RESORTS INTERNATIONAL INC, POS AM, 1995-05-04

RESORTS INTERNATIONAL INC
POS AM, 1995-05-04
MISCELLANEOUS AMUSEMENT & RECREATION

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<PAGE> 1

As filed with the Securities and Exchange Commission on May 4, 1995

Registration No. 33-53371
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

Post-Effective Amendment No. 1 To

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

RESORTS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
Delaware 7011 59-0763055
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer identification number)
incorporation or organization) classification code number)

1133 Boardwalk Matthew B. Kearney
Atlantic City, New Jersey 08401 Resorts International, Inc.
(609) 344-6000 1133 Boardwalk
(Address, including zip code, and Atlantic City, New Jersey 08401
telephone number, including area code, (609) 344-6000
of registrant's principal executive (Name, address, including zip code, and
offices) telephone number, including area code, of
agent of service)
</TABLE>

RESORTS INTERNATIONAL HOTEL FINANCING, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
Delaware 6719 65-0461729
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer identification number)
incorporation or organization) classification code number)

1133 Boardwalk Matthew B. Kearney
Atlantic City, New Jersey 08401 Resorts International, Inc.
(609) 344-6000 1133 Boardwalk
(Address, including zip code, and Atlantic City, New Jersey 08401
telephone number, including area code, (609) 344-6000
of registrant's principal executive (Name, address, including zip code, and
officers) telephone number, including area code, of
agent for service)
</TABLE>

RESORTS INTERNATIONAL HOTEL, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
New Jersey 7011 21-0423320
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer identification number)
incorporation or organization) classification code number)

Copies to:
Peter E. Panarites, Esq.
Freedman, Levy, Kroll & Simonds
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036
(202) 457-5105
</TABLE>

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 check the following box. /X/

<PAGE> 2
PROSPECTUS

RESORTS INTERNATIONAL, INC.

RESORTS INTERNATIONAL HOTEL FINANCING, INC.

RESORTS INTERNATIONAL HOTEL, INC.

All of the (i) $17,562,000 principal amount of 11% Mortgage Notes due
2003 (the "Mortgage Notes") issued by Resorts International Hotel Financing,
Inc., a Delaware corporation ("RIHF") and a wholly owned subsidiary of Resorts
International, Inc., a Delaware corporation ("RII"), and guaranteed (the
"Mortgage Note Guaranty") by Resorts International Hotel, Inc., a New Jersey
corporation ("RIH"), and a wholly owned subsidiary of RII; and (ii) 776 Units
(the "Units"), each Unit comprised of (a) $1,000 principal amount of 11.375%
Junior Mortgage Notes due 2004 (the "Junior Mortgage Notes") issued by RIHF and
guaranteed (the "Junior Mortgage Note Guaranty") by RIH, and (b) one share of
Class B Redeemable Common Stock, par value $.01 per share (the "Class B Common
Stock"), of RII, offered hereby are being offered by the Selling
Securityholders. This Prospectus, dated May __, 1995, updates material
information contained in the Company's original Prospectus dated May 4, 1994,
for the offering being made by the Selling Securityholders. See "Selling
Securityholders." The term "Company" as used herein includes RII and/or one or
more of its subsidiaries, as the context may require.

Interest on the Mortgage Notes accrues at the rate of 11% per year and
is payable in cash, semi-annually on March 15 and September 15 of each year.
See "Description of Mortgage Notes." The Mortgage Notes, as a class, are
secured by an assignment of a promissory note of RIH (the "RIH Promissory
Note") in the original principal amount of $125,000,000, payable in amounts and
at times necessary to pay the principal of and interest on the Mortgage Notes.
The RIH Promissory Note is secured by a lien on all real property, improvements
thereon and certain other property and equipment described below constituting
Merv Griffin's Resorts Casino Hotel in Atlantic City, New Jersey (the "Resorts
Casino Hotel"). The RIH Promissory Note and the Resorts Casino Hotel
collectively are referred to as the "Mortgage Note Trust Estate". In addition,
RIH has issued the Mortgage Note Guaranty of the payment of principal of and
interest on the Mortgage Notes, secured by a lien on the Resorts Casino Hotel.
The Mortgage Notes will be structurally subordinated to certain notes of RIHF
(the "Senior Facility Notes") that may be issued pursuant to a senior secured
note purchase agreement (the "Senior Facility"). See "Description of Mortgage
Notes."

Interest on the Junior Mortgage Notes accrues at the rate of 11.375%
per year and is payable in cash or, at RIHF's option and
<PAGE> 3
subject to certain limitations, additional Units comprised of Junior
Mortgage Notes and Class B Common Stock, semi-annually on June 15 and
December 15 of each year. See "Description of Junior Mortgage Notes". Interest
may be paid in additional Units ("Payments-In-Kind") on any interest payment
date on which RIH's Consolidated Cash Flow (as defined in the indenture
pursuant to which the Junior Mortgage Notes were issued (the "Junior Mortgage
Note Indenture")) for the most recently completed four fiscal quarters is less
than $35,000,000. Upon the redemption, or cancellation following the purchase
thereof, of each $1,000 principal amount of Junior Mortgage Notes, RII will
redeem, at $0.01, the one share of Class B Common Stock issued as a Unit with
each $1,000 principal amount of Junior Mortgage Notes. The Junior Mortgage
Notes and the Class B Common Stock comprising the Units may not be transferred
separately. The Junior Mortgage Notes, as a class, are secured by an assignment
of a junior promissory note of RIH (the "RIH Junior Promissory Note") in the
original principal amount of $35,000,000, payable in amounts and at times
necessary to pay the principal of and interest on the Junior Mortgage Notes.
The RIH Junior Promissory Note is secured by a lien on the Resorts Casino
Hotel. The RIH Junior Promissory Note and the Resorts Casino Hotel collectively
are referred to as the "Junior Mortgage Note Trust Estate". In addition, RIH
has issued the Junior Mortgage Note Guaranty of the payment of principal of and
interest on the Junior Mortgage Notes, secured by a lien on the Resorts Casino
Hotel. The Junior Mortgage Notes will be structurally subordinated to RIHF's
Senior Facility Notes, if issued, and are structurally subordinated to the
Mortgage Notes. See "Description of Junior Mortgage Notes."

The Company will not receive any of the proceeds from the sale of the
Mortgage Notes or Units. Any or all of such Mortgage Notes or Units may be
sold, from time to time, by means of ordinary brokerage transactions or
otherwise at prices prevailing at the time of sale or at such other prices as
may be negotiated among the parties. The Mortgage Notes and Units are listed on
the American Stock Exchange (the "AMEX"). See "Plan of Distribution."

FOR A DISCUSSION OF CERTAIN IMPORTANT CONSIDERATIONS RELEVANT TO AN
INVESTMENT IN THE MORTGAGE NOTES OR UNITS, SEE "RISK FACTORS."

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

---------------
<PAGE> 4
THE NEW JERSEY CASINO CONTROL COMMISSION HAS NOT PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS UNLAWFUL.

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

THE DATE OF THIS PROSPECTUS IS MAY __, 1995

<PAGE> 5

The Mortgage Notes and Units being offered hereby have been registered
under the Securities Act of 1933, as amended (the "Securities Act") by the
Company, in order to satisfy obligations of the Company to certain holders of
the Mortgage Notes and Units in connection with the restructuring (the
"Restructuring") of RII's former Senior Secured Redeemable Notes that were due
April 15, 1994 (the "Series Notes"). See "Restructuring of Series Notes" and
"Selling Securityholders." Substantially all of the expenses of the offering,
estimated at approximately $425,000, will be paid by the Company.

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

AVAILABLE INFORMATION

RII, RIHF, RIH (collectively, the "Registrants") have filed a
Registration Statement on Form S-1 (the "Registration Statement") with the
Securities and Exchange Commission (the "Commission") under the Securities Act
with respect to the securities offered hereby. As permitted by the rules and
regulations of the Commission, this Prospectus omits certain information,
exhibits and undertakings contained in the Registration Statement. Such
additional information, exhibits and undertakings can be inspected at and
obtained from the Commission in the manner set forth below. For further
information with respect to the securities offered hereby and the Registrants,
reference is made to the Registration Statement and the financial schedules and
exhibits filed as part thereof.

RII, RIHF and RIH are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended ("Exchange Act") and, in accordance
therewith, file periodic reports and other information with the Commission.
Reports and other information filed with the Commission, as well as the
Registration Statement, can be inspected and copied at the public reference
facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the Commission's regional offices located at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and at 7 World Trade
Center, Suite 1300, New York, New York 10048. Copies of such material also can
be obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Mortgage
Notes and Units are listed on the AMEX, and such reports and other information
regarding the Registrants can be inspected and copied at the offices of the
AMEX, 86 Trinity Place, New York, New York 10006. Copies of the various
documents referred to herein also may be obtained from RII upon request to RII
at its principal executive offices.

2
<PAGE> 6

The principal executive offices of RII, RIHF and RIH are located at
1133 Boardwalk, Atlantic City, New Jersey 08401. The telephone number of RII,
RIHF and RIH is (609) 344-6000.
---------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MAY NOT BE RELIED UPON. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THOSE TO WHICH IT RELATES, OR AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN ANY JURISDICTION IN WHICH, OR
TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR THE DISTRIBUTION OF ANY SECURITIES
HEREUNDER, UNDER ANY CIRCUMSTANCES, SHALL CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR IN THE INFORMATION CONTAINED
HEREIN SINCE THE DATE HEREOF.

3
<PAGE> 7

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
No.
---
<S> <C>
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Registrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Emergence from Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Summary Historical and Pro Forma Financial Data . . . . . . . . . . . . . . . . . . . . 9
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Continuing High Leverage; Future Refinancings . . . . . . . . . . . . . . . . . . . . . 13
Recent Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Involvement of Merv Griffin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Certain Federal Income Tax Considerations . . . . . . . . . . . . . . . . . . . . . . . 14
Additional Senior Secured Debt; Subordination . . . . . . . . . . . . . . . . . . . . . 14
Security for the Mortgage Notes and the Junior Mortgage Notes . . . . . . . . . . . . . 15
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
New Jersey Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Potential Disqualification of Holders by the Casino Control Commission . . . . . . . . 18
Risk of Highly Leveraged Transaction . . . . . . . . . . . . . . . . . . . . . . . . . 18
RESTRUCTURING OF SERIES NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Paradise Island Assets Acquired by SIHL . . . . . . . . . . . . . . . . . . . . . . . . 22
CAPITALIZATION OF RII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
CAPITALIZATION OF RIH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
CAPITALIZATION OF RIHF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SELECTED HISTORICAL FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
RII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
RIH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
RIHF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
PRO FORMA FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
RII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
RIH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
RIHF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
MARKET PRICES OF MORTGAGE NOTES AND UNITS . . . . . . . . . . . . . . . . . . . . . . . . 38
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OF RII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OF RIH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OF RIHF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
DESCRIPTION OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Gaming Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Resort and Hotel Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Capital Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
New Convention Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Transportation Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Gaming Credit Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Showboat Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Security Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Seasonal Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
</TABLE>

4
<PAGE> 8

<TABLE>
<S> <C>
Regulation and Gaming Taxes and Fees . . . . . . . . . . . . . . . . . . . . . . . . . 65
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
MANAGEMENT OF RII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Directors and Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
MANAGEMENT OF RIHF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Directors and Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
MANAGEMENT OF RIH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Directors and Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
SECURITY OWNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Security Ownership of Certain Beneficial Owners . . . . . . . . . . . . . . . . . . . . 89
Security Ownership of Management . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
DESCRIPTION OF MORTGAGE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Ranking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Sinking Fund Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Mandatory Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Optional Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Casino Control Act Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Intercreditor Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Release of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Limitations on Ability to Realize on Collateral . . . . . . . . . . . . . . . . . . . . 96
Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Payments of Net Proceeds of Asset Sales . . . . . . . . . . . . . . . . . . . . . . . . 97
Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Limitation on Consolidation, Merger, Conveyance, Transfer or Lease of Property
and Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Discharge of Mortgage Note Indenture; Defeasance . . . . . . . . . . . . . . . . . . . 111
Modification of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Reports to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
DESCRIPTION OF JUNIOR MORTGAGE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . 121
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Ranking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Sinking Fund Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Mandatory Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Optional Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Limitation on Open-Market Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Casino Control Act Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
Intercreditor Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
Release of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
Limitations on Ability to Realize on Collateral . . . . . . . . . . . . . . . . . . . . 125
Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Payments of Net Proceeds of Asset Sales . . . . . . . . . . . . . . . . . . . . . . . . 126
Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Limitation on Consolidation, Merger, Conveyance, Transfer or Lease of Property
and Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
Discharge of Junior Mortgage Note Indenture . . . . . . . . . . . . . . . . . . . . . . 139
Modification of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Reports to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
DESCRIPTION OF CLASS B COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
Casino Control Act Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
Description of Class B Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 149
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . 150
Treatment of the Debt Securities as Debt of RIH for Federal Income Tax Purposes . . . . 151
Classification of Debt Securities as Debt Rather Than Equity . . . . . . . . . . . . . 152
OID With Respect to the New Debt Securities . . . . . . . . . . . . . . . . . . . . . . 153
</TABLE>

5
<PAGE> 9

<TABLE>
<S> <C>
Consequences if the Debt Securities are Issued with OID . . . . . . . . . . . . . . . . 155
Sale, Exchange or Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
Market Discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
Potential Application of High Yield Debt Obligation Rules . . . . . . . . . . . . . . . 158
Backup Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
SELLING SECURITYHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . . F-1
</TABLE>

6
<PAGE> 10

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the detailed
information and financial statements and related notes appearing elsewhere in
this Prospectus.

THE REGISTRANTS

RII is a holding company which, through its subsidiary, RIH, is
principally engaged in the ownership and operation of the Resorts Casino Hotel
in Atlantic City, New Jersey. In addition, RII owns land in Atlantic City at
various sites, including approximately 10 acres of Boardwalk property that the
Company leases to Atlantic City Showboat, Inc. ("ACS") under a 99-year net
lease (the "Showboat Lease") and approximately 90 acres which are available for
development. RII was incorporated in 1958 and is a Delaware corporation.

RIHF was incorporated in Delaware in 1993 for the limited purpose of
issuing the Mortgage Notes and the Junior Mortgage Notes, and receiving certain
corresponding promissory notes of RIH. RIHF also entered into the Senior
Facility. See "Restructuring of Series Notes." RIHF is a wholly owned
subsidiary of RII.

RIH owns and operates all the property and improvements of the Resorts
Casino Hotel. The Resorts Casino Hotel is located on the Boardwalk in Atlantic
City, New Jersey, and has approximately 670 guest rooms, a 60,000-square-foot
casino and related facilities. RIH was incorporated in 1903 and is a New Jersey
corporation. RIH has issued certain promissory notes and guarantees relating to
the Mortgage Notes and Junior Mortgage Notes.

RISK FACTORS

The Mortgage Notes and Units offered hereby involve certain risks that
should be carefully considered by prospective investors. See "Risk Factors."

EMERGENCE FROM BANKRUPTCY

On May 3, 1994, a joint plan of reorganization proposed by RII,
together with certain of its debtor and non-debtor subsidiaries, including
RIHF, became effective. As a result, among other things, RII has significantly
reduced its consolidated debt and sold its former casino, hotel and resort
operations on Paradise Island in The Bahamas. See "Restructuring of Series
Notes" and "Pro Forma Financial Data."

7
<PAGE> 11
THE OFFERING

The following securities may be offered from time to time by the
Selling Securityholders:

$17,562,000 principal amount of 11% Mortgage Notes due 2003, issued by
RIHF.

776 Units, each Unit consisting of $1,000 principal amount of 11.375%
Junior Mortgage Notes due 2004, issued by RIHF, and one share of Class B Common
Stock, issued by RII.

The Mortgage Notes and Junior Mortgage Notes are guaranteed by RIH and
secured by the Resorts Casino Hotel. See "Description of Mortgage Notes" and
"Description of Junior Mortgage Notes."

None of the securities are being offered by the Company, which will
receive none of the proceeds of any sales. See "Selling Securityholders" and
"Plan of Distribution."

8
<PAGE> 12

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA

The following tables set forth certain historical and pro forma
consolidated financial data for RII and RIH. The pro forma statement of
operations data give effect to the Restructuring as if it had occurred on
January 1, 1994. See "Restructuring of Series Notes." The unaudited pro forma
financial information is not necessarily indicative of future results or what
the respective entities' results of operations would actually have been had the
transactions occurred on the date indicated. Such information should not be
used as a basis to project results for any future periods. For additional
information, see the Consolidated Financial Statements and the notes thereto
and "Pro Forma Financial Data" and the notes thereto.

RII Statement of Operations Data:
Operating revenues . . . . . . . . . . . . . . . . . $436.9 $439.6 $353.0 $285.6
Depreciation . . . . . . . . . . . . . . . . . . . . 23.3 27.9 17.3 13.2
Earnings (loss) from operations . . . . . . . . . . 21.5 12.9 (48.6) 12.7
Interest income (expense), net(a) . . . . . . . . . (73.5) (105.3) (47.6) (26.2)
Recapitalization costs . . . . . . . . . . . . . . . (2.8) (8.8) (5.2)
Proceeds from Litigation Trust(b) . . . . . . . . . 2.5 2.5
Loss before income taxes and extraordinary items . . (54.8) (101.2) (98.9) (11.0)
Loss before extraordinary items . . . . . . . . . . (53.5) (102.2) (98.9) (11.0)
Extraordinary items(c) . . . . . . . . . . . . . . . 190.0
Net earnings (loss) . . . . . . . . . . . . . . . . (53.5) (102.2) 91.1

Per Share data:
Loss before extraordinary items . . . . . . . . . . (2.65) (5.07) (3.02) (.29)
Extraordinary items . . . . . . . . . . . . . . . . 5.81
Net earnings (loss) . . . . . . . . . . . . . . . . (2.65) (5.07) 2.79

Ratio of earnings to fixed charges(d) . . . . . . . . - - - -
</TABLE>

<TABLE>
<CAPTION>
Historical
----------
December 31, 1994
-----------------
<S> <C>
RII Balance Sheet Data:
Cash and cash equivalents(e) . . . . . . . . . . . . . . . . . . . . . . . . . . $ 35.5
Net property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 246.8
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317.2
Long-term debt, excluding current maturities(f) . . . . . . . . . . . . . . . . 212.5
Shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.0
Book value per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
</TABLE>

9
<PAGE> 13

<TABLE>
<CAPTION>
Historical Pro Forma
---------- ---------
For the Year
------------
For the Year Ended December 31, Ended
------------------------------- -----
1992 1993 1994 December 31, 1994
---- ---- ---- -----------------
(in millions except ratios)
<S> <C> <C> <C> <C>
RIH Statement of Operations Data:
Operating revenues . . . . . . . . . . . . . . . . . $262.7 $271.5 $276.7 $276.7
Depreciation . . . . . . . . . . . . . . . . . . . . 11.4 13.7 13.2 13.2
Earnings from operations . . . . . . . . . . . . . . 21.0 12.1 20.8 20.8
Interest income (expense), net (g) . . . . . . . . . 7.3 7.4 (8.0) (16.6)
Recapitalization costs . . . . . . . . . . . . . . . (.9) (2.7) (1.0)
Earnings before income taxes and extraordinary
item . . . . . . . . . . . . . . . . . . . . . . . 27.4 16.8 11.8 4.2
Earnings before extraordinary item . . . . . . . . . 16.4 16.4 11.8 4.2
Extraordinary item (c) . . . . . . . . . . . . . . . 4.0
Net earnings . . . . . . . . . . . . . . . . . . . . 16.4 16.4 15.8
Ratio of earnings to fixed charges . . . . . . . . . 21.5 16.0 1.9 1.2
</TABLE>

<TABLE>
<CAPTION>
Historical
----------
December 31, 1994
-----------------
<S> <C>
RIH Balance Sheet Data:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . $ 26.9
Net property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . 157.5
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212.7
Notes payable to affiliate and other long-term debt,
excluding current maturities . . . . . . . . . . . . . . . . . . . . . . . . 125.3
Shareholder's equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.1
</TABLE>

<TABLE>
<CAPTION>
Historical
----------
From May 3 through
(in millions of dollars) December 31, 1994
-----------------
<S> <C>
RIHF Statement of Operations Data (h):
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11.6
Interest expense (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.6
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 0 -
</TABLE>

<TABLE>
<CAPTION>
Historical
----------
December 31, 1994
-----------------
<S> <C>
RIHF Balance Sheet Data:
Interest and notes receivable from affiliates(f) . . . . . . . . . . . . . . . 129.4
Interest payable and long-term debt(f) . . . . . . . . . . . . . . . . . . . . 129.4
</TABLE>

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

(a) Amounts presented include amortization of debt discount.

(b) Proceed from Litigation Trust represents a distribution that RII
received from a litigation trust established under the Company's 1990
plan of reorganization to pursue certain claims against a former
affiliate.

(c) As described in Note 2 of Notes to Consolidated Financial Statements
of RII, as part of the Restructuring the Company exchanged the Series
Notes for certain consideration. The difference between the carrying
value of the Series Note and

10
<PAGE> 14

the sum of the fair values of the items exchanged therefor resulted in
a gain of $186,000,000 which is reported as an extraordinary item.

In November 1994, RIH purchased 12,899 Units comprising $12,899,000
principal amount of Junior Mortgage Notes and 12,899 shares of Class B
Stock of RII at a price of $6,740,000. The resulting gain of
$4,008,000 was recorded as an extraordinary item.

(d) The ratios of earnings to fixed charges were computed by dividing
earnings available for fixed charges (earnings before income taxes
adjusted for interest expense, amortization of debt discount and
one-third of rent expense) by fixed charges. Fixed charges include
interest expense, amortization of debt discount and one-third of rent
expense. RII's historical earnings were insufficient to cover fixed
charges by $54,802,000 for 1992; $101,164,000 for 1993; and
$98,891,000 for 1994. Pro forma earnings were insufficient to cover
fixed charges by $11,012,000. For ratios of earnings to fixed charges
for additional periods see "Selected Historical Financial Data."

(e) Excludes restricted cash equivalents.

(f) Amounts are net of unamortized discounts.

(g) The 1994 historical and pro forma amounts include amortization of debt
discount.

(h) RIHF was incorporated in 1993 and had no operations prior to May 3,
1994.

THE COMPANY

RII is a holding company which, through its subsidiary, RIH, is
principally engaged in the ownership and operation of the Resorts Casino Hotel
in Atlantic City, New Jersey. In addition, RII owns land in Atlantic City at
various sites, including approximately 10 acres of Boardwalk property that the
Company leases to ACS under the Showboat Lease, and approximately 90 acres
which are available for development. RII was incorporated in 1958 and is a
Delaware corporation.

RIHF was incorporated in Delaware in 1993 for the limited purpose of
issuing the Mortgage Notes and the Junior Mortgage Notes, and receiving certain
corresponding promissory notes of RIH. RIHF also has entered into the Senior
Facility and may issue the Senior Facility Notes. RIHF is a wholly owned
subsidiary of RII.

11
<PAGE> 15
RIH owns and operates all the property and improvements of the Resorts
Casino Hotel. The Resorts Casino Hotel is located on the Boardwalk in Atlantic
City, New Jersey, and has approximately 670 guest rooms, a 60,000-square-foot
casino and related facilities. RIH was incorporated in 1903 and is a New Jersey
corporation wholly owned by RII. RIH has issued certain promissory notes and
guarantees relating to the Mortgage Notes and Junior Mortgage Notes.

RECENT DEVELOPMENTS

On February 5, 1994, RII (and a subsidiary, GGRI, Inc. ("GGRI"))
commenced a solicitation of acceptances of a joint plan of reorganization (the
"Plan") prior to initiating cases under chapter 11 of Title 11 of the United
States Code (the "Bankruptcy Code") as part of a "prepackaged bankruptcy." The
requisite acceptances for confirmation of the Plan were received and, on March
21, 1994, the Plan was filed with the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court") which confirmed the Plan on April
22, 1994. The Plan became effective on May 3, 1994.

Pursuant to the Plan, RII's former Series Notes were exchanged for the
Mortgage Notes, Units consisting of the Junior Mortgage Notes and Class B
Common Stock, shares of Common Stock, par value $.01 per share (the "Common
Stock") of RII, shares of an unaffiliated corporation that now owns the
Company's former Paradise Island assets and operations in The Bahamas, and
certain cash consideration.

As a result of the Restructuring of the Series Notes effected by the
Plan, the Company's only significant remaining assets and operations are those
located in Atlantic City, New Jersey.

See "Risk Factors," "Restructuring of Series Notes," "Pro Forma
Financial Data" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" as to the foregoing and other related
information contained in this Prospectus.

RISK FACTORS

Investors should carefully consider all of the information set forth
in this Prospectus. In particular, careful consideration should be given to the
information set forth below with respect to certain risk factors generally
applicable to an investment in the Mortgage Notes or Units.

12
<PAGE> 16
CONTINUING HIGH LEVERAGE; FUTURE REFINANCINGS

The Company is highly leveraged. The Company's aggregate publicly
issued recourse indebtedness totals approximately $147,000,000, assuming no
borrowing is made under the Senior Facility described under "Restructuring of
Series Notes." The Company's high leverage poses substantial risks to holders
of the Company's debt and equity securities.

Debt service on the Mortgage Notes and Junior Mortgage Notes is
premised solely on cash flows generated from the continued operation of the
Resorts Casino Hotel. There can be no assurance that the Company will generate
sufficient cash from operations to repay, when due, the principal amount of the
Mortgage Notes maturing in 2003, or the principal amount of the Junior Mortgage
Notes maturing in 2004. As a result, the Company may be required to refinance
such amounts as they become due and payable. While the Company believes that it
will be able to refinance such amounts, there can be no assurance that any such
refinancing would be consummated or, if consummated, would be in an amount
sufficient to repay such obligations, particularly in light of the Company's
high level of debt. If the Company is unable to effectuate such refinancings or
renewals in the ordinary course of business, it may be required to sell equity
interests in the Company. The sale of additional equity interests in the
Company could result in substantial dilution of the interests of the Company's
existing equity holders. There can be no assurance that such sales would be
consummated or, if consummated, would be in an amount sufficient to repay such
obligations in full. The failure to raise sufficient amounts of capital from
such sales could ultimately result in the Company's inability to meet its debt
obligations, including its obligations under the Mortgage Notes and the Junior
Mortgage Notes.

RECENT LOSSES

The Company experienced losses before extraordinary items of
$53,454,000, $102,164,000 and $98,891,000 in its fiscal years ended December
31, 1992, 1993 and 1994, respectively. In addition, the Company's earnings
before fixed charges were inadequate to cover fixed charges by $54,802,000,
$101,164,000 and $98,891,000 for the fiscal years ended December 31, 1992,
1993 and 1994, respectively. See "Pro Forma Financial Data," in this
connection.

INVOLVEMENT OF MERV GRIFFIN

The involvement of Merv Griffin, Chairman of the Board of RII, in the
affairs of the Company is believed to be extremely important to its future
prospects. The Company believes Merv Griffin's participation enhances and
projects a high positive profile for the Company's operations, and helps to
distinguish

13
<PAGE> 17
the Company from its competitors. There can be no assurance that Merv Griffin's
involvement will continue beyond September 17, 1997, the termination date of
the License and Services Agreement (the "Griffin Services Agreement"), dated
and effective as of September 17, 1992, among RII and RIH, and The Griffin
Group, Inc. (the "Griffin Group"), a corporation controlled by Mr. Griffin.

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

Original Issue Discount. The Junior Mortgage Notes and the Mortgage
Notes were issued with original issue discount ("OID"). A holder of such notes
may be required for Federal income tax purposes to report interest income at a
rate that is higher than the stated interest rate and in advance of the receipt
of cash interest. See "Certain Federal Income Tax Considerations - OID with
Respect to the New Debt Securities."

ADDITIONAL SENIOR SECURED DEBT; SUBORDINATION

The Company's senior secured note purchase agreement, the Senior
Facility, among RIHF, RII and RIH and certain funds and accounts advised or
managed by Fidelity Management & Research Company ("Fidelity"), as recently
amended, allows RIHF to borrow up to $19,738,000 through the issuance of Senior
Facility Notes. The Company believes that the Senior Facility will serve as a
safeguard if an emergency arises from current operations, or serve as a source
of funds for a profitable investment opportunity. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Financial
Condition - Liquidity of RII." If borrowings are made under the Senior
Facility, the Company's debt burden would increase. The Senior Facility Notes
will be senior obligations issued by RIHF secured by, among other things, an
assignment of a promissory note of RIH (the "RIH Senior Facility Promissory
Note") in an aggregate principal amount of up to $19,738,000 payable in amounts
and at times necessary to pay the principal of and interest on the Senior
Facility Notes. The RIH Senior Facility Promissory Note will be secured by a
lien on the Resorts Casino Hotel. The Senior Facility Notes will be guaranteed
by RIH (the "RIH Senior Facility Guaranty"). This guaranty also will be secured
by a lien on the Resorts Casino Hotel. RII also will issue a guaranty of the
payment of principal and interest on the Senior Facility Notes to be secured by
a pledge of the issued and outstanding stock of GGRI and RIHF. The Senior
Facility Notes also will be secured by a pledge by GGRI, which became RIH's
parent as a result of the Restructuring, of all issued and outstanding shares
of RIH.

The liens on the Resorts Casino Hotel securing the payment of the RIH
Promissory Note, the Mortgage Note Guaranty, the RIH Junior Promissory Note and
the Junior Mortgage Note Guaranty,

14
<PAGE> 18
respectively, will be subordinated to the liens securing the RIH Senior
Facility Promissory Note and the RIH Senior Facility Guaranty.

SECURITY FOR THE MORTGAGE NOTES AND THE JUNIOR MORTGAGE NOTES

If an Event of Default (as defined in either the indenture pursuant to
which the Senior Facility Notes may be issued or the indenture pursuant to
which the Mortgage Notes were issued (the "Mortgage Note Indenture") or the
Junior Mortgage Note Indenture) occurs, there can be no assurance that a
foreclosure on the Resorts Casino Hotel would produce proceeds in an amount
that would be sufficient to pay, first, the principal of, and accrued interest
on, the Senior Facility Notes (if any), second, the principal of, and accrued
interest on, the Mortgage Notes, and third, the principal of, and accrued
interest on, the Junior Mortgage Notes.

In any foreclosure sale of the Resorts Casino Hotel, the purchaser
would be required to be licensed to own the Resorts Casino Hotel under the New
Jersey Casino Control Act and the regulations promulgated thereunder (the
"Casino Control Act"). If the trustee for either the Mortgage Notes or the
Junior Mortgage Notes, as the case may be, were unable to, or chose not to,
sell the Resorts Casino Hotel, the trustee for either the Mortgage Notes or the
Junior Mortgage Notes, as the case may be, would be required to be licensed
under the Casino Control Act to operate the Resorts Casino Hotel. Such
requirements limit the number of potential bidders and may delay the sale of,
and may adversely affect the sales price for, the Resorts Casino Hotel. The
ability to take possession and dispose of the Resorts Casino Hotel upon
acceleration of the Senior Facility Notes, the Mortgage Notes and the Junior
Mortgage Notes is likely to be significantly impaired or delayed by applicable
bankruptcy law if a reorganization case were to be commenced by or against RII,
RIHF or RIH prior to the foreclosure upon or disposition of the Resorts Casino
Hotel by the trustee for either the Senior Facility Notes, the Mortgage Notes
or the Junior Mortgage Notes.

COMPETITION

General. The Company competes directly with other casino operators in
the Atlantic City market in which it operates, principally on the basis of
price, quality and customer service. Such competition has intensified in recent
years. See "Description of Business." The Company faces competition from cruise
lines, riverboat gambling, casinos located in Atlantic City, New Jersey, New
York, Connecticut, Nevada, Puerto Rico, The Bahamas and other locations outside
the United States, from other forms of legalized gaming in New Jersey and in
its surrounding states such as lotteries, horse racing, jai-alai, dog racing
and other legalized gaming activities and from illegal wagering of

15
<PAGE> 19

various types. The Company also would compete with any facilities in
jurisdictions that may authorize casino gaming or other forms of wager in the
future. Legalized gambling in some form or another is now allowed in 48 states.
Since 1988, Indian tribes have negotiated at least 131 compacts with 23 states
to operate legalized gambling, not including bingo parlors. The large increase
in Indian reservation casinos, along with a rapid expansion of riverboat
gambling and other casino gambling, may adversely affect the Company's
operations, particularly if casino gaming were permitted in jurisdictions
adjacent to, or elsewhere in, New Jersey. Currently, casino gaming is not
allowed in other areas of New Jersey, but is under consideration in
Pennsylvania.

The Mashantucket Pequot Indians operate a casino facility in Ledyard,
Connecticut, located in the eastern portion of the state. The facility opened
in early 1991 with authorization to conduct table gaming operations only, and
in January 1993, slot machines were authorized. In July 1993, the Oneida
Indians opened a casino near Syracuse, New York. In October 1993 approval was
granted for the construction of a high-stakes gambling casino on the St. Regis
Mohawk reservation in New York State near the Canadian border, 50 miles
southwest of Montreal. The casinos in Connecticut and New York may have an
adverse effect on the Atlantic City casino industry.

Atlantic City. Competition in the Atlantic City casino/hotel market is
intense. Casino/hotels compete primarily on the basis of promotional
allowances, entertainment, advertising, services provided to patrons, caliber
of personnel, attractiveness of the hotel and casino areas and related
amenities and parking facilities. The Resorts Casino Hotel competes directly
with 11 casino/hotels in Atlantic City which, in the aggregate, contain
approximately 860,000 square feet of gaming area, including simulcast betting
and poker rooms and 8,500 hotel rooms. The total amount of gaming area of the
competing properties is expected to increase as the Showboat Casino Hotel (the
"Showboat Casino") has recently announced plans for a sizable addition to its
casino gaming floor. The Showboat Casino is located on approximately ten acres
of Boardwalk property owned by the Company and leased to ACS under the Showboat
Lease. Also, several competitors are expected to add racetrack simulcasting
rooms which are permitted to house authorized table games. Unlike casino gaming
floor area, which is regulated based on the number of guest rooms at a
particular property, the size of simulcasting rooms is not limited.

The Resorts Casino Hotel is located at the eastern end of the
Boardwalk adjacent to the Trump Taj Mahal Casino-Resort (the "Taj Mahal") and
the Showboat Casino. These three properties have a total of more than 2,700
hotel rooms and 295,000 square feet of gaming space in close proximity to each
other. A 28-foot wide enclosed pedestrian bridge between the Resorts Casino
Hotel and

16
<PAGE> 20

the Taj Mahal allows patrons of both hotels and guests for events being held at
the Resorts Casino Hotel and at the Taj Mahal to move between the facilities
without exposure to the weather. A similar enclosed pedestrian bridge connects
the Showboat Casino to the Taj Mahal, allowing patrons to walk under cover
among all three casino/hotels. The remaining nine Atlantic City casino/hotels
are located approximately one-half mile to one and one-half miles to the west
on the Boardwalk or in the Marina area of Atlantic City.

NEW JERSEY REGULATORY MATTERS

The ownership and operations of casino/hotel facilities and related
businesses in Atlantic City are the subject of strict state regulation under
the Casino Control Act. The Casino Control Act also imposes substantial
restrictions on the ownership of equity and debt securities of a company
holding a casino license, or an intermediary, holding company or affiliate of a
casino licensee. As a holding company of a casino licensee, RII is required to
register with the New Jersey Casino Control Commission (the "Casino Control
Commission") and obtain qualification approval by meeting essentially the same
requirements as a casino licensee.

A casino license initially is issued for a term of up to one year and
must be renewed annually by action of the Casino Control Commission for the
first two renewal periods succeeding the initial issuance of a casino license.
Thereafter, a casino license is renewed for a period of up to two years,
although the Casino Control Commission may reopen licensing hearings at any
time. A license is not transferable and may be conditioned, revoked or
suspended at any time upon proper action by the Casino Control Commission. The
Casino Control Act also requires an operations certificate which, in effect,
has a term coextensive with that of a casino license. On February 26, 1979, the
Casino Control Commission granted a casino license to RIH for the operation of
the Company's Atlantic City casino. In February 1994, RIH's license was renewed
until January 31, 1996. RIH's renewed license is subject to several conditions,
including: (i) the submission of periodic reports and immediate notification of
certain events related to RII's public debt securities to the Casino Control
Commission; (ii) submission of certain financial and other reports relative to
the Restructuring and certain other periodic financial reports to the Casino
Control Commission; (iii) obtaining approval of the Casino Control Commission
prior to making certain payments from RIH to related parties; and (iv)
obtaining approval of the Casino Control Commission prior to borrowing under
the Senior Facility.

There can be no assurance that the Company will receive or continue to
receive all authorizations needed for the operation of the Company's Atlantic
City casino and thereby be permitted,

17
<PAGE> 21
in the future, to continue to operate the Resorts Casino Hotel. Failure to
maintain a casino license would have a material adverse effect on the Company's
ability to make payments in respect of the Mortgage Notes and the Junior
Mortgage Notes. See "Description of Business -- Regulation and Gaming Taxes and
Fees".

POTENTIAL DISQUALIFICATION OF HOLDERS BY THE CASINO CONTROL COMMISSION

Additionally, the Casino Control Commission imposes certain
restrictions upon the ownership of securities issued by a corporation which
holds a casino license or is a holding, intermediary, subsidiary or affiliated
company of a corporate licensee. Among other restrictions, the sale,
assignment, transfer, pledge or other disposition of any security issued by a
corporation which holds a casino license is conditional and shall be
ineffective if disapproved by the Casino Control Commission. If the Casino
Control Commission finds that an individual owner or holder of any securities
of a corporate licensee or any holding or affiliated company must be qualified
and is not qualified under the Casino Control Act, the Casino Control
Commission has the right to propose any necessary remedial action. In the case
of corporate holding or affiliated companies whose securities are publicly
traded, the Casino Control Commission may require divestiture of the security
held by any disqualified holder who is required to be qualified under the
Casino Control Act.

If entities or persons required to be qualified refuse or fail to
qualify and fail to divest themselves of such security interest, the Casino
Control Commission has the right to take any necessary action, including the
revocation or suspension of the casino license. If any security holder of the
licensee or any holding or affiliated company who is required to be qualified
is found disqualified, it will be unlawful for the security holder: (i) to
receive any dividends or interest upon any such securities; (ii) to exercise,
directly or through any trustee or nominee, any right conferred by such
securities; or (iii) to receive any remuneration in any form from the corporate
licensee for services rendered or otherwise. The Amended and Restated
Certificate of Incorporation of RII provides that all securities of RII are
held subject to the condition that, if the holder thereof is found to be
disqualified by the Casino Control Commission pursuant to provisions of the
Casino Control Act, such holder must dispose of his or her interest in the
securities.

RISK OF HIGHLY LEVERAGED TRANSACTION

The Junior Mortgage Note Indenture does not require RIHF to offer to
purchase the Junior Mortgage Notes upon occurrence of a change of control and
may not afford holders of the Junior Mortgage Notes protection in the event of
a highly leveraged

18
<PAGE> 22
transaction, reorganization, restructuring, merger or similar transaction
involving the Company that may adversely affect holders the Junior Mortgage
Notes.

RESTRUCTURING OF SERIES NOTES

BACKGROUND

The outstanding principal amount of RII's Series Notes, which were
scheduled to mature on April 15, 1994, was $481,907,000. According to the
terms of the Series Notes, the interest due on the maturity date would have
been approximately $36,000,000 and RII's total obligation at maturity would
have amounted to approximately $518,000,000.

The Company's ability to pay the principal balance due on the Series
Notes at maturity was premised on certain assumptions included in RII's 1990
plan of reorganization (the "Old Plan"), the most significant of which was the
Company's ability to sell its former Paradise Island Resort & Casino, Ocean
Club Golf & Tennis Resort, Paradise Paradise Beach Resort and related assets,
all located on Paradise Island, The Bahamas, by December 31, 1991 at a price
ranging from $250,000,000 to $300,000,000. Other assumptions included the
Company's ability to generate substantial excess cash flow from its operations
and the Company's ability to sell its non-operating real estate holdings in
Atlantic City at acceptable prices. However, the recession in the United
States, and more specifically in the northeast sector, the acute competition in
Atlantic City and The Bahamas, the unexpected increase in competition from
other jurisdictions, the unforeseen difficulty in selling the Paradise Island
assets at the projected price, and the adverse impact of the conflict in the
Persian Gulf in early 1991 on transportation and tourism, all adversely
affected the Company's ability to realize the assumptions in the Old Plan.

Although the Company did not discontinue its efforts to sell the
Paradise Island assets, it experienced a very limited amount of interest by
prospective purchasers. The only offer the Company received for its Paradise
Island assets prior to the Restructuring was made in August 1991. That offer
would have netted the Company approximately $150,000,000 if the transaction had
been consummated. This amount was inadequate to retire sufficient Series Notes
at par so as to permit the Company's then remaining Atlantic City operations to
service the debt that would have remained outstanding. Subsequent discussions
with the prospective purchaser did not lead to a definitive agreement, and the
discussions terminated in early 1992.

As the possibilities of a sale of the Paradise Island assets at other
than a depressed price diminished and the Company was

19
<PAGE> 23
unable to generate substantial excess cash flow from its operations, the
principal amount of the Series Notes (originally $325,000,000) increased due to
a payment-in-kind interest feature of the Series Notes, which allowed the
Company to satisfy interest obligations on its Series Notes by the issuance of
additional Series Notes in lieu of making cash interest payments. Thus, it
became evident that in order for the Company to reduce its debt to a level that
could be supported by the cash flow reasonably anticipated on a continuing
basis, it had to develop financial alternatives other than, or in conjunction
with, a sale of its Paradise Island assets. The Company worked with its
financial advisers on developing and analyzing financial alternatives, as well
as developing a long-term financial plan, since late 1991. In this connection,
management of the Company, with the assistance of its legal and financial
advisers, commenced discussions with representatives of major holders of Series
Notes in the summer of 1992 in an effort to reach an agreement as to the terms
of a possible restructuring of the Series Notes. This process resulted in the
Restructuring described below.

RESTRUCTURING

On October 25, 1993, RII and three of its subsidiaries, RIH, RIHF and
P.I. Resorts Limited ("PIRL"), filed a Form S-4 Registration Statement (No.
33-50733) under the Securities Act. That registration statement described in
detail the Restructuring which RII and GGRI, RII's subsidiary which guaranteed
the Series Notes, proposed to accomplish through the Plan, which was proposed
and for which acceptances were solicited before commencing cases under chapter
11 of the Bankruptcy Code. This process is known as a "prepackaged bankruptcy."
On February l, 1994, after certain amendments, the registration statement was
declared effective. On February 5, 1994 the solicitation of acceptances of the
Plan commenced with the mailing of the Information Statement/Prospectus for
Solicitation of Votes on Prepackaged Plan of Reorganization, ballots and other
materials to holders of Series Notes, RII's Common Stock and stock options (the
"1990 Stock Options") issued pursuant to the RII Senior Management Stock Option
Plan (the "1990 Stock Option Plan"). Holders of Series Notes, Common Stock and
1990 Stock Options as of January 10, 1994 (the "Voting Record Date") were
entitled to vote on the Plan. The solicitation period ended on March 15, 1994.
The Company received the requisite acceptances for confirmation of the Plan and
filed the Plan with the Bankruptcy Court on March 21, 1994. The Plan was
confirmed by the Bankruptcy Court on April 22, 1994 and on May 3, 1994 (the
"Effective Date"), all conditions to the effectiveness of the Plan were met or
waived and the Plan became effective.

Accordingly, on the Effective Date pursuant to the Order of the
Bankruptcy Court confirming the Plan, all Series Notes were

20
<PAGE> 24
cancelled on the books of RII and were settled in consideration of the right to
participate in the distributions under the Plan. Except as the context may
otherwise indicate, all references in this Prospectus to principal amounts of
Mortgage Notes and Junior Mortgage Notes, and shares of Class B Common Stock
and Common Stock outstanding, and to the ownership thereof, assume that the
distribution of such securities pursuant to the Plan occurred on the Effective
Date.

The Plan was the result of extensive negotiations among RII, Fidelity
and TCW Special Credits on behalf of various funds and accounts advised or
managed by it ("TCW"). Fidelity and TCW separately advise and manage various
funds and accounts that as of the Voting Record Date held in the aggregate
approximately 64% of the outstanding principal amount of Series Notes. In
addition, RII, Fidelity and TCW held discussions with Sun International
Investments Limited ("SIIL"), an unaffiliated company, regarding the purchase
of a 60% interest in the Company's Paradise Island assets (the "SIHL Sale")
through a subsidiary of SIIL, Sun International Hotels Limited ("SIHL"), formed
for that purpose. Pursuant to the Plan, Fidelity and TCW and their agents were
entitled to and have received reimbursement by the Company for reasonable fees
and expenses incurred in connection with the prepackaged bankruptcy effected
under the Plan.

Pursuant to the Plan the Company effected, among other things, the
exchange of the Series Notes for: (i) $125,000,000 aggregate principal amount
of Mortgage Notes; (ii) Units consisting of a total of $35,000,000 aggregate
principal amount of Junior Mortgage Notes, and 35,000 shares of Class B Common
Stock; (iii) 40% of the Common Stock of RII on a fully diluted basis (excluding
1990 Stock Options and options to be issued under a newly implemented stock
option plan (the "1994 Stock Option Plan")); (iv) $65,000,000 in cash, plus
interest at an annual rate of 7.5% from January 1, 1994 through May 3, 1994,
the closing date of the SIHL Sale, plus 40% of the capital stock of SIHL,
representing the consideration received from the SIHL Sale; and (v) the
Company's Excess Cash, as defined in the Plan, which was in excess of
$30,000,000.

