment
No. 1 to Registration Statement on Form S-1 (No. 33-51765) and related
Prospectus of Bally's Park Place Funding, Inc. and Bally's Park Place, Inc. for
the registration of $425 million principal amount First Mortgage Notes due 2004.

ERNST & YOUNG

Philadelphia, Pennsylvania

February 8, 1994

<PAGE> 1
Ex. 23.3

CONSENT OF APPRAISER

We hereby consent to the references made to us and to our report by Bally's
Park Place Funding, Inc. and Bally's Park Place, Inc. in the Prospectus
constituting a part of Amendment No. 1 to Registration Statement No. 33-51765
on Form S-1. In giving such consent, we do not thereby admit that we come
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.

AMERICAN APPRAISAL ASSOCIATES, INC.

By Ronald M. Goergen
---------------------------------
Ronald M. Goergen
Executive Vice President

Milwaukee, Wisconsin
February 11, 1994

<PAGE> 1

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM T-1

Statement of Eligibility and Qualification Under the
Trust Indenture Act of 1939 of a Corporation
Designated to Act as Trustee

FIRST BANK NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)

United States 41-0256895
(State of Incorporation) (I.R.S. Employer
Identification No.)

First Trust Center
180 East Fifth Street
St. Paul, Minnesota 55101
(Address of Principal Executive Offices) (Zip Code)

BALLY'S PARK PLACE FUNDING, INC.
BALLY'S PARK PLACE, INC.
(Exact name of registrant as specified in its charter)

Delaware 22-510861
Delaware 22-2264974
(State of Incorporation) (I.R.S. Employer
Identification No.)

Park Place and The Boardwalk 08401
Atlantic City, New Jersey (Zip Code)
(Address of Principal Executive Offices)

% FIRST MORTGAGE NOTES
(Title of the Indenture Securities)

<PAGE> 2

GENERAL

1. GENERAL INFORMATION Furnish the following information as to the
Trustee.

(a) Name and address of each examining or supervising authority to which it
is subject.

Comptroller of the Currency
Washington, D.C.

(b) Whether it is authorized to exercise corporate trust powers.

Yes

2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS If the obligor or any
underwriter for the obligor is an affiliate of the Trustee, describe each
such affiliation.

None

See Note following Item 16.

Items 3-15 are not applicable because to the best of the Trustee's
knowledge the obligor is not in default under any Indenture for which the
Trustee acts as Trustee.

16. LIST OF EXHIBITS List below all exhibits filed as a part of this
statement of eligibility and qualification. Each of the exhibits listed
below is incorporated by reference from a previous registration.

1. Copy of Articles of Association.

2. Copy of Certificate of Authority to Commence Business.

3. Authorization of the Trustee to exercise corporate trust powers
(included in Exhibits 1 and 2; no separate instrument).

4. Copy of existing By-Laws.

5. Copy of each Indenture referred to in Item 4. N/A

6. The consents of the Trustee required by Section 321(b) of the act.

7. Copy of the latest report of condition of the Trustee published pursuant
to law of the requirements of its supervising or examining authority.

<PAGE> 3

NOTE

The answers to this statement insofar as such answers relate to what
persons have been underwriters for any securities of the obligor within three
years prior to the date of filing this statement, or what persons are owners of
10% or more of the voting securities of the obligor, or affiliates, are based
upon information furnished to the Trustee by the obligor. While the Trustee has
no reason to doubt the accuracy of any such information, it cannot accept any
responsibility therefor.

SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, First Bank National Association, an Association organized and existing
under the laws of the United States, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, and its seal to be hereunto affixed and attested,
all in the City of Saint Paul and State of Minnesota on the 1st day of
February, 1994.

FIRST BANK NATIONAL ASSOCIATION

[SEAL]
/s/ Scott Strodthoff
---------------------------------
Scott Strodthoff
Assistant Vice President

/s/ Frank P. Leslie III
- ------------------------------
Frank P. Leslie III
Assistant Secretary

<PAGE> 4

EXHIBIT 6

CONSENT

In accordance with Section 321(b) of the Trust Indenture Act of 1939, the
undersigned, FIRST BANK NATIONAL ASSOCIATION hereby consents that reports of
examination of the undersigned by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.

Dated: February 1, 1994

FIRST BANK NATIONAL ASSOCIATION

/s/ Scott Strodthoff
--------------------------------------
Scott Strodthoff
Assistant Vice President