The Plan also provided for certain funds or accounts managed by
Fidelity to enter into the Senior Facility with RIHF which, subject to the
terms thereof, will allow RIHF to borrow up to $20,000,000 through the issuance
of the Senior Facility Notes. The Senior Facility was to be available for a
single borrowing during the one-year period from the Effective Date. If issued,
the Senior Facility Notes were to bear interest at 11% per year and mature in
2002. RIHF and Fidelity recently amended the Senior Facility, which amendment
(i) extended the borrowing period through May 2, 1996, (ii) increased the
interest rate to 11.75% and (iii) reduced the maximum amount of the potential
borrowing to $19,738,000. Market interest rates and other

21
<PAGE> 25

economic conditions, among other factors, will determine if it is appropriate
for the Company to draw on the Senior Facility. Any amount borrowed by RIHF
under the Senior Facility will be loaned by RIHF to RIH, and possibly by RIH to
RII, through intercompany transactions and will be used for working capital and
general corporate purposes. It is a condition of the Senior Facility that any
Senior Facility Notes issued thereunder be registered under the Securities Act
for public resale.

The following transactions, among others, also were effected in
connection with the consummation of the Plan: (i) the initial
post-Restructuring directors of RII were named to the RII Board of Directors
(see "Management of RII"); (ii) RII issued warrants, exercisable through May 3,
1998, to purchase 4,666,850 shares of RII Common Stock at $1.20 per share (the
"Griffin Warrants") to Griffin Group (see "Griffin Services Agreement" under
"Management of RII - Executive Compensation - Compensation Committee Interlocks
and Insider Participation"); (iii) termination of the 1990 Stock Option Plan
(although existing holders of 1990 Stock Options retained their options); and
(iv) implementation of the 1994 Stock Option Plan, which allows for the
granting of options to purchase up to 5% of the outstanding Common Stock of
RII.

PARADISE ISLAND ASSETS ACQUIRED BY SIHL

The Paradise Island assets acquired by SIHL in the SIHL Sale include
all the properties owned by the Company and its operations relating to its
former business in The Bahamas; principally, the Paradise Island Resort &
Casino, the Ocean Club Golf & Tennis Resort, and the Paradise Paradise Beach
Resort. The Paradise Island Resort & Casino includes two hotel towers totalling
1,186 guest rooms, the 30,000 square foot Paradise Island casino and related
facilities. The Ocean Club Golf & Tennis Resort is an exclusive 71-room hotel
with premium room rates. The Paradise Paradise Beach Resort is a 100-room hotel
complex that offers more moderately priced accommodations. The assets acquired
by SIHL include convention facilities, shops, restaurants, bars and lounges, an
18-hole golf course, tennis courts and swimming pools, approximately six miles
of beach and water frontage and other resort facilities on Paradise Island. A
total of 562 acres on Paradise Island, 218 of which were not used in the
Company's former operations and were available for future development, were
included in the SIHL Sale. Also, certain assets located in Florida and used in
connection with the Company's former Paradise Island operations were included
in the SIHL Sale. See "Pro Forma Financial Data."

22
<PAGE> 26
CAPITALIZATION OF RII

The following table sets forth the consolidated capitalization of RII
and its subsidiaries at December 31, 1994.

<TABLE>
<CAPTION>
(in thousands)
--------------
<S> <C>
Current maturities of long-term debt: . . . . . . . . . . . . . . . . . . . $ 5
--------
Long-term debt:
Mortgage Notes(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106,877
Junior Mortgage Notes(b) . . . . . . . . . . . . . . . . . . . . . . . . . 18,432
Senior Facility Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Showboat Notes(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,149
--------

Total long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . 212,458
--------
Shareholders' equity:
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 397
Class B Common Stock(d) . . . . . . . . . . . . . . . . . . . . . . . . .
Capital in excess of par . . . . . . . . . . . . . . . . . . . . . . . . . 129,237
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . (119,603)
---------

Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . 10,031
--------
Total capitalization . . . . . . . . . . . . . . . . . . . . . . . . . $222,494
========
</TABLE>

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

(a) See "Description of Mortgage Notes." Balance is net of unamortized
discount of $18,123,000.

(b) See "Description of Junior Mortgage Notes." Balance is net of
$12,899,000 principal amount of notes held by RIH and unamortized
discount of $3,669,000.

(c) See Note 7 of Notes to Consolidated Financial Statements of RII for a
description of RII's First Mortgage Non-Recourse Pass-Through Notes
due June 30, 2000 (the "Showboat Notes"). Amounts are net of
unamortized discount of $18,184,000.

(d) See "Description of Class B Common Stock.

23
<PAGE> 27

CAPITALIZATION OF RIH

The following table sets forth the consolidated capitalization of RIH
and its subsidiaries at December 31, 1994.

<TABLE>
<CAPTION>
(in thousands)
--------------
<S> <C>
Long-term debt:
RIH Promissory Note due to affiliate (a) $106,877
RIH Junior Promissory Note due to affiliate (b) 18,432
RIH Senior Facility Promissory Note 0
--------

Total long-term debt 125,309
--------

Shareholder's equity:
Common stock 1,000
Capital in excess of par 21,366
Retained earnings 12,770
--------

Total shareholder's equity 35,136
--------

Total capitalization $160,445
========
</TABLE>

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

(a) Note payable to RIHF with terms that mirror the Mortgage Notes. See
"Description of Mortgage Notes." Balance is net of unamortized
discount of $18,123,000.

(b) Note payable to RIHF with terms that mirror the Junior Mortgage Notes.
See "Description of Junior Mortgage Notes." Balance is net of
$12,899,000 principal amount of Junior Mortgage Notes held by RIH and
unamortized discount of $3,669,000.

24
<PAGE> 28
CAPITALIZATION OF RIHF

The following table sets forth the consolidated capitalization of RIHF
at December 31, 1994.

<TABLE>
<CAPTION>
(in thousands)
--------------
<S> <C>
Long-term debt:
Mortgage Notes(a) $106,877
Junior Mortgage Notes(b) 18,432
Senior Facility Notes 0
--------
Total long-term debt 125,309

Shareholder's equity 0
--------
Total capitalization $125,309
========
</TABLE>

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

(a) See "Description of Mortgage Notes." Balance is net of unamortized
discount of $18,123,000.

(b) See "Description of Junior Mortgage Notes." Balance is net of
$12,899,000 principal amount of notes held by RIH and unamortized
discount of $3,669,000.

25
<PAGE> 29
SELECTED HISTORICAL FINANCIAL DATA

The information presented below should be read in conjunction with the
consolidated financial statements, including notes thereto, presented elsewhere
in this Prospectus.

RESORTS INTERNATIONAL, INC.
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
For the Year Ended December 31,
1990

From Through
Operating Information (Note A) 1994 1993 1992 1991 September 1 August 31
<S> <C> <C> <C> <C> <C> <C>
Operating revenues (Note B) $353,016 $ 439,564 $436,934 $418,243 $129,591 $ 293,972
======== ========= ======== ======== ======== =========

Earnings (loss) from operations (Note B) (48,570) $ 12,898 $ 21,502 $ 16,036 $ (1,214) $ 13,540
Recapitalization costs (Notes A and C) (5,232) (8,789) (2,848) (187,018)
Proceeds from Litigation Trust (Note A) 2,542
Other income (deductions), net (Note D) (47,631) (105,273) (73,456) (58,438) (12,317) 1,884
-------- --------- -------- -------- -------- ---------
Loss before income taxes and
extraordinary items (101,164) (54,802) (42,402) (13,531) (171,594)
Income tax benefit (expense) (Note E) (98,891) (1,000) 1,348 831
-------- ---------- -------- -------- -------- ---------
Loss before extraordinary items (98,891) (102,164) (53,454) (41,571) (13,531) (171,594)
Extraordinary items (Note F) 190,008 429,809
-------- --------- -------- -------- -------- ---------
Net earnings (loss) $ 91,117 $(102,164) $(53,454) $(41,571) $(13,531) $ 258,215
======== ========= ======== ======== ======== =========

Per share data (Note G):
Loss before extraordinary items $ (3.02) $ (5.07) $ (2.65) $ (2.07) $ (.68)
Extraordinary items 5.81
-------- --------- -------- -------- --------
Net earnings (loss) $ 2.79 $ (5.07) $ (2.65) $ (2.07) $ (.68)
======== ========= ======== ======== ========
</TABLE>

26
<PAGE> 30

<TABLE>
<CAPTION>
At December 31,
-----------------------------------------------------------------------------------
Balance Sheet Information (Note A) 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Total assets $317,248 $ 575,785 $568,950 $567,890 $568,746

Current maturities of long-term debt
(Note H) $ 5 $ 466,336 $ 828 $ 1,571 $ 1,528

Long-term debt, excluding current
maturities (Note H) $212,466 $ 85,029 $460,712 $392,667 $341,069

Shareholders' equity (deficit) $ 10,031 $(113,744) $(17,262) $ 36,099 $ 77,041
</TABLE>

27
<PAGE> 31

Notes to Selected Financial Data

Note A: See Note 2 of Notes to Consolidated Financial Statements of RII of
a description of the transactions that occurred in connection with the
Restructuring, which was effective May 3, 1994.

In 1990 the Company emerged from bankruptcy proceedings pursuant to
a plan of reorganization which was effective September 17, 1990. The
reorganization was accounted for using "fresh start" accounting. Accordingly,
all assets and liabilities were restated to reflect their estimated fair
values. The Company recorded the effects of the reorganization as of August
31, 1990. The 1990 operating information is presented separately for the
periods "Through August 31" and "From September 1" due to the new basis of
accounting which resulted from the application of fresh start accounting.

Changes in operations during the past five years include the
following: As part of the Restructuring, on May 3, 1994, the Company sold its
Paradise Island subsidiaries as well as assets of RII and certain U.S.
subsidiaries that support the Paradise Island operations, and the Company's
scheduled airline operation which serviced routes between South Florida and
Paradise Island was effectively disposed of. See "SIHL Sale" in Note 2 of
Notes to Consolidated Financial Statements. The Company's security consulting
service operations were sold in 1990 and 1991. The Company's amphibious
airline operation was sold in December 1990.

Note B: Earnings from operations in 1994 include a charge of $20,525,000
for the write-down of certain non-operating properties to net realizable value.
Operating revenues for 1994 include the sales of various parcels of land in
Atlantic City for net proceeds of $534,000. Earnings from operations include a
net loss of $99,000 on those sales.

Operating revenues for 1993 include the sale of a residential lot
in The Bahamas for net proceeds of $445,000. Earnings from operations for 1993
include a net gain of $224,000 on that sale.

Operating revenues for 1992 include the sale of a residential lot
in The Bahamas for net proceeds of $213,000. Earnings from operations for 1992
include a net loss of $17,000 on that sale.

Operating revenues for 1990 include the sales of various parcels of
vacant land in The Bahamas for net proceeds of $3,933,000. Earnings from
operations for 1990 include gains of $247,000 on those sales.

Note C: See Note 2 of Notes to Consolidated Financial Statements of RII for
a discussion of this item in 1994, 1993 and 1992.

Note D: This item includes interest income, interest expense and
amortization of debt discounts.

Note E: For the years 1990 through 1992 the Company accounted for income
taxes in accordance with Statement of Financial Accounting Standards No. 96,
"Accounting for Income Taxes." Effective January 1, 1993 the Company adopted
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." There was no effect on the accompanying financial data nor was there a
cumulative effect of adopting this statement.

See Note 14 of Notes to Consolidated Financial Statements of RII
for further discussion of income taxes for 1994, 1993 and 1992. The income tax
benefit reported in 1991 represents a federal income tax refund. No tax
provision was recorded for the two periods of 1990 due to the generation of net
operating losses for federal and state income tax purposes. The gain on
exchange of debt which is reflected in the extraordinary item in 1990 was not
taxable. A deferred tax benefit resulted from the elimination of basis
differences on the previously outstanding public debt, and is included in the
extraordinary item.

Note F: As described in Note 2 of Notes to Consolidated Financial
Statements of RII, as part of the Restructuring the Company exchanged the
Series Notes for certain consideration. The difference between the carrying
value of the Series Notes of RII and the sum of the fair values of the items
exchanged therefor resulted in a gain of $186,000,000 which is reported as an
extraordinary item.

28
<PAGE> 32

In November 1994, RIH purchased 12,899 Units comprising $12,899,000
principal amount of Junior Mortgage Notes and 12,899 shares of Class B Stock of
RII at a price of $6,740,000. The resulting gain of $4,008,000 was recorded as
an extraordinary item.

The exchange of securities in connection with the reorganization in
1990 resulted in a gain of $421,611,000 which, together with the related
deferred income tax benefit of $8,198,000, is reported as an extraordinary
item.

Note G: See Note 1 of Notes to Consolidated Financial Statements of RII for
a discussion of per share data. For the period through August 31, 1990 there
was a sole shareholder of RII. Accordingly, no per share data is disclosed for
that period.

Note H: These items are presented net of unamortized discounts.

29
<PAGE> 33

RESORTS INTERNATIONAL HOTEL, INC.
(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
For the Year Ended December 31,

1990
From Through
Operating Information (Note A) 1994 1993 1992 1991 September 1 August 31
<C> <C> <C> <C> <C>
Operating revenues $276,733 $ 271,479 $ 262,740 $ 247,474 $ 76,216 $ 158,805
======== ========= ========= ========= ========= =========

Earnings from operations $ 20,791 $ 12,068 $ 21,049 $ 14,819 $ 2,304 $ 3,449
Recapitalization costs (Note B) (975) (2,727) (874) (119,804)
Affiliated bad debt write-off (Note C) (98,983)
Other income (deductions), net (Note D) (7,992) 7,422 7,181 6,942 2,696 5,209
-------- --------- --------- --------- --------- ---------
Earnings (loss) before income taxes and
extraordinary item 11,824 16,763 27,356 21,761 5,000 (210,129)
Income tax expense (Note E) (400) (10,942) (8,704)
-------- --------- --------- --------- --------- ---------
Earnings (loss) before extraordinary item 11,824 16,363 16,414 13,057 5,000 (210,129)
Extraordinary item (Note F) 4,008 (17,335)
-------- --------- --------- --------- --------- ---------
Net earnings (loss) $ 15,832 $ 16,363 $ 16,414 $ 13,057 $ 5,000 $(227,464)
======== ========= ========= ========= ========= ---------

At December 31,
Balance Sheet Information (Note A) 1994 1993 1992 1991 1990

Total assets $212,734 $ 264,164 $ 250,636 $ 235,235 $ 221,193

Current maturities of notes payable to
affiliate and other long-term debt
(Note G) $ 325,000 $ 643 $ 958 $ 1,044

Notes payable to affiliate and other
long-term debt, excluding current
maturities (Note G) $125,309 $ 325,904 $ 326,539 $ 326,787

Shareholder's equity (deficit) $ 35,136 $(147,995) $(164,358) $(180,772) $(193,829)
</TABLE>

Notes to Selected Financial Data

30
<PAGE> 34

Note A: See Note 2 of Notes to Consolidated Financial Statements of RIH for
a description of the transactions that occurred in connection with the
Restructuring, which was effective May 3, 1994.

In 1990 RII and certain of its subsidiaries emerged from bankruptcy
proceedings pursuant to a former plan of reorganization. This reorganization
was accounted for using "fresh start" accounting. Accordingly, all of RIH's
assets and liabilities were restated to reflect their estimated fair values and
its accumulated deficit was eliminated. RIH recorded the effects of the
reorganization as of August 31, 1990. The 1990 operating information is
presented separately for the periods "Through August 31" and "From September 1"
due to the new basis of accounting which resulted from the application of fresh
start accounting.

Note B: Recapitalization costs in 1992 through 1994 represent RIH's
allocated portion of RII's consolidated recapitalization costs.
Recapitalization costs in 1990 represent RIH's allocated portion of RII's
consolidated recapitalization costs as well as a net charge from restating
RIH's assets and liabilities to fair value in connection with "fresh-start"
accounting.

Note C: RIH's affiliated bad debt write-off resulted from the 1990
reorganization discussed above.

Note D: Includes interest income, interest expense and amortization of debt
discounts.

Note E: See Notes 1 and 10 of Notes to Consolidated Financial Statements of
RIH for discussion of income taxes for 1994, 1993 and 1992.

In 1991 RIH had an agreement with RII to provide for federal and
state income taxes at a combined rate of 40%.

No tax provision was recorded for the two periods of 1990 due to the
generation of additional net operating losses for federal and state income tax
purposes during the period through August 31 which were sufficient to offset
taxable income generated during the period from September 1.

Note F: In November 1994, RIH purchased $12,899,000 principal amount of
Junior Mortgage Notes through the purchase of 12,899 Units (each $1,000
principal amount of Junior Mortgage Notes is traded as a "Unit" along with one
share of RII's class B redeemable common stock) at a price of $6,740,000. The
resulting gain of $4,008,000 was recorded as an extraordinary item.

The extraordinary item in 1990 represents RIH's write-off of the
remaining balance of $17,335,000 of deferred debt issuance costs related to
certain debt securities that were cancelled pursuant to the 1990 plan of
reorganization.

Note G: These items are presented net of unamortized discounts.

31
<PAGE> 35

RESORTS INTERNATIONAL HOTEL FINANCING, INC.

(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
From May 3 through
Operating information (Note A) December 31, 1994
-----------------
<S> <C>
Operating revenues $11,604
=======

Earnings from operations and net earnings 0
=======
</TABLE>

<TABLE>
<CAPTION>
At December 31,
Balance Sheet Information (Note A) 1994
---------------
<S> <C>
Total assets $129,422
Long-term debt 125,309
Shareholder's equity 0
</TABLE>

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

A. RIHF is a wholly owned subsidiary of RII and was incorporated in 1993 for
the sole purpose of issuing the Mortgage notes and the Junior Mortgage
Notes, and receiving from RIH promissory notes which mirror the terms of
the Mortgage Notes and Junior Mortgage Notes. The Mortgage Notes and
Junior Mortgage Notes were issued in May 1994 and RIHF had no operations
prior to that time.

32
<PAGE> 36
PRO FORMA FINANCIAL DATA

Set forth below is certain unaudited pro forma financial information for
RII, RIH and RIHF. The pro forma statement of operations information for the
year ended December 31, 1994 gives effect to the Restructuring as if it
occurred on January 1, 1994. However, the pro forma statement of operations
information excludes the gains (losses) resulting from the Restructuring and
the costs associated therewith. The unaudited pro forma information is not
necessarily indicative of future results or what the respective entities'
results of operations would actually have been had the transactions occurred on
January 1, 1994. Such information should not be used as a basis to project
results for any future period.

33
<PAGE> 37

Resorts International, Inc.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(In Thousands of Dollars)

<TABLE>
<CAPTION>
For the Year Ended December 31, 1994
Pro Forma
Historical Adjustments Pro Forma
<S> <C> <C> <C>
Revenues:
Casino $278,597 $ (28,115)(a) $250,482
Rooms 20,553 (13,419)(a) 7,134
Food and beverage 28,255 (13,646)(a) 14,609
Other casino/hotel revenues 12,216 (7,708)(a) 4,508
Other operating revenues 4,582 (4,577)(a) 5
Real estate related 8,813 8,813
-------- --------- --------
353,016 (67,465) 285,551
-------- --------- --------
Expenses:
Casino 160,371 (16,623)(a) 143,748
Rooms 6,030 (2,787)(a) 3,243
Food and beverage 25,131 (9,308)(a) 15,823
Other casino/hotel operating
expenses 46,446 (11,687)(a) 34,759
Other operating expenses 3,483 (3,483)(a) -0-
Selling, general and
administrative 48,124 (9,394)(a) 39,801
1,971 (b)
(900)(c)
Depreciation 17,250 (4,013)(a) 13,237
Real estate related 1,763 1,763
Write-down of non-operating
real estate 20,525 20,525
Loss on SIHL Sale 72,463 (72,463)(d) -0-
-------- --------- -------
401,586 (128,687) 272,899
-------- --------- --------

Earnings (loss) from operations (48,570) 61,222 12,652
Other income (deductions):
Interest income 2,686 1,967 (a) 2,403
(2,250)(e)
Interest expense (35,271) 10 (a) (25,096)
16,064 (f)
(5,899)(g)
Amortization of debt discounts (15,046) 12,021 (f) (3,513)
(488)(g)
Recapitalization costs (5,232) 1,326 (a) -0-
3,906 (h)
Proceeds from Litigation
Trust 2,542 2,542
-------- --------- --------
Loss before extraordinary items $(98,891) $ 87,879 $(11,012)
======== ========= ========

Loss before extraordinary items
per share $ (3.02) $ (.29)
======== ========
Weighted average number of
shares outstanding 32,687 38,567(i)
======== ========
</TABLE>

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

See Notes to Pro Forma Consolidated Statement of Operations of RII.

34
<PAGE> 38

NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS OF RII

(a) Reflects the elimination of operating results of operations disposed
of in the SIHL Sale (the "PIRL Group").

(b) Reflects the elimination of the management fee charged to PIRL Group
by RII. Such fee was based on 3% of certain PIRL Group gross revenues.

(c) Reflects the elimination of costs incurred by RII for services
provided to the PIRL Group including accounting, data processing and other
support services.

(d) Reflects elimination of loss on SIHL Sale.

(e) Reflects the elimination of interest income on RIH's $50,000,000 note
receivable from a former Bahamian affiliate which was cancelled pursuant to the
terms of the Restructuring.

(f) Reflects the elimination of interest expense and amortization of debt
discounts on the Series Notes.

(g) Reflects interest expense and amortization of debt discounts on the
Mortgage Notes and the Junior Mortgage Notes from the assumed transaction date
of January 1, 1994 through the Effective Date.

(h) Reflects the elimination of recapitalization costs incurred in
connection with the Restructuring.

(i) Reflects the issuance, as of January 1, 1994, of (x) 612,500 shares of
RII Common Stock to financial advisers in settlement of certain
recapitalization costs and (y) 16,984,438 shares of RII Common Stock in
exchange for the Series Notes.

35
<PAGE> 39

Resorts International Hotel, Inc.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(In Thousands of Dollars)

<TABLE>
<CAPTION>
For the Year Ended December 31, 1994
Pro Forma
Historical Adjustments Pro Forma
<S> <C> <C> <C>
Revenues:
Casino $250,482 $250,482
Rooms 7,134 7,134
Food and beverage 14,609 14,609
Other casino/hotel revenues 4,508 4,508
-------- --------
276,733 276,733
-------- --------

Expenses:
Casino 143,748 143,748
Rooms 3,243 3,243
Food and beverage 15,823 15,823
Other casino/hotel operating
expenses 34,759 34,759
Selling, general and
administrative 36,101 36,101
RII parent services fee 9,082 9,082
Depreciation 13,186 13,186
------- -------
255,942 255,942
------- -------

Earnings from operations 20,791 20,791

Other income (deductions):
Interest income 3,623 $(2,250)(a) 1,373
Interest expense (10,858) (5,899)(b) (16,757)
Amortization of debt discounts (757) (488)(b) (1,245)
Recapitalization costs (975) 975 (c) -0-
-------- ------- ------

Earnings before extraordinary item $ 11,824 $ (7,662) $ 4,162
======== ======== ========
</TABLE>

NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS OF RIH

(a) Reflects the elimination of interest income on the RIB Note, which
note was distributed to GGRI as a return of surplus.

(b) Reflects interest expense and amortization of debt discounts on the
RIH Promissory Note and the RIH Junior Promissory Note from the assumed
transaction date of January 1, 1994 through the Effective Date.

36
<PAGE> 40

Resorts International Hotel Financing, Inc.
PRO FORMA STATEMENT OF OPERATIONS
(In Thousands of Dollars)

<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma

From May 3 For the Year
through Ended
December 31, December 31,
1994 1994
<S> <C> <C> <C>
Revenues:
Affiliated interest income $10,847 $5,899 $16,746
Amortization of discounts on
affiliated notes receivable 757 488 1,245
------- ------ -------
11,604 6,387 17,991
------ ----- ------

Expenses:
Interest expense 10,847 5,899 16,746
Amortization of debt discounts 757 488 1,245
------ ----- ------
11,604 6,387 17,991
------ ----- ------
Net earnings $ 0 $ 0 $ 0
======= ===== =======
</TABLE>

Note: Pro forma adjustments reflect interest and amortization income on the
RIH Promissory Notes and interest and amortization expense on the
Mortgage Notes and the Junior Mortgage Notes from the assumed
transaction date of January 1, 1994 through the Effective Date.

37
<PAGE> 41

MARKET PRICES OF MORTGAGE NOTES AND UNITS

The Mortgage Notes and Units each are listed and traded on the AMEX.
As of April 30, 1995, there was $125,000,000 principal amount of Mortgage Notes
outstanding and held of record by approximately 170 holders, and $22,101,000
principal amount of Units outstanding and held of record by approximately 70
holders. The following table sets forth, for the periods listed, the high and
low closing prices for the Mortgage Notes and the Units on the AMEX. The prices
shown should not be considered as an indication of future market prices.

<TABLE>
<CAPTION>
Mortgage Notes Units
-------------- -----
High Low High Low
---- --- ---- ---
<S> <C> <C> <C> <C>
1994:
Third Quarter(1). . . . . . . . . . . . . . . . . 72 1/4% 65 1/2% 63% 50%
Fourth Quarter . . . . . . . . . . . . . . . . . 70 3/4 63 61 49

1995:
First Quarter . . . . . . . . . . . . . . . . . . 80 1/2 69 75 60
Second Quarter(2) . . . . . . . . . . . . . . . . 86 79 1/4 83 1/4 75 1/2
</TABLE>

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

(1) Commencing July 7, 1994 for Mortgage Notes, and July 11, 1994 for
Units.

(2) Through April 28, 1995.

There were no Mortgage Notes or Units, consisting of Junior Mortgage
Notes and Class B Common Stock, outstanding prior to the Effective Date. The
22,101 shares of Class B Common Stock outstanding are not traded separately
from the Units.

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

FINANCIAL CONDITION

Liquidity

During 1994 the Company restructured its Series Notes pursuant to a
prepackaged bankruptcy plan as described in Note 2 of Notes to Consolidated
Financial Statements of RII. The Plan was confirmed by the Bankruptcy Court on
April 22, 1994 and became effective on May 3, 1994. Pursuant to the terms of
the Plan, the Company exchanged the Series Notes for, among other things: (i)
the proceeds of the SIHL Sale; (ii) Mortgage Notes and Junior Mortgage Notes;
(iii) 40% of RII Common Stock on a

38
<PAGE> 42

fully diluted basis (excluding certain stock options) and (iv) Excess Cash.
The Restructuring resulted in a significant reduction in the Company's
unrestricted cash and equivalents due to the distribution of Excess Cash to
holders of the Series Notes. However, the Restructuring also resulted in a
significant decrease in the Company's long-term debt outstanding. The Company
believes that the Restructuring will improve its long term liquidity and
enhance its ability to meet its financial obligations as they become due.

At December 31, 1994 the Company's working capital amounted to
$17,673,000, including unrestricted cash and equivalents of $35,503,000. A
substantial amount of the unrestricted cash and equivalents is required for
day-to-day operations, including approximately $10,000,000 of currency and coin
on hand which amount varies by days of the week, holidays and seasons, as well
as additional cash balances necessary to meet current working capital needs.

Capital Expenditures and Other Uses of Funds

In recent years, capital expenditures have consistently been a
significant use of financial resources. See capital additions by geographic and
business segment in the table entitled "Identifiable Assets, Depreciation and
Capital Additions" below.

Capital additions for Resorts Casino Hotel in 1992 amounted to
$15,548,000 and included the conversion of the parking garage from valet to
self-parking, the construction of a covered walkway from the garage to the
Resorts Casino Hotel, the renovation of guest rooms, the purchase of slot
machines and improvements to the building's infrastructure. Capital additions
in 1993 amounted to $21,618,000, as the Company converted certain
back-of-the-house space into an 8,000 square foot simulcast facility which
houses five betting windows and four customer-operated terminals and
approximately 80 seats for simulcast betting operations, as well as poker
tables, various other table games and a full service bar. Also, certain casino
renovations were completed, 280 slot machines were purchased, most of which
replaced older models, and the VIP slot and table player lounge, "Club Griffin,"
opened. In addition, guest room refurbishment continued and a new centralized
mobile communications system was installed. Capital expenditures in 1994 at
Resorts Casino Hotel totalled $7,744,000 and included the purchase of 221 slot
machines, most of which replaced older models, the purchase of equipment and
minor renovations to accommodate keno, which commenced in June 1994, and
Caribbean stud poker, which commenced in November 1994, and various other
capital maintenance projects.

For the Paradise Island properties, which were disposed of in the SIHL
Sale, capital additions in 1992 totalled $4,317,000

39
<PAGE> 43

and included the installation of 37 new slot machines, expansion of the
Paradise Island Airport parking lot, upgrading existing computer equipment and
restaurant renovations. In 1993 the Company expended $3,747,000 which included
the purchase of 110 new slot machines as replacements for older models as well
as various maintenance projects. The expenditures of $1,958,000 in 1994 were
largely made on behalf of SIHL in accordance with the agreement for the SIHL
Sale.

In November 1994 RIH purchased 12,899 Units comprising $12,899,000
principal amount of Junior Mortgage Notes and 12,899 shares of Class B Stock for
$6,740,000.

Another significant use of funds in recent years has been
recapitalization costs. Payments of legal, financial and other advisory fees
and costs amounted to $8,511,000, $8,095,000 and $2,460,000 in 1994, 1993 and
1992, respectively, in connection with the Restructuring of the Series Notes and
payments of $227,000, $237,000 and $2,954,000 in 1994, 1993 and 1992,
respectively, for costs associated with the Company's 1990 plan of
reorganization.

Capital Resources and Other Sources of Funds

Since 1992, operations have been the most significant source of funds
to the Company.

In 1993 Merv Griffin, the Chairman of the Board of RII, made a partial
payment of $3,477,000 of principal on his note payable to RII (the "Griffin
Note"). As described in Note 10 of Notes to Consolidated Financial Statements
of RII, the Griffin Note was then cancelled and a new note (the "Group Note")
from Griffin Group was substituted therefor. In 1994 pursuant to the Plan,
after certain fees the Company owed Griffin Group pursuant to its License and
Services Agreement (the "Griffin Services Agreement," also described in Note 10)
were applied to reduce the balance due under the Group Note, Griffin Group paid
the $3,008,000 balance due under the Group Note.

The Company has the $19,738,000 Senior Facility available for the
period ending May 2, 1996 should the Company have unforeseen cash needs. The
Company believes that the Senior Facility will serve as a safeguard if an
emergency arises from current operations, or serve as a source of funds for a
profitable investment opportunity. However, market interest rates and other
economic conditions, among other factors, will determine if it is appropriate
for the Company to draw on the Senior Facility.

40
<PAGE> 44

RESULTS OF OPERATIONS

General

The following discussion addresses the Company's Atlantic City
operations as well as certain operations which were disposed of through the SIHL
Sale. Operations disposed of include the Paradise Island portion of the
casino/hotel segment, the Paradise Island portion of the real estate related
segment and the airline segment.

<TABLE>
<CAPTION>
Revenues
- --------
For the Year Ended December 31,
-------------------------------------------------
(In Thousands of Dollars) 1994 1993 1992
<S> <C> <C> <C>
Casino/hotel:
Atlantic City, New Jersey:
Casino $250,482 $244,116 $233,780
Rooms 7,134 6,974 8,766
Food and beverage 14,609 15,926 16,056
Other casino/hotel 4,508 4,463 4,138
-------- -------- --------
276,733 271,479 262,740
-------- ------- --------
Paradise Island, The Bahamas(a):
Casino 28,115 62,943 66,120
Rooms 13,419 28,734 30,235
Food and beverage 13,646 30,917 32,851
Other casino/hotel 7,708 18,867 17,890
-------- -------- --------
62,888 141,461 147,096
-------- -------- --------

Total casino/hotel 339,621 412,940 409,836
-------- -------- --------

Real estate related:
Atlantic City, New Jersey 8,813 8,057 7,813
Paradise Island, The Bahamas(a) 445 213
-------- -------- --------
8,813 8,502 8,026
-------- -------- --------

Airline(a) 5,674 21,802 22,483
Other segments 12 115 162
Intersegment eliminations (1,104) (3,795) (3,573)
-------- -------- --------
Revenues from operations $353,016 $439,564 $436,934
======== ======== ========
</TABLE>

(a) These operations were disposed of through the SIHL Sale.

41
<PAGE> 45

Casino/hotel - Atlantic City, New Jersey

Casino revenues from the Company's Atlantic City casino/hotel increased
by $6,366,000 in 1994 and by $10,336,000 in 1993 as the modest growth in the
Atlantic City casino industry continues. The addition of poker and simulcast
betting in June 1993 and keno in June 1994 has added to the industry's revenues,
though not significantly. The Company believes that increased competition from
other newly opened or expanded jurisdictions which permit gaming has slowed the
growth of gaming revenue in Atlantic City. Expansion of existing Atlantic City
casinos has also adversely affected the Company's operations. These factors
have significantly increased the Company's cost of obtaining additional revenue.

RIH's revenue from poker, simulcasting and keno combined increased by
$2,850,000 in 1994 and amounted to $5,745,000 in 1993, the first year any of
these games were offered. RIH's win from slots and table games increased by
$3,516,000 in 1994 and by $4,591,000 in 1993, as increased slot win more than
offset decreased table game win. RIH's increases in slot revenue, 6.0% in 1994
and 5.6% in 1993, exceeded those of the industry's, 3.7% in 1994 and 4.8% in
1993. In 1993 RIH's decrease in table game win, 3.3%, exceeded the industry's,
3.1%, and in 1994 RIH's table game win declined by 8.4% while the industry's
table game win increased slightly. In 1993 RIH's table game win decreased due
to a lower hold percentage (ratio of casino win to total amount of chips
purchased), while the amount wagered did not fluctuate significantly from the
prior year. Also in 1993, RIH reduced the number of table games in its casino
by a greater percentage than the reduction for the Atlantic City industry.
RIH's tables amounted to 7.8% and 7.2% of the industry's total number of tables
at the end of 1992 and 1993, respectively. In 1994, although RIH's hold
percentage remained lower than the industry's average, the decrease in RIH's
table game win was primarily attributable to a decrease in amount wagered. RIH's
tables amounted to 7.0% of the industry's total number of tables at the end of
1994.

RIH's results reflect the fact that slot players have, until recently,
been the prime focus of RIH's marketing efforts. In an effort to recapture some
of its lost market share of table game win, in the fall of 1994 RIH increased
its program of charter flights, in early 1995 the "Griffin Games" promotion was
expanded to include table players and RIH is planning to renovate its suites to
attract table patrons.

42
<PAGE> 46

promotion was no longer cost effective at the prior price levels. Also, there
has been a general decline in the number of patrons served at all of RIH's food
and beverage facilities.

Although total occupancy was relatively flat in 1993 compared to 1992,
the number of complimentary rooms provided to casino patrons increased. The
reduced occupancy from rooms sold resulted in lower room revenues during 1993.

Casino/hotel - Paradise Island, The Bahamas

The Company's Paradise Island casino/hotel facilities were disposed of
in the SIHL Sale effective May 3, 1994. The Company's Paradise Island revenues
for 1994 reflect the Company's operation of the Paradise Island properties
through April 30, 1994.

In 1993 casino revenues decreased $3,177,000 primarily due to the effect
of a decrease in table game hold percentage from 16.5% in 1992 to 14.4% in 1993.
The Company's average table game hold percentage over the four years ended 1992
was 17.2%. The effect of this decrease was partially offset by the effect of an
increase in table game drop and improved slot win. Room revenues and food and
beverage revenues also were lower in 1993 due to lower occupancy, net of
complimentary rooms. Although total air arrivals to the Paradise Island - New
Providence Island area increased by 5% in 1993, the Company lost market share as
it did not continue to reduce room rates in response to significant rate
reductions by competitors.

Real Estate Related

Atlantic City real estate related revenues in 1994, 1993 and 1992
largely represent rent from ACS pursuant to the Showboat Lease. Such rent
receipts are restricted for the payment of interest on the Showboat Notes. See
Note 7 of Notes to Consolidated Financial Statements of RII. Atlantic City real
estate related revenues for 1994 also include $534,000 from the sale of certain
properties in Atlantic City.

The Paradise Island real estate related revenues in 1993 and 1992
resulted from the sale of residential lots on Paradise Island.

Airline

The Company's airline operation was effectively disposed of in the SIHL
Sale by means of an option/put agreement with a nominal option price. The only
aircraft owned by the Company was transferred to a subsidiary of SIHL as part of
the SIHL Sale. Pursuant to an agreement, the Company is to operate the airline
on behalf of SIHL for a small management fee for a period not to

43
<PAGE> 47

extend beyond July 1995. All profits earned or losses incurred in such
operation are to accrue to or be borne by SIHL. Airline revenues reflect
airline operations through April 30, 1994.

Airline revenues decreased by $681,000 in 1993 due primarily to a
decrease in passenger revenues during the fourth quarter of the year, as
competition from the south Florida-Nassau routes increased. In addition to the
new Jet Shuttle service that began operations earlier in that year, during the
fourth quarter of 1993 Trinity Air, a Bahamian carrier, commenced operations
offering jet service at lower fares than those offered by the Company on its
south Florida-Paradise Island routes and by other carriers on their south
Florida-Nassau routes. Also, from mid-November 1993 through early January 1994,
Bahamasair changed the aircraft used for its south Florida-Nassau flights to
jets with a larger seating capacity. Also affecting airline revenues in 1993
was a decrease in revenues from contract training, flight and maintenance work
for non-affiliated parties.

44
<PAGE> 48

<TABLE>
<CAPTION>
Contribution to Consolidated Loss Before
- ----------------------------------------
Income Taxes and Extraordinary Items
------------------------------------
For the Year Ended December 31,
(In Thousands of Dollars) 1994 1993 1992
<S> <C> <C> <C>
Casino/hotel:
Atlantic City, New Jersey $ 20,791 $ 12,069 $ 21,051
Paradise Island, The Bahamas(a)(b) 10,206 (9,979) (5,592)
-------- --------- --------
30,997 2,090 15,459
-------- --------- --------
Real estate related:
Atlantic City, New Jersey (13,494) 6,654 6,425
Paradise Island, The Bahamas(a) 224 (17)
-------- --------- --------
(13,494) 6,878 6,408
-------- --------- --------
Airline(a)(b) (7) (14) 77
Other segments (19) (122) (70)
Corporate expense, net of
management fees 6,416 4,066 (372)
Loss on SIHL Sale (72,463)
-------- --------- --------
Earnings (loss) from operations (48,570) 12,898 21,502
Other income (deductions):
Interest income 2,686 3,174 4,969
Interest expense (35,271) (57,244) (40,856)
Amortization of debt discounts (15,046) (51,203) (37,569)
Recapitalization costs (5,232) (8,789) (2,848)
Proceeds from Litigation Trust 2,542
-------- --------- --------
Loss before income taxes and
extraordinary items $(98,891) $(101,164) $(54,802)
======== ========= ========
</TABLE>

(a) These operations were disposed of through the SIHL Sale.

(b) The Paradise Island casino/hotel segment subsidized the operations of
Paradise Island Airlines, Inc. ("PIA") in the amount of $993,000 and $3,329,000
for the years 1994 and 1993, respectively. PIA's operations were effectively
disposed of in the SIHL Sale.

Casino/hotel - Atlantic City, New Jersey

Casino, hotel and related operating results increased by $8,722,000 for
1994 due to the combination of the increased revenues described above and a net
decrease in operating expenses. The most significant decreases in operating
expenses in 1994 were in payroll and related costs ($2,500,000), food and
beverage costs ($1,400,000) and advertising expense ($900,000). Payroll and
related costs were down primarily due to decreased staffing levels. The
decrease in food and beverage costs resulted primarily from reduced patronage at
the Beverly Hills Buffet and, to a lesser extent, other food and beverage
facilities as described above. Advertising costs were down largely because 1993
included advertising costs associated with the introduction of the "cash-back"
program (a promotion which rewards slot players by giving cash back to patrons
based on their level of play) and the 15th anniversary celebration of Resorts
Casino Hotel. Favorable variances in these and other costs were partially
offset by increases in other expenses. The most significant increase was in
casino promotional costs ($2,500,000) due primarily to the "cash-back" program
noted above, which commenced in late April 1993, and increased cash giveaways to
bus patrons. Since the introduction of the "cash-back" program the Company has
reduced certain other cash giveaway promotional

45
<PAGE> 49

mailings. Another significant cost increase was in the accrual for performance
and incentive bonuses ($700,000).

Casino, hotel and related operating results decreased by $8,982,000 for
1993 as increased revenues described above were offset by a net increase in
operating expenses. The most significant increases in operating expenses were
casino promotional costs ($7,700,000), payroll and related costs ($6,000,000),
other casino operating expenses ($2,600,000), depreciation ($2,300,000), fees to
Griffin Group for services rendered under the Griffin Services Agreement
described in Note 10 of Notes to Consolidated Financial Statements ($2,200,000)
and entertainers fees and accommodations ($1,000,000). The increase in casino
promotional costs was due primarily to the "cash-back" program. The majority of
the increase in payroll and related costs was due to merit and union increases
in salary and wage rates. The remaining increase in payroll and related costs
and a significant portion of the casino operating costs increase were associated
with the simulcast and poker facility which opened in June 1993. The increase
in entertainment costs resulted from a return to offering more headliner shows
in 1993. The most significant cost reductions in 1993 were in the performance
and incentive bonus ($3,300,000) and in food and beverage costs ($1,400,000).

For a discussion of competition in the Atlantic City casino/hotel
industry see "Competition" under "Description of Business."

Casino/hotel - Paradise Island, The Bahamas

The Company's Paradise Island casino/hotel facilities were disposed of
in the SIHL Sale effective May 3, 1994. The Paradise Island operating results
for 1994 reflect the Company's operation of the Paradise Island properties
through April 30, 1994.

Casino, hotel and related operating results declined by $4,387,000 for
1993 as decreased revenues discussed above were partially offset by a net
decrease in operating expenses. These operations suffered, generally, as
management's attention was diverted by the impending disposition of the Paradise
Island operations and the Company experienced the loss of certain key management
personnel.

The most significant reductions in operating expenses for 1993 were in
sales and marketing ($1,000,000), food and beverage and other direct costs
($900,000) and gaming taxes and fees ($700,000). The reduction in sales and
marketing costs resulted primarily from reductions in advertising during 1993.
Gaming taxes and fees declined relative to the decrease in casino revenue. A
reduction in occupancy resulted in decreased food, beverage and other direct
costs as well as reduced staffing levels and overall operating costs throughout
the facility. The most significant increase in operating expenses was the
subsidy of PIA ($3,329,000), the Company's former airline operation which
provides air service between south Florida and the Paradise Island Airport,
which subsidy increased as PIA's operating results declined. See "Airline"
below.

46
<PAGE> 50
Real Estate Related

Atlantic City real estate related results for 1994 include a charge of
$20,525,000 for the write-down of certain non-operating properties to net
realizable value. See Note 13 of Notes to Consolidated Financial Statements.
The comparison of earnings from Atlantic City real estate related activities is
also affected by annual increases in rental income under the Showboat Lease
described above and, in 1994, a loss of $99,000 on sales of certain properties
in Atlantic City.

The Paradise Island real estate related earnings represent the net gain
in 1993 and net loss in 1992 on the sales of residential lots on Paradise Island
mentioned above.

Airline

The Company's airline operation was effectively disposed of in the SIHL
Sale by means of an option/put agreement with a nominal option price. Pursuant
to an agreement, the Company is to operate the airline on behalf of SIHL for a
small management fee for a period not to extend beyond July 1995. All profits
earned or losses incurred in such operation are to accrue to or be borne by
SIHL. Operating results of the airline segment presented herein include airline
operations through April 30, 1994.

Airline operating results before the subsidy from the Paradise Island
casino/hotel segment decreased by $3,420,000 in 1993, which decrease resulted
primarily from an increase in maintenance costs and, to a lesser extent, the
decrease in passenger revenues discussed above.

Corporate Expense

The corporate expense segment includes credits for management fees
which RII charges certain subsidiaries based on three percent of their gross
revenues. The corresponding charges are included in the segments where the
respective subsidiary's operations are reported. Management fees charged to
RIH amounted to $9,082,000, $8,911,000 and $8,629,000 in 1994, 1993 and 1992,
respectively. Management fees charged to other subsidiaries totalled
$1,971,000, $4,635,000 and $5,284,000 in 1994, 1993 and 1992, respectively.

Corporate expense, net of management fees, decreased by $2,350,000 in
1994 due primarily to decreases in payroll and related costs associated with
certain executives whose service to the Company has terminated.

Corporate expense, net of management fees, decreased by $4,438,000 in
1993. This variance resulted primarily from charges recorded in 1992 of
approximately $2,900,000 in connection with the start-up, management and
subsequent termination of an agreement to manage a casino located in Black Hawk,
Colorado. Also affecting corporate expense for 1993 is a reduction in corporate
payroll and related costs ($800,000).

47
<PAGE> 51

The Environmental Protection Agency ("EPA") has named a predecessor to
RII as a potentially responsible party in the Bay Drum hazardous waste site (the
"Site") in Tampa, Florida which the EPA has listed on the National Priorities
List. No formal action has commenced against RII and RII intends to dispute any
claims of this nature, if asserted. Although it may ultimately be determined
that RII is one of several hundred parties that are jointly and severally liable
for the costs of Site remediation and for damages to natural resources at the
Site caused by hazardous wastes, the extent of any such liability, if any,
cannot be determined at this time.

Loss on SIHL Sale

See Note 2 of Notes to Consolidated Financial Statements of RII for a
description of the SIHL Sale.

Other Income (Deductions)

The decreases in interest expense and amortization of debt discounts for
1994 are attributable to the Restructuring, which resulted in a significant
decrease in the principal amount of debt outstanding as well as a reduction in
interest rates. Also affecting the comparison of these expenses is the fact
that the Company stopped accruing interest and amortizing debt discounts on the
Series Notes as of March 21, 1994, the date the Company entered bankruptcy
proceedings, while the accrual of interest and amortization of discounts on the
Mortgage Notes and Junior Mortgage Notes did not start until May 3, 1994. See
Note 2 of Notes to Consolidated Financial Statements of RII for a description of
these new debt securities.

The increase in interest expense in 1993 was due to a combination of (i)
an increase in the stated interest rates of the Series Notes, (ii) increased
principal amounts of debt outstanding due to payment-in-kind interest on the
Series Notes and (iii) changes in the market value of the Series Notes as,
through October 15, 1993, the Company recorded interest at the estimated market
value of additional Series Notes to be issued in satisfaction of its interest
obligations. Subsequent to October 15, 1993 the Company's option to satisfy
interest on the Series Notes through the issuance of additional Series Notes was
no longer available. Thus, effective October 16, 1993 the Company began
recording interest expense on the Series Notes at the stated rate in lieu of a
discounted rate to reflect market value. Amortization of debt discounts
increased in 1993 primarily due to the additional discounts associated with
Series Notes issued in satisfaction of interest obligations.

Recapitalization costs in 1994, 1993 and 1992 include costs of financial
advisers retained to assist in the development and analysis of financial
alternatives which resulted in the Restructuring and other legal and advisory
fees incurred in connection with such Restructuring. Also, in the fourth
quarter of 1994 the Company recorded credits of $3,256,000 resulting from the
reversal of restructuring reserves provided in connection with the Company's
1990 plan of reorganization.

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<PAGE> 52

Proceeds from Litigation Trust represent the distribution that the
Company received as a holder of units of beneficial interest in the litigation
trust established under the Company's 1990 plan of reorganization.

Income Taxes

See Note 14 of Notes to Consolidated Financial Statements of RII for an
explanation of changes in the Company's effective income tax rate during the
years 1992 through 1994.

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<PAGE> 53
Identifiable Assets, Depreciation and Capital Additions
(In Thousands of Dollars)

<TABLE>
<CAPTION>
Identifiable assets
Less accumulated
depreciation and
valuation Capital
Gross assets allowances Net assets Depreciation additions
------------ --------------- ---------- ------------ ---------

December 31, 1994 For the Year Ended December 31, 1994
<S> <C> <C> <C> <C> <C>
Casino/hotel:
Atlantic City, New Jersey $252,846 $(52,808) $200,038 $13,186 $ 7,744
Paradise Island, The Bahamas(a) 3,732 1,958
-------- -------- -------- ------- -------
252,846 (52,808) 200,038 16,918 9,702
-------- -------- -------- ------- -------

Real estate related:
Atlantic City, New Jersey 89,220 (83) 89,137 19
-------- -------- -------- -------

Airline(a) 276 186
Other segments 5
Corporate(b) 28,107 (34) 28,073 32 36
-------- -------- -------- ------- -------

$370,173 $(52,925) $317,248 $17,250 $ 9,924
======== ======== ======== ======= =======

</TABLE>

<TABLE>
<CAPTION>
December 31, 1993 For the Year Ended December 31, 1993
<S> <C> <C> <C> <C> <C>
Casino/hotel:
Atlantic City, New Jersey $241,544 $(40,326) $201,218 $13,654 $21,618
Paradise Island, The Bahamas(a) 207,003 (46,398) 160,605 13,325 3,747
-------- -------- -------- ------- -------
448,547 (86,724) 361,823 26,979 25,365
-------- -------- -------- ------- -------

Real estate related:
Atlantic City, New Jersey 110,781 (97) 110,684 29
Paradise Island, The Bahamas(a) 33,114 33,114
-------- -------- -------- -------
143,895 (97) 143,798 29
-------- -------- -------- -------

Airline(a) 12,887 (2,750) 10,137 831 445
Other segments 1,546 (47) 1,499 13 2
Corporate(b) 58,883 (355) 58,528 72 101
-------- -------- -------- ------- -------

$665,758 $(89,973) $575,785 $27,924 $25,913
======== ======== ======== ======= =======
</TABLE>

50
<PAGE> 54
Identifiable Assets, Depreciation and Capital Additions
(In Thousands of Dollars)

December 31, 1992 For the Year Ended December 31, 1992
<S> <C> <C> <C> <C> <C>
Casino/hotel:
Atlantic City, New Jersey $212,668 $(26,644) $186,024 $11,392 $15,548
Paradise Island, The Bahamas(a) 208,899 (33,899) 175,000 12,973 4,317
-------- -------- -------- ------- -------
421,567 (60,543) 361,024 24,365 19,865
-------- -------- -------- ------- -------

Real estate related:
Atlantic City, New Jersey 110,824 (68) 110,756 29
Paradise Island, The Bahamas(a) 33,414 33,414
-------- -------- -------- -------
144,238 (68) 144,170 29
-------- -------- -------- -------

Airline(a) 12,923 (1,995) 10,928 805 4
Other segments 1,542 (34) 1,508 13
Corporate(b) 51,605 (285) 51,320 110 16
-------- -------- -------- ------- -------

$631,875 $(62,925) $568,950 $25,322 $19,885
======== ======== ======== ======= =======
</TABLE>

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

(a) These operations were disposed of through the SIHL Sale.

(b) Includes cash equivalents, restricted cash equivalents not pledged for
operations, and other corporate assets.

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<PAGE> 55

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

FINANCIAL CONDITION

Liquidity

At December 31, 1994 RIH had working capital of $10,578,000 including
$26,876,000 of unrestricted cash and equivalents. The day-to-day operations of
RIH require approximately $10,000,000 of currency and coin on hand which amount
varies by days of the week, holidays and seasons. Additional cash balances are
necessary to meet current working capital needs.

As described in Note 2 of Notes to Consolidated Financial Statements of
RIH, RII recently restructured its Series Notes pursuant to a prepackaged
bankruptcy plan. The Plan was confirmed by the Bankruptcy Court on April 22,
1994 and became effective on May 3, 1994. Pursuant to the Plan, through its
affiliated notes payable to RIHF, RIH will be the principal source of funds for
servicing the Mortgage Notes and the Junior Mortgage Notes, as well as the
Senior Facility Notes to the extent issued. Annual interest expense on the
Mortgage Notes and the Junior Mortgage Notes, after the reduction for interest
on the $12,899,000 principal amount of Junior Mortgage Notes purchased by RIH
in November 1994, will total approximately $16,300,000. Based on projected
operating results, management believes that RIH's liquidity will continue to be
satisfactory; however, management can give no assurances as to RIH's future
liquidity due to the possibility of unanticipated events and circumstances
inherent in any projections.

Capital Expenditures and Other Uses of Funds

In recent years, capital expenditures have consistently been a
significant use of financial resources by RIH. Capital additions for Resorts
Casino Hotel in 1992 amounted to $15,548,000 and included the conversion of the
parking garage from valet to self-parking, the construction of a covered
walkway from the garage to the Resorts Casino Hotel, the renovation of guest
rooms, the purchase of slot machines and improvements to the building's
infrastructure. Capital additions in 1993 amounted to $21,618,000, as RIH
converted certain back-of-the-house space into an 8,000 square foot simulcast
facility which houses five betting windows and four customer-operated terminals
and approximately 80 seats for simulcast betting operations, as well as poker
tables, various other table games and a full service bar. Also, certain casino
renovations were completed, 280 slot machines were purchased, most of which
replaced older models, and the VIP slot and table player lounge, "Club
Griffin," opened. In addition, guest room refurbishment continued and a new
centralized mobile

52
<PAGE> 56

communications system was installed. Capital expenditures in 1994 at Resorts
Casino Hotel totalled $7,744,000 and included the purchase of 221 slot
machines, most of which replaced older models, the purchase of equipment and
minor renovations to accommodate keno, which commenced in June 1994, and
Caribbean stud poker, which commenced in November 1994, and various other
capital maintenance projects.

Pursuant to the Restructuring, RIH distributed all of its cash and cash
equivalents in excess of $15,000,000 as of the Effective Date, which amounted
to $12,262,000, to GGRI. GGRI then distributed such cash to RII so that RII,
in turn, could distribute Excess Cash to holders of Series Notes.

In November 1994 RIH purchased $12,899,000 principal amount of Junior
Mortgage Notes through the purchase of 12,899 Units at a price of $6,740,000.

Deposits made with the CRDA as required by the Casino Control Act,
repayments of debt under capitalized lease obligations and payment to RII of
RIH's allocable portion of RII's consolidated recapitalization costs have been
other uses of funds by RIH in the periods presented.

Capital Resources and Other Sources of Funds

Since 1992, operations have been the most significant source of funds
to RIH.

RIHF has the $19,738,000 Senior Facility available for the period
ending May 2, 1996 should RIH or RII have unforeseen cash needs. Management
believes that the Senior Facility will serve as a safeguard if an emergency
arises from current operations, or serve as a source of funds for a profitable
investment opportunity. However, market interest rates and other economic
conditions, among other factors, will determine if it is appropriate for RIHF
to draw on the Senior Facility.

RESULTS OF OPERATION

RIH operates in one business segment. Following is a discussion of the
results of operations for 1994 compared to 1993 and 1993 compared to 1992. The
discussion should be read in conjunction with the Consolidated Financial
Statements included herein.

Revenues

Casino revenues increased by $6,366,000 in 1994 and by $10,336,000 in
1993 as the modest growth in the Atlantic City casino industry continues. The
addition of poker and simulcast betting in June 1993 and keno in June 1994 has
added to the

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<PAGE> 57

industry's revenues, though not significantly. RIH believes that increased
competition from other newly opened or expanded jurisdictions which permit
gaming has slowed the growth of gaming revenue in Atlantic City. Expansion of
existing Atlantic City casinos has also adversely affected RIH's operations.
These factors have significantly increased RIH's cost of obtaining additional
revenue.

RIH's revenue from poker, simulcasting and keno combined increased by
$2,850,000 in 1994 and amounted to $5,745,000 in 1993, the first year any of
these games were offered. RIH's win from slots and table games increased by
$3,516,000 in 1994 and by $4,591,000 in 1993, as increased slot win more than
offset decreased table game win. RIH's increases in slot revenue, 6.0% in 1994
and 5.6% in 1993, exceeded those of the industry's, 3.7% in 1994 and 4.8% in
1993. In 1993 RIH's decrease in table game win, 3.3%, exceeded the industry's,
3.1%, and in 1994 RIH's table game win declined by 8.4% while the industry's
table game win increased slightly. In 1993 RIH's table game win decreased due
to a lower hold percentage (ratio of casino win to total amount of chips
purchased), while the amount wagered did not fluctuate significantly from the
prior year. Also in 1993, RIH reduced the number of table games in its casino
by a greater percentage than the reduction for the Atlantic City industry.
RIH's tables amounted to 7.8% and 7.2% of the industry's total number of tables
at the end of 1992 and 1993, respectively. In 1994, although RIH's hold
percentage remained lower than the industry's average, the decrease in RIH's
table game win was primarily attributable to a decrease in amount wagered.
RIH's tables amounted to 7.0% of the industry's total number of tables at the
end of 1994.

RIH's results reflect the fact that slot players have, until recently,
been the prime focus of RIH's marketing efforts. In an effort to recapture
some of its lost market share of table game win, in the fall of 1994 RIH
increased its program of charter flights, in early 1995 the "Griffin Games"
promotion was expanded to include table players and RIH is planning to renovate
its suites to attract table patrons.

RIH's food and beverage revenues were down in 1994 primarily due to
reduced patronage at the "all-you-can-eat" Beverly Hills Buffet. During the
second quarter of 1994 prices at the Beverly Hills Buffet were increased as
management determined that this promotion was no longer cost effective at the
prior price levels. Also, there has been a general decline in the number of
patrons served at all of RIH's food and beverage facilities.

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<PAGE> 58

Earnings from Operations

Casino, hotel and related operating results increased by $8,723,000 for
1994 due to the combination of the increased revenues described above and a net
decrease in operating expenses. The most significant decreases in operating
expenses in 1994 were in payroll and related costs ($2,500,000), food and
beverage costs ($1,400,000) and advertising expense ($900,000). Payroll and
related costs were down primarily due to decreased staffing levels. The
decrease in food and beverage costs resulted primarily from reduced patronage
at the Beverly Hills Buffet and, to a lesser extent, other food and beverage
facilities as described above. Advertising costs were down largely because
1993 included advertising costs associated with the introduction of the
"cash-back" program (a promotion which rewards slot players by giving cash back
to patrons based on their level of play) and the 15th anniversary celebration
of Resorts Casino Hotel. Favorable variances in these and other costs were
partially offset by increases in other expenses. The most significant increase
was in casino promotional costs ($2,500,000) due primarily to the "cash-back"
program noted above, which commenced in late April 1993, and increased cash
giveaways to bus patrons. Since the introduction of the "cash- back" program
RIH has reduced certain other cash giveaway promotional mailings. Another
significant cost increase was in the accrual for performance and incentive
bonuses ($700,000).

Casino, hotel and related operating results decreased by $8,981,000 for
1993 as increased revenues described above were offset by a net increase in
operating expenses. The most significant increases in operating expenses were
casino promotional costs ($7,700,000), payroll and related costs ($6,000,000),
other casino operating expenses ($2,600,000), depreciation ($2,300,000), fees
to The Griffin Group, Inc., a corporation controlled by Merv Griffin, for
services rendered under the Griffin Services Agreement described in Note 8 of
Notes to Consolidated Financial Statements ($2,200,000) and entertainers fees
and accommodations ($1,000,000). The increase in casino promotional costs was
due primarily to the "cash-back" program. The majority of the increase in
payroll and related costs was due to merit and union increases in salary and
wage rates. The remaining increase in payroll and related costs and a
significant portion of the casino operating costs increase were associated with
the simulcast and poker facility which opened in June 1993. The increase in
entertainment costs resulted from a return to offering more headliner shows in
1993. The most significant cost reductions in 1993 were in the performance and
incentive bonus ($3,300,000) and in food and beverage costs ($1,400,000).

55
<PAGE> 59

For a discussion of competition in the Atlantic City casino/hotel
industry see "Competition" under "Description of Business."

Other Income (Deductions)

Through the Effective Date, RIH's interest income had been largely
attributable to the $50,000,000 note receivable from RIB, a former Bahamian
affiliate. This note was cancelled as part of the Restructuring.

RIH's interest expense before the Restructuring was limited to minor
amounts incurred on capitalized lease obligations. After the Restructuring RIH
is to bear, indirectly, the interest on the Mortgage Notes, the Junior Mortgage
Notes and, to the extent issued, the Senior Facility Notes, through notes
payable to RIHF, the terms of which mirror the terms of such debt of RIHF. See
Note 2 of Notes to Consolidated Financial Statements of RIH for the terms of
such new debt.

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

RIHF's only assets consist of promissory notes issued by RIH and its
sole liabilities are the Mortgage Notes and the Junior Mortgage Notes. The
terms of the Promissory Notes are identical to the terms of the Mortgage Notes
and the Junior Mortgage Notes. Thus, RIHF is merely a conduit by which the
Mortgage Notes and the Junior Mortgage Notes are serviced by RIH. There will
be no change in its Balance Sheet other than the amount of debt discount will
decrease due to its amortization and its Statement of Operations will continue
to be break-even.

DESCRIPTION OF BUSINESS

GENERAL

RII is a holding company which, through its subsidiary, RIH, is
principally engaged in the ownership and operation of the Resorts Casino Hotel
in Atlantic City, New Jersey. RII was incorporated in Delaware in 1958. It has
no significant operations other than those represented by RIH, the owner and
operator of the Resorts Casino Hotel. RIH was incorporated in New Jersey in
1903. Prior to the Restructuring, the Company had significant casino, hotel and
resort assets and operations in The Bahamas on Paradise Island. See
"Restructuring of Series Notes - Paradise Island Assets Acquired by SIHL."

Approximately 10 acres of Boardwalk property owned by the Company is
leased to ACS under the 99-year net lease, the Showboat Lease. All lease
payments due under the Showboat Lease

56
<PAGE> 60
directly service the Company's interest obligations under the Showboat Notes.
The leased acreage is the site of the Showboat Casino which is operated by ACS.
The Company also owns other real estate in the Atlantic City area, most of
which consists of vacant land.

Casino operations are conducted under a casino license which is subject
to periodic review and renewal by action of the Casino Control Commission. The
Company's current license was renewed in February 1994 through January 31, 1996
and is subject to certain financial reporting and other conditions. See
"Regulation and Gaming Taxes and Fees" below.

RII's recent bankruptcy proceedings, including the Restructuring of
RII's Series Notes and the sale of the Company's former Paradise Island
properties, are discussed under "Restructuring of Series Notes."

GAMING FACILITIES

The Resorts Casino Hotel in Atlantic City, New Jersey, has a 60,000
square foot casino and a racetrack simulcast betting and poker area of
approximately 8,000 square feet. At December 31, 1994, these gaming areas
contained 45 blackjack tables, 18 poker tables, 11 dice tables, 9 roulette
tables, 4 Caribbean stud poker tables, 3 baccarat tables, 2 mini-baccarat
tables, 2 pai gow poker tables, 1 big six wheel, 1 sic bo table, 1,944 slot
machines, 5 betting windows and 4 customer-operated terminals for race book,
and a keno parlor. As discussed below, Resorts Casino Hotel has recently
received approval from the Casino Control Commission to expand its casino by an
additional 10,000 square feet and expects to complete such expansion by
mid-1995.

During 1994, the Company had total gaming revenues from its Atlantic
City casino of $250,482,000. This compares to total gaming revenues of
$244,116,000 for 1993 and $233,780,000 for 1992. The Company has offered
simulcast betting and poker since June 1993, keno since June 1994 and Caribbean
stud poker since November 1994.

Casino gaming in Atlantic City is highly competitive and is strictly
regulated under the Casino Control Act, which affects virtually all aspects of
the Company's Atlantic City casino operations. See "Competition" and
"Regulation and Gaming Taxes and Fees" below.

Resort and Hotel Facilities

The Resorts Casino Hotel commenced operations in May 1978 and was the
first casino/hotel opened in Atlantic City. This was accomplished by the
conversion of the former Haddon Hall Hotel, a classic hotel structure
originally built in the early 1900's,

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<PAGE> 61
into a casino/hotel. It is situated on approximately seven acres of land with
approximately 310 feet of Boardwalk frontage overlooking the Atlantic Ocean.
The Resorts Casino Hotel consists of two hotel towers, the 15-story East Tower
and the nine-story North Tower. In addition to the casino facilities described
above, the casino/hotel complex includes approximately 670 guest rooms and
suites, the 1,400-seat Superstar Theater, eight restaurants, two cocktail and
entertainment lounges, a VIP slot and table player lounge, an indoor swimming
pool and health club, and retail stores. The complex also has approximately
50,000 square feet of convention facilities, including eight large meeting
rooms and a 16,000 square foot ballroom.

The Company owns a garage that is connected to the Resorts Casino Hotel
by a covered walkway. This garage is used for patrons' self parking and
accommodates approximately 700 vehicles. The Company also offers valet parking
at nearby, uncovered leased lots that provide space for approximately 600 cars
and has an additional leased lot which provides uncovered self-parking for
approximately 170 cars.

Consistent with industry practice, the Company reserves a portion of
its hotel rooms and suites as complimentary accommodations for high-level
casino wagerers. For 1994, 1993 and 1992 the average occupancy rates,
including complimentary rooms, which were primarily provided to casino patrons,
were 91%, 92% and 93%, respectively. The average occupancy rate and weighted
average daily room rental, excluding complimentary rooms, were 47% and $64,
respectively, for 1994. This compares with 47% and $62, respectively, for
1993, and 57% and $61, respectively, for 1992.

Capital Improvements

The Company has pursued a major capital improvements program since 1989
in order to compete more effectively in the Atlantic City market. During these
six years capital additions at Resorts Casino Hotel exceeded $109,000,000. In
1994 the Company purchased 221 slot machines, most of which replaced older
models, and completed various capital maintenance projects. In 1993 the
Company converted certain back-of-the-house space into a simulcast facility,
which houses five betting windows and four customer-operated terminals and
approximately 80 seats for simulcast betting operations, as well as 18 poker
tables, various other table games and a bar with food service. Also, certain
casino renovations were completed, 280 slot machines were purchased, most of
which replaced older models, and the VIP slot and table player lounge, "Club
Griffin," opened. In addition, guest room refurbishments continued and a new
centralized mobile communications system was installed. During the years 1989
through 1992 improvements included refurbishment of rooms in both the East
Tower and the North Tower, casino renovations, purchase

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<PAGE> 62

of new slot machines and gaming equipment, conversion of the parking garage
from valet to self-parking, restaurant remodeling and upgrading, renovation of
public areas, installation of new computer equipment and management information
systems, as well as improvements to the infrastructure such as elevators, air
conditioning, and exterior renovations and painting. As the major capital
improvements program was completed in 1993, management expects capital
expenditures in 1995, as in 1994, to be largely related to maintenance of
existing facilities. Such capital costs of a recurring nature are planned to
approximate $10,000,000 in 1995. It is currently estimated that an additional
$1,500,000 will be required to enlarge the Company's gaming area by an
additional 10,000 square feet, which expansion was recently approved by the
Casino Control Commission. The Company also estimates that slot machines for
this additional gaming space will cost approximately $2,500,000; the Company
will explore leasing, rather than purchasing, these slot machines.

Marketing

The Company continues to take advantage of the celebrity status of Merv
Griffin, who is actively engaged in the marketing of the Resorts Casino Hotel.
Mr. Griffin, who is Chairman of the Board of RII, is featured in television
commercials and in print advertisements. Mr. Griffin also appeared live at the
Resorts Casino Hotel in "Merv Griffin's New Year's Eve Special 1994" which was
broadcast nationwide. Merv Griffin's New Year's Eve Special has been produced
at the Resorts Casino Hotel since 1991. Mr. Griffin is to continue to
participate in the operations and marketing of the Resorts Casino Hotel through
the term of the Griffin Services Agreement. See "Griffin Services Agreement"
under "Management of RII - Executive Compensation - Compensation Committee
Interlocks and Insider Participation."

The Company's marketing strategy is designed to enhance the appeal of
the Resorts Casino Hotel to the mid and premium-level slot and table game
players, although slot players have been, in recent years, the primary focus of
the Company's marketing efforts. In 1993 the Company introduced the
"cash-back" program which rewards slot players with cash refunds or
complimentaries based on their volume of play and expanded and upgraded
"Hollywood Hills," its high-limit slot area. In the fall of 1994, the Company
increased its program of charter flights in an effort to recapture some of its
lost market share in table win. Also, in the fall of 1994, the Company
introduced the "Griffin Games," created by Merv Griffin, whereby slot patrons
are chosen at random to participate in daily tournaments with the daily winners
eventually participating in a $100,000 "winners tournament." In January 1995
the "Griffin Games" were extended to those patrons playing table games and, to
further attract premium players, the Company has budgeted in its 1995 capital

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<PAGE> 63

expenditure program approximately $800,000 to renovate its suites. The Company
also has a VIP slot and table player lounge, "Club Griffin," which serves
complimentary food and beverages. Notwithstanding the preceding, the Company
continues to rely heavily on its bus program to produce low to middle level
slot players.

New Convention Center

In January 1992, the State of New Jersey enacted legislation that
authorized a financing plan for the construction of a new convention center to
be located on a 30-acre site next to the Atlantic City train station at the
base of the Atlantic City Expressway. The Company understands that the new
convention center will have 500,000 square feet of exhibit space and an
additional 104,000 square feet of meeting rooms. Construction of the new
convention center began in early 1993 and it is scheduled to be completed in
early 1997.

The convention center is part of a broader plan that includes an
additional expansion of the Atlantic City International Airport, the
transformation of the main entryway into Atlantic City into a new corridor,
revitalizing the Boardwalk's commercial district by means of a themed retail
area, and the construction of new hotel rooms. Officials have commented upon
the need for improved commercial air service into Atlantic City as a factor in
the success of the proposed convention center. See further discussion under
"Transportation Facilities" below. The corridor project presently includes
plans for a new convention hotel. In addition, to further spur construction of
new hotel rooms and renovation of substandard hotel rooms into deluxe
accommodations to support the new convention center, up to a total of
$100,000,000 has been set aside by the Casino Reinvestment Development
Authority (the "CRDA"), a public authority created under the Casino Control
Act, to aid in financing such projects. To date, the CRDA has approved the
expansion projects submitted by five casino/hotels which are to receive CRDA
financing approximating $84,000,000 and result in the construction of
approximately 2,100 hotel rooms.

Although these developments are viewed as positive and favorable to the
future prospects of the Atlantic City gaming industry, the Company, at this
point, can make no representations as to whether, or to what extent, its
operations may be improved by the completion of the new convention center, the
proposed airport expansion projects and the proposed increase in number of
hotel rooms in the area.

Transportation Facilities

The lack of an adequate transportation infrastructure in the Atlantic
City area continues to negatively affect the industry's

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<PAGE> 64

ability to attract patrons from outside a core geographic area. In 1989,
Amtrak express rail service to Atlantic City commenced from Philadelphia, New
York, Washington and other major cities in the northeast. This service was
expected to improve access to Atlantic City and expand the geographic size of
the Atlantic City casino industry's marketing base. Recently, Amtrak announced
that express rail service to Atlantic City will be discontinued in April 1995.

Also, in 1989 the terminal at the Atlantic City International Airport
(located approximately 12 miles from Atlantic City) was expanded to handle
additional air carriers and large passenger jets, but scheduled service to that
airport from major cities by national air carriers remains extremely limited.
In order to attract increased air service, expansion of the existing terminal
is currently in progress. This construction, which will double the size of the
terminal, is expected to be completed in the fall of 1995. This project
includes a new second level for the terminal, additional departure gates, an
improved baggage system and sheltered walkways connecting the terminal and
planes. Furthermore, in early 1995 the South Jersey Transportation Authority
submitted a comprehensive master plan for the future development of the airport
which plan is currently being reviewed in public hearings. The plan predicts a
threefold increase in passenger volume in the next 20 years and recommends
$155,000,000 of improvements.

Since the inception of gaming in Atlantic City there has been no
significant change in the industry's marketing base or in the principal means
of transportation to Atlantic City, which continues to be automobile and bus.
The resulting geographic limitations and traffic congestion have restricted
Atlantic City's growth as a major destination resort.

The Company continues to utilize day-trip bus programs. A
non-exclusive easement enables the Resorts Casino Hotel to utilize a bus tunnel
under the adjacent Trump Taj Mahal Casino-Resort (the "Taj Mahal"), which
connects Pennsylvania and Virginia Avenues, and a service road exit from the
bus tunnel. This reduces congestion around the Pennsylvania Avenue bus entrance
to the Resorts Casino Hotel. To comfortably accommodate its bus patrons, the
Company has a waiting facility which is located indoors, adjacent to the
casino, and offers various amenities.

Competition

Competition in the Atlantic City casino/hotel industry is intense.
Casino/hotels compete primarily on the basis of promotional allowances,
entertainment, advertising, services provided to patrons, caliber of personnel,
attractiveness of the hotel and casino areas and related amenities, and parking

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<PAGE> 65

facilities. The Resorts Casino Hotel competes directly with 11 casino/hotels
in Atlantic City which, in the aggregate, contain approximately 860,000 square
feet of gaming area, including simulcast betting and poker rooms, and 8,500
hotel rooms. These amounts reflect increases of approximately 74,000 square
feet of gaming area and 300 hotel rooms in 1994. Significant additional
expansion is expected in 1995 due to the previously discussed projects to be
financed by the CRDA as well as the recently passed amendments to the Casino
Control Act which amendments will permit three existing casino/hotels, in
addition to the Company, to increase their gaming area without adding
additional hotel rooms. As previously noted, the Company has received approval
from the Casino Control Commission to expand its casino by 10,000 square feet
and the Company anticipates completion of its expansion in mid-1995.

The Resorts Casino Hotel is located at the eastern end of the Boardwalk
adjacent to the Taj Mahal, which is next to the Showboat. These three
properties have a total of more than 2,700 hotel rooms and approximately
295,000 square feet of gaming space in close proximity to each other. A
28-foot wide enclosed pedestrian bridge between the Resorts Casino Hotel and
the Taj Mahal allows patrons of both hotels and guests for events being held at
the Resorts Casino Hotel and at the Taj Mahal to move between the facilities
without exposure to the weather. A similar enclosed pedestrian bridge connects
the Showboat to the Taj Mahal, allowing patrons to walk under cover among all
three casino/hotels. The remaining nine Atlantic City casino/hotels are
located approximately one-half mile to one and one-half miles to the west on
the Boardwalk or in the Marina area of Atlantic City.

All Atlantic City casino/hotels compete for customers with
casino/hotels located in Nevada, and in certain foreign resort areas, including
The Bahamas, particularly with respect to destination-oriented business,
including conventions. The Las Vegas casino/hotel industry benefits from a
favorable climate and nearby airport facilities that serve most major domestic
carriers.

Atlantic City casino/hotels also compete with casinos located in other
U.S. jurisdictions, particularly those close to New Jersey. Colorado,
Illinois, Iowa, Louisiana, Mississippi, Missouri and South Dakota have
legalized, and several other states, including Pennsylvania, are currently
considering legalizing limited land-based and riverboat casino gaming.
Additionally, certain gaming operations are conducted or have been proposed on
Federal Indian reservations in a number of states. The gaming operation which
competes directly with the Atlantic City casino/hotels is on an Indian
reservation in Connecticut which currently operates more than 3,800 slot
machines and whose slot revenue in 1994 exceeded $470,000,000,

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<PAGE> 66

which is almost twice the slot revenue of the largest casino/hotel in Atlantic
City. In July 1993 the Oneida Indians opened a casino near Syracuse, New York.
Other Indian reservation projects have been announced in the states of New
York, Connecticut and Rhode Island. This rapid expansion of casino gaming,
particularly that which has been or may be introduced into jurisdictions in
close proximity to Atlantic City, may adversely affect the Company's operations
as well as the Atlantic City gaming industry.

Gaming Credit Policy

Credit is extended to selected gaming customers primarily in order to
compete with other casino/hotels in Atlantic City which also extend credit to
customers. Credit play represented 21% of table game volume at the Resorts
Casino Hotel in 1994, 24% in 1993 and 23% in 1992. RIH's gaming receivables,
net of allowance for uncollectible amounts, were $4,216,000, $3,618,000 and
$4,503,000 as of December 31, 1994, 1993 and 1992, respectively. The
collectibility of gaming receivables has an effect on results of operations,
and management believes that overall collections have been satisfactory.
Atlantic City gaming debts are enforceable under the laws of New Jersey and
certain other states, although it is not clear whether other states will honor
this policy or enforce judgments rendered by the courts of New Jersey with
respect to such debts.

Showboat Lease

The Showboat owned by ACS has 800 guest rooms, a 60-lane bowling
center, an 80,000 square foot casino and a 15,000 square foot simulcast betting
and poker room. The Showboat is situated on approximately 10 acres which are
owned by the Company and leased to ACS pursuant to the Showboat Lease, a
99-year net lease dated October 26, 1983, as amended. The Showboat Lease
provided for an initial annual rental, which commenced in March 1987, of
$6,340,000, subject to annual adjustment based upon changes in the consumer
price index. The annual rental was $8,326,000 for the 1994 lease year and is
expected to approximate $8,500,000 for the 1995 lease year.

The Company's First Mortgage Non-Recourse Pass-Through Notes due June
30, 2000 (the "Showboat Notes") are secured and serviced by the Showboat Lease,
and all lease payments are made to the Indenture Trustee for the Showboat Notes
to meet the Company's interest obligations under those notes. See Note 7 of
Notes to Consolidated Financial Statements.

The Showboat Lease provides that if, under New Jersey law, the Company
is prohibited from acting as lessor, including any finding by the Casino
Control Commission that the Company is unsuitable, the Company must appoint a
trustee, acceptable to the

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Casino Control Commission, to act for the Company and collect all lease
payments on the Company's behalf. In that event, the trustee also must proceed
to sell the Company's interest in the Showboat Lease and the leased property to
a buyer qualified to act as lessor. The net proceeds of any such sale,
together with any unremitted rentals, would be paid to the Company. Also, if
the Company is no longer able to act as a lessor, as aforesaid, ACS would have
an option to acquire ownership of the 10 acres leased from the Company. The
option would be exercisable during a period of not more than three months. The
purchase price would be an amount equal to the greater of $66,000,000 or the
fair market value of the leased acreage, as defined, but in no event may the
purchase price be more than 11 times the rent being paid by ACS in the year in
which the option may become effective. If the fair market value is not
ascertained within the time required by the Casino Control Commission, then the
purchase price would be the lesser of $66,000,000 or 11 times the rent being
paid by ACS in the year the option may become effective. In the event of any
sale of the leased property under the circumstances described above, the
disposition of the proceeds of such sale would be governed by the indenture for
the Showboat Notes.

Under the Casino Control Act, both the Company and ACS, because of
their lessor-lessee relationship, are jointly and severally liable for the acts
of the other with respect to any violations of the Casino Control Act by the
other. In order to limit the potential liability that could result from this
provision, ACS, its parent, Ocean Showboat, Inc., and the Company have entered
into an indemnity agreement pursuant to which they agree to indemnify each
other from all liabilities and losses which may arise as a result of acts of
the other party that violate the Casino Control Act. The Casino Control
Commission could determine, however, that the party seeking indemnification is
not entitled to, or is barred from, such indemnification.

Security Controls

Gaming at the Resorts Casino Hotel is conducted by Company trained and
supervised personnel. Prior to employment, all casino personnel must be
licensed under the Casino Control Act. Security checks are made to determine,
among other matters, that job applicants for key positions have had no criminal
ties or associations. The Company employs extensive security and internal
controls at its casino. Security in the Resorts Casino Hotel utilizes closed
circuit video cameras to monitor the casino floor and money counting areas. The
count of monies from gaming is observed daily by government representatives.

Seasonal Factors

The Company's business activities are strongly affected by seasonal
factors that influence the New Jersey beach tourist

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trade. Higher revenues and earnings are typically realized from the Company's
Atlantic City operations during the middle third of the year.

Employees

Since the disposition of the Company's Paradise Island operations in
May 1994, the Company has had a maximum of approximately 3,900 employees,
almost all of whom were located in Atlantic City. The Company believes that
its employee relations are satisfactory.

Approximately 1,500 of the Company's employees are represented by
unions. Of these employees, approximately 1,200 are represented by the Hotel
Employees and Restaurant Employees International Union Local 54, whose contract
expires in September 1999. There are several union contracts covering other
union employees.

All of the Company's casino employees and casino hotel employees must
be licensed under the Casino Control Act. Casino hotel employees are those
employees whose work requires access to the casino, the casino simulcasting
facility or restricted casino areas. Each casino and casino hotel employee
must meet applicable standards pertaining to such matters as financial
responsibility, good character, ability, casino training and experience, and
New Jersey residency. Hotel employees are no longer required to be registered
with the Casino Control Commission.

Regulation and Gaming Taxes and Fees

General

The Company's operations in Atlantic City are subject to regulation
under the Casino Control Act, which authorizes the establishment of casinos in
Atlantic City, provides for licensing, regulation and taxation of casinos and
created the Casino Control Commission and the Division of Gaming Enforcement.
These bodies administer the Casino Control Act. In general, the provisions of
the Casino Control Act concern: the ability, character and financial stability
and integrity of casino operators, their officers, directors and employees and
others financially interested in a casino; the nature and suitability of hotel
and casino facilities, operating methods and conditions; and financial and
accounting practices. Gaming operations are subject to a number of
restrictions relating to the rules of games, number of games, credit play, size
and facilities of hotel and casino operations, hours of operation, persons who
may be employed, companies which may do business with casinos, the maintenance
of accounting and cash control procedures, security and other aspects of the
business.

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<PAGE> 69

There were significant regulatory changes from 1993 through early 1995.
The Casino Control Commission approved poker and keno, which were implemented
by casinos in the summers of 1993 and 1994, respectively. Also, the Casino
Control Act was amended to allow casinos to expand their casino floors before
building the requisite number of hotel rooms, subject to approval of the Casino
Control Commission. This amendment was designed to encourage hotel room
construction by giving casino licensees an incentive and an added ability to
generate money to finance hotel construction. Further legislation was passed
allowing the Casino Control Commission to approve increasing a casino's gaming
space if a licensee has had qualified rooms in an annexed approved casino/hotel
or rebuilds existing hotel rooms as part of a neighborhood rehabilitation
program. Previous law only allowed for casino expansion if a casino built new
hotel rooms. In addition, the minimum casino square footage has been increased
from 50,000 square feet to 60,000 square feet for the first 500 qualifying
rooms and allows for an additional 10,000 square feet for each additional 100
qualifying rooms over 500. Future costs of regulation have been reduced as new
legislation (i) no longer requires hotel employees to be registered and (ii)
extends the term for casino and casino key employee license renewals from two
years to four years. The new legislation also allows greater efficiency by
either reducing or eliminating the time permitted the Casino Control Commission
to approve (i) internal controls, (ii) patron complimentary programs and (iii)
the movement of gaming equipment.

Casino License

A casino license is initially issued for a term of one year and must be
renewed annually by action of the Casino Control Commission for the first two
renewal periods succeeding the initial issuance of a casino license. Until
recently, the Casino Control Commission was given the authority to renew a
casino license for a period of two years. This period has been extended to
four years, although the Casino Control Commission may reopen licensing
hearings at any time. A license is not transferable and may be conditioned,
revoked or suspended at any time upon proper action by the Casino Control
Commission. The Casino Control Act also requires an operations certificate
which, in effect, has a term coextensive with that of a casino license.

On February 26, 1979, the Casino Control Commission granted a casino
license to RIH for the operation of the Company's Atlantic City casino. In
February 1994, RIH's license was renewed until January 31, 1996. RIH's renewed
license is subject to several conditions, including (i) the Company must
provide certain periodic reports and immediate notification of certain events
related to RII's public debt securities to the Casino Control Commission, (ii)
the Company must submit certain periodic financial reports to the Casino
Control Commission, (iii) certain

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payments from RIH to related parties are subject to prior approval of the
Casino Control Commission and (iv) any borrowing under the Senior Facility is
subject to prior approval of the Casino Control Commission.

Restrictions on Ownership of Equity and Debt Securities

The Casino Control Act imposes certain restrictions upon the ownership
of securities issued by a corporation which holds a casino license or is a
holding, intermediary or subsidiary company of a corporate licensee
(collectively, "holding company"). Among other restrictions, the sale,
assignment, transfer, pledge or other disposition of any security issued by a
corporation which holds a casino license is conditional and shall be
ineffective if disapproved by the Casino Control Commission. If the Casino
Control Commission finds that an individual owner or holder of any securities
of a corporate licensee or its holding company must be qualified and is not
qualified under the Casino Control Act, the Casino Control Commission has the
right to propose any necessary remedial action. In the case of corporate
holding companies and affiliates whose securities are publicly traded, the
Casino Control Commission may require divestiture of the security held by any
disqualified holder who is required to be qualified under the Casino Control
Act.

In the event that entities or persons required to be qualified refuse
or fail to qualify and fail to divest themselves of such security interest, the
Casino Control Commission has the right to take any necessary action, including
the revocation or suspension of the casino license. If any security holder of
the licensee or its holding company or affiliate who is required to be
qualified is 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. The Amended and Restated
Certificate of Incorporation of RII provides that all securities of RII are
held subject to the condition that if the holder thereof is found to be
disqualified by the Casino Control Commission pursuant to provisions of the
Casino Control Act, then that holder must dispose of his or her interest in the
securities. The Mortgage Notes and Junior Mortgage Notes are also subject to
the qualification, divestiture and redemption provisions under the Casino
Control Act described herein.

Remedies

In the event that it is determined that a licensee has violated the
Casino Control Act, or if a security holder of the licensee required to be
qualified is found disqualified but does not dispose of his securities in the
licensee or holding company,

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under certain circumstances the licensee could be subject to fines or have its
license suspended or revoked.

The Casino Control Act provides for the mandatory appointment of a
conservator to operate the casino and hotel facility if a license is revoked or
not renewed and permits the appointment of a conservator if a license is
suspended for a period in excess of 120 days. If a conservator is appointed,
the suspended or former licensee is entitled to a "fair rate of return out of
net earnings, if any, during the period of the conservatorship, taking into
consideration that which amounts to a fair rate of return in the casino or
hotel industry."

Under certain circumstances, upon the revocation of a license or
failure to renew, the conservator, after approval by the Casino Control
Commission and consultation with the former licensee, may sell, assign, convey
or otherwise dispose of all of the property of the casino/hotel. In such
cases, the former licensee is entitled to a summary review of such proposed
sale by the Casino Control Commission and creditors of the former licensee and
other parties in interest are entitled to prior written notice of sale.

License Fees, Taxes and Investment Obligations

The Casino Control Act provides for casino license renewal fees and
other fees based upon the cost of maintaining control and regulatory
activities, and various work permits and license fees for the various classes
of employees. In addition, a licensee is subject annually to a tax of 8% of
"gross revenue" (defined under the Casino Control Act as casino win, less
provision for uncollectible accounts up to 4% of casino win) and license fees
of $500 on each slot machine.

The following table summarizes, for the periods shown, the fees and
taxes assessed upon the Company by the Casino Control Commission.

<TABLE>
<CAPTION>
For the Year
---------------------------------------------
1994 1993 1992
<S> <C> <C> <C>
Gaming tax $19,996,000 $19,545,000 $18,788,000
License, investigation,
inspection and other fees 4,218,000 3,985,000 4,417,000
----------- ----------- ----------
$24,214,000 $23,530,000 $23,205,000
=========== =========== ===========
</TABLE>

The Casino Control Act, as originally adopted, required a licensee to
make investments equal to 2% of the licensee's gross revenue (the "investment
obligation") for each calendar year,

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<PAGE> 72

commencing in 1979, in which such gross revenue exceeded its "cumulative
investments" (as defined in the Casino Control Act). A licensee had five years
from the end of each calendar year to satisfy this investment obligation or
become liable for an "alternative tax" in the same amount. In 1984 the New
Jersey legislature amended the Casino Control Act so that these provisions now
apply only to investment obligations for the years 1979 through 1983. Certain
issues have been raised concerning the satisfaction of the Company's investment
obligations for the years 1979 through 1983. See Note 16 of Notes to
Consolidated Financial Statements for a discussion of these issues.

Effective for 1984 and subsequent years, the amended Casino Control Act
requires a licensee to satisfy its investment obligation by purchasing bonds to
be issued by the CRDA or by making other investments authorized by the CRDA, in
an amount equal to 1.25% of a licensee's gross revenue. If the investment
obligation is not satisfied, then the licensee will be subject to an investment
alternative tax of 2.5% of gross revenue. Licensees are required to make
quarterly deposits with the CRDA against their current year investment
obligations. The Company's investment obligations for the years 1994, 1993 and
1992 amounted to $3,124,000, $3,054,000, and $2,930,000, respectively, and have
been satisfied by deposits made with the CRDA. At December 31, 1994, the
Company held $5,286,000 face amount of bonds issued by the CRDA and had
$15,577,000 on deposit with the CRDA. The CRDA bonds issued through 1994 have
interest rates ranging from 3.9% to 7% and have repayment terms of between 20
and 50 years.

Recent amendments to the Casino Control Act create a new Atlantic City
fund for economic development projects other than the construction and
renovation of casino/hotels. Beginning in fiscal year 1995/1996 and for the
following three fiscal years, if the amount of money expended by the Casino
Control Commission and the Division of Gaming Enforcement is less than
$57,300,000, the prior year's budget for these agencies, the amount of the
difference is to be deposited into the Atlantic City fund. Thereafter,
beginning with fiscal year 1999/2000 and for the following three fiscal years,
an amount equal to the average paid into the Atlantic City fund for the previous
four fiscal years shall be deposited in the Atlantic City fund. Each licensee's
share of the amount to be contributed to the fund is based upon its percentage
of the total industry gross revenue for the relevant fiscal year. After eight
years, the casino licensee's requirement to contribute to this fund ceases.

PROPERTIES

The Company's casino, resort hotel and related properties in Atlantic
City, the approximately 10 acre site of the Showboat and certain other
properties described below are owned in fee, except for approximately 1.2 acres
of the Resorts Casino Hotel site

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which are leased pursuant to ground leases expiring from 2056 through 2067.

RIH's fee and leasehold interests in the Resorts Casino Hotel, the
contiguous parking garage and property, all additions and improvements thereto,
and related personal property of RIH compose the collateral securing the
Mortgage Notes and the Junior Mortgage Notes. The Showboat Lease, including the
land subject to the lease, secures the payment of the Showboat Notes.

Other Properties

The Company owns various non-operating sites in Atlantic City that could
be developed and are available for sale. These sites consist primarily of
vacant land in Great Island, Brigantine Island, the marina area and waterfront
parcels in the inlet section. In view of the generally depressed state of the
commercial real estate market in Atlantic City and the condition of the economy
generally, the Company does not anticipate any significant real estate activity
in the foreseeable future. In this connection, see Note 13 of Notes to
Consolidated Financial Statements of RII for a discussion of a write-down of the
Company's non-operating Atlantic City real estate in 1994.

RII is the owner of real property located at Brigantine Boulevard on
Brigantine Island that consists of approximately 40 acres ("Rum Point"), of
which only approximately 15 acres can potentially be developed because the
remaining portions constitute wetlands areas and consequently are not available
for development. Additional environmental and coastal restrictions apply to the
development of Rum Point.

RII owns in fee an approximately 552 acre parcel located in Atlantic
City on Blackhorse Pike (the "Great Island Property"), of which approximately
545 acres are considered to be woodlands and wetlands. The Company owns in fee
an eight acre parcel located in the marina area of Atlantic City immediately
adjacent to the Harrah's Casino Hotel. The Company also owns in fee various
individual parcels of property located in the area of Atlantic City known as the
South Inlet which in the aggregate constitute approximately 10 acres and a
parcel of land in Atlantic City consisting of approximately six acres and a
warehouse thereon. The Company is the owner of various additional properties at
scattered sites in Atlantic City. Principal among these is the so-called "Trans
Expo" site, a 2.3 acre parcel located near the site of the new convention
center.

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MANAGEMENT OF RII

DIRECTORS AND EXECUTIVE OFFICERS

The directors of RII are:

<TABLE>
<CAPTION>
Director
--------
Name Age Since
---- --- -----
<S> <C> <C>
Merv Griffin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 1988
Chairman of the Board of Directors
William J. Fallon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 1994
Thomas E. Gallagher . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 1993
President and Chief Executive Officer
Jay M. Green . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 1994
Charles Masson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 1994
Vincent J. Naimoli . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 1994
</TABLE>

Pursuant to RII's Amended and Restated Certificate of Incorporation, the
total number of directors is fixed at six. Holders of RII's Class B Redeemable
Common Stock (the "Class B Stock") are entitled to elect one-third of RII's
Board of Directors (the "Class B Directors") and under certain circumstances
they would be entitled to elect a majority of RII's Board of Directors. The
remaining directors are elected by holders of RII's common stock (the "RII
Common Stock"). The Board of Directors is divided into three equal classes,
Class I, Class II, and Class III, which have staggered three year terms. Class
I directors are to serve for a term ending at the annual meeting to be held in
1995, Class II directors are to serve for a term ending at the annual meeting to
be held in 1996, and Class III directors are to serve for a term ending at the
annual meeting to be held in 1997. Notwithstanding the foregoing, each director
shall serve until his successor is elected and qualified or until his earlier
death, resignation or removal.

RII's present Board of Directors was appointed pursuant to a joint
plan of reorganization (the "Plan") effected by RII and certain of its
subsidiaries on May 3, 1994 (the "Effective Date"). Messrs. Gallagher and
Green compose Class I, Messrs. Fallon and Naimoli compose Class II, and Messrs.
Griffin and Masson compose Class III. Messrs. Naimoli and Masson serve as
Class B Directors. The directors serving on the committees of the Board are as
follows: Audit Committee - Messrs. Green, Masson and Naimoli;
Compensation/Option Committee - Messrs. Fallon, Green, Masson and Naimoli;
Executive Committee - Messrs. Griffin, Gallagher and Masson; and Business
Development and Strategic Planning Committee - Messrs. Fallon, Gallagher and
Masson.

Pursuant to the Plan, Antonio C. Alvarez II, Warren Cowan, Joseph G.
Kordsmeier and Paul C. Sheeline resigned from the RII

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Board of Directors as of the Effective Date, and Messrs. Fallon, Green, Masson
and Naimoli were appointed to the Board of Directors.

The executive officers of RII are:

<TABLE>
<CAPTION>
Executive
---------
Officer
-------
Name Age Since
---- --- -----
<S> <C> <C>
Merv Griffin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 1988
Chairman of the Board of Directors
Thomas E. Gallagher . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 1995
President and Chief Executive Officer
Matthew B. Kearney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 1982
Executive Vice President- Finance, Chief
Financial Officer and Treasurer
David G. Bowden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 1979
Vice President- Controller, Chief Accounting Officer,
Secretary and Assistant Treasurer
</TABLE>

The officers of RII serve at the pleasure of the Board of Directors of
RII.

Business Experience

The principal occupations and business experience for the last five
years or more of the directors and executive officers of RII are as follows:

Merv Griffin - Chairman of the Board of RII since November 1988;
Chairman of Griffco Resorts Holding, Inc. ("Griffco," a company which
through September 1990 was owned by Mr. Griffin and from November 1988
through September 1990 was RII's parent) from its incorporation in May
1986 to September 1990; President of Griffco from September 1988 to
September 1990; Chairman of The Griffin Group, Inc. ("Griffin Group"),
a company controlled by Merv Griffin, since its incorporation in
September 1988; Chairman of January Enterprises, Inc. ("January
Enterprises"), a television production and holding company doing
business as Merv Griffin Enterprises, from 1964 to May 1986, and Chief
Executive Officer from 1964 to March 1994; director of Hollywood Park
Operating Company from 1987 to June 1991; television and radio
producer since 1945. Mr. Griffin created and produced the nationally
syndicated television game shows, "Wheel of Fortune" and "Jeopardy."
For 21 years, through 1986, Mr. Griffin hosted "The Merv Griffin
Show," a nationally syndicated talk show. In 1986, Mr. Griffin sold
January Enterprises to The Coca Cola Company, but he continues to act
as Executive Producer of "Wheel of Fortune" and "Jeopardy," now owned
by Sony Pictures Entertainment, Inc.

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William J. Fallon - Executive Vice President of R.M. Bradley & Co.
Inc. ("Bradley"), a real estate brokerage and management company,
since March 1994; Senior Vice President of Bradley from 1988 to March
1994; other positions with Bradley from 1979 to 1988; a director of
Massachusetts Certified Development Corporation, a small business
development company, since 1987; President of A.D. Ventures, Inc., an
asset development consulting company owned by Mr. Fallon, since its
formation in September 1994. A.D. Ventures, Inc. has provided real
estate consulting services to Griffin Group.

Thomas E. Gallagher - RII's Board of Directors appointed Mr. Gallagher
President and Chief Executive Officer of RII effective May 1, 1995.
President and Chief Executive Officer of Griffin Group since April
1992; a director of Players International, Inc., a gaming company,
since December 1992. For the preceding 15 years, Mr. Gallagher was a
partner of the law firm of Gibson, Dunn & Crutcher.

Jay M. Green - Executive Vice President-Chief Financial Officer and
Treasurer of Culbro Corporation ("Culbro"), a diversified consumer and
industrial products company since 1988; Chairman of the Board of The
Eli Witt Company, a Culbro subsidiary, since February 1993; prior to
1988, Vice President and Controller of Columbia Pictures
Entertainment, Inc.

Charles M. Masson - Chairman of the Board of Directors of Cadillac
Fairview Corporation Limited, a property developer, since September
1994; President of McCloud Partners, a private advisory firm, since
June 1993; a director of Salomon Brothers Inc from 1991 through May
1993; Vice President of Salomon Brothers Inc from 1983 through 1990.

Vincent J. Naimoli - Chairman, President and Chief Executive Officer
of Harvard Industries, Inc., a manufacturer of automotive parts, since
1993; Chairman and Chief Executive Officer of Doehler-Jarvis
Corporation, a manufacturer of automotive parts, since 1991; Chairman,
President and Chief Executive Officer of Ladish Company, Inc., a
company involved in the aerospace industry, since 1993; Managing
General Partner of the Tampa Bay Baseball Ownership Group since 1992;
Chairman, President and Chief Executive Officer of Anchor Industries
International, Inc., a multi-industry operating, holding and financial
services company, since 1989; a director of Simplicity Pattern
Company, a manufacturer of home furnishings, since 1990; Chairman,
President and Chief Executive Officer of Anchor Glass Container
Corporation from 1983 through 1989.

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Matthew B. Kearney - Executive Vice President-Finance of RII
since September 1993; Chief Financial Officer of RII since 1982;
Treasurer of RII since May 1993; Office of the President of RII from
November 1993 to March 1995; Vice President-Finance of RII from 1982
through September 1993.

David G. Bowden - Vice President-Controller and Chief Accounting
Officer of RII since 1979; Secretary of RII since August 1994.

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EXECUTIVE COMPENSATION

The following table (the "Summary Compensation Table") sets forth
information concerning compensation earned by, paid to or awarded to each
individual serving as RII's Chief Executive Officer or acting in a similar
capacity during 1994 and to each of the other executive officers of RII who
were serving as executive officers at December 31, 1994 for services rendered
in all capacities to RII and its subsidiaries.

Long Term
Compensation -
Number of
Annual Compensation Securities
Name and Principal -------------------------- Underlying Stock All Other
Position during 1994 Year Salary Bonus Options Granted Compensation
-------------------- ---- -------- ------------ ---------------- ------------
<S> <C> <C> <C> <C> <C>
Matthew B. Kearney 1994 $300,000 $325,000 (2) 200,000 $ 17,002 (5)
Office of the President, 1993 $281,712 $100,000 (3) $ 26,419
Executive Vice
President-Finance 1992 $275,000 $125,000 (4) $ 16,074
and Chief Financial Officer

Christopher D. Whitney (1) 1994 $178,846 $125,000 (2) $233,550 (5)
Office of the President, 1993 $300,000 $100,000 (3) $ 13,379
Executive Vice President, 1992 $300,000 $125,000 (4) $ 14,592
and Chief of Staff

David G. Bowden 1994 $135,000 $ 70,000 (2) 35,000 $ 11,857 (5)
Vice President-Controller 1993 $135,000 $ 31,303
and Chief Accounting Officer 1992 $135,000 $ 40,000 (4) $ 8,126
- -----------
</TABLE>

(1) Mr. Whitney resigned from all positions with RII and its subsidiaries as
of July 31, 1994.

(2) Includes bonus in recognition of efforts relative to the reorganization
of RII: Mr. Kearney - $125,000, Mr. Whitney - $125,000 and Mr. Bowden -
$50,000; and performance bonus for 1994: Mr. Kearney - $200,000 and
Mr. Bowden - $20,000.

(3) Represents bonus in recognition of efforts relative to the
reorganization of RII.

(4) Represents performance bonus for 1992.

(5) Includes $222,306 lump sum termination benefit to Mr. Whitney; the cost
of group life, health, and other insurance coverage: Mr. Kearney -
$11,228, Mr. Whitney - $7,667 and Mr. Bowden - $9,157; and the Company's
contribution to a defined contribution group retirement plan:
Mr. Kearney - $5,774, Mr. Whitney - $3,577 and Mr. Bowden - $2,700.

75
<PAGE> 79

See also the description of the Griffin Services Agreement under
"Compensation Committee Interlocks and Insider Participation - Transactions with
Management and Others - Griffin Services Agreement" below for a description of
compensation to Griffin Group for certain services rendered by Mr. Griffin.

76
<PAGE> 80

Option Grants in Last Fiscal Year

The following table sets forth the information concerning options to
purchase shares of RII Common Stock which were granted during 1994 to the
individuals named in the Summary Compensation Table.

<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Option Term -
Individual Grants (1) 10 Years

Number of % of Total
Securities Options
Underlying Granted to
Options Employees Exercise Expiration
Name Granted in Fiscal Year Price Date 5% 10%
- ------------------ ---------- -------------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Matthew B. Kearney 200,000 20.0% $1.03125 8/1/04 $129,710 $328,709

David G. Bowden 35,000 3.5% $1.03125 8/1/04 $ 22,699 $ 57,524
</TABLE>

(1) These options were granted on August 1, 1994, and are to vest 25% per
year on the first four anniversaries of the date granted.

77
<PAGE> 81

Fiscal Year End Option Value Table

The following table sets forth information as of December 31, 1994,
concerning the unexercised options held by executive officers named in the
Summary Compensation Table, none of whom exercised options in 1994. No options
held by those executive officers were in-the-money at December 31, 1994. Options
are "in-the-money" when the fair market value of underlying common stock exceeds
the exercise price of the option. The exercisable options held by the named
executives have an exercise price of $1.875 per share. The unexercisable
options held by the named executives have an exercise price of $1.03125 per
share. The closing price of RII Common Stock on December 31, 1994, was $.875
per share.

<TABLE>
<CAPTION>
Number of Securities Underlying
Unexercised Options
at December 31, 1994
--------------------------------
Name Exercisable Unexercisable
------------------- ----------- -------------
<S> <C> <C>
Matthew B. Kearney 87,500 200,000

David G. Bowden 25,000 35,000
</TABLE>

Compensation of Directors

RII's non-employee directors are each entitled to receive $35,000
annually as compensation for serving as a director, $500 for each Board meeting
attended and $500 for each Committee meeting attended when such Committee
meeting is not held on the same day as a Board meeting or another Committee
meeting. Also, any non-employee director who, upon the request of the Board or
of the Chairman of a Committee of the Board, performs services on behalf of RII
or its subsidiaries in addition to such director's preparation for and
attendance at meetings of the Board or its Committees is entitled to receive a
per diem fee of $1,250.

No compensation was paid to Mr. Griffin for his services as a director
of RII in 1994. However, Griffin Group was compensated for certain services
provided by Mr. Griffin, including Mr. Griffin's serving as Chairman of the
Board of RII. See the description of the Griffin Services Agreement under
"Compensation Committee Interlocks and Insider Participation - Transactions with
Management and Others - Griffin Services Agreement" below.

Messrs. Alvarez, Cowan, Kordsmeier and Sheeline received $10,750 each
for their services as directors during 1994, which services terminated as of the
Effective Date. Messrs. Fallon, Green, Masson and Naimoli received $35,834,
$25,834, $25,834 and $25,834, respectively, for their services during 1994,
which services commenced on the Effective Date. Mr. Fallon's

78
<PAGE> 82

compensation includes per diem fees paid to him and his company, A.D. Ventures,
Inc., for services on behalf of RII in addition to preparation for and
attendance at meetings. Mr. Gallagher, who served as a director throughout the
year 1994, received $39,500 for his services during 1994.

Pursuant to RII's 1994 Stock Option Plan, on the date that a director of
RII commences service on the Stock Option Committee, such Committee member
automatically shall be granted a non-qualified option to purchase 10,000 shares
of RII Common Stock. One half of such options are to be exercisable upon grant
and the remainder are to become exercisable on the first anniversary of the
grant date. Accordingly, Messrs. Fallon, Green, Masson and Naimoli were each
granted options on June 7, 1994 to purchase 10,000 shares of RII Common Stock at
$1.03125 per share.

In addition, see "Certain Transactions - Transactions with Management
and Others" for a discussion of compensation to be paid for the services of Mr.
Gallagher in his capacity as President and Chief Executive Officer of RII which
services will commence on May 1, 1995. Also discussed are stock options to
purchase 500,000 shares of RII Common Stock granted to Mr. Gallagher by the
Board of Directors of RII, subject to approval by RII's shareholders of certain
amendments to RII's 1994 Stock Option Plan.

Employment Contracts and Termination of Employment and Change in
Control Arrangements

Matthew B. Kearney. RII has an employment agreement with Mr. Kearney,
dated as of May 3, 1991, which was extended to May 1995. The term of employment
is to renew automatically for another year unless either party to the agreement
notifies the other that the term is not to be renewed. Mr. Kearney's agreement,
as amended, provides for an annual salary of $300,000. If RII terminates the
executive's employment without cause, as defined, the executive will be entitled
to receive base salary payments through the end of his term of employment. If
such a termination of his employment follows a change in control, as defined,
the executive will receive a lump-sum payment equal to the present value of such
base salary payments.

Compensation Committee Interlocks and Insider Participation

Messrs. Fallon, Green, Masson and Naimoli have served as members of the
Compensation/Option Committee of the Board of Directors of RII since the
Effective Date. Messrs. Alvarez, Griffin and Sheeline served as members of the
Compensation Committee until the Effective Date. Mr. Griffin also serves as an
officer of RII.

79
<PAGE> 83
Transactions with Management and Others

Griffin Services Agreement. In April 1993 RII and Resorts
International Hotel, Inc. ("RIH"), RII's subsidiary which owns and operates
Merv Griffin's Resorts Casino Hotel (the "Resorts Casino Hotel") in Atlantic
City, New Jersey, entered into a License and Services Agreement with Griffin
Group (the "Griffin Services Agreement") dated and effective as of September
17, 1992 to replace the previous License and Services Agreement among RII, Merv
Griffin and Griffin Group upon its expiration. Pursuant to the Griffin
Services Agreement, Griffin Group granted RII and RIH a non-exclusive license
to use the name and likeness of Merv Griffin in certain advertising media and
limited merchandising for the sole purpose of advertising and promoting the
facilities and operations of RII and RIH. In connection with such license,
Griffin Group will not grant any similar license to any casino/hotel located in
Atlantic City during the term of the Griffin Services Agreement, so long as RII
and RIH own or operate casino and hotel facilities there.

Pursuant to the Griffin Services Agreement, Griffin Group agreed to
provide to RII and RIH, for the term of the Griffin Services Agreement, the
non-exclusive services of Merv Griffin, subject to the performance by RII and
RIH of their obligations under the Griffin Services Agreement, (i) as Chairman
of the Board of Directors of RII, (ii) as host, producer, presenter and
featured performer relative to certain shows to be presented at the Resorts
Casino Hotel, (iii) as consultant and marketing adviser, (iv) in certain
capacities, as spokesperson for RII and RIH and (v) as participant in certain
radio, television and print advertisements.

The Griffin Services Agreement is to continue in force until September
17, 1997 and provides for earlier termination under certain circumstances
including, among others, a change of control (as defined) of RII and RIH and
Mr. Griffin ceasing to serve as Chairman of the Board of RII.

The Griffin Services Agreement provides for compensation to Griffin
Group in the following annual amounts over the five year term: $2,000,000;
$2,100,000; $2,205,000; $2,310,000 and $2,425,000. The agreement called for a
payment of $4,100,000, upon signing, representing compensation for the first
two years of services. Thereafter, the agreement called for annual payments on
September 17, each representing a prepayment for the year ending two years
hence. In lieu of paying in cash, at RII's option, it could satisfy its
obligation to make any of the payments required under the Griffin Services
Agreement by reducing the amount of the Group Note described below under
"Indebtedness of Management." In the event of an early termination of the
Griffin Services Agreement, and depending on the circumstances of such early
termination, all or a portion of

80
<PAGE> 84

the compensation paid to Griffin Group in respect of the period subsequent to
the date of termination may be required to be repaid to RII and RIH.

RIH made the $4,100,000 payment for the first two years under the
Griffin Services Agreement in April 1993. In September 1993, RII satisfied the
obligation to make the $2,205,000 payment for the year ending September 16,
1995 by reducing the Group Note by that amount. In May 1994, as contemplated
in the Plan, RII satisfied the $2,310,000 obligation to Griffin Group for the
fourth year of the Griffin Services Agreement by reducing the principal amount
of the Group Note in an equal amount. The final payment required under the
agreement, $2,425,000, was to be due in September 1995. On August 1, 1994,
following review and approval by the independent members of RII's Board of
Directors, RII agreed to issue 1,940,000 shares of RII Common Stock to Atlantic
Resorts Holdings, Inc. ("ARH"), an affiliate of Griffin Group through which Mr.
Griffin holds certain securities of RII, in satisfaction of this final payment
obligation. The closing price of RII Common Stock on the date of the agreement
was $1.0625 per share. The shares are not registered under the Securities Act
of 1933 and are restricted securities.

As additional compensation provided for in the Griffin Services
Agreement, on the Effective Date RII issued to ARH, as assignee from Griffin
Group, a warrant to purchase 4,666,850 shares of RII Common Stock at $1.20 per
share (the "Griffin Warrant"). The Griffin Warrant is exercisable through May
3, 1998.

RII and RIH also have agreed to indemnify Merv Griffin and Griffin
Group for certain costs and liabilities arising in connection with the Griffin
Services Agreement or Merv Griffin's services, or the service of any employee
of Griffin Group, as a director or officer of RII or any subsidiary thereof.

Pursuant to the Griffin Services Agreement, RII and RIH have agreed to
maintain for at least four years comprehensive public liability, personal
injury and umbrella insurance coverage in specified amounts for both Griffin
Group and Merv Griffin, individually.

RII and RIH also have agreed to reimburse Griffin Group for certain
expenses incurred by Griffin Group and Merv Griffin in connection with the
license and services agreed to under the Griffin Services Agreement.

Other Transactions. The Company reimbursed Griffin Group $396,000,
$219,000 and $296,000 for charter air services rendered in 1992, 1993 and 1994,
respectively, to Mr. Griffin as well as other directors and officers of RII and
its subsidiaries for travel related to Company business.

81
<PAGE> 85

In 1992 and 1993 the Company did business with various subsidiaries of
January Enterprises of which Merv Griffin was Chief Executive Officer through
March 1994. In 1992 the Company agreed to pay $100,000 and provided certain
facilities, labor and accommodations in connection with the production of the
live television broadcast of "Merv Griffin's New Year's Eve Special 1992" from
Resorts Casino Hotel. In 1993 the Company agreed to the same terms as in 1992
for the production of the live television broadcast of "Merv Griffin's New
Year's Eve Special 1993." In 1994 RII and RIH incurred charges from
unaffiliated parties of $394,000 in producing the live television broadcast of
"Merv Griffin's New Year's Eve Special" from Resorts Casino Hotel. The Company
received certain promotional considerations in connection with the television
broadcast of these shows.

In 1994 the Company entered into a barter agreement with Griffin Group
whereby certain promotional spots would air on radio stations owned by Griffin
Group in exchange for certain packages including rooms, food and beverage and
entertainment at the Resorts Casino Hotel. The retail value of the services
exchanged are to total approximately $120,000.

In early 1992, RII entered into an agreement with Alvarez & Marsal,
Inc. ("Alvarez & Marsal") pursuant to which it was to provide financial
advisory services in connection with the development and analysis of financial
alternatives available to the Company, and the development of a long-term
financial plan. The Company paid Alvarez & Marsal $300,000 for financial
advisory services rendered under this agreement in 1992. According to an
amendment to this agreement, RII paid no fees to Alvarez & Marsal during 1993;
however, in 1994 RII paid Alvarez & Marsal, Inc. $225,000 and issued 112,500
shares of RII Common Stock as compensation for financial advisory services
rendered in connection with the reorganization of RII. Mr. Alvarez, a
shareholder of Alvarez & Marsal, was a member of RII's Board of Directors from
September 1990 until the Effective Date.

Certain Business Relationships. The Company retained Verner, Liipfert,
Bernhard, McPherson and Hand during 1992 and 1993 for certain legal services.
Mr. Sheeline, who was Of Counsel to such law firm through March 1993, was a
director of RII from 1990 until the Effective Date.

Indebtedness of Management. Pursuant to the 1990 plan of reorganization
of RII and certain of its subsidiaries, in September 1990, RII received
$12,345,000 in cash and an $11,000,000 promissory note (the "Griffin Note")
from Merv Griffin for 4,400,000 shares of RII Common Stock purchased by him. In
April 1993, in accordance with the Griffin Services Agreement described above
under "Transactions with Management and Others - Griffin Services Agreement,"
simultaneous with RIH's payment to Griffin Group of $4,100,000 for the first
two years of

82
<PAGE> 86

service under the agreement, Mr. Griffin made a partial payment of principal
and interest in the amount of $4,100,000 on the Griffin Note. This resulted in
a remaining balance of $7,523,333. The Griffin Note was then cancelled and a
new note from Griffin Group (the "Group Note") in the amount of $7,523,333 was
substituted therefor. The Group Note was payable on demand and bore interest
at the rate of 3% per year. Merv Griffin personally guaranteed payment of the
Group Note. As noted above, the balance of the Group Note was reduced by
$2,205,000 in September 1993 and by $2,310,000 in May 1994 in satisfaction of
fees due to Griffin Group under the Griffin Services Agreement. Also in May
1994, as part of the reorganization of RII, Griffin Group repaid the remaining
principal balance of $3,008,000 and accrued interest thereon.

MANAGEMENT OF RIHF

DIRECTORS AND EXECUTIVE OFFICERS

The directors of RIHF are:

<TABLE>
<CAPTION>
Director
--------
Name Age Since
---- --- -----
<S> <C> <C>
Matthew B. Kearney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 1993
Lawrence Cohen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 1994
</TABLE>

The executive officers of RIHF are:

<TABLE>
<CAPTION>
Executive
---------
Officer
-------
Name Age Since
---- --- -----
<S> <C> <C>
Matthew B. Kearney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 1993
President and Principal Executive,
Financial and Accounting Officer
David G. Bowden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 1994
Vice President and Secretary
</TABLE>

See "Management of RII" for a description of the business experience
of Messrs. Kearney and Bowden, who receive no compensation specifically for
their services as officers or as a director of RIHF. However, Messrs. Kearney
and Bowden both serve as officers of RII and are compensated for such services.
Mr. Kearney has an employment agreement with RII. See "Management of RII --
Executive Compensation -- Employment Contracts and Termination of Employment
and Change in Control Arrangements."

Lawrence Cohen has been Executive Vice President - Finance and
Administration of Griffin Group since 1988, a director of Liberty Broadcasting,
Inc. since November 1994, and a director of RIH, RIHF and GGRI since August
1994.

83
<PAGE> 87
MANAGEMENT OF RIH

DIRECTORS AND EXECUTIVE OFFICERS

The directors of RIH are:

The executive officers of RIH are:

<TABLE>
<CAPTION>
Executive
---------
Officer
-------
Name Age Since
---- --- -----
<S> <C> <C>
Matthew B. Kearney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 1982
Executive Vice President and Principal
Executive, Financial and Accounting Officer
John P. Belisle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 1991
Executive Vice President and Chief Operating Officer
Stephen S. Callender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 1994
Vice President - Casino Operations
Barbara L. Chan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 1994
Vice President - Marketing
Ronald DePietro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 1994
Vice President -Casino Marketing
William C. Murtha . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 1994
Vice President and General Counsel
Paul E. Patay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 1989
Vice President -Food and Beverage
Michelle Perna . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 1988
Vice President - Human Resources
Anthony P. Rodio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 1993
Vice President -Finance
Paul R. Ryan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 1994
Vice President - Hotel Operations
</TABLE>

Business Experience

See "Management of RII," and "Management of RIHF" above for
information regarding Mr. Kearney and Mr. Cohen, respectively. The principal
occupations and business experience for the last five years or more of the
directors and executive officers of RIH who do not also serve as executive
officers of RII or RIHF are as follows:

John P. Belisle - Executive Vice President and Chief Operating Officer
of RIH since November 1993; Senior Vice President - Casino Operations of RIH
from May 1993 to November 1993; Vice President - Marketing of RIH from June
1990

84
<PAGE> 88

to May 1993; Vice President - Marketing of Trump Castle in Atlantic City, New
Jersey from January 1990 to June 1990; Vice President - Marketing of RIH from
September 1989 to January 1990; various other positions with RIH from December
1981 to September 1989.

Stephen S. Callender - Vice President - Casino Operations of RIH since
February 1994; Director - Table Games of RIH from July 1993 to February 1994;
Casino Shift Manager of RIH from April 1990 to July 1993; Assistant Casino
Shift Manager of RIH from 1989 to April 1990.

Barbara L. Chan - Vice President - Marketing of RIH since April 1994;
Director of Special Events, Advertising and Promotions for Harrah's Casino
Hotel, Atlantic City, New Jersey, from January 1993 to April 1994; Director of
Special Events and Promotions for Harrah's Casino Hotel from 1985 to January
1993.

Ronald DePietro - Vice President - Casino Marketing of RIH since June
1994; Vice President - Regional Marketing of RIH from August 1991 to June 1994;
Special Marketing Consultant for RIH from January 1991 to August 1991, and for
Paradise Island Casino, Nassau, Bahamas, from January 1991 to December 1993;
Executive Director of Customer Development for TropWorld Casino Hotel, Atlantic
City, New Jersey, from 1989 to January 1991.

William C. Murtha - Vice President and General Counsel of RIH since
April 1994; private practice, William C. Murtha, Attorney at Law, from October
1993 to March 1994; Vice President and General Counsel to the Casino
Association of New Jersey from March 1990 to September 1993; Vice President and
General Counsel of RIH from 1989 to February 1990.

Paul E. Patay - Vice President - Food and Beverage of RIH since April
1989; manager of food and beverage operations of RIH from December 1988 to
April 1989; Vice President - Food and Beverage of Trump Castle casino/hotel in
Atlantic City, New Jersey from September 1985 to May 1988.

Michelle Perna - Vice President - Human Resources of RIH since
November 1988; Manager - Employee Relations and various other positions with
Harrah's Marina in Atlantic City, New Jersey from May 1980 to November 1988.

Anthony P. Rodio - Vice President - Finance of RIH since September
1993; Director of Operational Accounting of RIH from October 1990 to September
1993; Casino Controller of Trump Plaza Hotel and Casino in Atlantic City, New
Jersey from August 1987 to October 1990.

85
<PAGE> 89

Paul R. Ryan - Vice President - Hotel Operations of RIH since 1994;
Director of Food & Beverage of RIH from 1989 to June 1994.

EXECUTIVE COMPENSATION

The following table (the "RIH Summary Compensation Table") sets forth
information concerning compensation earned by, paid to or awarded to RIH's
Principal Executive Officer and to each of the other four most highly
compensated executive officers of RIH who were serving as executive officers at
December 31, 1994, and another executive officer no longer with RIH, for
services rendered in all capacities to RIH, RII and RII's other subsidiaries.

<TABLE>
<CAPTION>
Long-Term
----------
Compensation -
------------
Number of
----------
Securities
-----------
Annual Compensation Underlying Stock All Other
------------------- ---------------- ---------
Name and Principal Position Year Salary Bonus Options Granted Compensation
--------------------------- ---- ------ ----- --------------- ------------
<S> <C> <C> <C> <C> <C>
Christopher D. Whitney . . . . 1994 (1) (1)
Executive Vice President(2) 1993 (1) (1)
1992 (1) (1)

Matthew B. Kearney . . . . . . 1994 (1) (1) (1)
Executive Vice President and 1993 (1) (1)
Principal Executive, 1992 (1) (1)
Financial and Accounting Officer

John P. Belisle . . . . . . . . 1994 $247,917 $150,000 150,000 $10,453(3)
Executive Vice President 1993 $184,021 $17,110
and Chief Operating Officer 1992 $174,646 $ 53,068 $ 9,337

Ronald DePietro . . . . . . . . 1994 $209,435 $35,000 35,000 $18,056(3)
Vice President - Casino Marketing 1993 $209,435 $ 7,560 $76,752(4)
1992 $209,435 $22,275 $58,564(4)

Michelle Perna . . . . . . . . 1994 $155,000 $35,000 35,000 $ 9,666(3)
Vice President -Human 1993 $146,065 $ 5,185
Resources 1992 $127,015 $53,068 $ 8,046

Paul E. Patay . . . . . . . . . 1994 $136,144 $35,000 35,000 $16,407(3)
Vice President - Food and Beverage 1993 $131,997 $ 7,383
1992 $126,998 $53,068 $ 7,558
</TABLE>

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

(1) Messrs. Whitney and Kearney were executive officers of RII during
1994. See the RII Summary Compensation Table for information regarding
their compensation.

(2) Mr. Whitney served in this capacity through July 1994.

(3) Includes the cost of group life and health insurance: Mr. Belisle -
$6,675, Mr. DePietro - $14,976, Ms. Perna - $6,586 and Mr. Patay -
$13,687; employer's contribution to a defined contribution group
retirement plan: Mr. Belisle - $3,778, Mr. DePietro - $3,080, Ms.
Perna - $3,080, and Mr. Patay - $2,720.

(4) Includes $48,000 per year related to Mr. DePietro's services to
Paradise Island Casino.

86
<PAGE> 90

Option Grants in Last Fiscal Year

Certain Executives of RIH Participate in RII's Stock Option Plans, to
purchase shares of RII's Common Stock. The following table sets forth the
information concerning options to purchase shares of RII Common Stock which
were granted during 1994 to the individuals named in the Summary Compensation
Table.

Potential Realizable
Value at
Assumed Annual Rates of
Stock
Price Appreciation for
Option
Individual Grants (1) Term - 10 Years
- ------------------------------------------------------------------------------------------------- -------------------
% of Total
Number of Options
Securities Granted to
Underlying Employees
Options in Fiscal Exercise Expiration
Name Granted Year Price Date 0)05 0)1
- ---- ------- ---- ----- ---- ---- ---
<S> <C> <C> <C> <C> <C> <C>
Matthew B. Kearney (2) (2) (2) (2) (2) (2)

John P. Belisle 150,000 15.0% $1.03125 8/1/04 $97,282 $246,532
Ronald DePietro 35,000 3.5% $1.03125 8/1/04 $22,699 $ 57,524

Michelle Perna 35,000 3.5% $1.03125 8/1/04 $22,699 $ 57,524
Paul E. Patay 35,000 3.5% $1.03125 8/1/04 $22,699 $ 57,524
</TABLE>

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

(1) These options were granted on August 1, 1994, and are to vest
25% per year on the first four anniversaries of the date
granted.

(2) See "Management of RII - Executive Compensation" for
information related to Mr. Kearney.

87
<PAGE> 91

FISCAL YEAR END OPTION VALUE TABLE

The following table sets forth information as of December 31, 1994,
concerning the unexercised options held by executive officers named in the
Summary Compensation Table, none of whom exercised options in 1994. No options
held by those executive officers were in-the-money at December 31, 1994.
Options are "in-the-money" when the fair market value of underlying common
stock exceeds the exercise price of the option. The exercisable options held
by the named executives have an exercise price of $1.875 per share. The
unexercisable options held by the named executives have an exercise price of
$1.03125 per share. The closing price of RII Common Stock on December 31,
1994, was $.875 per share.

<TABLE>
<CAPTION>
Number of Securities Underlying
Unexercised Options
at December 31, 1994
------------------------------------
NAME EXERCISABLE UNEXERCISABLE
---- ----------- -------------

<S> <C> <C>
Matthew B. Kearney (1) (1)

John P. Belisle 35,000 150,000

Ronald DePietro 15,000 35,000

Michelle Perna 30,000 35,000

Paul E. Patay 30,000 35,000
</TABLE>

(1) For information regarding Mr. Kearney, see the table of unexercised
options at December 31, 1994 under "Management of RII - Executive
Compensation."

Compensation of Directors

The directors of RIH presently receive no compensation specifically
for their services as directors. However, Mr. Kearney serves as an officer of
RII and is compensated for such services.

Employment Contracts and Termination of Employment and Change in Control
Arrangements

Mr. Kearney has an employment agreement with RII. See "Management of
RII - Executive Compensation - Employment Contracts and Termination of
Employment and Change in Control Arrangements."

88
<PAGE> 92
SECURITY OWNERSHIP

Security Ownership of Certain Beneficial Owners

The following table sets forth information as to the beneficial
ownership of RII Common Stock as of March 31, 1995, by persons known by RII to
be holders of 5% or more of such common stock. RII is not aware of any holders
of 5% or more of Class B Stock. Information as to the number of shares
beneficially owned has been furnished by the persons named in the table.

<TABLE>
<CAPTION>
Amount and Percent of
Nature of Class -
Name and Address of Beneficial RII Common
Beneficial Owner Ownership Stock
- --------------------------------- ---------- ----------
<S> <C> <C>
Merv Griffin, Thomas E.
Gallagher and Lawrence Cohen(1)(2) 15,890,192(1)(2) 35.82%
c/o The Griffin Group, Inc.
780 Third Avenue, Suite 1801
New York, NY 10017
</TABLE>

- ---------------
(1) This information was obtained from a Schedule 13D filed
with the Securities Exchange Commission on January 6, 1995, pursuant to the
Securities Exchange Act of 1934 ("Exchange Act"). According to the Schedule
13D (i) Mr. Griffin, Chairman of the Board of Directors of RII, individually
and through his ownership interest in ARH, beneficially owns 14,359,021 shares
of RII Common Stock, including 3,733,479 shares issuable upon exercise of
warrants; (ii) Thomas E. Gallagher, a director of RII, individually
beneficially owns 1,249,628 shares of RII Common Stock, including 700,028
shares issuable upon exercise of warrants and (iii) Lawrence Cohen, a director
of RIH, individually beneficially owns 281,543 shares of RII Common Stock,
including 233,343 shares issuable upon exercise of warrants. Messrs. Gallagher
and Cohen are executive officers of Griffin Group and ARH, corporations
controlled by Mr. Griffin. Messrs. Griffin, Gallagher and Cohen may be deemed
to be members of a "group" for purposes of Rule 13d-5(b)(1) and each may be
deemed to be the beneficial owner of shares owned by the other two members of
the group. The amount reported here represents holdings by the group
comprising Messrs. Griffin, Gallagher and Cohen. The shares issuable upon
exercise of warrants included herein, a total of 4,666,850 shares, represent
the Griffin Warrant, portions of which were sold to Messrs. Gallagher and
Cohen by ARH in September 1994.

(2) In March 1995, RII's Board of Directors approved the grant of options to
purchase 500,000 and 75,000 shares of RII Common Stock to Mr. Gallagher and Mr.
Cohen, respectively, subject to the approval by RII's shareholders of certain
amendments to RII's 1994 Stock Option Plan. Such plan amendments are necessary
in

89
<PAGE> 93

order to allow for the granting of these options. These options are not
included in the amounts reported above; including these options, the percent of
RII Common Stock beneficially owned would increase to 36.64%.

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth information as to the beneficial ownership
of RII Common Stock and Class B Stock as of March 31, 1995 by each director,
each executive officer named in the Summary Compensation Table and by all
directors and executive officers as a group. Except as noted below, each
director and executive officer has sole voting and investment power over the
shares shown.

<TABLE>
<CAPTION>
RII Common Stock Class B Stock
----------------------------------- --------------------
Amount and Amount and
Nature of Nature of
Name of Beneficial Percent Beneficial Percent
Beneficial Owner Ownership of Class Ownership of Class
---------------- ---------- -------- --------- --------
<S> <C> <C> <C> <C>
Merv Griffin 14,359,021 (1) 33.06%

William J. Fallon 35,000 (2) .09%

Thomas E. Gallagher 1,249,628(1) (3) 3.09%

Jay M. Green 5,000 (4) .01%

Charles M. Masson 5,000 (4) .01%

Vincent J. Naimoli 5,000 (4) .01%

Matthew B. Kearney 87,500 (4) .22% 215 .61%

David G. Bowden 25,000 (4) .06%

Directors and
executive officers
as a group
(8 persons) 15,771,149 (5) 35.63% 215 .61%
</TABLE>

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

(1) Messrs. Griffin and Gallagher, together with Lawrence Cohen, may be
deemed to be members of a "group" for purposes of Rule 13d-5(b)(1)
under the Exchange Act. As a group, Messrs. Griffin, Gallagher and
Cohen may be deemed to beneficially own an aggregate of 15,890,192
shares, or 35.82%, of RII Common Stock. See notes (1) and (2) to
table of "Security Ownership of Certain Beneficial Owners".

<PAGE> 94

(2) Includes 5,000 shares which are issuable upon exercise of stock
options. Related percentage shown gives effect to the exercise of all
such options. Also includes 5,000 shares held by Mr. Fallon's spouse
in her Individual Retirement Account, as to which Mr. Fallon disclaims
any beneficial ownership.

(3) On March 27, 1995, the Compensation/Option Committee granted options
to purchase 500,000 shares of RII Common Stock to Mr. Gallagher.
This grant is subject to the approval by the Company's shareholders of
certain amendments to the 1994 Stock Option Plan necessary for the
issuance of the options. These options are not included in the
amounts reported above; including these options, the percentage of RII
Common Stock beneficially owned by Mr. Gallagher would increase to
4.28%.

(4) Ownership represents shares issuable upon exercise of stock options.
Related percentage shown gives effect to the exercise of all such
options. Mr. Green exercised his options in April 1995.

(5) Includes 4,433,507 shares issuable upon exercise of warrants and
132,500 shares issuable upon exercise of stock options. Related
percentage shown gives effect to the exercise of all such options and
warrants. Amounts reported herein exclude the options granted to Mr.
Gallagher (see note (3)) which are subject to shareholder approval of
amendments to RII's 1994 Stock Option Plan. Including these options,
the percent of RII Common Stock owned by directors and executive
officers as a group would increase to 36.35%. Amounts reported herein
also do not include shares beneficially owned by, or options subject
to shareholder approval of amendments to the 1994 Stock Option Plan
granted to Lawrence Cohen. See Note (1) hereto and Note (2) to table
of "Security Ownership of Certain Beneficial Owners".

CERTAIN TRANSACTIONS

Messrs. Alvarez, Griffin and Sheeline served as members of the Compensation
Committee of the Board of Directors of RII during 1993. Mr. Griffin also served
as an officer of RII. See "Management of RII - Executive Compensation -
Compensation Committee Interlocks and Insider Participation" for information
regarding certain relationships and related transactions involving directors
which serve or served on the Compensation Committee of RII's Board of
Directors.

The Company paid Rogers & Cowan, Inc. $128,000 for public relations
services rendered in 1992, on a non-exclusive basis for

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<PAGE> 95

the Company's Atlantic City and Paradise Island properties. Mr. Cowan, who was
the Chairman of the Board and a shareholder of Rogers & Cowan, Inc. until July
1992, was a director of RII from September 1990 until the Effective Date.

The Company retained Gibson, Dunn & Crutcher during 1992, 1993 and 1994 to
provide certain legal services, including legal services related to the
Restructuring. Mr. Gallagher, who was a partner of such law firm through March
31, 1992 has been a director of RII since November 1, 1993.

Transactions with Management and Others

Mr. Gallagher, a director of RII since 1993, was appointed President and
Chief Executive Officer of RII effective May 1, 1995. Mr. Gallagher has been
the President and Chief Executive Officer of Griffin Group since April 1992.
In connection with Mr. Gallagher's appointment as President and Chief
Executive Officer of RII, the Board of Directors of RII has agreed to pay
$300,000 per year for his services in this capacity. Such payment is to be
made to Griffin Group where Mr. Gallagher remains President and Chief Executive
Officer.

In addition, the Board of Directors of RII approved the grant of options to
purchase 500,000 shares of RII Common Stock to Mr. Gallagher, subject to the
approval by RII's shareholders of certain amendments to RII's 1994 Stock Option
Plan.

Certain Business Relationships

As noted above, Mr. Gallagher is President and a director of RII and also
serves as President and Chief Executive Officer of Griffin Group. See "Griffin
Services Agreement" and "Other Transactions" under "Compensation Committee
Interlocks and Insider Participation - Transactions with Management and Others"
for a discussion of payments made by RII and RIH to Griffin Group.

DESCRIPTION OF MORTGAGE NOTES

The following is a summary of certain provisions of the Mortgage Notes and
the Mortgage Note Indenture. Wherever particular provisions of the Mortgage Note
Indenture or Mortgage Notes are referred to, such provisions are incorporated by
reference herein. References to Sections or Articles refer to Sections or
Articles of the Mortgage Note Indenture. The definitions of certain terms used
below are set forth in "Certain Definitions" below in this section. All other
capitalized terms used in this section but not defined in this Prospectus have
the meanings ascribed thereto in the Mortgage Note Indenture and are
incorporated by reference herein.

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<PAGE> 96

GENERAL

The Mortgage Notes were issued pursuant to the Mortgage Note Indenture,
dated May 3, 1994, among RIHF, RIH and State Street Bank and Trust Company of
Connecticut, National Association, as trustee (the "Mortgage Note Trustee"). A
copy of the Mortgage Note Indenture is filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The terms of the Mortgage Note
Indenture also are governed by certain provisions of the Trust Indenture Act of
1939 (the "TIA"). The Mortgage Notes are secured subordinated obligations of
RIHF in the aggregate principal amount of $125,000,000. The Mortgage Notes will
mature on September 15, 2003.

RANKING

Although the Mortgage Notes are not contractually subordinated to the
Senior Facility Notes as to priority of payment, the lien securing the Mortgage
Notes is junior to the lien securing the Senior Facility Notes, and the Mortgage
Notes therefore are structurally subordinated to the Senior Facility Notes. The
lien on the Resorts Casino Hotel securing payment of the RIH Promissory Note
is pari passu with the lien securing the Mortgage Note Guaranty and
subordinated to the liens securing payment of the RIH Senior Facility
Promissory Note, the Senior Facility Guaranty and any other secured Working
Capital Facility. (Section 4.03).

The aggregate principal amount that may be outstanding under the Senior
Facility and any other Working Capital Facility is limited to $20,000,000.

INTEREST

Interest on the Mortgage Notes accrues at a rate of 11% per year. Interest
is payable semi-annually on March 15 and September 15 in each year to holders of
record at the close of business on the first day of the month in which the
Interest Payment Date occurs. RIHF is required to pay interest on overdue
principal and, to the extent permitted by law, overdue interest at the rate of
14% per year.

SINKING FUND REQUIREMENTS

None.

MANDATORY REDEMPTION

In the event of an RIH Sale, all the Mortgage Notes shall be redeemed by
RIHF whether such RIH Sale occurs before, on or after the fifth anniversary of
the Effective Date, at par together with interest, if any, accrued and unpaid
thereon to the Redemption

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<PAGE> 97

Date; provided, however, that such obligation of RIHF to redeem the Mortgage
Notes in the event of a proposed RIH Sale shall cease to exist if the Holders
of not less than 66 2/3% in Outstanding Amount of the Outstanding Mortgage
Notes have consented to such proposed RIH Sale. (Section 3.12).

OPTIONAL REDEMPTION

The Mortgage Notes are redeemable at any time in whole, or from time to
time in part, on or after the fifth anniversary of the Effective Date at the
election of RIHF, at a redemption price of 100% of their principal amount plus
any accrued and unpaid interest to the Redemption Date. (Section 3.12).

From and after any Redemption Date, if funds for the redemption of any
Mortgage Notes called for redemption shall have been made available, such
Mortgage Notes will cease to bear interest and the only right of the holders
will be to receive payment of the Redemption Price and all interest accrued to
such Redemption Date. (Section 13.06).

The Mortgage Note Indenture requires that notice of any redemption of any
Mortgage Notes be given to holders at their addresses, as shown in the register,
not less than 30 nor more than 60 days prior to the Redemption Date. The notice
of redemption must specify, among other things, the Redemption Date, the
Redemption Price, the principal amount of Mortgage Notes to be redeemed, and, if
less than all outstanding Mortgage Notes are to be redeemed, the identification
(and, in the case of partial redemption, the respective principal amounts) of
the Mortgage Notes to be redeemed and the place or places where the Mortgage
Notes to be redeemed are to be surrendered for payment of the Redemption Price.
(Section 13.04).

The Mortgage Note Indenture provides that in the event of redemption of
less than all the outstanding Mortgage Notes, the particular Mortgage Notes to
be redeemed will be selected by the Mortgage Note Trustee by a random, automated
selection process or pro rata, as deemed appropriate by the Mortgage Note
Trustee. (Section 13.03).

CASINO CONTROL ACT REGULATION

The Mortgage Notes are subject to the qualification, divestiture and
redemption provisions under the Casino Control Act that are described in
"Description of Business -- Regulation and Gaming Taxes and Fees". (Section
13.08).

INTERCREDITOR AGREEMENT

The RIH Senior Facility Promissory Note, the RIH Senior Facility Guaranty,
the RIH Promissory Note, the Mortgage Note

<PAGE> 98

Guaranty, the RIH Junior Promissory Note and the Junior Mortgage Note
Guaranty are all secured, in part, by the Resorts Casino Hotel. See
"Collateral", "Guaranty", "Description of Junior Mortgage Notes -- Collateral"
and "Description of Junior Mortgage Notes -- Guaranty".

RII, RIH, RIHF, the Mortgage Note Trustee and the Junior Mortgage Note
Trustee have entered, and any other lender or lenders (or any trustee or agent
acting on behalf of such lender or lenders) under the Junior Mortgage Facility
or the Working Capital Facility and the trustee for the indenture pursuant to
which the Senior Facility Notes may be issued (the "Senior Facility Trustee"),
will enter, into an intercreditor agreement (the "Intercreditor Agreement"),
which defines the rights of each such lender in and to its respective security
interest in the Resorts Casino Hotel.

The Intercreditor Agreement provides that: (i) the liens securing payment
of the RIH Senior Facility Promissory Note and the RIH Senior Facility Guaranty
will be pari passi with each other and senior to liens securing payment of the
RIH Promissory Note, the Mortgage Note Guaranty, the RIH Junior Promissory Note
and the Junior Mortgage Note Guaranty with respect to payment from proceeds
realized upon any sale or other disposition of the Resorts Casino Hotel; and
(ii) the liens securing payment of the RIH Promissory Note and the Mortgage Note
Guaranty will be pari passu with each other, and senior to the liens securing
payment of the RIH Junior Promissory Note and the Junior Mortgage Note Guaranty,
and junior to the liens securing payment of the RIH Senior Facility Promissory
Note and the RIH Senior Facility Guaranty with respect to payment from proceeds
realized upon any sale or other disposition of the Resorts Casino Hotel.

COLLATERAL

General

The Mortgage Notes are secured by the Mortgage Note Trust Estate pursuant
to the Mortgage Documents described below. (Article Six).

The "Mortgage Note Trust Estate" consists of an assignment by RIHF to the
Mortgage Note Trustee for the benefit of the holders of the Mortgage Notes, of
the RIH Promissory Note in the original aggregate principal amount of
$125,000,000, payable in amounts and at times necessary to pay the principal of
and interest on the Mortgage Notes, which is secured by a lien on the Resorts
Casino Hotel, consisting of RIH's fee and leasehold interests comprising the
Resorts Casino Hotel, the contiguous parking garage and property, all additions
or improvements constructed thereon, all rents, leases and profits derived
therefrom and certain tangible and intangible personal property located on, or

<PAGE> 99
used in connection with, the operation of the Resorts Casino Hotel
(collectively, the "RIH Mortgage"), comprising the trust estate encumbered
pursuant to the RIH Mortgage between RIH, as mortgagor, and RIHF, as mortgagee.

The RIH Mortgage

The RIH Mortgage creates a mortgage lien and security interest (subject to
the liens securing the RIH Senior Facility Promissory Note, the RIH Senior
Facility Guaranty and any other secured Working Capital Facility) in the Resorts
Casino Hotel.

RELEASE OF COLLATERAL

No portion of the Mortgage Note Trust Estate may be released without the
consent of the Holders of not less than 66 2/3% in Outstanding Amount of the
Mortgage Notes then Outstanding. (Section 11.02). Section 2.02 of the RIH
Mortgage provides that, unless an Event of Default shall have occurred and be
continuing, RIH may sell or dispose of certain elements of the Resorts Casino
Hotel which may have become obsolete or unfit for use or which are no longer
necessary in the conduct of its businesses.

LIMITATIONS ON ABILITY TO REALIZE ON COLLATERAL

General

If there is an Event of Default under the Mortgage Note Indenture or the
RIH Mortgage, the Mortgage Note Trustee, subject to the requirements of the
Casino Control Act, may enforce the rights and remedies arising under the RIH
Mortgage. The net amount realized in any foreclosure sale for the benefit of
holders of the Mortgage Notes will be only that amount that exceeds all amounts
then due and owing to creditors, if any, having senior security interests
(including the holders of the Senior Facility Notes or the parties to any other
secured Working Capital Facility) and certain costs, taxes and other items.

Certain Regulatory Considerations

In any foreclosure sale with respect to the Resorts Casino Hotel, the
Mortgage Note Trustee could bid the amount of the outstanding Mortgage Notes.
The Mortgage Note Trustee would be required to comply with the applicable
requirements of the Casino Control Act in any foreclosure sale, including
obtaining a casino license.

Certain Bankruptcy Considerations

In the event of the filing of a petition under the Bankruptcy Code for RIHF
or RIH, applicable provisions of the Bankruptcy Code, including the automatic
stay provisions of section 362 of

<PAGE> 100

the Bankruptcy Code, may operate to prevent the Mortgage Note Trustee, from
taking action to realize on the Mortgage Note Trust Estate if there is an Event
of Default.

Ground Leases

A substantial portion of the North Tower of the Resorts Casino Hotel, a
portion of the adjacent parking garage and a small portion of the casino/hotel
are located on land that is owned by unrelated third parties and leased to RIH
under long-term ground leases. The ground leases do not provide certain
mortgagee protections and, in the event of a default thereunder, the Mortgage
Note Trustee may not have the right to cure any such default. However, the
Mortgage Note Trustee has the right under the Mortgage Note Indenture to tender
defaulted ground lease payments to RIH and require RIH to transmit such funds to
the respective ground lessor. If such default is not cured, the lessor under any
ground lease may have the right to terminate the ground lease. The termination
of any or all of such ground leases could result in the loss of portions of, or
rights with respect to, the property subject to the terminated ground lease.

GUARANTY

RIH has guaranteed payment of principal of and interest on the Mortgage
Notes pursuant to the Mortgage Note Guaranty. In addition, the Mortgage Note
Guaranty is secured by a lien on the Resorts Casino Hotel pursuant to a mortgage
and security agreement with an assignment of rents, and an assignment of leases
and rents (collectively, the "RIH Guaranty Mortgage"). The RIH Guaranty Mortgage
will encumber the Resorts Casino Hotel on a basis pari passu with the RIH
Mortgage. (Article Four)

PAYMENTS OF NET PROCEEDS OF ASSET SALES

None.

COVENANTS

Corporate Existence

Subject to the provisions described under "Limitations on Merger,
Consolidation, Transfer or Lease of Property and Assets", the Mortgage Note
Indenture provides that each of RIHF and RIH will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate existence of each of its Subsidiaries in accordance
with the respective organizational documents of RIHF, RIH and each such
Subsidiary and the rights (charter and statutory), licenses, permits, approvals
and governmental franchises of it and each of its Subsidiaries necessary to the
conduct of its and their respective businesses, including without limitation,
all

<PAGE> 101

licenses, permits, approvals and franchises necessary to assure the
continued operation of RIH's gaming operations at the Resorts Casino Hotel;
provided, however, that any direct or indirect wholly owned subsidiary of RIH
may consolidate with, merge into or transfer or distribute all or part of its
properties and assets to RIH or RIHF or as otherwise provided in Section 10.01
of the Mortgage Note Indenture. (Section 12.04).

Limitation on Dividends and Restricted Payments

The Mortgage Note Indenture provides that RIHF will not, directly or
indirectly, make, or permit any Subsidiary of RIHF to make, any Restricted
Payment.

The Mortgage Note Indenture also provides that RIH will not, directly or
indirectly make, or permit any Subsidiary of RIH to make, any Restricted
Payment; provided, however, that: (i) if RIH's Consolidated Interest Coverage
Ratio, as certified to the Mortgage Note Trustee by an Officers' Certificate,
calculated at the time of the declaration of the dividend or distribution, is
equal to or exceeds two, then RIH may declare and pay cash dividends or make
cash distributions in respect of any class of capital stock of RIH in an amount
not to exceed in the aggregate with any other such cash dividends or
distributions declared or made from and after the date of the Mortgage Note
Indenture, 50% of RIH's Consolidated Net Income from and after the date of the
Mortgage Note Indenture; and (ii) if (1) RIH's Consolidated Interest Coverage
Ratio, as certified to the Mortgage Note Trustee by an Officer's Certificate,
calculated at the time of the declaration of the dividend or distribution, is
equal to or exceeds two, and (2) RIH has cash in excess of the amount required
to pay interest on the Mortgage Notes and the Junior Mortgage Notes on the next
Interest Payment Date plus $20,000,000, then RIH may declare and pay cash
dividends or make cash distributions in respect of any class of capital stock of
RIH in an amount not to exceed such excess cash amount.

The Mortgage Note Indenture further provides that RIHF and RIH will not,
and will not permit any of their respective Subsidiaries to, create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction of
any kind on the ability of any Subsidiary of RIH or RIHF: (i) to pay dividends
or make any other distribution on the capital stock of such Subsidiary that is
owned by RIH, RIHF or a wholly owned Subsidiary of RIHF or RIH, as applicable;
(ii) to pay any Indebtedness owed by such Subsidiary to RIH, RIHF or any wholly
owned Subsidiary of RIHF or RIH, as applicable; (iii) to make loans or advances
to RIH, RIHF or any wholly owned Subsidiary of RIHF or RIH, as applicable; or
(iv) to transfer any of its property or assets to RIHF, RIH or any wholly owned
Subsidiary of RIHF or RIH, as applicable, except (A) any restrictions existing
on or prior to the date of the Mortgage Note Indenture, or in

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<PAGE> 102

connection with agreements in effect, or entered into, on the date of the
Mortgage Note Indenture, or any permitted amendments, renewals, refundings,
refinancings or extensions thereof; provided, however, that the terms and
conditions of any such amendments, renewals, refundings, refinancings or
extensions are no more restrictive with respect to the matters set forth in
clauses (i) through (iv) of this paragraph than the agreements being amended,
refunded, renewed, refinanced or extended; (B) any restrictions or encumbrances
existing or arising pursuant to the terms of Indebtedness of a Person
outstanding at the time such Person becomes a Subsidiary of RIHF or RIH and not
incurred in connection with, or in contemplation of, such Person becoming
a Subsidiary of RIHF or RIH or any permitted amendments, renewals, refinancings
or extensions thereof; provided, however, that the terms and conditions of any
such amendments, renewals, refundings, refinancings or extensions are no more
restrictive with respect to the matters set forth in clauses (i) through (iv)
of this paragraph than the agreements being amended, renewed, refunded,
refinanced or extended; (C) encumbrances or restrictions existing under or by
reason of applicable law or regulation (including, without limitation, the
Casino Control Act) or the Mortgage Note Indenture; (D) customary provisions
restricting assignment of contracts or subletting or assignment of any lease
governing a leasehold interest of any Subsidiary of RIHF or RIH; or (E) net
worth maintenance requirements imposed by any governmental authority. (Section
12.07).

Limitation on Additional Indebtedness and Issuance of Notes

The Mortgage Note Indenture provides that RIHF and RIH will not, and will
not permit any of their respective Subsidiaries to, directly or indirectly,
incur, issue, assume, guarantee or otherwise become directly or indirectly
liable with respect to, including without limitation through any merger or
consolidation to which RIHF, RIH or any of their respective Subsidiaries is a
party or through any other acquisition of any such Subsidiary (collectively,
"incur"), or have outstanding, any Indebtedness other than, without duplication,
the following:

(i) Indebtedness represented by the Mortgage Notes, the RIH Promissory
Note and the Mortgage Note Guaranty;

(ii) Indebtedness represented by the Junior Mortgage Facility, the RIH
Junior Promissory Note and the Junior Mortgage Note Guaranty;

(iii) Indebtedness represented by the Working Capital Facility, the
Working Capital Facility Guaranty and the RIH Senior Facility Promissory
Note;

<PAGE> 103

(iv) Indebtedness represented by Capitalized Lease Obligations in an
amount not in excess of $5,000,000 in the aggregate at any time
outstanding;

(v) Indebtedness represented by F, F&E Financing Agreements in an
amount not in excess of $10,000,000 in the aggregate at any time
outstanding;

(vi) unsecured Indebtedness in an amount not in excess of $5,000,000
in the aggregate at any time outstanding that is subordinated and junior to
the Junior Mortgage Notes at least to the extent set forth in the
Subordination Provisions attached to the Mortgage Note Indenture as Exhibit
C and which Indebtedness does not have any requirements for amortization
payments, mandatory redemption or sinking fund payments prior to the stated
maturity of the Junior Mortgage Notes and does not provide for the payment
of interest in cash at any time when the most recent installment of
interest on the Junior Mortgage Notes was not paid in cash;

(vii) Non-Recourse Indebtedness in an amount not in excess of
$25,000,000 in the aggregate at any time outstanding;

(viii) After-Acquired Fee Mortgage Debt in an amount not in excess of
$3,000,000 in the aggregate at any time outstanding; and

(ix) Intercompany advances between RIH, RIHF or any of their direct or
indirect Subsidiaries on the one hand, and RII, on the other hand, not in
excess of $1,000,000 in the aggregate at any time outstanding.

The Mortgage Note Indenture also provides that RIHF and RIH will not permit
any of their respective Subsidiaries to issue (other than to RIHF, RIH or a
direct or indirect wholly owned Subsidiary of RIHF or RIH) any capital stock
which has voting rights or has a preference as to any distribution over its
common stock. (Section 12.08).

Limitation on Repayment of Subordinated Indebtedness

The Mortgage Note Indenture provides that neither RIHF nor RIH will, and
neither RIHF nor RIH will permit any Subsidiary to, directly or indirectly,
purchase, redeem, defease (including, but not limited to, in substance or legal
defeasance) or otherwise acquire or retire for value prior to the Stated
Maturity of, or prior to any scheduled mandatory redemption or sinking fund
payment with respect to (collectively, to "repay" or a "repayment"), the
principal of any Indebtedness of RIHF, RIH or any Subsidiary of RIHF or RIH
which is subordinated (whether pursuant to its terms or by operation of law) in
right of payment to the Mortgage Notes; provided, however, that the provisions
of

100

<PAGE> 104

this paragraph shall not apply with respect to the Indebtedness incurred
pursuant to the Junior Mortgage Facility. (Section 12.09).

Limitation on Certain Transactions

The Mortgage Note Indenture also provides that each of RIHF and RIH will
not, and will not permit any Subsidiary to, repurchase any Mortgage Notes in the
open market if an Event of Default shall have occurred and shall be continuing
under the Mortgage Note Indenture, under the Junior Mortgage Note Indenture or
under the indenture pursuant to which the Senior Facility Notes may be issued
(the "Senior Facility Indenture"). (Section 12.10).

Restriction of Activities

The Mortgage Note Indenture provides that RIH will not, until the date that
is 91 days after the payment in full by RIHF of the principal of (and interest,
if any, on) all Outstanding Mortgage Notes, engage in any business or investment
activities other than those necessary for, incident to, connected with or
arising out of acquiring, financing, owning and operating the Resorts Casino
Hotel or additional hotels or casinos or related or ancillary businesses.

The Mortgage Note Indenture also provides that neither RIHF nor RIH shall
make any loans to any Affiliate or any other Person other than (i) Indebtedness
of the type described in clause (ix) of the covenant described in "Limitation on
Additional Indebtedness and Issuance of Notes", (ii) indebtedness from RIH to
RIHF evidenced by the RIH Senior Facility Promissory Note, the RIH Promissory
Note and the RIH Junior Promissory Note, and (iii) loans to RII from the
proceeds of the Indebtedness represented by the Working Capital Facility;
provided, however, that RIH shall have the right to make loans to employees of
RIH actively involved in the operation of the Resorts Casino Hotel or to engage
in credit transactions in the operation of the Resorts Casino Hotel, if such
loans or credit transactions are in the ordinary course of business of operating
a casino/hotel.

The Mortgage Note Indenture further provides that RIHF will not engage in
any business (and shall not have any Subsidiaries) other than (i) to collect
principal, interest (and any interest on overdue principal and interest) and
other amounts under any intercompany notes or guaranties made to the order of or
otherwise in favor of RIHF, (ii) to preserve its rights under the Mortgage Note
Indenture and the Mortgage Documents and otherwise to comply with its
obligations thereunder and under the Mortgage Notes, (iii) to do or cause to be
done all things necessary or appropriate to protect the Mortgage Note Trust
Estate, (iv) to preserve its rights under the Junior Mortgage Note Indenture and

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<PAGE> 105

the Junior Mortgage Documents and otherwise to comply with its obligations
thereunder and under the Junior Mortgage Notes, (v) to issue the Indebtedness
represented by any other Junior Mortgage Facility, (vi) to issue Indebtedness
represented by the Working Capital Facility; (vii) to preserve its rights under
the Working Capital Facility and otherwise comply with its obligations under the
Working Capital Facility, (viii) to incur any other Indebtedness permitted under
the Mortgage Note Indenture, (ix) to do all such acts and deeds necessary in
connection with the Junior Mortgage Facility and the documents and instruments
relating thereto and in connection with the Working Capital Facility and the
documents and instruments relating thereto, (x) to declare, issue and pay
dividends on, or make any redemptions or repurchases of, RIHF's capital stock as
contemplated by its Certificate of Incorporation (to the extent permitted
hereby) and otherwise to comply with and perform the provisions of its
Certificate of Incorporation and By-laws, and (xi) to do such further acts and
deeds to effectuate any of the matters listed in the foregoing clauses of this
paragraph. (Section 12.11).

Limitation on Subsidiaries Consolidated Group

The Mortgage Note Indenture provides that RIHF and RIH will not have any
Subsidiaries except the Subsidiaries existing on the date of the Mortgage Note
Indenture and Subsidiaries acquired by RIHF or RIH in transactions not
prohibited by the other provisions of the Mortgage Note Indenture which are and
shall at all times be wholly owned (directly or indirectly) by RIHF or RIH.
(Section 12.12).

Limitations on Liens

The Mortgage Note Indenture provides that neither RIHF nor RIH will create,
incur, suffer to exist or permit to be created or incurred any mortgage, lien,
charge or encumbrance on or pledge of the Mortgage Documents or any of the
Mortgage Note Trust Estate, other than (a) Permitted Encumbrances on the
Mortgage Note Trust Estate, (b) liens on the Mortgage Note Trust Estate in
connection with Indebtedness permitted by clauses (i), (ii), (iii), (iv), or
(v) of the first paragraph of the covenant described in "Limitation on
Additional Indebtedness and Issuance of Notes", and (c) a building contract or
notice of intention filed by a mechanic, materialman or laborer under the New
Jersey lien law. Without limiting the generality of the previous sentence, but
notwithstanding the provisions of such sentence, RIH will not be deemed to have
breached such provisions by virtue of the existence of liens for Impositions
(as defined in the RIH Mortgage) or mechanics' liens so long as RIH is in good
faith contesting the validity of such liens in accordance with the provisions
of Section 5.09 of the RIH Mortgage. (Section 12.13).

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Compliance with Laws

The Mortgage Note Indenture provides that each of RIHF and RIH will comply,
and will cause each of its Subsidiaries to comply, with the Casino Control Act
and all other applicable statutes (including without limitation ERISA), rules,
regulations, orders and restrictions of the United States of America, states and
municipalities, and of any governmental department, commission, board,
regulatory authority, bureau, agency and instrumentality of the foregoing in
respect of the conduct of its business and the ownership of its properties and
assets, including without limitation the Mortgage Note Trust Estate, except such
as are being contested in good faith by appropriate proceedings in accordance
with the Mortgage Documents (to the extent applicable) and except for such
noncompliances as will not in the aggregate have a material adverse effect on
the business, properties, operations or financial condition of RIHF, RIH or
their respective Subsidiaries. (Section 12.14).

Payment of Taxes and Other Claims

The Mortgage Note Indenture provides that RIHF or RIH will pay or discharge
or cause to be paid or discharged, before the same shall become delinquent, (a)
all taxes, assessments and governmental charges levied or imposed upon RIHF, RIH
or any of their respective Subsidiaries or upon the Mortgage Note Trust Estate
or any portion thereof or upon the income, profits or property of RIHF, RIH or
any of their respective Subsidiaries, and (b) all lawful claims for labor,
materials and supplies which, if unpaid, will by law become a Lien upon the
Mortgage Note Trust Estate or upon any other property of RIHF, RIH or any of
their respective Subsidiaries; provided, however, that RIHF and RIH shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessments, charge or claim the amount, applicability or validity of which is
being contested in good faith by appropriate proceedings in accordance with the
Mortgage Documents (to the extent applicable) if adequate reserves therefor have
been established in accordance with GAAP. (Section 12.15).

Maintenance of Properties

The Mortgage Note Indenture further provides that each of RIHF and RIH will
cause the Mortgage Note Trust Estate and all other properties (other than
obsolete equipment) owned by or leased to it or any of its Subsidiaries, and
used or useful in the conduct of its business or the business of RIHF, RIH or
such Subsidiary to be maintained and kept in good condition, repair and working
order, except for reasonable wear and use, and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as required by the Mortgage Documents or, to the extent not governed by the
Mortgage

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Documents, as in the reasonable judgment of the Board of Directors of RIH may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times. (Section 12.16).

Insurance

The Mortgage Note Indenture provides that each of RIHF and RIH will
maintain, and will cause each of its Subsidiaries to maintain, with financially
sound and reputable insurers, appropriate insurance on each of their respective
properties and businesses against liabilities, casualties, risks and
contingencies of the type and in amounts required by the Mortgage Documents or,
to the extent not governed by the Mortgage Documents, as customarily maintained
by corporations and other entities engaged in the same or similar businesses and
similarly situated; provided, however, that any such insurer shall be qualified
to do business in the jurisdiction where the insured property is located.
(Section 12.17).

Waiver of Stay, Extension or Usury Laws

The Mortgage Note Indenture provides that each of RIHF and RIH (to the
extent that it may lawfully do so) will not, and will not cause or permit any of
its Subsidiaries to, at any time insist upon, or plead, or in any manner
whatsoever claim, and will resist any and all efforts to be compelled to take
the benefit or advantage of, any stay or extension law or any usury law or other
law that would prohibit or forgive RIHF or RIH from paying all or any portion of
the principal of, or premium, if any, and interest on the Mortgage Notes or the
RIH Promissory Note or the Mortgage Note Guaranty, wherever and whenever
enacted, or which may affect the covenants or the performance of the Mortgage
Note Indenture or the RIH Promissory Note or the Mortgage Note Guaranty; and (to
the extent that it may lawfully do so) RIHF and RIH will expressly waive all
benefit of advantage or any such law, and covenant that they will not hinder,
delay or impede the execution of any power granted to the Mortgage Note Trustee
in the Mortgage Note Indenture and in the Mortgage Documents, but will suffer
and permit the execution of every such power as though no such law had been
enacted. (Section 12.18).

Transactions with Shareholders and Affiliates

The Mortgage Note Indenture also provides that each of RIHF and RIH will
not, and will not permit any of its Subsidiaries to, directly or indirectly,
enter into or permit to exist any transaction (including without limitation the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate of RIHF or RIH, unless (a) such transaction is upon
fair and reasonable terms which are no less favorable to RIHF or such
Subsidiary, as the case may be, than

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would be available in an arm's-length transaction with an unrelated person and
(b) if over $250,000, such transaction is determined in the good faith judgment
of a majority of the members of the Board of Directors of either (i) RII, so
long as RII owns, directly or indirectly, a majority of the outstanding
capital stock of RIH, directly or indirectly, or (ii) RIH, to be in the best
interests of RIHF, RIH or such Subsidiary as applicable; provided, however,
that this provision shall not apply to (A) any agreements, documents,
instruments or transactions entered into in connection with the RIHF Senior
Facility Notes, (B) the Griffin Services Agreement, (C) the RII Management
Contract or (D) the RII Tax Sharing Agreement. (Section 12.21).

EVENTS OF DEFAULT

The following events constitute "Events of Default" under the Mortgage Note
Indenture:

(a) default in the payment of any interest upon any Mortgage Note when
such interest becomes due and payable and continuance of such default (the
deposit with the Mortgage Note Trustee of funds sufficient to make such
interest payment in full being deemed to cure any such default) for a
period of ten days;

(b) default in the payment of all or any portion of the principal of
any Mortgage Note at its Maturity;

(c) default in the performance or breach of any covenant of RIHF or
RIH in the Mortgage Note Indenture (other than a covenant a default in the
performance or breach of which is specifically dealt with in this paragraph
or one of the other clauses set forth herein), the Assignment Agreement or
any of the Mortgage Documents and continuance of such default or breach for
a period of 30 days (or such shorter or longer cure period, if any, as may
be specified in respect of such default or breach in the Assignment
Agreement or the applicable Mortgage Document, as the case may be), and
(other than with respect to the covenants described in
"Covenants -- Limitation on Dividends and Restricted Payments",
"Covenants -- Limitation on Additional Indebtedness and Issuance of Notes",
"Covenants -- Limitation on Repayment of Subordinated Indebtedness",
"Covenants -- Limitation on Certain Transactions",
"Covenants -- Restriction of Activities", "Covenants -- Limitation on
Subsidiaries; Consolidated Group", "Covenants -- Limitation on Liens" and
"Covenants -- Transactions with Stockholders and Affiliates") after there
has been given (i) to RIHF by the Mortgage Note Trustee, or (ii) to RIHF
and the Mortgage Note Trustee by the Holders of at least 25% in Outstanding
Amount of the Outstanding Mortgage Notes, a written notice specifying such
default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default"; provided, however, that, if such default
or breach is of a

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covenant set forth in certain specified provisions of the Mortgage Note
Indenture, and if such default or breach is of such a nature that is
curable but is not susceptible of being cured with due diligence within
such 30-day period (or such shorter or longer cure period) (for reasons
other than lack of funds), then, under certain circumstances, such period
shall be extended for such further period of time (up to a maximum of 60
days) as may reasonably be required to cure such default or breach;

(d) a proceeding or case shall be commenced, without the application
or consent of RIHF or RIH, in any court of competent jurisdiction, seeking
(i) its liquidation, reorganization, dissolution or winding-up, or the
composition or readjustment of it debts, (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like of RIHF or RIH or of all or any
substantial part of its assets, or (iii) similar relief in respect of RIHF
or RIH under any law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or adjustment of debts, and such proceeding or
case shall continue undismissed, or an order, judgment or decree approving
or ordering any of the foregoing shall be entered and continue unstayed and
in effect, for a period of 60 consecutive days;

(e) the commencement by RIHF or RIH of a voluntary case under the
Federal bankruptcy laws or any other applicable Federal or state law, or
the consent or acquiescence by any of them to the filing of any such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or other similar
official) of RIHF or RIH or any substantial part of any of their property,
or the making by any of them of an assignment for the benefit of creditors,
or the taking of action by RIHF or RIH in furtherance of any such action;

(f) the revocation, suspension or involuntary loss of any Permit which
results in the cessation of a substantial portion of the operations of the
Resorts Casino Hotel for a period of more than 90 consecutive days;

(g) (i) a default by RIHF, RIH or any of their Subsidiaries under any
Indebtedness (other than the Working Capital Facility and the Junior
Mortgage Facility), in an aggregate principal amount in excess of
$5,000,000, which default results in the acceleration of the maturity of
any such Indebtedness under the evidence of indebtedness, indenture or
other instrument governing such Indebtedness; provided, however, that, if
such default under such evidence of indebtedness, indenture or other
instrument shall be cured by the obligor, or be waived by the holders of
such Indebtedness, in each case as may be permitted by such evidence of
indebtedness, indenture or other instrument and in each case resulting in
rescission of such acceleration thereunder, then the Event of Default by
reason of such default

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shall be deemed likewise to have been thereupon cured or waived; or (ii) a
default by RIHF, RIH or any of their Subsidiaries under any Indebtedness
represented by the Working Capital Facility, or the Junior Mortgage
Facility, the effect of which default (after the expiration of any
applicable notice or grace periods) is to permit the holder or holders of
any such Indebtedness represented by the Working Capital Facility or the
Junior Mortgage Facility in an aggregate principal amount in excess of
$5,000,000 (or a trustee or agent on behalf of such holder or holders) to
cause the acceleration of the maturity of such Indebtedness represented by
the Working Capital Facility or the Junior Mortgage Facility under the
evidence of indebtedness, indenture or other instrument governing such
Indebtedness; provided, however, that if such default under such evidence
of indebtedness, indenture or other instrument shall be cured by the
obligor, or be waived by the holders of such evidence of Indebtedness,
indenture or other instrument (and, if such default resulted in the
acceleration of the maturity of such indebtedness, such acceleration shall
have been rescinded thereunder), then the Event of Default under the
Mortgage Note Indenture by reason of such default shall be deemed likewise
to have been thereupon cured or waived; or (iii) the existence of a final
judgment of a court of competent jurisdiction in an amount in excess of
$3,000,000 against RIHF, RIH or the Mortgage Note Trust Estate, which
judgment has not been satisfied or otherwise provided for, for a period of
30 days (during which execution shall not be effectively stayed) following
the date on which such judgment becomes a lien against the Mortgage Note
Trust Estate or any part thereof (unless the lawsuit in question was
commenced without effective service of process upon either RIHF or RIH in
which case such 30-day period shall not commence until RIHF or RIH receives
notice of such final judgment); or (iv) the existence of a final judgment
of a court of competent jurisdiction in an amount in excess of $15,000,000
against RIHF, RIH or the Mortgage Note Trust Estate, which judgment has not
been satisfied or otherwise provided for, for a period of 60 days (during
which execution shall not be effectively stayed) following the date of such
final judgment; or (v) the existence of a final judgment of a court of
competent jurisdiction, regardless of amount, against RIHF, RIH or the
Mortgage Note Trust Estate, which judgment has not been satisfied or
otherwise provided for, for a period of 60 days (during which execution
shall not be effectively stayed) following the date of such final judgment,
if such judgment, by itself or upon recordation or other action of the
judgment creditor, imposes or would impose a lien on the Mortgage Note
Trust Estate or any part thereof senior to the lien of the RIH Mortgage;

(h) default in the performance, or breach, of any covenant of RIHF or
RIH in connection with the restrictions described under "Limitation on
Consolidation, Merger, Conveyance, Transfer or Lease of Property and
Assets";

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(i) the existence of a judgment of a court of competent jurisdiction
in an amount in excess of $3,000,000 against RIH regarding the CRDA
Dispute, which judgment has not been stayed, satisfied or otherwise
provided for, for a period of 30 days (during which execution shall not be
effectively stayed) (unless the lawsuit in question was commenced without
effective service of process upon RIH in which case such 30-day period
shall not commence until RIH receives notice of such final judgment); or

(j) if RII fails to pay or discharge or cause to be paid or
discharged, within 30 days before the same shall become delinquent, all
taxes levied or imposed upon RII; provided, however, that no Event of
Default or Default shall be deemed to exist under the Mortgage Note
Indenture with respect to any tax liability not paid or discharged by RII
if and to the extent that the amount, applicability or validity of such tax
liability is being contested in good faith by appropriate proceedings if
adequate reserves therefor have been established in accordance with GAAP;
provided further, however, that this paragraph shall not apply to amounts
due with respect to any period during which neither RIHF, RIH nor any of
their Subsidiaries is included in RII's consolidated group for Federal
income tax purposes. (Section 7.01).

If an Event of Default (other than one referred to in clause (d) or (e)
above) occurs and is continuing, then and in every such case the Mortgage Note
Trustee or the Holders of not less than 25% in Outstanding Amount and all
accrued interest of the Mortgage Notes Outstanding may declare the Outstanding
Amount of all the Mortgage Notes to be due and payable immediately, by a notice
in writing to RIHF (and to the Mortgage Note Trustee, if given by any
Noteholders), and upon any such declaration such Outstanding Amount shall become
immediately due and payable. If an Event of Default referred to in clause (d) or
(e) above occurs, then the Outstanding Amount of all the Mortgage Notes shall
automatically become immediately due and payable without presentment, demand,
protest or other formalities of any kind, all of which will be expressly waived
by RIHF. (Section 7.02).

At any time after such a declaration of acceleration has been made, but
before any judgment or decree for payment of money due on any Mortgage Notes has
been obtained by the Mortgage Note Trustee, the Holders of a majority in
Outstanding Amount of the Mortgage Notes may, by written notice to RIHF and the
Mortgage Note Trustee, rescind and annul such declaration and its consequences
if: (a) RIHF has deposited with the Mortgage Note Trustee a sum sufficient to
pay (1) all overdue installments of interest on all Mortgage Notes, (2) the
principal of any Mortgage Notes which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate or rates prescribed
therefor in the Mortgage Notes, and (3) all sums paid or advanced by the
Mortgage Note Trustee and the reasonable compensation,

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expenses, disbursements and advances of the Mortgage Note Trustee, its agents
and counsel; and (b) all Events of Default, other than the non-payment of the
Outstanding Amount of the Mortgage Notes which have become due solely by such
declaration of acceleration, have been cured or have been waived as provided in
the Mortgage Note Indenture. No such rescission and annulment shall affect any
subsequent default or impair any right consequent thereon. (Section 7.02).

LIMITATION ON CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE OF PROPERTY
AND ASSETS

Neither RIHF nor RIH shall consolidate, combine or merge with or into any
other Person or permit any other Person to consolidate, combine or merge with or
into RIHF or RIH, as the case may be; and neither RIHF with respect to its
assets nor RIH with respect to the Mortgage Note Trust Estate shall sell,
assign, convey or transfer its interest in such assets or the Mortgage Note
Trust Estate, as the case may be, substantially as an entirety (and
notwithstanding anything to the contrary contained in the Mortgage Note
Indenture (including the proviso at the end of this sentence), but subject to
the provisions of the RIH Mortgage regarding dispositions of the Mortgage Note
Trust Estate, neither RIHF with respect to its assets nor RIH with respect to
the Mortgage Note Trust Estate may sell, assign, convey or transfer such assets
or the Mortgage Note Trust Estate, as the case may be, other than substantially
as an entirety) to any other Person or group of Persons in one transaction or a
series of related transactions, or permit any other Person or group of Persons
to convey or transfer all or substantially all of its assets, subject to
liabilities other than de minimis liabilities, to RIHF or RIH; and RIHF and RIH
shall not transfer, convey, sell or otherwise dispose of to any other Person, or
issue to any Person, any equity interest in RIHF or RIH, as the case may be
(each such transaction referred to as a "Combination Transaction"); provided,
however, that (i) RIHF may engage in a Combination Transaction in which the only
other party or parties is RIH or a direct or indirect wholly owned Subsidiary of
RIHF or RIH, and (ii) RIHF or RIH may engage in any other Combination
Transaction (either independently or at the same time as other Combination
Transactions), subject to the following with respect to each such Combination
Transaction: (a) immediately following such Combination Transaction, (1) RIH (or
any successor entity) shall be eligible for and shall meet all relevant Legal
Requirements, including holding all permits, required for the normal operation
of the business of owning and operating the Resorts Casino Hotel, and (2) RIH
(or any successor entity) shall be controlled by a Person that is, or shall
retain to manage the Resorts Casino Hotel one or more Persons that are,
experienced in the operation and management of casino/hotels; (b) in the event
RIHF or RIH shall consolidate, combine or merge with or into another Person or
sell, assign, convey or transfer its interest

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in its assets or in the Mortgage Note Trust Estate, as the case may be,
substantially as an entirety (but not less than substantially as an entirety) to
another Person in one transaction or a series of related transactions, the
entity which is formed by or survives such consolidation, combination or merger
or the Person to which such assets or the Mortgage Note Trust Estate are
conveyed or transferred, (1) shall be organized and existing under the laws of
the United States of America, any state thereof, or the District of Columbia;
(2) shall expressly assume, by an indenture supplemental to the Mortgage Note
Indenture, executed and delivered to the Mortgage Note Trustee, the performance
and observance of every covenant, obligation and condition of the Mortgage Note
Indenture to be performed or observed by RIHF or RIH, whichever the case may be;
(3) shall expressly assume, by an instrument executed and delivered to the
Mortgage Note Trustee, the performance of every covenant, obligation and
condition of the Mortgage Documents and the Assignment Agreement to be performed
by RIHF or RIH, whichever the case may be; (4) immediately after and giving
effect to such transaction could incur at least $1.00 of additional Indebtedness
under the covenant described in "Covenants -- Limitation on Additional
Indebtedness and Issuance of Notes"; (c) immediately after giving effect to such
transaction, no Event of Default, or Default under the Mortgage Note Indenture
or under the RIH Mortgage, shall have occurred and be continuing; (d) such
Combination Transaction shall be on such terms as shall not impair the lien and
security and priority of the Mortgage Note Indenture or of the Mortgage
Documents or of the Assignment Agreement and the rights and powers of the
Mortgage Note Trustee and the Holders of the Mortgage Notes thereunder; and (e)
RIHF or RIH, as the case may be, shall have delivered to the Mortgage Note
Trustee an Officers' Certificate and an Opinion of Counsel, each of which shall
state that such Combination Transaction and such supplemental indenture comply
with the provisions of Article Ten of the Mortgage Note Indenture and that all
conditions precedent provided for in the Mortgage Note Indenture relating to
such transaction have been complied with. (Section 10.01).

Except as otherwise expressly permitted by the RIH Mortgage and the
Mortgage Note Indenture, neither RIHF nor RIH shall sell, assign, lease,
hypothecate, pledge, mortgage or otherwise transfer all or any part of the
assets of RIHF or the Mortgage Note Trust Estate or any interest therein
(including without limitation any interest in the Ground Leases). Without
limiting the generality of the foregoing, RIH shall not separate, or attempt
to separate, its ownership of its interest in the Ground Leases from the
ownership of the buildings constituting the Resorts Casino Hotel or any part
thereof. (Section 10.04).

The foregoing limitations on consolidation, merger, conveyance, transfer or
lease of property and assets shall not apply in connection with an RIH Sale.
(Section 10.05).

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DISCHARGE OF MORTGAGE NOTE INDENTURE; DEFEASANCE

RIHF may terminate substantially all obligations under the Mortgage Note
Indenture at any time by delivering all outstanding Mortgage Notes to the
Mortgage Note Trustee for cancellation and paying any other sums payable under
the Mortgage Note Indenture. (Article Five).

The Mortgage Note Indenture also provides that RIHF will be deemed to have
paid and discharged the entire Indebtedness on the Mortgage Notes and the
provisions of the Mortgage Note Indenture (except as to any surviving rights of
transfer or exchange of Mortgage Notes provided for in the Mortgage Note
Indenture or the Mortgage Notes and any right to receive payments of principal
and interest as provided in this paragraph) if: (1) RIHF irrevocably deposits in
trust with the Mortgage Note Trustee, pursuant to an irrevocable trust and
security agreement in form and substance reasonably satisfactory to the Mortgage
Note Trustee, U.S. Legal Tender or direct non-callable obligations of, or
non-callable obligations guaranteed as to timely payment by, the United States
of America for the payment of which obligation or guarantee the full faith and
credit of the United States of America is pledged ("U.S. Government
Obligations") maturing as to principal and interest in such amounts and at such
times as are sufficient, without consideration of the reinvestment of such
interest and after payment of all Federal, state and local taxes or other
charges or assessments in respect thereof payable by the Mortgage Note Trustee,
in the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof (in form and substance reasonably
satisfactory to the Mortgage Note Trustee) delivered to the Mortgage Note
Trustee, to pay reasonable compensation to the Mortgage Note Trustee under
Section 8.07 of the Mortgage Note Indenture and the principal of and interest on
the outstanding Mortgage Notes on the dates on which any such payments are due
and payable in accordance with the terms of the Mortgage Note Indenture and of
the Mortgage Notes; (2) such deposits will not cause the Mortgage Note Trustee
to have a conflicting interest as defined in and for purposes of the TIA; (3)
such deposit will not result in a Default under the Mortgage Note Indenture; (4)
RIHF will deliver to the Mortgage Note Trustee an Opinion of Counsel, or a
private ruling of the Internal Revenue Service, in form and substance
satisfactory to the Mortgage Note Trustee, to the effect that Holders of the
Mortgage Notes will not recognize income, gain or loss for Federal income tax
purposes as a result of such deposit and the defeasance contemplated hereby and
will be subject to Federal income tax in the same amounts and in the same manner
and at the same times as would have been the case if such deposit and defeasance
had not occurred; (5) the deposit will not result in RIHF, the Mortgage Note
Trustee or the trust becoming or being deemed to be an "investment company"
under the Investment Company Act of 1940, as amended; (6) the Holders shall

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have a perfected security interest under applicable law in the U.S. Legal Tender
or U.S. Government Obligations deposited pursuant to clause (1) above; and
(7) RIHF has delivered to the Mortgage Note Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent specified
herein relating to the defeasance contemplated by this paragraph have been
complied with.

If all or any portion of the Mortgage Notes are to be redeemed through such
irrevocable trust, RIHF must make arrangements satisfactory to the Mortgage Note
Trustee, at the time of such deposit, for the giving of the notice of such
redemption or redemptions by the Mortgage Note Trustee in the name and at the
expense of RIHF.

The Mortgage Note Trustee and each co-trustee and separate trustee, if any,
then acting as such hereunder shall, at the expense of RIHF, execute and deliver
a termination statement and such instruments of satisfaction and discharge as
may be necessary and pay, assign, transfer and deliver to RIHF or upon Company
Order all cash, securities and other personal property then held by it
hereunder, other than pursuant to Section 14.01 of the Mortgage Note Indenture.
(Section 14.01).

MODIFICATION OF INDENTURE

From time to time, the parties to the Mortgage Note Indenture, without the
consent of the Holders of the Mortgage Notes, may enter into one or more
supplemental indentures for certain specified purposes, including curing
ambiguities, defects or inconsistencies, provided such action does not adversely
affect the interests of any Holder. (Section 11.01). Modifications, changes and
amendments to the Mortgage Note Indenture also may be made by the parties
thereto with the consent of the Holders of not less than 66 2/3% in Outstanding
Amount of the Mortgage Notes then Outstanding, except that, without the consent
of the Holder of each Mortgage Note affected, no such modification or alteration
may (i) change the stated maturity of the principal of, or any installment of
interest on, any Mortgage Note, or reduce the principal amount thereof or the
premium payable upon the redemption thereof, or change any Place of Payment
where, or the coin or currency in which, any Mortgage Note, or the interest
thereon is payable, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), (ii) reduce the percentage in
Outstanding Amount of the Mortgage Notes, the consent of whose Holders is
required for any amendment, supplement or waiver, (iii) modify or alter the
provisions of the proviso of the definition of the term "Outstanding", (iv)
modify any of the provisions described in this paragraph or, with certain
exceptions, the provisions of the Mortgage Note Indenture regarding waiver of
default, or

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(v) permit the creation of any lien ranking prior to the lien of the
RIH Mortgage (except for such liens expressly permitted pursuant to the covenant
described under "Covenants -- Limitations on Liens"). (Section 11.02).

TRUSTEE

The Mortgage Note Trustee may require reasonable indemnity before
exercising any of its rights or powers under the Mortgage Note Indenture.
(Section 8.03).

REPORTS TO HOLDERS

RIH will furnish or cause to be furnished to the Mortgage Note Trustee,
within 105 days after each fiscal year of RIH: (i) a copy of annual audited
financial statements of RIH prepared in conformity with GAAP, accompanied by a
report of Ernst & Young or of another firm of independent certified public
accountants of recognized national standing selected by RIH (the "National
Accountants"), together with a certificate from such National Accountants
stating that their audit examination has included a review of the terms of the
Mortgage Note Indenture and that the National Accountants have not become aware
of any Event of Default or that a Default has occurred and is continuing, and if
they have become aware of any such Event of Default or Default, describing it;
provided, however, that the National Accountants will not be liable to any
Person for any failure to discover any Event of Default or Default in connection
with such review; and (ii) a copy of annual unaudited financial statements of
RIH, including notes to such financial statements and corresponding management's
discussion and analysis, in form and substance and comparable to that which
would be required to be filed with the Commission in an Annual Report on Form
10-K under the Exchange Act, prepared in the same manner as the audited
financial statements referred to in clause (i) above, signed by a proper
accounting officer of RIH. Contemporaneously with the furnishing of such audited
financial statements to the Mortgage Note Trustee under clause (i) of this
paragraph, RIH will mail copies of such audited financial statements to the
Holders (which need not include the certificate referred to in clause (i)
above).

RIH also will furnish or cause to be furnished to the Mortgage Note
Trustee, within 60 days after each quarter of each fiscal year of RIH, except
the final quarter of such fiscal year, a copy of unaudited financial statements
of RIH prepared on a consistent basis with the audited financial statements
referred to in clause (i) of the paragraph above, signed by a proper accounting
officer of RIH and consisting of at least a balance sheet as at the close of
such quarter and statements of operations and cash flow for such quarter and for
the period from the beginning of such fiscal year to the close of such quarter,
including notes to such financial statements and corresponding management's
discussion

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and analysis, in form and substance comparable to that which would be required
to be filed with the Commission in a Quarterly Report on Form 10-Q under the
Exchange Act. Contemporaneously with the furnishing of such unaudited
financial statements to the Mortgage Note Trustee, RIH shall mail copies of such
unaudited financial statements to the Holders (which need not be signed by a
proper accounting officer of RIH).

RIH will furnish or cause to be furnished to the Mortgage Note Trustee,
contemporaneously with the furnishing of a copy of the annual financial
statements and of the quarterly financial statements referred to above, an
Officers' Certificate dated the date of such annual financial statement or such
quarterly financial statements to the effect that no Default or Event of Default
has occurred and is continuing, or, if there is any such Default or Event of
Default, describing it and the steps, if any, being taken to cure it.

RIH will furnish or cause to be furnished to the Mortgage Note Trustee,
copies of each filing and report made by RIH or RIHF with the Commission
pursuant to the reporting and filing requirements of Section 13 or 15(d) of the
Exchange Act, within 15 days after RIH or RIHF, as applicable, is required to
file the same.

Pursuant to the Mortgage Note Indenture, if RIH becomes exempt from the
Commission reporting and filing requirements of Section 13 or 15(d) of the
Exchange Act, RIH will prepare such periodic reports as it would otherwise have
been required to file with the Commission and (i) at its own expense, cause all
such periodic reports to be filed with the Commission, the Mortgage Note Trustee
and any exchange upon which the Mortgage Notes then are listed, in each case on
the date when such periodic report would have been required to be filed with the
Commission under Section 13 or 15(d) of the Exchange Act, if either of such
provisions were applicable, and (ii) keep copies of such periodic reports
available at its office and promptly provide any Person who so requests with a
copy of any such periodic report, at RIHF's expense.

Each of RIHF and RIH shall comply with the provisions of sec. 314(a) of the
TIA.

RIHF will deliver to the Mortgage Note Trustee, promptly upon becoming
aware of any Default or Event of Default (but in no event later than five
business days thereafter) in the performance of any covenant or agreement of the
Company contained in the Mortgage Note Indenture or any of the Mortgage
Documents, an Officers' Certificate specifying with particularity such event.
(Section 12.06).

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CERTAIN DEFINITIONS

"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person, and, with respect to any specified natural
Person, any other Person having a relationship by blood, marriage or adoption
not more remote than first cousin with such specified Person. For purposes of
this definition, "control" when used with respect to any specified Person means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing; provided, however, that, except as may be required
under the TIA, the term "Affiliate" shall not include, with respect to RIHF or
RIH, any of Fidelity Management & Research Company, TCW Special Credits or funds
or accounts managed or advised by either of them.

"After-Acquired Fee Mortgage Debt" means any Indebtedness secured by an
After-Acquired Fee Mortgage.

"After-Acquired Fee Mortgage" has the meaning stated in Section 2.07 of the
RIH Mortgage.

"Assignment Agreement" means the Assignment of Agreements dated as of the
date of the Mortgage Note Indenture, providing for the assignment of the RIH
Promissory Note, the RIH Mortgage and certain of the other Mortgage Documents
securing the RIH Promissory Note to the Mortgage Note Trustee by RIHF, and
acknowledgment thereof by RIH, a copy of which is attached to the Mortgage Note
Indenture as Exhibit B.

"Capitalized Lease Obligation" means, with respect to any Person, any lease
of any property (whether real, personal or mixed) by such Person as lessee
which, in conformity with GAAP consistently applied, is accounted for as a
capitalized lease on the balance sheet of such Person.

"Consolidated Cash Flow" means, with respect to any Person for any period,
an amount equal to the sum of (i) the Consolidated Net Income of such Person for
such period determined in accordance with GAAP consistently applied, excluding
interest income, interest expense and gains or losses from extraordinary or
nonrecurring items, plus (ii) all amounts deducted in computing such
Consolidated Net Income in respect of depreciation and amortization, plus (iii)
non-cash charges arising from the reduction of CRDA Deposits to market value,
minus (iv) CRDA Deposits made during such period.

"Consolidated Interest Charges" means, with respect to any Person for any
period, the consolidated interest expense (not

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including the non-cash amortization of discount on the original issuance of (a)
the RIH Promissory Note, (b) any intercompany indebtedness of RIH issued in
connection with Indebtedness represented by the Junior Mortgage Facility and (c)
any intercompany indebtedness of RIH issued in connection with Indebtedness
represented by the Working Capital Facility), whether payable in cash or in-kind
(and with respect to RIH, including without limitation the interest paid or
accrued (without duplication) on (i) the RIH Promissory Note, (ii) any
intercompany indebtedness of RIH issued in connection with Indebtedness
represented by the Junior Mortgage Facility and (iii) any intercompany
indebtedness of RIH issued in connection with Indebtedness represented by the
Working Capital Facility), without deduction for interest income (other than
cash interest income received from RII in payment of its interest cost on any
Working Capital Facility), in each case for such Person and its consolidated
Subsidiaries for such period determined in accordance with GAAP consistently
applied.

"Consolidated Interest Coverage Ratio" shall mean, at any date of
calculation thereof, the ratio of (a) Consolidated Cash Flow of RIH and its
consolidated Subsidiaries for the immediately preceding four consecutive fiscal
quarters to (b) Consolidated Interest Charges of RIH and its consolidated
Subsidiaries for such period.

"Consolidated Net Income" means, with respect to any Person for any period,
an amount equal to consolidated net income (or loss) of such Person for such
period determined in accordance with GAAP consistently applied, plus (a)
non-cash charges arising from Federal and state taxes based upon or measured by
income, minus (b) non-cash Federal and state tax benefits based upon or measured
by income.

"CRDA Deposits" means (a) the quarterly deposits made by RIH to the Casino
Reinvestment Development Authority in an amount equal to 1.25% of RIH's gross
revenue in order to satisfy its investment obligation pursuant to the Casino
Control Act, and (b) the amounts invested in qualified investments in lieu of
any of the quarterly deposits (or portion thereof) referred to in clause (a)
above.

"CRDA Dispute" means the dispute existing on the date hereof between RIH
and the New Jersey Casino Reinvestment Development Authority regarding CRDA
Deposits and New Jersey Casino Reinvestment Authority Notes, which dispute
involves an amount of approximately $30,000,000.

"F, F&E Financing Agreement" means a purchase money lien upon any Tangible
Personal Property (as defined in the RIH Mortgage) and other items constituting
Operating Assets (as defined in the RIH Mortgage), such as computer software,
which are financed,

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purchased or leased by RIH, provided that, with certain
exceptions, the principal amount of the indebtedness secured by such lien shall
not exceed 85% of the cost to RIH of such property at the time of acquisition.

"Guaranty" means the RIH Mortgage Note Guaranty as set forth in Article
Four of the Mortgage Note Indenture.

"Holder" means a Person in whose name a Mortgage Note is registered.

"Indebtedness" means, as applied to any Person, without duplication, any
indebtedness, exclusive of deferred taxes: (a) 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); (b) evidenced by bonds, notes, debentures
or similar instruments or letters of credit; (c) representing the balance
deferred and unpaid of the purchase price of any property, if and to the extent
such indebtedness would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP (but excluding trade accounts payable
arising in the ordinary course of business that are not overdue by more than 90
days or are being contested by such Person in good faith); (d) any Capitalized
Lease Obligations (other than, with respect to RIH or RIHF, the Ground Leases)
of such Person; and (e) Indebtedness of others guaranteed by such Person,
including without limitation every obligation of such Person (i) to purchase or
pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or to purchase (or to advance or supply funds for the purchase of)
any security for the payment of such Indebtedness, (ii) to purchase property,
securities or services for the purpose of assuring the holder of such
Indebtedness of the payment of such Indebtedness, or (iii) to maintain working
capital, equity capital or other financial statement condition or liquidity of
the primary obligor so as to enable the primary obligor to pay such
Indebtedness; provided, however, that the guaranty by any Person shall not
include endorsements by such Person for collection or deposit, in either case in
the ordinary course of business. The term "Indebtedness" does not include: (1)
any of the types of indebtedness described in clauses (a) through (e) above
(inclusive) owed by RIHF to RIH or any of their Subsidiaries, by RIH to RIHF or
any of their Subsidiaries or by any such Subsidiary to RIH, RIHF or any other
such Subsidiary (including without limitation the RIH Promissory Note and the
RIH Junior Promissory Note); (2) the Mortgage Note Guaranty, the Junior Mortgage
Note Guaranty and any Working Capital Facility Guaranty; (3) matters relating to
the CRDA Dispute, New Jersey Casino Reinvestment Development Authority Notes or
the CRDA Deposits; and (4) any payments required to be made by RIHF or RIH under
the RII Management Agreement, the RII Tax Sharing Agreement or the Services
Agreement.

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"Junior Mortgage Documents" means (a) the RIH Junior Mortgage, the RIH
Junior Guaranty Mortgage, the RIH Junior Promissory Note, the Junior Assignment
of Leases and Rents and any other security document to which either RIH or RIHF
is a party relating to the RIH Junior Mortgage Notes, which is executed and
delivered pursuant to or in connection with the RIH Junior Mortgage, the RIH
Junior Guaranty Mortgage or the Junior Assignment Agreement, and (b) any
mortgage, deed of trust, guaranty, promissory note, collateral assignment
agreement, assignment of leases and rents, assignment of operating assets and
any other security document to which either RIH or RIHF is a party relating to
the Junior Mortgage Facility.

"Junior Mortgage Facility" means the Junior Mortgage Notes and any secured
or unsecured facility or facilities entered into by RIH or RIHF providing for
the making of loans to RIH or RIHF on a revolving or term basis, or the issuance
of notes, debentures or bonds by RIH or RIHF, as such agreement, indenture or
instrument may be amended, supplemented or modified from time to time, or any
refinancing thereof, in an aggregate principal amount outstanding at any time up
to $35,000,000 plus additional notes, debentures or bonds issued in payment of
interest accrued on outstanding notes, debentures or bonds; provided, however,
that the lender or lenders thereunder (or any trustee or agent acting on behalf
of such lender or lenders) shall have executed an intercreditor agreement
covering the matters set forth on Exhibit G to the Mortgage Note Indenture. The
liens, if any, securing the Junior Mortgage Facility shall be pari passu with
the lien of the RIH Junior Mortgage and the RIH Junior Guaranty Mortgage. The
term "Junior Mortgage Facility" does not include the Junior Mortgage Note
Guaranty.

"Mortgage Documents" means the RIH Mortgage, the RIH Guaranty Mortgage, the
RIH Promissory Note, an Assignment of Leases and Rents and an Assignment of
Operating Assets each dated as of the date of the Mortgage Note Indenture by RIH
to RIHF and any other security document to which either RIH or RIHF is a party
relating to the Mortgage Notes, which is executed and delivered pursuant to or
in connection with the RIH Mortgage, the RIH Guaranty Mortgage or the Assignment
Agreement.

"Non-Recourse Indebtedness" means indebtedness incurred in connection with
the acquisition, purchase, improvement or development of property or assets
(other than the Mortgage Note Trust Estate) used by RIHF, RIH or any Subsidiary
of RIH or RIHF to engage in the casino business, the hotel business or related
or ancillary business or purpose and which is secured only by such assets and
without recourse to RIH, RIHF or any Subsidiary of RIH or RIHF or the Mortgage
Note Trust Estate for such indebtedness.

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"Outstanding" when used with respect to Mortgage Notes means, as of the
date of determination, all Mortgage Notes theretofore authenticated and
delivered under the Mortgage Note Indenture, except:

(a) Mortgage Notes theretofore canceled by the Mortgage Note Trustee
or delivered to the Trustee for cancellation;

(b) Mortgage Notes for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Mortgage Note
Trustee or any Paying Agent in trust for the Holders of such Mortgage
Notes;

(c) Mortgage Notes in exchange for or in lieu of which other Mortgage
Notes have been authenticated and delivered under the Mortgage Note
Indenture; and

(d) Mortgage Notes alleged to have been destroyed, lost or stolen
which have been paid as provided in Section 3.06 of the Mortgage Note
Indenture;

provided, however, that in determining whether the Holders of the requisite
principal amount of Mortgage Notes Outstanding have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Mortgage Notes
owned by RIHF or any other obligor upon the Mortgage Notes or any Affiliate of
RIHF or of such other obligor shall be disregarded and deemed not to be
Outstanding. In determining whether the Mortgage Note Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Mortgage Notes which the Mortgage Note Trustee actually
knows to be so owned shall be so disregarded.

"Outstanding Amount" of any Indebtedness at any time means the principal
amount outstanding of such Indebtedness at such time.

"Restricted Payment" means (a) any declaration or payment of any dividend
or the making of any distribution to holders of capital stock of RIH or RIHF or
any Subsidiary of RIH or RIHF in respect of such capital stock (other than to
RIH or RIHF or a direct or indirect wholly owned Subsidiary of RIH or RIHF), (b)
any purchase, redemption or other acquisition or retirement for value of any
capital stock (or warrants, rights or options to acquire any capital stock or
Indebtedness convertible into or exchangeable for any capital stock) of RIH or
RIHF or any Subsidiary of RIH or RIHF (other than purchases, redemptions,
acquisitions or retirement solely from RIH or RIHF or a direct or indirect
wholly owned Subsidiary of RIH or RIHF); provided, however, that any such
purchase, redemption or other acquisition or retirement that is required by the
Casino Control Commission or under the Casino Control Act shall not constitute a
Restricted Payment. The term "Restricted Payment" also shall not include any

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loan or advance to RII of all or any portion of the proceeds of the Indebtedness
represented by the Working Capital Facility.

"RIH Sale" means (a) a consolidation, combination or merger involving RIH
and any other Person, (b) a sale, assignment, conveyance or transfer or RIH's
interest in the Mortgage Note Trust Estate, substantially as an entirety, to any
other Person or group of Persons in one transaction or a series of related
transactions, or (c) any transaction as a result of which RIH ceases to be a
direct or indirect wholly owned Subsidiary of RII; provided, however, that any
of the transactions described in clauses (a), (b) and (c) above shall not
constitute an RIH Sale if the other party or parties to the transaction consists
of only one or more of the following Persons: RIHF or any wholly owned direct or
indirect subsidiary of RIH or RIHF; provided further, however, that
notwithstanding any other provision of this definition, if the primary effect of
any of the aforesaid transactions is the redemption of the Mortgage Notes, then
such transaction shall not be considered to be a RIH Sale.

"RII Management Contract" means the Interim Management Agreement.

"RII Tax Sharing Agreement" means the Tax Sharing Agreement between RII and
RIH pursuant to which (i) RIH will not make any payments to RII or any other
Affiliate in respect of taxes, other than to reimburse RII for any cash payments
actually made by RII in respect of any Federal, state or local income or
alternative minimum taxes arising from the earnings or operations of RIH;
provided, however, that RIH shall not be required to reimburse RII for cash
payments in respect of Federal, state or local income or alternative minimum
taxes that would not have been owed but for the reduction, if any, of the amount
of the consolidated net operating loss carryforwards or consolidated current
losses of the affiliated group of which RII is a common parent which resulted
from the inclusion in the consolidated return filed for such group for any
taxable year ending after the Effective Date of the income of any entity other
than RIH, other than income directly attributable to the consummation of the
Plan, including but not limited to the transfer of the stock of RIB and the
assets of the U.S. Paradise Island Subsidiaries, and (ii) RIH will be entitled
to any refund (plus the interest thereon) of any taxes for which RIH is required
to reimburse RII.

"Subsidiary" of any Person means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by such
Person or one or more Subsidiaries of such Person.

"Working Capital Facility" means the Senior Facility (and the Senior
Facility Notes issued thereunder) and any other secured or unsecured facility or
facilities entered into by RIH and/or RIHF

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providing for the making of working capital loans to RIH or RIHF (with RIH, RII
and/or GRI as a guarantor thereunder) on a revolving or term basis, or the
issuance of notes, debentures or bonds by RIH, RIHF or RII, as such agreement
may be amended, supplemented or modified from time to time, or any refinancing
thereof, in an aggregate principal amount up to $20,000,000; provided, however,
that the lender or lenders thereunder (or any trustee or agent acting on behalf
of such lender or lenders) shall have executed an intercreditor agreement
covering the matters set forth on Exhibit G to the Mortgage Note Indenture. The
liens, if any, securing the Working Capital Facility may be senior to the lien
of the RIH Mortgage, the RIH Guaranty Mortgage, the RIH Junior Mortgage and the
RIH Junior Guaranty Mortgage. The term "Working Capital Facility" does not
include the Working Capital Facility Guaranty.

DESCRIPTION OF JUNIOR MORTGAGE NOTES

The following is a summary of certain provisions of the Junior Mortgage
Notes and the Junior Mortgage Note Indenture. Wherever particular provisions of
the Junior Mortgage Note Indenture or Junior Mortgage Notes are referred to,
such provisions are incorporated by reference herein. References to Sections or
Articles refer to Sections or Articles of the Junior Mortgage Note Indenture.
The definition of certain terms used below are set forth in "Certain
Definitions" below in this section. All other capitalized terms used in this
section but not defined in this Information Statement/Prospectus have the
meanings ascribed thereto in the Junior Mortgage Note Indenture and are
incorporated by reference herein.

GENERAL

The Junior Mortgage Notes were issued pursuant to the Junior Mortgage Note
Indenture, dated May 3, 1994, among RIHF, RIH and U.S. Trust Company of
California, N.A. (the "Junior Mortgage Note Trustee"). A copy of the Junior
Mortgage Note Indenture is filed as an exhibit to the Registration Statement of
which this Prospectus is a part. The terms of the Junior Mortgage Note Indenture
also are governed by certain provisions of the TIA. The Junior Mortgage Notes
are secured obligations of RIHF in the aggregate principal amount of $35,000,000
plus the principal amount of Junior Mortgage Notes that may be issued in payment
of interest as described below. The Junior Mortgage Notes will mature on
December 15, 2004.

RANKING

Although the Junior Mortgage Notes are not contractually subordinated to
the Senior Facility Notes and the Mortgage Notes as to priority of payment, the
lien securing the Junior Mortgage

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Notes is junior to the liens securing the Senior Facility Notes and the Mortgage
Notes, and the Junior Mortgage Notes therefore are structurally subordinated to
the Senior Facility Notes and the Mortgage Notes. The lien on the Resorts Casino
Hotel securing payment of the RIH Junior Promissory Note is pari passu with
the lien securing the Junior Mortgage Note Guaranty and subordinated to the
liens securing payment of the RIH Senior Facility Promissory Note, the RIHF
Senior Facility Guaranty, any other secured Working Capital Facility, the RIH
Promissory Note and the Mortgage Note Guaranty. (Section 4.03).

INTEREST

Interest on the Junior Mortgage Notes accrues at a rate of 11.375% per
year. Interest is payable semi-annually on June 15 and December 15 in each year
(commencing December 15, 1994) to Holders of record at the close of business on
the first day of the month in which the interest payment date occurs. RIHF is
required to pay interest on overdue principal and, to the extent
permitted by law, overdue interest at the rate of 14.375% per year. (Section
3.10).

RIHF may pay all or any portion of interest accruing on the Junior Mortgage
Notes by issuing additional Units comprised of Junior Mortgage Notes (valued,
for purposes only of determining the principal amount of additional Junior
Mortgage Notes to be issued in respect of interest so paid, at 100% of their
principal amount) and Class B Common Stock in lieu of cash in satisfaction of
interest payments due, provided that on the interest payment date in question,
Consolidated Cash Flow of RIH and its consolidated Subsidiaries for the most
recently completed four fiscal quarters is less than $35,000,000. (Section
3.11).

SINKING FUND REQUIREMENTS

None.

MANDATORY REDEMPTION

In the event of an RIH Sale, all the Junior Mortgage Notes shall be
redeemed by RIHF whether such RIH Sale occurs before, on or after the fifth
anniversary of the Effective Date, at par together with interest, if any,
accrued and unpaid thereon to the Redemption Date; provided, however, that such
obligation of RIHF to redeem the Junior Mortgage Notes in the event of a
proposed RIH Sale shall cease to exist if the Holders of not less than 66 2/3%
in Outstanding Amount of the Outstanding Junior Mortgage Notes have consented to
such proposed RIH Sale. (Section 3.13).

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OPTIONAL REDEMPTION

The Junior Mortgage Notes are redeemable at any time in whole, or from time
to time in part, on or after the fifth anniversary of the Effective Date at the
election of RIHF, at a redemption price of 100% of their principal amount plus
accrued and unpaid interest to the Redemption Date. (Section 3.13).

From and after any Redemption Date, if funds for the redemption of any
Junior Mortgage Notes called for redemption shall have been made available, such
Junior Mortgage Notes will cease to bear interest and the only right of the
Holders will be to receive payment of the Redemption Price and all interest
accrued to such Redemption Date. (Section 13.06).

The Junior Mortgage Note Indenture requires that notice of any redemption
of any Junior Mortgage Notes be given to Holders at their addresses, as shown in
the register, not less than 30 nor more than 60 days prior to the Redemption
Date. The notice of redemption must specify, among other things, the Redemption
Date, the Redemption Price, the principal amount of Junior Mortgage Notes to be
redeemed, and, if less than all outstanding Junior Mortgage Notes are to be
redeemed, the identification (and, in the case of partial redemption, the
respective principal amounts) of the Junior Mortgage Notes to be redeemed and
the place or places where the Junior Mortgage Notes to be redeemed are to be
surrendered for payment of the Redemption Price. (Section 13.04).

The Junior Mortgage Note Indenture provides that in the event of redemption
of less than all the outstanding Junior Mortgage Notes, the particular Junior
Mortgage Notes to be redeemed will be selected by the Junior Mortgage Note
Trustee by a random, automated selection process or pro rata, as deemed
appropriate by the Junior Mortgage Note Trustee. (Section 13.03).

LIMITATION ON OPEN-MARKET PURCHASES

The Junior Mortgage Note Indenture provides that RIHF and RIH will not, and
will not permit any of their respective Subsidiaries to, purchase or otherwise
acquire (other than pursuant to a redemption described in Article Thirteen of
the Junior Mortgage Note Indenture) any Junior Mortgage Notes unless all
interest accrued on the Junior Mortgage Notes and payable on the Interest
Payment Date immediately preceding the date of such repurchase was paid solely
in cash and not in Additional Notes. (Section 12.22). In addition, the Junior
Mortgage Note Indenture provides that RIHF and RIH will not, and will not permit
any of their respective subsidiaries to, repurchase any Junior Mortgage Notes in
the open market if an Event of Default has occurred and is continuing under the
Junior Mortgage Note Indenture, the Mortgage Note Indenture or the Senior
Facility Note Indenture. (Section 12.10).

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CASINO CONTROL ACT REGULATION

The Junior Mortgage Notes are subject to the qualification, divestiture and
redemption provisions under the Casino Control Act that are described in
"Description of Business -- Regulation and Gaming Taxes and Fees". (Section
13.08).

INTERCREDITOR AGREEMENT

See "Description of Mortgage Notes -- Intercreditor Agreement".

COLLATERAL

General

The Junior Mortgage Notes are secured by the Junior Mortgage Note Trust
Estate pursuant to the Mortgage Documents described below. (Article Six).

The "Junior Mortgage Note Trust Estate" consists of an assignment by RIHF
to the Junior Mortgage Note Trustee for the benefit of the Holders of the Junior
Mortgage Notes, of the RIH Junior Promissory Note in the original aggregate
principal amount of $35,000,000, payable in amounts and at times necessary to
pay the principal of and interest on the Junior Mortgage Notes, which is secured
by a lien on Resorts Casino Hotel, consisting of RIH's fee and leasehold
interests comprising the Resorts Casino Hotel, the contiguous parking garage and
property, all additions or improvements constructed thereon, all rents, issues
and profits derived therefrom and certain tangible and intangible personal
property located on, or used in connection with, the operation of the Resorts
Casino Hotel (collectively, the "RIH Junior Mortgage"), comprising the trust
estate, encumbered pursuant to the RIH Junior Mortgage between RIH, as
mortgagor, and RIHF, as mortgagee.

The RIH Junior Mortgage

The RIH Junior Mortgage creates a mortgage lien and security interest
(subject to the liens securing the RIH Senior Facility Promissory Note, the RIH
Senior Facility Guaranty, any other secured Working Capital Facility, the RIH
Promissory Note and the RIH Mortgage Note Guaranty) in the Resorts Casino Hotel.

RELEASE OF COLLATERAL

No portion of the Junior Mortgage Trust Estate may be released without the
consent of the Holders of not less than 66 2/3% in Outstanding Amount of the
Junior Mortgage Notes then Outstanding. (Section 11.02). Section 2.02 of the RIH
Junior Mortgage provides that RIH may, unless an Event of Default shall have
occurred and be continuing, sell or dispose of certain elements of the Resorts

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Casino Hotel which may have become obsolete or unfit for use or which are no
longer necessary in the conduct of its businesses.

LIMITATIONS ON ABILITY TO REALIZE ON COLLATERAL

General

If there is an Event of Default under the Junior Mortgage Note Indenture or
the RIH Junior Mortgage, the Junior Mortgage Note Trustee, subject to the
requirements of the Casino Control Act, may enforce the rights and remedies
arising under the RIH Junior Mortgage. The net amount realized in any
foreclosure sale for the benefit of Holders of the Junior Mortgage Notes will be
only that amount that exceeds all amounts then due and owing to creditors, if
any, having senior security interests (including the Holders of the RIHF Senior
Facility Notes, the parties to any other secured Working Capital Facility and
the holders of the Mortgage Notes and the related Mortgage Note Guaranty) and
certain costs, taxes and other items.

Certain Regulatory Considerations

In any foreclosure sale with respect to the Resorts Casino Hotel, the
Junior Mortgage Note Trustee could bid the amount of the outstanding Junior
Mortgage Notes. The Junior Mortgage Note Trustee would be required to comply
with the applicable requirements of the Casino Control Act in any foreclosure
sale, including obtaining a casino license.

Certain Bankruptcy Considerations

In the event of the filing of a petition under the Bankruptcy Code for RIHF
or RIH, applicable provisions of the Bankruptcy Code, including the automatic
stay provisions of section 362 of the Bankruptcy Code, may operate to prevent
the Junior Mortgage Note Trustee from taking action to realize on the Junior
Mortgage Trust Estate if there is an Event of Default.

Ground Leases

A substantial portion of the North Tower of the Resorts Casino Hotel, a
portion of the adjacent parking garage and a small portion of the casino/hotel
are located on land that is owned by unrelated third parties and leased to RIH
under long-term ground leases. The ground leases do not provide certain
mortgagee protections and, in the event of a default thereunder, the Junior
Mortgage Note Trustee may not have the right to cure any such default. However,
the Junior Mortgage Note Trustee has the right under the Junior Mortgage Note
Indenture to tender defaulted ground lease payments to RIH and require RIH to
transmit such funds to the respective ground lessor. If such default is not
cured, the lessor under any ground lease may have the right to

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terminate the ground lease. The termination of any or all of such ground
leases could result in the loss of portions of, or rights with respect to, the
property subject to the terminated ground lease.

GUARANTY

RIH has guaranteed payment of principal of and interest on the Junior
Mortgage Notes pursuant to the Junior Mortgage Note Guaranty. In addition, the
Junior Mortgage Note Guaranty is secured by a lien on the Resorts Casino Hotel
pursuant to a mortgage and security agreement with an assignment of rents, and
an assignment of leases and rents (collectively, the "RIH Guaranty Mortgage").
The RIH Junior Guaranty Mortgage will encumber the Resorts Casino Hotel on a
basis pari passu with the RIH Junior Mortgage. (Article Four)

PAYMENTS OF NET PROCEEDS OF ASSET SALES

None.

COVENANTS

Corporate Existence

Subject to the provisions described under "Limitations on Merger,
Consolidation, Transfer or Lease of Property and Assets", the Junior Mortgage
Note Indenture provides that each of RIHF and RIH will do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence and the corporate existence of each of its Subsidiaries in accordance
with the respective organizational documents of RIHF, RIH and each such
Subsidiary and the rights (charter and statutory), licenses, permits, approvals
and governmental franchises of it and each of its Subsidiaries necessary to the
conduct of its and their respective businesses, including without limitation all
licenses, permits, approvals and franchises necessary to assure the continued
operation of RIH's gaming operations at the Resorts Casino Hotel; provided,
however, any direct or indirect wholly owned subsidiary of RIH may consolidate
with, merge into or transfer or distribute all or part of its properties and
assets to RIH or RIHF or as otherwise provided in Section 10.01 of the Junior
Mortgage Note Indenture. (Section 12.04).

Limitation on Dividends and Restricted Payments

The Junior Mortgage Note Indenture provides that RIHF will not, directly or
indirectly, make, or permit any Subsidiary of RIHF to make, any Restricted
Payment.

The Junior Mortgage Note Indenture also provides that RIH will not,
directly or indirectly make, or permit any Subsidiary of RIH

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to make, any Restricted Payment; provided, however, that: (i) if RIH's
Consolidated Interest Coverage Ratio, as certified to the Junior Mortgage Note
Trustee by an Officers' Certificate calculated at the time of the declaration of
the dividend or distribution, is equal to or exceeds two, then RIH may declare
and pay cash dividends or make cash distributions in respect of any class of
capital stock of RIH in an amount not to exceed in the aggregate with any other
such cash dividends or distributions declared or made from and after the date of
the Junior Mortgage Note Indenture, 50% of RIH's Consolidated Net Income from
and after the Effective Date; and (ii) if (1) RIH's Consolidated Interest
Coverage Ratio, as certified to the Junior Mortgage Note Trustee by an Officer's
Certificate, calculated at the time of the declaration of the dividend or
distribution is equal to or exceeds two; and (2) RIH has cash in excess of the
amount required to pay interest on the Junior Mortgage Notes and the Mortgage
Notes on the next Interest Payment Date plus $20,000,000, then RIH may declare
and pay cash dividends or make cash distributions in respect of any class of
capital stock of RIH in an amount not to exceed such excess cash amount.

The Junior Mortgage Note Indenture further provides that RIHF and RIH will
not, and will not permit any of their respective Subsidiaries to, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction of any kind on the ability of any Subsidiary of RIH or RIHF: (i) to
pay dividends or make any other distribution on the capital stock of such
Subsidiary that is owned by RIH, RIHF or a wholly owned Subsidiary of RIHF or
RIH, as applicable; (ii) to pay any Indebtedness owed by such Subsidiary to RIH,
RIHF or any wholly owned Subsidiary of RIHF or RIH, as applicable; (iii) to make
loans or advances to RIH, RIHF or any wholly owned Subsidiary of RIHF or RIH, as
applicable; or (iv) to transfer any of its property or assets to RIHF, RIH or
any wholly owned Subsidiary of RIHF or RIH, as applicable, except (A) any
restrictions existing on or prior to the date of the Junior Mortgage Note
Indenture, or in connection with agreements in effect, or entered into, on the
date of the Junior Mortgage Note Indenture, or any permitted amendments,
renewals, refundings, refinancings or extensions thereof; provided, however,
that the terms and conditions of any such amendments, renewals, refundings,
refinancings or extensions are no more restrictive with respect to the matters
set forth in clauses (i) through (iv) of this paragraph than the agreements
being amended, refunded, renewed, refinanced or extended; (B) any restrictions
or encumbrances existing or arising pursuant to the terms of Indebtedness of a
Person outstanding at the time such Person becomes a Subsidiary of RIHF or RIH
and not incurred in connection with, or in contemplation of, such Person
becoming a Subsidiary of RIHF or RIH or any permitted amendments, renewals,
refinancings or extensions thereof; provided, however, that the terms and
conditions of any such amendments, renewals, refundings, refinancings or
extensions are no more restrictive

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with respect to the matters set forth in clauses (i) through (iv) of this
paragraph than the agreements being amended, renewed, refunded, refinanced or
extended; (C) encumbrances or restrictions existing under or by reason of
applicable law or regulation (including, without limitation, the Casino Control
Act) or the Junior Mortgage Note Indenture; (D) customary provisions restricting
assignment of contracts or subletting or assignment of any lease governing a
leasehold interest of any Subsidiary of RIHF or RIH; or (E) net worth
maintenance requirements imposed by any governmental authority. (Section 12.07).

Limitation on Additional Indebtedness and Issuance of Notes

The Junior Mortgage Note Indenture provides that RIHF and RIH will not, and
will not permit any of their respective Subsidiaries to, directly or
indirectly, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to, including, without limitation, through
any merger or consolidation to which RIHF, RIH or any of their respective
Subsidiaries is a party or through any other acquisition of any such Subsidiary
(collectively, "incur"), or have outstanding, any Indebtedness other than,
without duplication, the following:

(i) Indebtedness represented by the Mortgage Notes, the RIH Promissory
Note and the Mortgage Note Guaranty;

(ii) Indebtedness represented by the Junior Mortgage Facility, the RIH
Junior Promissory Note and the Junior Mortgage Note Guaranty;

(iii) Indebtedness represented by the Working Capital Facility, the
Working Capital Facility Guaranty and the RIH Senior Facility Promissory
Note;

(iv) Indebtedness represented by Capitalized Lease Obligations in an
amount not in excess of $5,000,000 in the aggregate at any time
outstanding;

(v) Indebtedness represented by F,F&E Financing Agreements in an
amount not in excess of $10,000,000 in the aggregate at any time
outstanding;

(vi) unsecured Indebtedness in an amount not in excess of $5,000,000
in the aggregate at any time outstanding that is subordinated and junior to
the Junior Mortgage Notes at least to the extent set forth in the
Subordination Provisions attached to the Junior Mortgage Note Indenture as
Exhibit C and which Indebtedness does not have any requirements for
amortization payments, mandatory redemption or sinking fund payments prior
to the Stated Maturity of the Junior Mortgage Notes and does not provide
for the payment of interest in cash at any time when

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the most recent installment of interest on the Junior Mortgage Notes was
not paid in cash;

(vii) Non-Recourse Indebtedness in an amount not in excess of
$25,000,000 in the aggregate at any time outstanding;

(viii) After-Acquired Fee Mortgage Debt in an amount not in excess of
$3,000,000 in the aggregate at any time outstanding; and

The Junior Mortgage Note Indenture also provides that RIHF and RIH will not
permit any of their respective Subsidiaries to issue (other than to RIHF, RIH or
a direct or indirect wholly owned Subsidiary of RIHF or RIH) any capital stock
which has voting rights or has a preference as to any distribution over its
common stock. (Section 12.08).

Limitation on Repayment of Subordinated Indebtedness

The Junior Mortgage Note Indenture provides that neither RIHF nor RIH will,
and neither RIHF nor RIH will permit any Subsidiary to, directly or indirectly,
purchase, redeem, defease (including, but not limited to, in substance or legal
defeasance) or otherwise acquire or retire for value prior to the Stated
Maturity of, or prior to any scheduled mandatory redemption or sinking fund
payment with respect to (collectively, to "repay" or a "repayment"), the
principal of any Indebtedness of RIHF, RIH or any Subsidiary of RIHF or RIH
which is subordinated (whether pursuant to its terms or by operation of law) in
right of payment to the Junior Mortgage Notes. (Section 12.09).

Limitation on Certain Transactions

The Junior Mortgage Note Indenture also provides that each of RIHF and RIH
will not, and will not permit any Subsidiary to, repurchase any Junior Mortgage
Notes in the open market if an Event of Default shall have occurred and shall be
continuing under the Mortgage Note Indenture, the Junior Mortgage Note Indenture
or under the Senior Facility Indenture. (Section 12.10).

Restriction of Activities

The Junior Mortgage Note Indenture provides that RIH will not, until the
date that is 91 days after the payment in full by RIHF of the principal of (and
interest, if any, on) all Outstanding Junior Mortgage Notes, engage in any
business or investment

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activities other than those necessary for, incident to, connected with or
arising out of acquiring, financing, owning and operating the Resorts Casino
Hotel or additional hotels or casinos or related or ancillary businesses.

The Junior Mortgage Note Indenture also provides that neither RIHF nor RIH
will make any loans to any Affiliate or any other Person other than (i)
Indebtedness of the type described in clause (ix) of the covenant described in
"Limitation on Additional Indebtedness and Issuance of Notes", (ii) indebtedness
from RIH to RIHF evidenced by the RIH Senior Facility Promissory Note, the RIH
Promissory Note and the RIH Junior Promissory Note, and (iii) loans to RII from
the proceeds of the Indebtedness represented by the Working Capital Facility;
provided, however, that RIH shall have the right to make loans to employees of
RIH actively involved in the operation of the Resorts Casino Hotel or to engage
in credit transactions in the operation of the Resorts Casino Hotel, if such
loans or credit transactions are in the ordinary course of business of operating
a casino/hotel.

The Junior Mortgage Note Indenture further provides that RIHF will not
engage in any business (and will not have any Subsidiaries) other than (i) to
collect principal, interest (and any interest on overdue principal and interest)
and other amounts under any intercompany notes or guaranties made to the order
of or otherwise in favor of RIHF, (ii) to preserve its rights under the Junior
Mortgage Note Indenture and the Mortgage Documents and otherwise to comply with
its obligations thereunder and under the Junior Mortgage Notes, (iii) to do or
cause to be done all things necessary or appropriate to protect the Junior
Mortgage Trust Estate, (iv) to preserve its rights under the Mortgage Note
Indenture and the Senior Mortgage Documents and otherwise to comply with its
obligations thereunder and under the Mortgage Notes, (v) to issue Indebtedness
represented by the Working Capital Facility, (vi) to preserve its rights under
the Working Capital Facility and otherwise comply with its obligations under the
Working Capital Facility, (vii) to incur any other Indebtedness permitted under
the Junior Mortgage Note Indenture, (viii) to do all such acts and deeds
necessary in connection with the Junior Mortgage Facility and the documents and
instruments relating thereto and the Working Capital Facility and the documents
and instruments relating thereto, (ix) to declare, issue and pay dividends on,
or make any redemptions or repurchases of, RIHF's capital stock as contemplated
by its Certificate of Incorporation (to the extent permitted by the Junior
Mortgage Note Indenture) and otherwise to comply with and perform the provisions
of its Certificate of Incorporation and By-laws, and (x) to do such further acts
and deeds to effectuate any of the matters listed in the foregoing clauses of
this paragraph. (Section 12.11).

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Limitation on Subsidiaries; Consolidated Group

The Junior Mortgage Note Indenture provides that RIHF and RIH will not have
any Subsidiaries except the Subsidiaries existing on the date of the Junior
Mortgage Note Indenture and Subsidiaries acquired by RIHF or RIH in transactions
not prohibited by the other provisions of the Junior Mortgage Note Indenture
which are and shall at all times be wholly owned (directly or indirectly) by
RIHF or RIH. (Section 12.12).

Limitations on Liens

The Junior Mortgage Note Indenture provides that neither RIHF nor RIH will
create, incur, suffer to exist or permit to be created or incurred any mortgage,
lien, charge or encumbrance on or pledge of the Mortgage Documents or any of the
Junior Mortgage Trust Estate, other than (a) Permitted Encumbrances on the
Junior Mortgage Note Trust Estate, (b) liens on the Junior Mortgage Note Trust
Estate in connection with Indebtedness permitted by clauses (i), (ii), (iii),
(iv) or (v) of the first paragraph of the covenant described in "Limitation on
Additional Indebtedness and Issuance of Notes", and (c) a building contract or
notice of intention filed by a mechanic, materialman or laborer under the New
Jersey lien law. Without limiting the generality of the previous sentence, but
notwithstanding the provisions of such sentence, RIH shall not be deemed to have
breached such provisions by virtue of the existence of liens for Impositions (as
defined in the RIH Junior Mortgage) or mechanics' liens so long as RIH is in
good faith contesting the validity of such liens in accordance with the
provisions of Section 5.09 of the RIH Junior Mortgage. (Section 12.13).

Compliance with Laws

The Junior Mortgage Note Indenture provides that each of RIHF and RIH will
comply, and will cause each of its Subsidiaries to comply, with the Casino
Control Act and all other applicable statutes (including, without limitation,
ERISA), rules, regulations, orders and restrictions of the United States of
America, states and municipalities, and of any governmental department,
commission, board, regulatory authority, bureau, agency and instrumentality of
the foregoing in respect of the conduct of its business and the ownership of its
properties and assets, including, without limitation, the Junior Mortgage Note
Trust Estate, except such as are being contested in good faith by appropriate
proceedings in accordance with the Mortgage Documents (to the extent applicable)
and except for such noncompliances as will not in the aggregate have a material
adverse effect on the business, properties, operations or financial condition of
RIHF, RIH or their respective Subsidiaries. (Section 12.14).

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Payment of Taxes and Other Claims

The Junior Mortgage Note Indenture provides that RIHF or RIH will pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (a) all taxes, assessments and governmental charges levied or
imposed upon RIHF, RIH or any of their respective Subsidiaries or upon the
Junior Mortgage Note Trust Estate or any portion thereof or upon the income,
profits or property of RIHF, RIH or any of their respective Subsidiaries, and
(b) all lawful claims for labor, materials and supplies which, if unpaid, will
by law become a Lien upon the Junior Mortgage Note Trust Estate or upon any
other property of RIHF, RIH or any of their respective Subsidiaries; provided,
however, that RIHF and RIH shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessments, charge or claim the amount,
applicability or validity of which is being contested in good faith by
appropriate proceedings in accordance with the Mortgage Documents (to the extent
applicable) if adequate reserves therefor have been established in accordance
with GAAP. (Section 12.15).

Maintenance of Properties

The Junior Mortgage Note Indenture further provides that each of RIHF and
RIH will cause the Junior Mortgage Trust Estate and all other properties (other
than obsolete equipment) owned by or leased to it or any of its Subsidiaries,
and used or useful in the conduct of its business or the business of RIHF, RIH
or such Subsidiary to be maintained and kept in good condition, repair and
working order, except for reasonable wear and use, and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as required by the Mortgage Documents or, to the extent not governed by the
Mortgage Documents, as in the reasonable judgment of the Board of Directors of
RII may be necessary so that the business carried on in connection therewith may
be properly and advantageously conducted at all times. (Section 12.16).

Insurance

The Junior Mortgage Note Indenture provides that each of RIHF and RIH will
maintain, and will cause each of its Subsidiaries to maintain, with financially
sound and reputable insurers, appropriate insurance on each of their respective
properties and businesses against liabilities, casualties, risks and
contingencies of the type and in amounts required by the Mortgage Documents or,
to the extent not governed by the Mortgage Documents, as customarily maintained
by corporations and other entities engaged in the same or similar businesses and
similarly situated; provided, however, that any such insurer shall be qualified
to do business in the jurisdiction where the insured property is located.
(Section 12.17).

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Waiver of Stay, Extension or Usury Laws

The Junior Mortgage Note Indenture provides that each of RIHF and RIH (to
the extent that it may lawfully do so) will not, and will not cause or permit
any of its Subsidiaries to, at any time insist upon, or plead, or in any manner
whatsoever claim, and will resist any and all efforts to be compelled to take
the benefit or advantage of, any stay or extension law or any usury law or other
law that would prohibit or forgive RIHF or RIH from paying all or any portion of
the principal of, or premium, if any, and interest on the Junior Mortgage Notes
or the RIH Junior Promissory Note or the Junior Mortgage Note Guaranty, wherever
and whenever enacted, or which may affect the covenants or the performance of
the Junior Mortgage Note Indenture or the RIH Junior Promissory Note or the
Junior Mortgage Note Guaranty; and (to the extent that it may lawfully do so)
RIHF and RIH will 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
granted to the Junior Mortgage Note Trustee in the Junior Mortgage Note
Indenture and in the Mortgage Documents, but will suffer and permit the
execution of every such power as though no such law had been enacted. (Section
12.18).

Transactions with Shareholders and Affiliates

The Junior Mortgage Note Indenture also provides that each of RIHF and RIH
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, enter into or permit to exist any transaction (including without
limitation the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate of RIHF or RIH, unless (a) such
transaction is upon fair and reasonable terms which are no less favorable to
RIHF or such Subsidiary, as the case may be, than would be available in an
arm's-length transaction with an unrelated person and (b) if over $250,000, such
transaction is determined in the good faith judgment of a majority of the
members of the Board of Directors of either (i) RII, so long as RII owns
directly or indirectly a majority of the outstanding capital stock of RIH,
directly or indirectly, or (ii) RIH, to be in the best interests of RIHF, RIH or
such Subsidiary as applicable; provided, however, that this provision shall not
apply to (A) any agreements, documents, instruments or transactions entered into
in connection with the RIHF Senior Facility Notes, (B) the Services Agreement,
(C) the RII Management Contract, or (D) the RII Tax Sharing Agreement. (Section
12.21).

EVENTS OF DEFAULT

The following events constitute "Events of Default" under the Junior
Mortgage Note Indenture:

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(a) default in the payment of any interest upon any Junior Mortgage
Note when such interest becomes due and payable and continuance of such
default (the deposit with the Junior Mortgage Note Trustee of funds
sufficient to make such interest payment in full being deemed to cure any
such default) for a period of ten days;

(b) default in the payment of all or any portion of the principal of
any Junior Mortgage Note at its Maturity;

(c) default in the performance or breach of any covenant of RIHF or
RIH in the Junior Mortgage Note Indenture (other than a covenant a default
in the performance or breach of which specifically dealt with in this
paragraph or one of the other clauses set forth herein), the Assignment
Agreement or any of the Mortgage Documents and continuance of such default
or breach for a period of 30 days (or such shorter or longer cure period,
if any, as may be specified in respect of such default or breach in the
Assignment Agreement or the applicable Mortgage Document, as the case may
be), and (other than with respect to the covenants described in
"Covenants -- Limitation on Dividends and Restricted Payments",
"Covenants -- Limitation on Additional Indebtedness and Issuance of Notes",
"Covenants -- Limitation on Repayment of Subordinated Indebtedness",
"Covenants -- Limitation on Certain Transactions",
"Covenants -- Restriction of Activities", "Covenants -- Limitations on
Subsidiaries, Consolidated Group", "Covenants -- Limitation on Liens" and
"Covenants -- Transactions with Stockholders and Affiliates") after there
has been given (i) to RIHF by the Junior Mortgage Note Trustee, or (ii) to
RIHF and the Junior Mortgage Note Trustee by the Holders of at least 25% in
Outstanding Amount of the Outstanding Junior Mortgage Notes, a written
notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default"; provided, however,
that, if such default or breach is of a covenant set forth in certain
specified provisions of the Junior Mortgage Note Indenture, and if such
default or breach is of such a nature that is curable but is not
susceptible of being cured with due diligence within such 30-day period (or
such shorter or longer cure period) (for reasons other than lack of funds),
then, under certain circumstances, such period shall be extended for such
further period of time (up to a maximum of 60 days) as may reasonably be
required to cure such default or breach;

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insolvency, reorganization, winding-up, or composition or adjustment of
debts, and such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of 60 consecutive
days;

(e) the commencement by RIHF or RIH of a voluntary case under the
federal bankruptcy laws or any other applicable federal or state law, or
the consent or acquiescence by any of them to the filing of any such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or other similar
official) of RIHF or RIH or any substantial part of any of their property,
or the making by any of them of an assignment for the benefit of creditors,
or the taking of action by RIHF or RIH in furtherance of any such action;

(g) (i) a default by RIHF, RIH or any of their Subsidiaries under any
Indebtedness (other than the Indebtedness represented by the Working
Capital Facility and the Junior Mortgage Facility in an aggregate principal
amount in excess of $5,000,000), which default results in the acceleration
of the maturity of any such Indebtedness under the evidence of
indebtedness, indenture or other instrument governing such Indebtedness;
provided, however, that, if such default under such evidence of
indebtedness, indenture or other instrument shall be cured by the obligor,
or be waived by the holders of such Indebtedness, in each case as may be
permitted by such evidence of indebtedness, indenture or other instrument
and in each case resulting in rescission of such acceleration thereunder,
then the Event of Default under the Junior Mortgage Note Indenture by
reason of such default shall be deemed likewise to have been thereupon
cured or waived; or (ii) a default by RIHF, RIH or any of their
Subsidiaries under any Indebtedness represented by the Working Capital
Facility or the Junior Mortgage Facility, the effect of which default
(after the expiration of any applicable notice or grace periods) is to
permit the holder or holders of any such Indebtedness represented by the
Working Capital Facility or the Junior Mortgage Facility in an aggregate
principal amount in excess of $5,000,000 (or a trustee or agent on behalf
of such holder or holders) to cause the acceleration of the maturity of
such Indebtedness represented by the Working Capital Facility or the Junior
Mortgage Facility under the evidence of indebtedness, indenture or other
instrument governing such Indebtedness; provided, however, that if such
default under such evidence of indebtedness, indenture or other instrument
shall be cured by the obligor, or be waived by the holders of such evidence
of indebtedness, indenture or other

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instrument (and, if such default resulted in the acceleration of the
maturity of such Indebtedness, such acceleration shall have been rescinded
thereunder), then the Event of Default under the Junior Mortgage Note
Indenture by reason of such default shall be deemed likewise to have been
thereupon cured or waived; or (iii) the existence of a final judgment of a
court of competent jurisdiction in an amount in excess of $3,000,000
against RIHF, RIH or the Junior Mortgage Note Trust Estate, which judgment
has not been satisfied or otherwise provided for, for a period of 30 days
(during which execution shall not be effectively stayed) following the date
on which such judgment becomes a lien against the Junior Mortgage Note
Trust Estate or any part thereof (unless the lawsuit in question was
commenced without effective service of process upon either RIHF or
RIH in which case such 30-day period shall not commence until RIHF or RIH
receives notice of such final judgment); or (iv) the existence of a final
judgment of a court of competent jurisdiction in an amount in excess of
$15,000,000 against RIHF, RIH or the Junior Mortgage Note Trust Estate,
which judgment has not been satisfied or otherwise provided for, for a
period of 60 days (during which execution shall not be effectively stayed)
following the date of such final judgment; or (v) the existence of a final
judgment of a court of competent jurisdiction, regardless of amount,
against RIHF, RIH or the Junior Mortgage Note Trust Estate, which judgment
has not been satisfied or otherwise provided for, for a period of 60 days
(during which execution shall not be effectively stayed) following the date
of such final judgment, if such judgment, by itself or upon recordation or
other action of the judgment creditor, imposes or would impose a lien on
the Junior Mortgage Note Trust Estate or any part thereof senior to the
lien of the RIH Junior Mortgage;

(h) default in the performance, or breach, of any covenant of RIHF or
RIH in connection with the provisions described in "Limitation on
Consolidation, Merger, Conveyance, Transfer or Lease of Property and
Assets";

(i) the existence of a judgment of a court of competent jurisdiction
in an amount in excess of $3,000,000 against RIH regarding the CRDA
Dispute, which judgment has not been stayed, satisfied or otherwise
provided for, for a period of 30 days (during which execution shall not be
effectively stayed) (unless the lawsuit in question was commenced without
effective service of process upon RIH in which case such 30-day period
shall not commence until RIH receives notice of such final judgement); or

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extent that the amount, applicability or validity of such tax
liability is being contested in good faith by appropriate proceedings if
adequate reserves therefor have been established in accordance with GAAP;
provided, further, however, that this paragraph shall not apply to amounts
due with respect to any period during which neither RIHF, RIH nor any of
their Subsidiaries is included in RII's consolidated group for Federal
income tax purposes. (Section 7.01);

If an Event of Default (other than one referred to in clause (d) or (e)
above) occurs and is continuing, then and in every such case the Junior Mortgage
Note Trustee or the Holders of not less than 25% in Outstanding Amount and all
accrued interest of the Junior Mortgage Notes Outstanding may declare the
Outstanding Amount of all the Junior Mortgage Notes to be due and payable
immediately, by a notice in writing to RIHF (and to the Junior Mortgage Note
Trustee, if given by any Noteholders), and upon any such declaration such
Outstanding Amount shall become immediately due and payable. If an Event of
Default referred to in clause (d) or (e) above occurs, then the Outstanding
Amount of all the Junior Mortgage Notes shall automatically become immediately
due and payable without presentment, demand, protest or other formalities of any
kind, all of which will be expressly waived by RIHF. (Section 7.02).

At any time after such a declaration of acceleration has been made, but
before any judgment or decree for payment of money due on any Junior Mortgage
Notes has been obtained by the Junior Mortgage Note Trustee, the Holders of a
majority in Outstanding Amount of the Junior Mortgage Notes may, by written
notice to RIHF and the Junior Mortgage Note Trustee, rescind and annul such
declaration and its consequences if: (a) RIHF has deposited with the Junior
Mortgage Note Trustee a sum sufficient to pay (1) all overdue installments of
interest on all Junior Mortgage Notes, (2) the principal of any Junior Mortgage
Notes which have become due otherwise than by such declaration of acceleration
and interest thereon at the rate or rates prescribed therefor in the Junior
Mortgage Notes, and (3) all sums paid or advanced by the Junior Mortgage Note
Trustee and the reasonable compensation, expenses, disbursements and advances of
the Junior Mortgage Note Trustee, its agents and counsel; and (b) all Events of
Default, other than the non-payment of the Outstanding Amount of the Junior
Mortgage Notes which have become due solely by such declaration of acceleration,
have been cured or have been waived as provided in the Junior Mortgage Note
Indenture. No such rescission and annulment shall affect any subsequent default
or impair any right consequent thereon. (Section 7.02).

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LIMITATION ON CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE OF PROPERTY
AND ASSETS

Neither RIHF nor RIH shall consolidate, combine or merge with or into any
other Person or permit any other Person to consolidate, combine or merge with or
into RIHF or RIH, as the case may be; and neither RIHF with respect to its
assets nor RIH with respect to the Junior Mortgage Note Trust Estate shall sell,
assign, convey or transfer its interest in such assets or the Junior Mortgage
Note Trust Estate, as the case may be, substantially as an entirety (and
notwithstanding anything to the contrary contained in the Junior Mortgage Note
Indenture (including the proviso at the end of this sentence), but subject to
the provisions of the RIH Junior Mortgage regarding dispositions of the Junior
Mortgage Note Trust Estate, neither RIHF with respect to its assets nor RIH with
respect to the Junior Mortgage Note Trust Estate may sell, assign, convey or
transfer such assets or the Junior Mortgage Trust Estate, as the case may be,
other than substantially as an entirety) to any other Person or group of Persons
in one transaction or a series of related transactions, or permit any other
Person or group of Persons to convey or transfer all or substantially all of its
assets, subject to liabilities other than de minimis liabilities, to RIHF or
RIH; and RIHF and RIH shall not transfer, convey, sell or otherwise dispose of
to any other Person, or issue to any Person, any equity interest in RIHF or RIH,
as the case may be (each such transaction referred to as a "Combination
Transaction"); provided, however, that (i) RIHF may engage in a Combination
Transaction in which the only other party or parties is RIH or a direct or
indirect wholly owned Subsidiary of RIHF or RIH, and (ii) RIHF or RIH may engage
in any other Combination Transaction (either independently or at the same time
as other Combination Transactions), subject to the following with respect to
each such Combination Transaction: (a) immediately following such Combination
Transaction, (1) RIH (or any successor entity) shall be eligible for and shall
meet all relevant Legal Requirements, including holding all permits, required
for the normal operation of the business of owning and operating the Resorts
Casino Hotel, and (2) RIH (or any successor entity) shall be controlled by a
Person that is, or shall retain to manage the Resorts Casino Hotel one or more
Persons that are, experienced in the operation and management of casino hotels;
(b) in the event RIHF or RIH shall consolidate, combine or merge with or into
another Person or sell, assign, convey or transfer its interest in its assets or
in the Junior Mortgage Note Trust Estate, as the case may be, substantially as
an entirety (but not less than substantially as an entirety) to another Person
in one transaction or a series of related transactions, the entity which is
formed by or survives such consolidation, combination or merger or the Person to
which such assets or the Junior Mortgage Note Trust Estate are conveyed or
transferred, (1) shall be organized and existing under the laws of the United
States of

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America, any state thereof, or the District of Columbia; (2) shall
expressly assume, by an indenture supplemental to the Junior Mortgage Note
Indenture, executed and delivered to the Junior Mortgage Note Trustee, the
performance and observance of every covenant, obligation and condition of the
Junior Mortgage Note Indenture to be performed or observed by RIHF or RIH,
whichever the case may be; (3) shall expressly assume, by an instrument executed
and delivered to the Junior Mortgage Note Trustee, the performance of every
covenant, obligation and condition of the Mortgage Documents and the Assignment
Agreement to be performed by RIHF or RIH, whichever the case may be; (4)
immediately after giving effect to such transaction could incur at least $1.00
of additional Indebtedness under the covenant described in
"Covenants -- Limitation on Additional Indebtedness and Issuance of Notes"; (c)
immediately after giving effect to such transaction, no Event of Default, or
Default under the Junior Mortgage Note Indenture or under the RIH Junior
Mortgage, shall have occurred and be continuing; (d) such Combination
Transaction shall be on such terms as shall not impair the lien and security and
priority of the Junior Mortgage Note Indenture or of the Mortgage Documents or
of the Assignment Agreement and the rights and powers of the Junior Mortgage
Note Trustee and the Holders of the Junior Mortgage Notes thereunder; and (e)
RIHF or RIH, as the case may be, shall have delivered to the Junior Mortgage
Note Trustee an Officers' Certificate and an Opinion of Counsel, each of which
shall state that such Combination Transaction and such supplemental indenture
comply with the provisions of Article Ten of the Junior Mortgage Note Indenture
and that all conditions precedent provided for in the Junior Mortgage Note
Indenture relating to such transaction have been complied with. (Section 10.01).

Except as otherwise expressly permitted by the RIH Junior Mortgage and the
Junior Mortgage Note Indenture, neither RIHF nor RIH shall sell, assign, lease,
hypothecate, pledge, mortgage or otherwise transfer all or any part of the
assets of RIHF or the Junior Mortgage Note Trust Estate or any interest therein
(including without limitation any interest in the Ground Leases). Without
limiting the generality of the foregoing, RIH shall not separate, or attempt to
separate, its ownership of its interest in the Ground Leases from the ownership
of the buildings constituting the Resorts Casino Hotel or any part thereof.
(Section 10.04).

The foregoing limitations on consolidation, merger, conveyance, transfer or
lease of property and assets shall not apply in connection with an RIH Sale.
(Section 10.05).

DISCHARGE OF JUNIOR MORTGAGE NOTE INDENTURE

RIHF may terminate substantially all obligations under the Junior Mortgage
Note Indenture at any time by delivering all

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outstanding Junior Mortgage Notes to the Junior Mortgage Note Trustee for
cancellation and paying any other sums payable under the Junior Mortgage Note
Indenture. (Article Five).

MODIFICATION OF INDENTURE

From time to time, the parties to the Junior Mortgage Note Indenture,
without the consent of the Holders of the Junior Mortgage Notes, may enter into
one or more supplemental indentures for certain specified purposes, including
curing ambiguities, defects or inconsistencies, provided such action does not
adversely affect the interests of any Holder. (Section 11.01). Modifications,
changes and amendments to the Junior Mortgage Note Indenture also may be made by
the parties thereto with the consent of the Holders of not less than 66 2/3% in
Outstanding Amount of the Junior Mortgage Notes then Outstanding, except that
without the consent of the Holder of each Junior Mortgage Note affected, no such
modification or alteration may (i) change the Stated Maturity of the principal
of, or any installment of interest on, any Junior Mortgage Note, or reduce the
principal amount thereof or the premium payable upon the redemption thereof, or
change any Place of Payment where, or the coin or currency in which, any Junior
Mortgage Note, or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the Redemption
Date), (ii) reduce the percentage in Outstanding Amount of the Junior Mortgage
Notes, the consent of whose Holders is required for any amendment, supplement or
waiver, (iii) modify or alter the provisions of the proviso of the definition of
the term "Outstanding", (iv) modify any of the provisions described in this
paragraph or, with certain exceptions, the provisions of the Junior Mortgage
Indenture regarding waiver of default, or (v) permit the creation of any lien
ranking prior to the lien of the RIH Junior Mortgage (except for such liens
expressly permitted pursuant to the covenant described under
"Covenants -- Limitations on Liens"). In addition, the Holders of 66 2/3% in
aggregate principal amount of the Mortgage Notes must consent to any amendment
of the Junior Mortgage Note Indenture allowing for the redemption of the Junior
Mortgage Notes prior to the fifth anniversary of the Effective Date unless such
redemption is in connection with an RIH Sale. (Section 11.02).

TRUSTEE

The Junior Mortgage Note Trustee may require reasonable indemnity before
exercising any of its rights or powers under the Junior Mortgage Note Indenture.
(Section 8.03).

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REPORTS TO HOLDERS

RIH will furnish or cause to be furnished to the Junior Mortgage Note
Trustee, within 105 days after each fiscal year of RIH: (i) a copy of annual
audited financial statements of RIH prepared in conformity with GAAP,
accompanied by a report of Ernst & Young or of another firm of independent
certified public accountants of recognized national standing selected by RIH
(the "National Accountants"), together with a certificate from such National
Accountants stating that their audit examination has included a review of the
terms of the Junior Mortgage Note Indenture and that the National Accountants
have not become aware of any Event of Default or that a Default has occurred and
is continuing, and if they have become aware of any such Event of Default or
Default, describing it; provided, however, that the National Accountants will
not be liable to any Person for any failure to discover any Event of Default in
connection with such review; and (ii) a copy of annual unaudited financial
statements of RIH, including notes to such financial statements and
corresponding management's discussion and analysis, in form and substance
comparable to that which would be required to be filed with the Commission in an
Annual Report on Form 10-K under the Exchange Act, prepared in the same
manner as the audited financial statements referred to in clause (i) above,
signed by a proper accounting officer of RIH. Contemporaneously with the
furnishing of such audited financial statements to the Junior Mortgage Note
Trustee under clause (i) of this paragraph, RIH will mail copies of such audited
financial statements to the Holders (which need not include the certificate
referred to in clause (i) above).

RIH also will furnish or cause to be furnished to the Junior Mortgage Note
Trustee, within 60 days after each quarter of each fiscal year of RIH, except
the final quarter of such fiscal year, a copy of unaudited financial statements
of RIH prepared on a consistent basis with the audited financial statements
referred to in clause (i) of the paragraph above, signed by a proper accounting
officer of RIH and consisting of at least a balance sheet as at the close of
such quarter and statements of operations and cash flow for such quarter and for
the period from the beginning of such fiscal year to the close of such quarter,
including notes to such financial statements and corresponding management's
discussion and analysis, in form and substance comparable to that which would be
required to be filed with the Commission in a Quarterly Report on Form 10-Q
under the Exchange Act. Contemporaneously with the furnishing of such unaudited
financial statements to the Mortgage Note Trustee, RIH shall mail copies of such
unaudited financial statements to the Holders (which need not be signed by a
proper accounting officer of RIH).

RIH will furnish or cause to be furnished to the Junior Mortgage Note
Trustee, contemporaneously with the furnishing of a

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copy of the annual financial statements and of the quarterly financial
statements referred to above, an Officers' Certificate dated the date of such
annual financial statement or such quarterly financial statements to the effect
that no Default or Event of Default has occurred and is continuing, or, if there
is any such Default or Event of Default, describing it and the steps, if any,
being taken to cure it.

RIH will furnish or cause to be furnished to the Junior Mortgage Note
Trustee, copies of each filing and report made by RIH or RIHF with the
Commission pursuant to the reporting and filing requirements of Section 13 or
15(d) or the Exchange Act, within 15 days after RIH or RIHF, as applicable, is
required to file the same.

Pursuant to the Junior Mortgage Note Indenture, if RIH becomes exempt from
the Commission reporting and filing requirements of Section 13 or 15(d) of the
Exchange Act, RIH will prepare such periodic reports as it would otherwise have
been required to file with the Commission and (i) at its own expense, cause all
such periodic reports to be filed with the Commission, the Junior Mortgage Note
Trustee and any exchange upon which the Junior Mortgage Notes then are listed,
in each case on the date when such periodic report would have been required to
be filed with the Commission under Section 13 or 15(d) of the Exchange Act, if
either or such provisions were applicable, and (ii) keep copies of such periodic
reports available at its office and promptly provide any Person who so requests
with a copy of any such periodic report, at RIHF's expense.

Each of RIHF and RIH shall comply with the provisions of sec. 314(a) of the
TIA.

RIHF will deliver to the Trustee, promptly upon becoming aware of any
Default or Event of Default (but in no event later than five business days
thereafter) in the performance of any covenant or agreement of RIHF contained in
the Junior Mortgage Note Indenture or any of the Mortgage Documents, an
Officers' Certificate specifying with particularity such event. (Section 12.06).

CERTAIN DEFINITIONS

"Additional Junior Mortgage Notes" means additional Junior Mortgage Notes
issued in payment of interest accrued on outstanding Junior Mortgage Notes
pursuant to Section 3.11 of the Junior Mortgage Note Indenture.

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Person having a relationship by blood, marriage or adoption not more remote
than first cousin with such specified Person. For purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing; provided, however, that, except as may be required under the TIA, the
term "Affiliate" shall not include, with respect to RIHF or RIH, any of Fidelity
Management & Research Company, TCW Special Credits or funds or accounts managed
or advised by either of them.

"After-Acquired Fee Mortgage Debt" means any Indebtedness secured by an
After-Acquired Fee Mortgage.

"After-Acquired Fee Mortgage" has the meaning stated in Section 2.07 of the
RIH Junior Mortgage.

"Assignment Agreement" means the Assignment of Agreements providing for the
assignment of the RIH Junior Promissory Note, the RIH Junior Mortgage and
certain of the other Mortgage Documents securing the RIH Junior Promissory Note
to the Junior Mortgage Note Trustee by RIHF, and acknowledgment thereof by RIH,
a copy of which is attached to the Junior Mortgage Note Indenture as Exhibit B.

"Consolidated Interest Charges" means, with respect to any Person for any
period, the consolidated interest expense (not including the non-cash
amortization of discount on the original issuance of (a) the RIH Promissory
Note, (b) any intercompany indebtedness of RIH issued in connection with
Indebtedness represented by the Junior Mortgage Facility and (c) any
intercompany indebtedness of RIH issued in connection with Indebtedness
represented by the Working Capital Facility),

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whether payable in cash or in-kind (and with respect to RIH, including, without
limitation, the interest paid or accrued (without duplication) on (i) the
RIH Promissory Note, (ii) any intercompany indebtedness of RIH issued in
connection with Indebtedness represented by the Junior Mortgage Facility and
(iii) any intercompany indebtedness of RIH issued in connection with
Indebtedness represented by the Working Capital Facility), without deduction for
interest income (other than cash interest income received from RII in payment of
its interest cost on any Working Capital Facility), in each case for such Person
and its consolidated Subsidiaries for such period determined in accordance with
GAAP consistently applied.

"Default" means the occurrence and continuance of an Event of Default or an
event which, after notice or lapse of time or both, would become an Event of
Default.

"F, F&E Financing Agreement" means a purchase money lien upon any Tangible
Personal Property (as defined in the RIH Junior Mortgage) and other items
constituting Operating Assets (as defined in the RIH Junior Mortgage), such as
computer software, which are financed, purchased or leased by RIH, provided
that, with certain exceptions, the principal amount of the indebtedness

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secured by such lien shall not exceed 85% of the cost to RIH of such property at
the time of acquisition.

"Guaranty" means the RIH Junior Mortgage Note Guaranty as set forth in
Article Four of the Junior Mortgage Note Indenture.

"Holder" means a Person in whose name a Junior Mortgage Note is registered.

"Indebtedness" means, as applied to any Person, without duplication, any
indebtedness, exclusive of deferred taxes: (a) 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); (b) evidenced by bonds, notes, debentures
or similar instruments or letters of credit; (c) representing the balance
deferred and unpaid of the purchase price of any property, if and to the extent
such indebtedness would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP (but excluding trade accounts payable
arising in the ordinary course of business that are not overdue by more than 90
days or are being contested by such Person in good faith); (d) any Capitalized
Lease Obligations (other than, with respect to RIH or RIHF, the Ground Leases)
of such Person; and (e) Indebtedness of others guaranteed by such Person,
including without limitation every obligation of such Person (i) to purchase or
pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or to purchase (or to advance or supply funds for the purchase of)
any security for the payment of such Indebtedness, (ii) to purchase property,
securities or services for the purpose of assuring the Holder of such
Indebtedness of the payment of such Indebtedness, or (iii) to maintain working
capital, equity capital or other financial statement condition or liquidity of
the primary obligor so as to enable the primary obligor to pay such
Indebtedness; provided, however, that the guaranty by any Person shall not
include endorsements by such Person for collection or deposit, in either case in
the ordinary course of business. The term "Indebtedness" does not include: (1)
any of the types of indebtedness described in clauses (a) through (e) above
(inclusive) owed by RIHF to RIH or any of their Subsidiaries, by RIH to RIHF or
any of their Subsidiaries or by any such Subsidiary to RIH, RIHF or any other
such Subsidiary (including without limitation the RIH Promissory Note and the
RIH Junior Promissory Note); (2) the Mortgage Note Guaranty, the Junior Mortgage
Note Guaranty, and any Working Capital Facility Guaranty; (3) matters relating
to the CRDA Dispute, New Jersey Casino Reinvestment Development Authority Notes
or the CRDA Deposits; and (4) any payments required to be made by RIHF or RIH
under the RII Management Agreement, the RII Tax Sharing Agreement or the
Services Agreement.

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"Junior Mortgage Facility" means the Junior Mortgage Notes and any secured
or unsecured facility or facilities entered into by RIH or RIHF providing for
the making of loans to RIH or RIHF on a revolving or term basis, or the issuance
of notes, debentures or bonds by RIH or RIHF, as such agreement, indenture or
instrument may be amended, supplemented or modified from time to time, or any
refinancing thereof, in an aggregate principal amount outstanding at any time up
to $35,000,000 plus additional notes, debentures or bonds issued in payment of
interest accrued on outstanding notes, debentures or bonds; provided, however,
that the lender or lenders thereunder (or any trustee or agent acting on behalf
of such lender or lenders) shall have executed an intercreditor agreement
covering the matters set forth on Exhibit G to the Junior Mortgage Note
Indenture. The liens, if any, securing the Junior Mortgage Facility shall be
pari passu with the lien of the RIH Junior Mortgage and the RIH Junior Guaranty
Mortgage. The term "Junior Mortgage Facility" does not include the Junior
Mortgage Note Guaranty.

"Mortgage Documents" means (a) the RIH Junior Mortgage, the RIH Junior
Guaranty Mortgage, the RIH Junior Promissory Note, an Assignment of Leases and
Rents and an Assignment of Operating Assets each dated as of the date of the
Junior Mortgage Note Indenture and any other security document to which either
RIH or RIHF is a party relating to the Junior Mortgage Notes, which is executed
and delivered pursuant to or in connection with the RIH Junior Mortgage, the RIH
Junior Guaranty Mortgage or the Assignment Agreement, and (b) any mortgage, deed
of trust, guaranty, promissory note, collateral assignment agreement, assignment
of leases and rents, assignment of operating assets and any other security
document to which either RIH or RIHF is a party relating to the Junior Mortgage
Facility.

"Non-Recourse Indebtedness" means indebtedness incurred in connection with
the acquisition, purchase, improvement or development of property or assets
(other than the Junior Mortgage Note Trust Estate) used by RIHF, RIH or any
Subsidiary of RIH or RIHF to engage in the casino business, the hotel business
or related or ancillary business or purpose and which is secured only by such
assets and without recourse to RIH, RIHF or any Subsidiary of RIH or RIHF or the
Junior Mortgage Note Trust Estate for such indebtedness.

"Outstanding" when used with respect to Junior Mortgage Notes means, as of
the date of determination, all Junior Mortgage Notes theretofore authenticated
and delivered under this Indenture, except:

(a) Junior Mortgage Notes theretofore canceled by the Junior Mortgage
Note Trustee or delivered to the Junior Mortgage Note Trustee for
cancellation;

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(b) Junior Mortgage Notes for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Junior Mortgage
Note Trustee or any Paying Agent in trust for the Holders of such Junior
Mortgage Notes;

(c) Junior Mortgage Notes in exchange for or in lieu of which other
Junior Mortgage Notes have been authenticated and delivered under the
Junior Mortgage Note Indenture; and

(d) Junior Mortgage Notes alleged to have been destroyed, lost or
stolen which have been paid as provided in Section 3.06 of the Junior
Mortgage Note Indenture;

provided, however, that in determining whether the Holders of the requisite
principal amount of Junior Mortgage Notes Outstanding have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, Junior
Mortgage Notes owned by RIHF or any other obligor upon the Junior Mortgage Notes
or any Affiliate of RIHF or of such other obligor shall be disregarded and
deemed not to be Outstanding. In determining whether the Junior Mortgage Note
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Junior Mortgage Notes
which the Junior Mortgage Note Trustee actually knows to be so owned shall be so
disregarded.

"Outstanding Amount" of any Indebtedness at any time means the principal
amount outstanding of such Indebtedness at such time.

"Restricted Payment" means (a) any declaration or payment of any dividend
or the making of any distribution to Holders of capital stock of RIH or RIHF or
any Subsidiary of RIH or RIHF in respect of such capital stock (other than to
RIH or RIHF or a direct or indirect wholly owned Subsidiary of RIH or RIHF), (b)
any purchase, redemption or other acquisition or retirement for value of any
capital stock (or warrants, rights or options to acquire any capital stock or
Indebtedness convertible into or exchangeable for any capital stock) of RIH or
RIHF or any Subsidiary of RIH or RIHF (other than purchases, redemptions,
acquisitions or retirement solely from RIH or RIHF or a direct or indirect
wholly owned Subsidiary of RIH or RIHF); provided, however, that any such
purchase, redemption or other acquisition or retirement that is required by the
Casino Control Commission or under the Casino Control Act shall not constitute a
Restricted Payment. The term "Restricted Payment" also shall not include any
loan or advance to RII of all or any portion of the proceeds of the Indebtedness
represented by the Working Capital Facility.

"RIH Sale" means (a) a consolidation, combination or merger involving RIH
and any other Person, (b) a sale, assignment, conveyance or transfer or RIH's
interest in the Junior Mortgage Note Trust Estate, substantially as an entirety,
to any other

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Person or group of Persons in one transaction or a series of related
transactions, or (c) any transaction as a result of which RIH ceases to be a
direct or indirect wholly owned Subsidiary of RII; provided, however, that any
of the transactions described in clauses (a), (b) and (c) above shall not
constitute an RIH Sale if the other party or parties to the transaction consists
of only one or more of the following Persons: RIHF or any wholly owned direct or
indirect subsidiary of RIH or RIHF; and provided, further, however, that
notwithstanding any other provision of this definition, if the primary effect of
any of the aforesaid transactions is the redemption of the Junior Mortgage
Notes, then such transaction shall not be considered to be a RIH Sale.

"RII Management Contract" means the Interim Management Agreement.

"Senior Mortgage Documents" means the RIH Mortgage, the RIH Guaranty
Mortgage, the RIH Promissory Note, the Senior Assignment of Leases and Rents and
any other security document to which either RIH or RIHF is a party relating to
the Mortgage Notes, which is executed and delivered pursuant to or in connection
with the RIH Mortgage, the RIH Guaranty Mortgage or the Senior Assignment
Agreement.

"Subsidiary" of any Person means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by such
Person or one or more Subsidiaries of such Person.

"Working Capital Facility" means the RIHF Senior Facility (and the RIHF
Senior Facility Notes issued thereunder) and any other

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secured or unsecured facility or facilities entered into by RIH and/or RIHF
providing for the making of working capital loans to RIH or RIHF (with RIH, RII
and/or GRI as a guarantor thereunder) on a revolving or term basis, or the
issuance of notes, debentures or bonds by RIH, RIHF or RII, as such agreement
may be amended, supplemented or modified from time to time, or any refinancing
thereof, in an aggregate principal amount up to $20,000,000; provided, however,
that the lender or lenders thereunder (or any trustee or agent acting on behalf
of such lender or lenders) shall have executed an intercreditor agreement
covering the matters set forth on Exhibit G to the Junior Mortgage Note
Indenture. The liens, if any, securing the Working Capital Facility may be
senior to the lien of the RIH Junior Mortgage, the RIH Junior Guaranty Mortgage,
the RIH Senior Mortgage and the RIH Senior Guaranty Mortgage. The term "Working
Capital Facility" does not include the Working Capital Facility Guaranty.

DESCRIPTION OF CLASS B COMMON STOCK

GENERAL

RII is a Delaware corporation that has two classes of authorized and
outstanding common stock; the Common Stock and the Class B Common Stock. The
Class B Common Stock may only be issued as part of the Units and is essentially
a non-participating stock that entitles its holders to elect two directors (the
"Class B Directors") to the RII Board of Directors. THE CLASS B COMMON STOCK
MAY NOT BE TRANSFERRED SEPARATELY FROM THE RELATED JUNIOR MORTGAGE NOTES. All
the outstanding shares of Class B Common Stock are validly issued, fully paid
and non-assessable.

CASINO CONTROL ACT REGULATION

The Class B Common Stock is subject to the qualification, divestiture and
redemption provisions under the Casino Control Act that are described in
"Description of Business - Regulation and Gaming Taxes and Fees".

DESCRIPTION OF CLASS B COMMON STOCK

Number of Shares Authorized. Up to 120,000 shares of Class B Common Stock
are authorized. Authorized and unissued shares of Class B Common Stock will be
issued only as part of Units that are issuable if Payments-In-Kind are made
with respect to the Junior Mortgage Notes.

Dividends. The holders of Class B Common Stock are not entitled to
participate in any dividends which may be declared by RII's Board of Directors.

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Redemption. Upon the redemption, or cancellation following the purchase
thereof, of each $1,000 principal amount of Junior Mortgage Notes, RII will
redeem, at a price of $.01 per share, the share of Class B Common Stock issued
as a Unit with each $1,000 principal amount of Junior Mortgage Notes. The
Class B Common Stock also is subject to redemption if a holder is required to
qualify under the Casino Control Act and refuses or fails to so qualify and
subsequently fails to divest itself of such Class B Common Stock.

Liquidation Rights. In the event of a dissolution, liquidation or winding
up of RII, the holders of Class B Common Stock are entitled to share ratably
with the holders of the Common Stock in all assets remaining after payments of
liabilities and liquidation preferences, if any, to the extent of the $.01 par
value per share of each such class.

Restrictions of Transfer. Each share of Class B Common Stock will be
issued as part of a Unit with each $1,000 principal amount of Junior Mortgage
Notes and may not be transferred separately from such Junior Mortgage Note.

Election of Directors. Holders of the Class B Common Stock are entitled to
elect one-third of the entire RII Board of Directors (or following the Class B
Triggering Event in connection with the Junior Mortgage Notes, a majority of
the entire RII Board of Directors).

Voting Rights. The holders of Class B Common Stock are not entitled to any
voting rights, except (i) in the election of directors by the holders of the
Class B Common Stock as described above, (ii) to the extent required under the
Delaware General Corporation Law, and (iii) with respect to certain amendments
to the Amended and Restated Certificate of Incorporation or the Amended and
Restated By-laws of RII that would affect the Class B Common Stock.

Preemptive Rights. None.

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

The following discussion describes all of the material Federal income tax
consequences of acquiring, holding and disposing of the Mortgage Notes and
Units consisting of Junior Mortgage Notes and Class B Common Stock
(collectively, the "Debt Securities"), and, to the extent that it relates to
matters of law and subject to the qualifications, assumptions and limitations
stated herein, constitutes the opinion of Gibson, Dunn & Crutcher, special tax
counsel to the Company ("Counsel"). The following discussion does not include
all matters that may be relevant to any particular holder in light of such
holder's particular facts and

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circumstances. Certain holders, including financial institutions,
broker-dealers, tax-exempt entities, insurance companies and foreign persons
may be subject to special rules not discussed below. The discussion assumes
that holders hold their Debt Securities as "capital assets" (generally property
held for investments) within the meaning of Section 1221 of the Internal
Revenue Code of 1986, as amended (the "Tax Code").

The discussion and opinions set forth in this section "Certain Federal
Income Tax Considerations" are based upon the provisions of the Tax Code,
final, temporary and proposed U.S. Treasury regulations promulgated thereunder,
and administrative and judicial interpretations thereof, all as in effect as of
the date hereof and all of which are subject to change (possibly on a
retroactive basis) by legislation, administrative action or judicial decision.
No rulings from the Internal Revenue Service (the "Service") have been or will
be requested with respect to any of the tax issues discussed herein.

EACH INVESTOR SHOULD CONSULT WITH ITS OWN TAX ADVISER CONCERNING THE
SPECIFIC TAX CONSEQUENCES TO SUCH INVESTORS OF ACQUIRING, HOLDING AND DISPOSING
OF THE DEBT SECURITIES, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL,
FOREIGN OR OTHER TAX LAWS.

TREATMENT OF THE DEBT SECURITIES AS DEBT OF RIH FOR FEDERAL INCOME TAX PURPOSES

Whether the formal, or nominal, obligor of any given instrument will be
treated as the obligor of the instrument for Federal income tax purposes
depends upon all of the facts and circumstances, and no single characteristic
or factor is determinative. Where the nominal obligor exists solely to be the
nominal issuer of the instrument and the instrument is "mirrored" by an
instrument with virtually identical terms issued by a related party, the
Service will closely scrutinize the reality of the nominal obligor's
"obligation." In addition, there is substantial authority in the law for the
position that, where a person issues a debt obligation to a third party
pursuant to a disclosed nominee arrangement with a related person, the debt can
be deemed to be indebtedness of the related person for Federal income tax
purposes, provided that certain formalities are observed. The substantial
authority standard is an objective standard involving an analysis of the law
and the application of the law to the relevant facts, and is less stringent
than the more likely than not standard. There is substantial authority for the
tax treatment of an item only if the weight of the authority supporting the
treatment is substantial in relation to the weight of authority supporting
contrary treatment, taking all relevant authorities into account. There may be
substantial authority for more than one position.

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With respect to the Debt Securities, a conclusion that RIHF rather than RIH
is the true obligor for Federal income tax purposes would disregard totally the
economic substance of the transaction and would elevate "empty forms" over
substance, something the courts generally have not done. Counsel does note,
however, that generally a validly formed and maintained corporate entity will
not be ignored for Federal income tax purposes, and the courts have held
taxpayers to strict standards when such taxpayers have sought to disregard the
form of the transaction chosen by them. Accordingly, although the issue is not
free from doubt, based upon the foregoing factors, the issuance of the RIH
Mortgage and the RIH Junior Mortgage to support the Debt Securities, the
identical terms (when combined with the RIH Mortgages) of the RIH Promissory
Note and the RIHF Mortgage Notes, and of the RIH Junior Promissory Note and the
RIHF Junior Mortgage Notes, the existence of the Nominee Agreement between RIHF
and RIH and the fact that at all times the assets of RIH will be the ultimate
and only source of payment on the Debt Securities, the Company has taken the
position for Federal income tax purposes that the Debt Securities are to be
treated as obligations of RIH for Federal income tax purposes, and the
following discussion assumes such treatment.

If, however, the Service were to treat RIHF, the formal obligor of the Debt
Securities, as the obligor for Federal income tax purposes, such treatment
should not materially adversely affect the treatment of the Mortgage Notes or
the Junior Mortgage Notes as debt for Federal income tax purposes, as discussed
below (see "- Classification of Debt Securities as Debt Rather than Equity").

CLASSIFICATION OF DEBT SECURITIES AS DEBT RATHER THAN EQUITY

Whether an instrument constitutes debt or equity for Federal income tax
purposes is an inherently factual question, and no single characteristic is
determinative. Based upon an analysis of the applicable legal authorities, it
is more likely than not that the Mortgage Notes will be treated as debt, and
there is substantial authority that the Junior Mortgage Notes will be treated
as debt obligations for Federal income tax purposes, and the following
discussion assumes such treatment in both such cases.

Due to the factual nature of the determination as to the treatment of
instruments such as the Debt Securities, however, there can be no assurance
that in either of such cases the Service would not challenge such treatment of
the Debt Securities as indebtedness, or that a court would not sustain such a
challenge. If it were determined that any of the Debt Securities constitute
equity for Federal income tax purposes, then (a) payments of interest on such
Debt Securities would not be deductible by the Company and could be taxed as
dividend income

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<PAGE> 156
to the holders; (b) payments of principal on such Debt Securities would be
treated as redemption distributions under Section 302 of the Tax Code, which
could result in either gain or dividend income to the holders; and (c) certain
corporate holders may be entitled to a dividends-received deduction with
respect to payments of principal or interest that are taxed as dividends. The
loss of the interest deduction with respect to all or a portion of the Debt
Securities also would increase the Company's taxable income, resulting in a
greater utilization of the Company's net operating loss ("NOL") carryovers and,
ultimately, potentially substantially increasing the Company's Federal income
tax liability sooner than currently anticipated.

OID WITH RESPECT TO THE NEW DEBT SECURITIES

On February 2, 1994, the Service issued regulations (the "Regulations")
relating to the determination and treatment of OID with respect to debt
instruments. The regulations are effective for debt obligations issued on or
after April 3, 1994.

In general, subject to a de minimis rule, a debt obligation will be treated
as being issued with OID if there exists a difference between the "stated
redemption price at maturity" of the instrument and such instrument's "issue
price."

The stated redemption price at maturity of a debt obligation is the
aggregate of all payments due to the holder under such debt obligation at or
prior to its maturity date, other than interest that is actually and
unconditionally payable in cash or property at a single fixed (or a qualified
floating) rate (or a permitted combination of the two) at least annually
(qualified stated interest payments or "QSIPs"). Interest is payable at a
single fixed rate only if the rate appropriately takes into account the length
of the interval between payments. QSIPs are included in income at the time they
are accrued or received, in accordance with the holder's usual method of
accounting for Federal income tax purposes.

Pursuant to Section 1273(a)(3) of the Tax Code and the Regulations
promulgated thereunder, if the OID with respect to an obligation is de minimis,
i.e., less than .25% of the obligation's stated redemption price at maturity
multiplied by the number of complete years from the issue date to the maturity
date, the amount of OID with respect to such obligation is considered to be
zero.

Under the Regulations, the determination of the issue price of a debt
obligation will depend, in part, on whether such obligation, or the property
for which the debt obligation is exchanged, is treated as "traded on an
established market" at any time during the 60-day period ending 30 days after
the issue date (the "Trading Testing Period"). If the debt obligation is listed

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<PAGE> 157
on an established exchange, or such debt obligation is otherwise traded on an
established market, the issue price of the debt obligation will be the fair
market value of such obligation as of the issue date (i.e., the trading price).
If the debt obligation is not treated as "traded on an established market" the
issue price will equal the fair market value, as of the issue date, of the
portion of the property deemed to be exchanged therefor, assuming such property
is listed or deemed to be so traded.

In the case of the Mortgage Notes, interest will be payable in cash on a
semi-annual basis, commencing on September 15, 1994. Such semi-annual interest
payments on the Mortgage Notes should qualify as QSIPs. Moreover, the Company
has taken the position that the difference between the fair market value of the
Mortgage Notes and the stated redemption price at maturity of such Notes
exceeded the statutory de minimis amount. Therefore, the Mortgage Notes will
be treated as issued with OID.

In the case of the Junior Mortgage Notes, interest is payable on a
semi-annual basis commencing on December 15, 1994 in cash, or, under certain
circumstances, in kind. Because interest on such notes may, under certain
circumstances, be paid through the issuance of additional Payment-In-Kind notes
and the rate of interest of such Payment-In-Kind notes will be the same as the
rate of interest on the Junior Mortgage Notes, none of the interest payments on
the Junior Mortgage Notes will qualify as QSIPs, and such notes, therefore,
have been treated as issued with OID.

Although the issue is not free from doubt, the Company also has taken the
position that the provisions of Section 1273(c)(2) of the Tax Code (relating to
debt instruments issued as part of an "investment unit") do not apply in
determining the issue price of the Debt Securities. If, however, the provisions
of Section 1273(c)(2) of the Tax Code were held to apply to any of the Debt
Securities, and the Debt Securities were found to have been issued as part of
an investment unit, under the Regulations the issue price of an investment unit
is to be allocated between (or among) the unit's components based on their
relative fair market values. The issuer's allocation of the issue price of the
investment unit is binding on all holders of the investment unit except for the
holder who explicitly discloses (on such holder's Federal income tax return for
the year in which the investment unit is acquired) that such holder's
allocation of the issue price of the investment unit is different from the
issuer's allocation. (Because the Company has taken the position that none of
the Debt Securities should be treated as having been issued as part of a
investment unit for purposes of Section 1273(c)(2) of the Tax Code and
calculate and report OID with respect to the Debt Securities accordingly, a
holder wishing to take a different position should consult such holder's own
tax advisor.)

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<PAGE> 158
CONSEQUENCES IF THE DEBT SECURITIES ARE ISSUED WITH OID

When a Debt Security is issued with OID, a holder, subject to the
adjustments discussed below, must include in gross income for Federal income
tax purposes the sum of the daily portions of OID for each day during the
taxable year or portion thereof during which the holder holds the Debt
Security, whether or not the holder actually receives a payment relating to OID
in such years. The daily portion is determined by allocating to each day of the
relevant "accrual period" a pro rata portion of an amount equal to (a) the
product of (i) the "adjusted issue price" of the Debt Securities at the
beginning of each accrual period, multiplied by (ii) the yield to maturity of
the Debt Security (determined by semi-annual compounding) less (b) the sum of
any QSIPs during the accrual period. The adjusted issue price of a Debt
Security at the beginning of any accrual period is its issue price increased by
all accrued OID for prior accrual periods and decreased by the amount of any
payment previously made on the Debt Security other than a QSIP. The accrual
period for a Debt Security (except for any initial short period) is each
six-month period which ends on the date in each calendar year corresponding to
the maturity date of the Debt Securities or the date six months before such
maturity date.

Therefore, prospective holders of the Debt Securities should be aware that
a holder will be required to include OID in income as such OID accrues,
regardless of the holders' method of accounting and regardless of when such
holder receives cash payments relating to the OID. A holder's tax basis in a
Debt Security will be increased by the amount of OID included in the holder's
income and reduced by the amount of all interest payments on the Debt Security
that are not QSIPs.

Under the Regulations, the issuance of Payment-In-Kind notes in lieu of a
cash payment does not constitute payment. (As discussed in the preceding
paragraphs, a cash payment (other than a payment that is QSIP) is not treated
as interest but rather reduces the adjusted issue price of the instrument).
Accordingly, the Company intends to treat, for Federal income tax purposes, the
issuance of any Payment-In-Kind notes in lieu of a cash payment of interest as
not constituting a payment of interest with respect to the Junior Mortgage
Notes. Moreover, since each holder of a Junior Mortgage Note will recognize, as
ordinary income, through the accrual of OID, the full amount of interest with
respect to the Junior Mortgage Notes (as well as with respect to any
Payment-In-Kind notes issued in payment of interest with respect to such
Notes), such holder generally should not also recognize additional ordinary
income upon receipt of a Payment-In-Kind note or a cash payment of stated
interest.

Further, the Regulations treat a Junior Mortgage Note and any additional
debt instrument issued with respect thereto (such as a

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<PAGE> 159
Payment-In-Kind note) as part of the same debt issue. Accordingly, the adjusted
basis and adjusted issue price of a Junior Mortgage Note would be allocated
between such Junior Mortgage Note and any Payment-In-Kind notes received with
respect thereto, based on their respective principal amounts. The Regulations
treat payments made with respect to Payment-In-Kind notes as payments made on
the Junior Mortgage Note.

A subsequent purchaser of a Debt Security issued with OID who purchases the
note at a cost less than the remaining stated redemption price at maturity but
greater than its adjusted issue price immediately before such purchase (a
purchase of an "acquisition premium") also will be required to include in gross
income the sum of the daily portions of OID on that Debt Security. In
computing the daily portions of OID for such a purchaser, however, the daily
portion is reduced by the amount that would be the daily portion for such day
(computed in accordance with the rules set forth above) multiplied by a
fraction, the numerator of which is the amount, if any, by which the holder's
basis in the Debt Security on the date of purchase exceeds the adjusted issue
price of the Debt Security at that time, and the denominator of which is the
sum of the daily portions for that Debt Security for all days beginning on the
date after the purchase date and ending on the maturity date.

A purchaser of a Debt Security who purchases the Debt Security at a cost
greater than its remaining stated redemption price at maturity will be
considered to have purchased the Debt Security at a premium, and may elect to
amortize such premium under a constant yield method. Such an election would
apply to all taxable bonds held at or acquired after the beginning of the
holder's taxable year as to which the election is made, and may be revoked only
with the consent of the Service. The Tax Code provides that amortizable premium
will be treated (except as provided in U.S. Treasury regulations) as an offset
to interest income for all purposes rather than as a separate interest
deduction item.

The Company is required to furnish annually to the Service and to each
holder information regarding the amount of OID attributable to that year.

SALE, EXCHANGE OR REDEMPTION

Upon the sale, exchange or redemption of a Debt Security for cash, a holder
generally will recognize gain or loss in an amount equal to the difference
between the amount of cash received and the holder's adjusted basis in such
property, except to the extent that the amount realized is attributable to
accrued interest, OID or taxable dividends not previously included in income,
which amount will be taxed as ordinary income. Assuming that the holder holds
the property as a capital asset, such gain

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<PAGE> 160
or loss will be capital gain or loss except (in the case of a Debt Security) to
the extent of any accrued market discount (see "Market Discount" below), and
will be long-term capital gain or loss if the property has been held for more
than one year at the time of the sale, exchange or redemption.

Under the Regulations, an unscheduled payment made on a debt instrument
such as a Debt Security prior to maturity that results in a substantial pro
rata reduction of each payment of principal and interest remaining on the
instrument is treated as a payment in retirement of a portion of the
instrument, which may result in gain or loss to the holder. The gain or loss is
calculated by treating the debt obligation as consisting of two instruments,
one that is retired and one that remains outstanding, and by allocating the
adjusted issue price, the holder's adjusted basis and the accrued but unpaid
qualified stated interest between the two instruments based upon the portion of
the obligation that is treated as retired by the pro rata prepayment.

MARKET DISCOUNT

A holder of a Debt Security generally will be required to treat any gain
recognized on the sale, exchange, redemption or other disposition of the Debt
Security as ordinary income to the extent of any accrued market discount. The
market discount rules also provide that a holder who acquires a Debt Security
at a market discount may be required to defer a portion of any interest expense
that may otherwise be deductible on any indebtedness incurred or maintained to
purchase or carry such Debt Security until the holder disposes of the Debt
Security in a taxable transaction.

"Market discount" can be defined generally as the excess of the stated
redemption price at maturity of a Debt Security (adjusted to exclude any
unaccrued OID) over the holder's tax basis in the Debt Security immediately
after its acquisition. In addition, under a de minimis exception, the amount of
market discount is considered to be zero if it is less than the product of .25%
of the stated redemption price of the Debt Security at maturity (possibly
adjusted to exclude unaccrued OID) multiplied by the number of complete years
from acquisition to maturity. Market discount generally will accrue ratably
during the period from the date of acquisition to the maturity date of the Debt
Security, unless the holder elects to accrue such discount on the basis of the
constant yield method.

A holder of a Debt Security acquired at a market discount may elect to
include the market discount in income as interest as it accrues, in which case
the foregoing rules would not apply. This election would apply to all Debt
Securities with market discount acquired by the electing holder on or after the
first day of the

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first taxable year to which the election applies. The election may be revoked
only with the consent of the Service.

POTENTIAL APPLICATION OF HIGH YIELD DEBT OBLIGATION RULES

As noted above, the Junior Mortgage Notes and the Mortgage Notes were
issued with original issue discount for Federal income tax purposes. Under the
"AHYDO" rules contained in Sections 163(e) and (i) of the Tax Code, if a debt
obligation with a term of more than five years has "significant" OID, and has a
yield to maturity of five percentage points or more in excess of a specified
rate (generally the U.S. Treasury note rate for instruments of similar
maturities), interest deductions with respect to OID accruing on such
instrument may be deferred until such OID is paid in cash, or, if the yield to
maturity exceeds six percentage points above the specified rate, the deduction
for such excess may be denied completely and the OID may be treated as dividend
income for purposes of the dividend received deduction, rather than interest
income, to the holder (provided the issuer has adequate earnings and profits to
support such a dividend). The Junior Mortgage Notes and the Mortgage Notes were
issued with significant OID. Based upon the applicable federal rate in effect
on the date the Debt Securities were issued, the Company has taken the position
that the AHYDO rules will apply to accruals of OID on the Mortgage Notes and
the Junior Mortgage Notes.

BACKUP WITHHOLDING

Under the Tax Code, a holder of a Debt Security may be subject, under
certain circumstances, to "backup withholding" at a rate of 31% with respect to
payments in respect of interest and OID thereon or the gross proceeds from the
disposition thereof. This withholding generally applies only if the holder (i)
fails to furnish his or her social security or other taxpayer identification
number ("TIN"), (ii) furnishes an incorrect TIN, (iii) is notified by the
Service that he or she has failed to report properly payments of interest and
dividends and the Service has notified the Company that he or she is subject to
backup withholding, or (iv) fails, under certain circumstances, to provide a
certified statement, signed under penalty of perjury, that the TIN provided in
its correct number and that it is not subject to backup withholding. Any amount
withheld from a payment to a holder under the backup withholding rules does not
constitute additional tax, and is allowable as a credit against such holder's
Federal income tax liability, provided that the required information is
furnished to the Service. Holders of Debt Securities should consult their tax
advisers as to their qualification for exemption from backup withholding and
the procedure for obtaining such an exemption.

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LITIGATION

U.S. District Court - Friedman and Rogers Actions

RII has been named as the nominal defendant in an action (Arthur M.
Friedman suing derivatively on behalf of RII v. Merv Griffin et al. and RII,
Nominal Defendant) brought derivatively on its behalf by a shareholder, Arthur
M. Friedman. The complaint was filed in the Supreme Court of the State of New
York, New York County on January 27, 1994 and was amended in February 1994.
The defendants in the action, as amended, are Merv Griffin, Griffin Group,
Thomas E. Gallagher, David P. Hanlon, who was President, Chief Executive
Officer and a director of RII through October 31, 1993, and four former
directors of RII who served in that capacity until the Effective Date. The
complaint seeks to recover for the Company an unspecified sum of money as
compensatory damages for allegedly wrongful acts by the defendants. The
allegations include that the defendants improperly (i) permitted defendant
Griffin not to repay money he allegedly owed to the Company and (ii) paid
defendant Hanlon excessive compensation.

On April 26, 1994, RII removed this action to the U.S. District Court for
the Southern District of New York (the "District Court"). On May 26, 1994, RII
filed a motion to transfer the action to the Bankruptcy Court. On February 6,
1995, Arthur M. Friedman filed a Supplemental Memorandum in opposition to
RII's motion to transfer. The District Court presently has the motion to
transfer under advisement.

RII has been named as a nominal defendant in a purported class action
brought by Nathan Rogers, a shareholder of RII, which action names essentially
the same defendants as the Friedman action. Rogers alleges a violation of
section 14(a) of the Securities Exchange Act for allegedly false and misleading
proxy statements used to elect directors and auditors at the 1991 and 1992
shareholder meetings. Rogers has also brought a claim derivatively on behalf
of RII alleging that defendants improperly permitted defendant Griffin not to
repay money he allegedly owed to the Company. The complaint seeks, among other
things, the appointment of a receiver until after election of new directors and
an unspecified sum of money as compensatory damages to RII for allegedly
wrongful acts by the defendants.

The Company has not been served in this action and, therefore, has not
prepared a response.

U.S. District Court Action - RII v. Lowenschuss

In September 1989 RII filed an action in the U.S. District Court for the
Eastern District of Pennsylvania to recover certain sums paid to the defendant,
as trustee for two Individual

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Retirement Accounts and the Fred Lowenschuss Associates Pension Plan, for RII
stock in the 1988 merger, in which RII was acquired by Merv Griffin. This
action was transferred to the Bankruptcy Court for the District of New Jersey
(the "NJ Bankruptcy Court") in connection with the Company's former bankruptcy
case commenced there in 1989.

In February 1992, the NJ Bankruptcy Court issued an opinion granting
partial summary judgment in favor of RII on one of its six causes of action.
The NJ Bankruptcy Court reserved the issue of remedies for trial.

In August 1992, Fred Lowenschuss filed for chapter 11 reorganization in the
U.S. Bankruptcy Court for the District of Nevada (the "Nevada Bankruptcy
Court"). As a result, the NJ Bankruptcy Court stayed RII's action against
Lowenschuss.

The Nevada Bankruptcy Court confirmed Fred Lowenschuss' plan of
reorganization in October 1993. RII appealed certain portions of the
confirmation order and other orders of the Nevada Bankruptcy Court. In June
1994, the U.S. District Court for the District of Nevada (the "Nevada District
Court") granted RII's appeal in all respects. Fred Lowenschuss has appealed
the Nevada District Court's decision and order to the U.S. Court of Appeals for
the Ninth Circuit.

The foregoing litigation and bankruptcy proceedings have spawned additional
and related litigation including an injunction action brought by Fred
Lowenschuss wherein the Nevada Bankruptcy Court enjoined RII from proceeding
against Fred Lowenschuss individually, a malicious prosecution action brought
by Fred Lowenschuss against RII and its counsel that was recently dismissed by
the Nevada Bankruptcy Court and an action filed by Laurance Lowenschuss, as
trustee of the Fred Lowenschuss Associates Pension Plan, in the Nevada District
Court against RII that was recently transferred to the U.S. District Court for
the Eastern District of Pennsylvania. RII has appealed the Nevada injunction,
Fred Lowenschuss has appealed the dismissal of his malicious prosecution action
and RII has moved to transfer the Lawrence Lowenschuss action to the NJ
Bankruptcy Court for consolidation with its pending action in that court.

SELLING SECURITYHOLDERS

This Prospectus covers resales of Mortgage Notes and Units received in the
Restructuring by the Selling Securityholders named below who may be deemed to
be underwriters of such securities within the meaning of the Securities Act.
The table below provides certain information as of May 1, 1995 with respect to
those holders of Mortgage Notes and Units presently known by the Company to be
Selling Securityholders for whose accounts

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Mortgage Notes or Units may be sold pursuant to this Prospectus. The
information presented in the table is based on information furnished to the
Company by the Selling Securityholders and other sources that the Company has
not verified. Because the Selling Securityholders may sell all or some part of
the Mortgage Notes or Units that they hold pursuant to this Prospectus, no
estimate can be given as to the amount of Mortgage Notes or Units that will be
held by the Selling Securityholders at any time subsequent to the date of this
Prospectus. See "Plan of Distribution." The Selling Securityholders listed
below are funds and accounts advised or managed by either Fidelity (or an
affiliate thereof) or TCW. For information relating to the prior ownership of
Series Notes by such funds and accounts, the participation of Fidelity and TCW
in the negotiations relating to the Restructuring of the Series Notes pursuant
to the Plan, including certain reimbursements in connection therewith, and the
extension of the Senior Facility to RIHF by funds and accounts managed by
Fidelity, see "Restructuring of Series Notes." Other than relationships arising
in connection with such matters, none of the Selling Securityholders has had a
material relationship within the past three years with the Company.

SECURITIES OFFERED

<TABLE>
<CAPTION>
Mortgage Notes Units
-------------------------- -----------------------------------------

Class B Principal
------- ---------
Principal Percent of Common Stock Amount of Percent of
--------- ---------- ------------ --------- ----------
Name Amount Outstanding Shares Junior Notes Outstanding
---- ------ ----------- ------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Fidelity Accounts
Fidelity Management Trust
Company on behalf of
various private
investment accounts
managed by it . . . . . . . $8,091,000 6.5% 776 $776,000 3.5%

TCW Funds and Accounts
TCW Special Credits
Fund III . . . . . . . . . . 7,004,000 5.6%
THE TCW Group, Inc. and
affiliates, as general partner
or investment advisor
of various investment
accounts managed by it . . . 2,467,000 2.0%
--------- ---- --- -------- ----
Total . . . . . . . . . . $17,562,000 14.1% 776 $776,000 3.5%
=========== ===== --- ======== ====
</TABLE>

PLAN OF DISTRIBUTION

GENERAL

The Company will not receive any of the proceeds from the sale by the
Selling Securityholders of the Mortgage Notes or Units offered hereby. Such
securities, which are listed on the

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AMEX, may be sold by the Selling Securityholders in ordinary brokerage
transactions on the AMEX or otherwise at prices prevailing at the time of sale
or at such other prices as may be negotiated among the parties. Any or all of
the Mortgage Notes or Units may be sold from time to time to purchasers
directly by any of the Selling Securityholders. Alternatively, the Selling
Securityholders may from time to time offer their Mortgage Notes or Units
through dealers or agents who may receive compensation in the form of
discounts, concessions or commissions from the Selling Securityholders and/or
the purchasers of the Mortgage Notes or Units for whom they act as agents. The
Selling Securityholders and any such dealers or agents that participate in the
distribution of the Mortgage Notes or Units may be deemed to be underwriters
within the meaning of the Securities Act, and any profit on the sale of the
Mortgage Notes or Units by them and any discounts, commissions or concessions
received by them may be deemed to be underwriting discounts and commissions
under the Securities Act. The Mortgage Notes and Units may be sold from time to
time in one or more transactions at a fixed offering price, which may be
changed, or at varying prices determined at the time of sale or at negotiated
prices. Such prices will be determined by the Selling Securityholders or by an
agreement between the Selling Securityholders and dealers. Brokers or dealers
acting in connection with the sale of the Mortgage Notes or Units contemplated
by this Prospectus may receive fees or commissions in connection therewith.

At the time a particular offer of Mortgage Notes or Units is made, to
the extent required, a supplement to this Prospectus will be prepared which
will identify and set forth the terms of the offering, including the name or
names of any dealers or agents, the purchase price paid for Mortgage Notes or
Units as the case may be, purchased from the Selling Securityholders, any
discounts, commissions and other items constituting compensation from the
Selling Securityholders, and any discounts, commissions or concessions allowed
or reallowed or paid to dealers, including the proposed selling price to the
public. Such supplement to this Prospectus and, if necessary, a post-effective
amendment to the Registration Statement of which this Prospectus is a part,
will be filed with the Commission to reflect the disclosure of additional
information with respect to the distribution of the Mortgage Notes and Units.

Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the Mortgage Notes or Units may not
simultaneously engage in market making activities with respect to the Mortgage
Notes or Units, as the case may be, for a period of nine business days prior to
the commencement of such distribution. In addition and without limiting the
foregoing, the Selling Securityholders and any person participating in the
distribution of the Mortgage Notes or Units will be subject to applicable
provisions of the Exchange

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Act and the rules and regulations thereunder, including without limitation
Rules 10b-6 and 10b-7, which provisions may limit the timing of purchases and
sales of the Mortgage Notes or Units by the Selling Securityholders or any
other person.

In order to comply with certain states' securities laws, if
applicable, the Mortgage Notes or Units will be sold in such jurisdictions only
through registered or licensed brokers or dealers. In certain states the
Mortgage Notes and Units may not be sold unless they have been registered or
qualified for sale in such state, or unless an exemption from registration or
qualification is available.

REGISTRATION RIGHTS AGREEMENT

Pursuant to a Registration Rights Agreement, dated as of April 29,
1994, among RIHF, RII and RIH, and Fidelity and TCW (the "Registration Rights
Agreement"), the Company agreed to file the Registration Statement, of which
this Prospectus is a part, with the Commission and use its best efforts to have
it declared effective. Under the terms of the Registration Rights Agreement,
substantially all of the expenses of the offering will be paid by the Company.
Furthermore, the Company has agreed to keep the Registration Statement
continuously effective, subject to certain blackout periods, for a period of up
to two years following the Effective Date. In addition, the Company and the
Selling Securityholders are obligated to indemnify each other against certain
liabilities, including liabilities arising under the Securities Act.

LEGAL MATTERS

The validity of the Mortgage Notes, the Junior Mortgage Notes, and the
Class B Common Stock has been passed upon for the Company by Gibson, Dunn &
Crutcher. The validity of the Mortgage Note Guaranty and the Junior Mortgage
Note Guaranty under New Jersey law has been passed upon for RIH by Ravin,
Sarasohn, Cook, Baumgarten, Fisch & Baime, a Professional Corporation.

EXPERTS

The consolidated financial statements and schedules of RII and RIH at
December 31, 1994 and 1993, and for each of the three years in the period ended
December 31, 1994, and the financial statements of RIHF at December 31, 1994
and 1993, and for the year ended December 31, 1994, appearing in this
Prospectus and Registration Statement have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon appearing elsewhere
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.

163

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INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<TABLE>
<CAPTION>
PAGE
----
FINANCIAL STATEMENTS
<S> <C>
CONSOLIDATED FINANCIAL STATEMENTS OF
RESORTS INTERNATIONAL, INC.:
Report of Independent Auditors F-2
Consolidated Balance Sheets at December 31, 1993
and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Operations for the years
ended December 31, 1992, 1993 and 1994 . . . . . . . . . . . . . . . . . . . . . . . F-5
Consolidated Statements of Cash Flows for the years
ended December 31, 1992, 1993 and 1994 . . . . . . . . . . . . . . . . . . . . . . . F-6
Consolidated Statements of Changes in Shareholders'
Equity (Deficit) for the years ended December 31,
1992, 1993 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . F-8

CONSOLIDATED FINANCIAL STATEMENTS OF
RESORTS INTERNATIONAL HOTEL, INC.:
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-29
Consolidated Balance Sheets at December 31, 1993
and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-30
Consolidated Statements of Operations for the
years ended December 31, 1992, 1993 and 1994 . . . . . . . . . . . . . . . . . . . . F-32
Consolidated Statements of Cash Flows for the years
ended December 31, 1992, 1993 and 1994 . . . . . . . . . . . . . . . . . . . . . . . F-33
Consolidated Statements of Changes in Shareholder's
Equity (Deficit) for the years ended December 31,
1992, 1993 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-34
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . F-35

FINANCIAL STATEMENT OF
RESORTS INTERNATIONAL HOTEL FINANCING, INC.:
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-50
Balance Sheets at December 31, 1993 and 1994 . . . . . . . . . . . . . . . . . . . . . F-51
Statement of Operations for the year ended
December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-52
Statement of Cash Flows for the year ended
December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-53
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-54

SUPPLEMENTARY DATA
Consolidated Selected Quarterly Financial Data for
Resorts International, Inc. (unaudited) . . . . . . . . . . . . . . . . . . . . . . . F-58
Consolidated Selected Quarterly Financial Data for
Resorts International Hotel, Inc. (unaudited) . . . . . . . . . . . . . . . . . . . . F-60
</TABLE>

F-1
<PAGE> 168
REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
Resorts International, Inc.

We have audited the accompanying consolidated balance sheets of
Resorts International, Inc. as of December 31, 1994 and 1993, and the related
consolidated statements of operations, changes in shareholders' equity
(deficit), and cash flows for each of the three years in the period ended
December 31, 1994. 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 Resorts International, Inc. at December 31, 1994 and 1993, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles.

/S/ ERNST & YOUNG LLP

Philadelphia, Pennsylvania
February 17, 1995,
except for Note 2,
as to which the date is
February 27, 1995

F - 2
<PAGE> 169

Resorts International, Inc.
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)

<TABLE>
<CAPTION>
December 31,
------------------------------------
Assets 1994 1993
- ----------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash (including cash equivalents
of $21,321 and $41,273) $ 35,503 $ 62,546
Restricted cash equivalents 5,388 14,248
Receivables, net 6,509 19,297
Inventories 1,793 8,664
Prepaid expenses 9,531 10,664
-------- --------
Total current assets 58,724 115,419
-------- --------

Property and equipment:
Land and land rights, including
land held for investment,
development and resale 142,025 243,336
Land improvements and utilities 158 22,891
Hotels and other buildings 108,410 182,011
Furniture, machinery and equipment 45,148 80,424
Construction in progress 41 1,277
-------- --------
295,782 529,939
Less accumulated depreciation (49,024) (82,099)
-------- --------
Net property and equipment 246,758 447,840

Deferred charges and other assets 11,766 12,526
-------- --------

$317,248 $575,785
======== ========
- ----------------------------------------------------------------------------------
</TABLE>

See Notes to Consolidated Financial Statements of RII.

F - 3
<PAGE> 170
Resorts International, Inc.
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars, except par value)

<TABLE>
<CAPTION>
Liabilities and Shareholders' December 31,
------------------------------------
Equity (Deficit) 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt,
net of unamortized discounts $ 5 $ 466,336
Accounts payable and accrued liabilities 41,046 84,164
--------- ---------
Total current liabilities 41,051 550,500
--------- ---------

Long-term debt, net of unamortized
discounts 212,466 85,029
--------- ---------

Deferred income taxes 53,700 54,000
--------- ---------

Commitments and contingencies (Note 16)

Shareholders' equity (deficit):
RII Common Stock - 39,694,172 and
20,157,234 shares outstanding -
$.01 par value 397 202
Class B Stock - 35,000 shares
outstanding in 1994 - $.01 par value
Capital in excess of par 129,237 102,092
Accumulated deficit (119,603) (210,720)
--------- ---------
10,031 (108,426)
Note receivable from related party (5,318)
--------- ---------
Total shareholders' equity (deficit) 10,031 (113,744)
--------- ---------

$ 317,248 $ 575,785
========= =========
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Consolidated Financial Statements of RII.

F - 4
<PAGE> 171
Resorts International, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except per share data)

<TABLE>
<CAPTION>
For the Year Ended December 31,
----------------------------------------------------------
1994 1993 1992
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Casino $278,597 $ 307,059 $299,900
Rooms 20,553 35,708 39,001
Food and beverage 28,255 46,843 48,907
Other casino/hotel revenues 12,216 23,330 22,028
Other operating revenues 4,582 18,122 19,072
Real estate related 8,813 8,502 8,026
-------- --------- --------
353,016 439,564 436,934
-------- --------- --------
Expenses:
Casino 160,371 189,304 176,119
Rooms 6,030 10,906 11,799
Food and beverage 25,131 41,859 42,819
Other casino/hotel operating
expenses 46,446 69,918 64,654
Other operating expenses 3,483 14,697 15,549
Selling, general and
administrative 48,124 70,453 77,571
Depreciation 17,250 27,924 25,322
Real estate related 1,763 1,605 1,599
Write-down of non-operating
real estate 20,525
Loss on SIHL Sale 72,463
-------- --------- --------
401,586 426,666 415,432
-------- --------- --------

Earnings (loss) from operations (48,570) 12,898 21,502
Other income (deductions):
Interest income 2,686 3,174 4,969
Interest expense (35,271) (57,244) (40,856)
Amortization of debt discounts (15,046) (51,203) (37,569)
Recapitalization costs (5,232) (8,789) (2,848)
Proceeds from Litigation Trust 2,542
-------- --------- --------
Loss before income taxes and
extraordinary items (98,891) (101,164) (54,802)
Income tax benefit (expense) (1,000) 1,348
-------- --------- --------
Loss before extraordinary items (98,891) (102,164) (53,454)
Extraordinary items 190,008
-------- --------- --------

Net earnings (loss) $ 91,117 $(102,164) $(53,454)
======== ========= ========

Per share data:
Loss before extraordinary items $ (3.02) $ (5.07) $ (2.65)
Extraordinary items 5.81
-------- --------- --------
Net earnings (loss) $ 2.79 $ (5.07) $ (2.65)
======== ========= ========
Weighted average number of
shares outstanding 32,687 20,157 20,146
======== ========= ========
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Consolidated Financial Statements of RII.

F - 5
<PAGE> 172
Resorts International, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)

<TABLE>
<CAPTION>
For the Year Ended December 31,
--------------------------------------------
1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 347,896 $ 441,354 $ 432,212
Cash paid to suppliers and employees (285,343) (393,013) (390,012)
--------- --------- ---------
Cash flow from operations before interest and
income taxes 62,553 48,341 42,200
Interest received 2,882 3,809 5,211
Interest paid (15,002) (8,440) (8,463)
Income taxes refunded, net of payments (285) 306 1,484
--------- --------- ---------
Net cash provided by operating activities 50,148 44,016 40,432
--------- --------- ---------

Cash flows from investing activities:
Cash proceeds from SIHL Sale, net of cash balances
transferred 39,747
Payments for property and equipment (9,924) (25,308) (19,832)
Purchase of 12,899 Units (6,740)
Proceeds from sales of property and equipment 650 445 213
Proceeds from prior year sale of property and equipment 2,484
CRDA deposits and bond purchases (3,044) (3,025) (2,871)
Proceeds from sales of short-term money market securities
with maturities greater than three months 1,377 2,083
Purchases of short-term money market securities with
maturities greater than three months (492) (1,768)
--------- --------- ---------
Net cash provided by (used in) investing
activities 20,689 (27,003) (19,691)
--------- --------- ---------

Cash flows from financing activities:
Excess Cash and cash proceeds of SIHL Sale distributed
to noteholders (103,434)
Collection of note receivable from related party 3,008 3,477
Payments of recapitalization costs (8,738) (8,332) (5,414)
Proceeds from Litigation Trust 2,542
Repayments of non-public debt (118) (2,251) (1,619)
--------- --------- ---------
Net cash used in financing activities (106,740) (7,106) (7,033)
--------- --------- ---------

Net increase (decrease) in cash and cash equivalents (35,903) 9,907 13,708
Cash and cash equivalents at beginning of period 76,794 66,887 53,179
--------- --------- ---------

Cash and cash equivalents at end of period $ 40,891 $ 76,794 $ 66,887
========= ========= =========
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Consolidated Financial Statements of RII.

F - 6
<PAGE> 173
Resorts International, Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
(In Thousands of Dollars)

<TABLE>
<CAPTION>
RII Capital
Common Class B in excess Accumulated Notes
Stock Stock of par deficit receivable
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1991 $201 $-0- $102,000 $ (55,102) $(11,000)

Settlement of Other Class 3C Claims 1 92
Net loss for year 1992 (53,454)
---- --- -------- --------- --------

Balance at December 31, 1992 202 -0- 102,092 (108,556) (11,000)

Collection on Griffin Note 3,477
Cancellation of Griffin Note 7,523
Issuance of Group Note (7,523)
Reduction of Group Note applied
to prepaid services 2,205
Net loss for year 1993 (102,164)
---- --- -------- --------- --------

Balance at December 31, 1993 202 -0- 102,092 (210,720) (5,318)

Shares issued to financial advisers in
settlement of recapitalization costs 6 859
Reduction of Group Note applied to
prepaid services 2,310
Collection of Group Note 3,008
Shares issued in exchange for
Series Notes 170 24,245
Shares issued to affiliate of Griffin
Group in satisfaction of final
payment under service agreement 19 2,041
Net earnings for year 1994 91,117
---- --- -------- --------- --------

Balance at December 31, 1994 $397 $-0- $129,237 $(119,603) $ -0-
==== === ======== ========= ========
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Consolidated Financial Statements of RII.

F - 7
<PAGE> 174
Resorts International, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The term "Company" as used herein includes Resorts International, Inc.
("RII") and/or one or more of its subsidiaries, as the context may require.

Principles of Consolidation

The consolidated financial statements include the accounts of RII and
all significant subsidiaries. All significant intercompany transactions and
balances have been eliminated in consolidation. The accounts of foreign
subsidiaries were maintained in U.S. dollars.

Revenue Recognition

The Company records as revenue the win from casino gaming activities
which represents the difference between amounts wagered and amounts won by
patrons. Revenues from hotel and related services and from theater ticket
sales are recognized at the time the related service is performed.

Complimentary Services

The Consolidated Statements of Operations reflect each category of
operating revenues excluding the retail value of complimentary services
provided to casino patrons without charge. The rooms, food and beverage, and
other casino/hotel operations departments allocate a percentage of their total
operating expenses to the casino department for complimentary services provided
to casino patrons. These allocations do not necessarily represent the
incremental cost of providing such complimentary services to casino patrons.
Amounts allocated to the casino department from the other operating departments
were as follows:

<TABLE>
<CAPTION>
(In Thousands of Dollars) 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Rooms $ 4,236 $ 4,470 $ 3,738
Food and beverage 15,787 20,353 20,805
Other casino/hotel operations 7,467 7,412 6,408
------- ------- -------

Total allocated to casino $27,490 $32,235 $30,951
======= ======= =======
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>

Cash Equivalents

The Company considers all of its short-term money market

F - 8
<PAGE> 175
securities purchased with maturities of three months or less to be cash
equivalents. The carrying value of cash equivalents approximates fair value
due to the short maturity of these instruments.

Inventories

Inventories of provisions, supplies and spare parts are carried at the
lower of cost (first-in, first-out) or market.

Property and Equipment

Property and equipment are depreciated over their estimated useful
lives using the straight-line method for financial reporting purposes.

Casino Reinvestment Development Authority ("CRDA") Obligations

Under the New Jersey Casino Control Act ("Casino Control Act"), the
Company is obligated to purchase CRDA bonds, which will bear a below-market
interest rate, or make an alternative qualifying investment. The Company
charges to expense an estimated discount related to CRDA investment obligations
as of the date the obligation arises based on fair market interest rates of
similar quality bonds in existence as of that date. On the date the Company
actually purchases the CRDA bond, the estimated discount previously recorded is
adjusted to reflect the actual terms of the bonds issued and the then existing
fair market interest rate for similar quality bonds.

The discount on CRDA bonds purchased is amortized to interest income
over the life of the bonds using the effective interest rate method.

Payment-In-Kind ("PIK") Interest Accrual

When the Company elects to satisfy its interest obligations through
PIK instead of cash interest payments, for financial statement purposes, such
interest is accrued at the estimated market value of the securities to be
issued. The discount resulting from the difference between face value and
estimated market value of the additional securities decreases interest expense
of the current period and is amortized to expense over the remaining life of
the issue.

Income Taxes

RII and all of its domestic subsidiaries file consolidated U.S.
federal income tax returns.

F - 9
<PAGE> 176
For the year 1992 the Company accounted for income taxes under the
liability method prescribed by Statement of Financial Accounting Standards No.
96 ("SFAS 96"), "Accounting for Income Taxes." Under this method, the deferred
tax liability is determined based on the difference between the financial
reporting and tax bases of assets and liabilities and enacted tax rates which
will be in effect for the years in which the differences are expected to
reverse. The deferred tax liability is reduced by cumulative tax credits and
losses being carried forward for tax purposes, subject to applicable
limitations.

Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes." SFAS
109 supersedes SFAS 96 but retains the liability method of accounting for
income taxes. Among other changes, SFAS 109 changed the recognition and
measurement criteria for deferred tax assets included in SFAS 96.

There are no income taxes in The Bahamas and the income of RII's
former subsidiaries in The Bahamas was generally not subject to U.S. federal
income taxation until it was distributed to a U.S. parent. Deferred federal
income taxes were provided on the undistributed earnings of Bahamian
subsidiaries until their disposition.

Per Share Data

Per share data was computed using the weighted average number of
shares of common stock outstanding.

NOTE 2 - RESTRUCTURING OF SENIOR SECURED REDEEMABLE NOTES
DUE APRIL 15, 1994 (THE "SERIES NOTES")

The outstanding principal amount of the Series Notes, which were
scheduled to mature on April 15, 1994, was $481,907,000. According to the
terms of the Series Notes, the interest due on the maturity date would have
been approximately $36,000,000 and RII's total obligation at maturity would
have amounted to approximately $518,000,000. Over the past several years
various factors adversely affected the Company's ability to satisfy its
obligations under the Series Notes. In late 1991 the Company began working
with its financial advisers on developing and analyzing financial alternatives,
as well as developing a long-term financial plan. In this connection,
management of the Company, with the assistance of its legal and financial
advisers, commenced discussions in the summer of 1992 with representatives of
major holders of Series Notes, Fidelity Management & Research Company
("Fidelity") and The TCW Group, Inc. ("TCW"), in an effort to reach an
agreement as to the terms of a possible restructuring of the Series Notes.
Further negotiations were conducted among the Company, Fidelity, TCW and an
unrelated party Sun International Investments Limited ("SIIL") regarding SIIL's
acquisition of a 60% interest in the Company's

F - 10
<PAGE> 177
Paradise Island assets (the "SIHL Sale") through a subsidiary of SIIL, Sun
International Hotels Limited ("SIHL"), formed for that purpose.

In October 1993 RII and three of its subsidiaries, Resorts
International Hotel, Inc. ("RIH," the company which owns and operates Merv
Griffin's Resorts Casino Hotel (the "Resorts Casino Hotel") in Atlantic City,
New Jersey), Resorts International Hotel Financing, Inc. ("RIHF") and P.I.
Resorts Limited ("PIRL"), filed a Form S-4 Registration Statement with the
Securities and Exchange Commission. That Registration Statement, as amended,
described in detail the restructuring (the "Restructuring") which RII and GGRI,
Inc. ("GGRI"), RII's subsidiary which guaranteed the Series Notes, proposed to
accomplish through a prepackaged bankruptcy joint plan of reorganization (the
"Plan"). On March 21, 1994, after receiving the requisite acceptances for
confirmation of the Plan from holders of Series Notes and equity interests in
RII, RII and GGRI filed their prepackaged bankruptcy cases with the United
States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court").

In accordance with Statement of Position 90-7, "Financial Reporting by
Entities in Reorganization Under the Bankruptcy Code," the Company stopped
accruing interest and amortizing discounts on the Series Notes as of March 21,
1994.

The Plan was confirmed by the Bankruptcy Court on April 22, 1994 and
on May 3, 1994 (the "Effective Date"), all conditions to the effectiveness of
the Plan were either met or waived and the Plan became effective. Pursuant to
the Plan, among other things, the Company exchanged the Series Notes for (i)
$160,000,000 principal amount of New Debt Securities (see below), (ii) 40% of
the common stock of RII (the "RII Common Stock") on a fully diluted basis
(excluding certain stock options), (iii) the proceeds from the SIHL Sale, (iv)
the Company's Excess Cash, as defined in the Plan, which approximated
$34,500,000 and (v) rights to receive further cash distributions in certain
circumstances.

Excess Cash was essentially all the Company's non-restricted cash and
equivalents on the Effective Date in excess of (i) $20,000,000, (ii) cash
balances to be transferred as part of the SIHL Sale and (iii) estimated cash
balances required to pay certain recapitalization costs and other expenses
provided for in the Plan. Included in Excess Cash was a $2,542,000
distribution that RII received in March 1994 from a litigation trust (the
"Litigation Trust") established under a previous plan of reorganization to
pursue certain claims against a former affiliate. Such distribution was
described in the Plan as "Deferred Cash."

In July 1994, upon completion of the audit of certain settlement
adjustments regarding the SIHL Sale, $1,005,000 of the cash transferred in the
SIHL Sale was returned to the Company.

F - 11
<PAGE> 178
These funds were described in the Plan as "Net Reserved Cash."

In October 1994, after settlement of the majority of recapitalization
costs and updating estimates of unbilled costs and costs still to be incurred,
the Company determined that the cash balance required to pay such costs was
$1,300,000 less than originally anticipated. These excess funds were described
in the Plan as "Net Plan Consummation Cash." After obtaining Bankruptcy Court
approval to disburse the Net Plan Consummation Cash, a distribution in the
amount of $2,214,000 was made to holders of the Series Notes in December 1994,
which amount represented the Net Reserved Cash and the Net Plan Consummation
Cash, net of an adjustment to a prior distribution.

The difference between the carrying value of the Series Notes and the
sum of the fair values of the items exchanged therefor resulted in a gain of
$186,000,000 which has been reported as an extraordinary item.

Pursuant to the Plan, the Company entered into the senior note
purchase agreement (the "Senior Facility") described below. Also, in
connection with the Restructuring (i) the Company prepaid fees of $2,310,000
due The Griffin Group, Inc. (the "Griffin Group"), a corporation controlled by
Merv Griffin, Chairman of the Board of Directors of RII, under a license and
services agreement (the "Griffin Services Agreement") by applying such amount
as a reduction of the balance of a note receivable from Griffin Group (the
"Group Note"); (ii) Griffin Group repaid the then remaining balance,
$3,008,000, of the Group Note (which was distributed to holders of the Series
Notes as part of Excess Cash); (iii) RII issued a warrant, which is exercisable
through May 3, 1998, to purchase 4,666,850 shares of RII Common Stock at $1.20
per share to an affiliate of Griffin Group (the "Griffin Warrant"); (iv) the
RII Senior Management Stock Option Plan (the "1990 SOP") was terminated,
although holders of options granted under that plan established in 1990 retain
their options; (v) the RII 1994 Stock Option Plan (the "1994 SOP") was adopted
(see Note 9) and (vi) RII increased its authorized shares of RII Common Stock
to 100,000,000 and authorized 120,000 shares of Class B redeemable common stock
(the "Class B Stock") and 10,000,000 shares of preferred stock.

For pro forma effects of the Restructuring on continuing operations
assuming the Restructuring occurred on January 1, 1994 see "PRO FORMA FINANCIAL
DATA - RII."

New Debt Securities

The "New Debt Securities" consist of $125,000,000 principal amount of
11% Mortgage Notes (the "Mortgage Notes") due September 15, 2003 and
$35,000,000 principal amount of 11.375% Junior Mortgage Notes (the "Junior
Mortgage Notes") due December 15, 2004. The New Debt Securities were issued by
RIHF and are guaranteed by RIH. The accrual of interest and amortization of
discounts on the New Debt Securities commenced on May 3, 1994.

F - 12
<PAGE> 179
interests in the Resorts Casino Hotel, the contiguous parking garage and
property, all additions and improvements thereto, and related personal
property. The liens securing the Mortgage Notes will be subordinated to the
lien securing the Senior Facility Notes (described below), if the Senior
Facility Notes are issued.

The Junior Mortgage Notes were issued as part of units (the "Units")
with Class B Stock. In certain circumstances, interest payable on the Junior
Mortgage Notes may be satisfied by the issuance of additional Units. The
Junior Mortgage Notes are secured by a $35,000,000 promissory note made by RIH
(the "RIH Junior Promissory Note"), the terms of which mirror the terms of the
Junior Mortgage Notes. The RIH Junior Promissory Note and RIH's guaranty of
the Junior Mortgage Notes are also secured by liens on the Resorts Casino Hotel
property as described above. The liens securing the Junior Mortgage Notes will
be subordinated to the lien securing the Senior Facility Notes, if the Senior
Facility Notes are issued, and are subordinated to the liens securing the
Mortgage Notes.

The indentures pursuant to which the Mortgage Notes and the Junior
Mortgage Notes were issued (collectively, the "Indentures") prohibit RIH and
its subsidiaries from paying dividends, from making other distributions in
respect of their capital stock, and from purchasing or redeeming their capital
stock, with certain exceptions, unless certain interest coverage ratios are
attained. Also, the Indentures restrict RIH and its subsidiaries from
incurring additional indebtedness, with certain exceptions, and limit
intercompany loans by RIH to RII to loans from the proceeds of the Senior
Facility (or similar working capital facility) and other advances not in excess
of $1,000,000 in the aggregate at any time outstanding. Similar restrictions
curtail the activities of RIHF. The shareholder's equity of RIH amounted to
$35,136,000 at December 31, 1994, all of which is restricted under these
Indenture provisions.

Senior Facility

The Senior Facility among RIHF, RII and RIH and certain funds and
accounts advised or managed by Fidelity, as amended in February 1995, is
available for a single borrowing of up to $19,738,000 during the period ending
May 2, 1996, through the issuance of notes (the "Senior Facility Notes"). If
issued, the Senior Facility Notes will bear interest at 11.75% and will be due
in 2002. The Senior Facility Notes will be senior obligations of RIHF secured
by a promissory note from RIH in an aggregate principal amount of up to
$19,738,000 payable in amounts and at times necessary to pay the principal of
and interest on the Senior Facility Notes. The Senior Facility Notes will
be guaranteed by RIH and secured by a lien on the Resorts Casino Hotel property
as described above. The Senior Facility Notes will also be secured by a pledge
by GGRI, RII's subsidiary which became the parent of RIH as a result of the
Restructuring, of all issued and outstanding shares of RIH's common stock. In
addition, the Senior Facility Notes will be guaranteed by RII, which guaranty
will be secured by a pledge of all the issued and outstanding stock of GGRI and
RIHF. Market interest rates and other economic conditions, among other
factors, will determine if it is appropriate for the Company to draw on the
Senior Facility.

F - 13
<PAGE> 180
Units

Each Unit comprises $1,000 principal amount of Junior Mortgage Notes
and one share of Class B Stock. Shares of Class B Stock may not be transferred
separately from the related Junior Mortgage Note. Holders of Class B Stock are
entitled to elect one- third of the Board of Directors of RII and under certain
circumstances they would be entitled to elect a majority of the Board of
Directors. Holders of Class B Stock do not participate in any dividends which
may be declared by RII's Board of Directors. Approximately 35,000 Units were
issued pursuant to the Plan.

SIHL Sale

In transactions related to the SIHL Sale, SIIL purchased 60% of the
capital stock of SIHL for $90,000,000 plus interest at 7.5% from January 1,
1994 through the Effective Date (the "SIHL Proceeds"). Pursuant to the
purchase agreement, SIHL then purchased 100% of the equity of Resorts
International (Bahamas) 1984 Limited, RII's former Bahamian subsidiary which,
along with its subsidiaries, owned and operated the Company's Paradise Island
properties. Also, certain subsidiaries of SIHL acquired certain assets of RII
and its U.S. subsidiaries which supported the Paradise Island operations and
assumed certain related liabilities. The purchase price received from SIHL was
$65,000,000 in cash, plus interest at 7.5% from January 1, 1994 through the
Effective Date, and 2,000,000 Series A Ordinary Shares of SIHL (the "SIHL
Shares"), which amounts to the remaining 40% of the capital stock of SIHL.
These cash proceeds as well as the SIHL Shares were distributed to holders of
Series Notes pursuant to the Plan. SIHL used a portion of the SIHL Proceeds to
fund its $65,000,000 (plus interest) purchase price of the Company's Paradise
Island assets. RII understands that the other $25,000,000 of SIHL Proceeds
remaining in SIHL as of the Effective Date ($90,000,000 SIHL Proceeds less the
$65,000,000 used to purchase the Paradise Island assets) increased the equity
value of SIHL and, in effect, represented additional consideration in the
amount of $10,000,000 (40% of $25,000,000) for the sale of the Company's
Paradise Island assets. Such consideration was realized by the holders of
Series Notes through the increased value of their 40% equity interest in SIHL.

Although the SIHL Sale was effective May 3, 1994, the consolidated
statements of operations and cash flows reflect the Paradise Island operations
through April 30, 1994. The loss on SIHL Sale represents the difference
between the carrying values and the fair values of the assets and equity
interests sold.

For information as to the revenues and contribution to consolidated
earnings from operations of the operations disposed of in the SIHL Sale, see
the Paradise Island portion of the casino/hotel segment, the Paradise Island
portion of the real estate related segment and the airline segment in the
segment tables included in "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - RII."

Recapitalization Costs

Recapitalization costs in 1994, 1993 and 1992 include costs of
financial advisers retained to assist in the development and analysis of
financial alternatives which resulted in the

F - 14
<PAGE> 181
Restructuring and other legal and advisory fees incurred in connection with
such Restructuring. Also, recapitalization costs for 1994 include credits of
$3,256,000 recorded in the fourth quarter resulting from the reversal of
restructuring reserves provided in connection with the Company's 1990 plan of
reorganization.

NOTE 3 - CASH EQUIVALENTS

Cash equivalents and restricted cash equivalents at December 31, 1994
included reverse repurchase agreements (federal government securities purchased
under agreements to resell those securities) with the institutions listed in
the following table under which the Company had not taken delivery of the
underlying securities. These agreements matured January 3, 1995 except for
$10,000 with City National Bank of Florida which matures on April 5, 1995.

<TABLE>
<CAPTION>
(In Thousands of Dollars)
- ------------------------------------------------------------------------
<S> <C>
National Westminster Bank NJ $6,317

City National Bank of Florida $1,482
- ------------------------------------------------------------------------
</TABLE>

The Company's cash equivalents at December 31, 1994 also included U.S.
Treasury Bills and bank time deposits.

NOTE 4 - RESTRICTED CASH EQUIVALENTS

Components of restricted cash equivalents at December 31 were as
follows:

<TABLE>
<CAPTION>
(In Thousands of Dollars) 1994 1993
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Showboat Lease payments
and interest earned thereon
held by trustee (see Note 11) $3,494 $ 3,405
Amount, including interest earned,
on deposit with trustee for
Litigation Trust 1,711 4,278
Escrow for the SIHL Sale 4,000
Collateral account for Series Notes 1,220
Plan consummation account (for
payment of recapitalization costs) 141
Cash equivalents securing letters
of credit and other guarantees 42 1,345
------ -------
$5,388 $14,248
====== =======
- -----------------------------------------------------------------------------------------------
</TABLE>

F - 15
<PAGE> 182
NOTE 5 - RECEIVABLES

Components of receivables at December 31 were as follows:

<TABLE>
<CAPTION>
(In Thousands of Dollars) 1994 1993
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Gaming $ 8,035 $15,566
Less allowance for doubtful accounts (3,819) (6,598)
------- -------
4,216 8,968
------- -------
Non-gaming:
Hotel and related 799 6,131
Other trade 2,560
Interest on note receivable from
related party 271
Contracts and notes 270 212
Other 1,306 2,431
------- -------
2,375 11,605
Less allowance for doubtful accounts (82) (1,276)
------- -------
2,293 10,329
------- -------

$ 6,509 $19,297
======= =======
- -----------------------------------------------------------------------------------------------
</TABLE>

NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Components of accounts payable and accrued liabilities at December 31
were as follows:

<TABLE>
<CAPTION>
(In Thousands of Dollars) 1994 1993
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Accrued payroll and related taxes and
benefits $12,170 $16,277
Accrued interest 7,609 18,464
Accrued gaming taxes, fees and related
assessments 7,064 7,719
Customer deposits and unearned revenues 2,152 9,768
Trade payables 1,441 8,524
Accrued costs of recapitalization 995 3,510
Litigation Trust and related expenses 871 3,513
Other accrued liabilities 8,744 16,389
------- -------
$41,046 $84,164
======= =======
- -----------------------------------------------------------------------------------------------
</TABLE>

F - 16
<PAGE> 183
NOTE 7 - LONG-TERM DEBT

As described in Note 2, on May 3, 1994, the Series Notes were
exchanged for, among other things, the Mortgage Notes and the Junior Mortgage
Notes. The Series Notes, consisting of the Series A Notes and the Series B
Notes, and the First Mortgage Non-Recourse Pass-Through Notes due June 30, 2000
(the "Showboat Notes") had been issued pursuant to the Company's 1990 plan of
reorganization.

In November 1994, RIH purchased 12,899 Units comprising $12,899,000
principal amount of Junior Mortgage Notes and 12,899 shares of Class B Stock at
a price of $6,740,000. The resulting gain of $4,008,000 is reported as an
extraordinary item. As described in Note 2, a total of 35,000 Units were
issued as part of the reorganization of RII in May 1994.

The carrying value and fair value by component of long-term debt at
December 31 were as follows:

<TABLE>
<CAPTION>
1994 1993
---------------------------- -----------------------------
Carrying Fair Carrying Fair
(In Thousands of Dollars) Value Value Value Value
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mortgage Notes $125,000 $ 83,750
Less unamortized discount (18,123)
--------
106,877
--------

Junior Mortgage Notes 35,000
Less notes held by RIH (12,899)
--------
22,101 13,040
Less unamortized discount (3,669)
--------
18,432
--------

Series A Notes $262,531 $176,552
Less unamortized discount (8,331)
-------- --------
-0- 254,200
-------- --------

Series B Notes 219,376 147,530
Less unamortized discount (7,447)
-------- --------
-0- 211,929
-------- --------

Showboat Notes 105,333 88,480 105,333 94,800
Less unamortized discount (18,184) (20,452)
-------- --------
87,149 84,881

Capitalized leases 13 13 355 355
-------- -------- -------- --------
212,471 185,283 551,365 419,237
Less due within one year (5) (5) (466,336) (324,289)
-------- -------- -------- --------

$212,466 $185,278 $ 85,029 $ 94,948
======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

The fair value presented above for the Company's long-term debt is
based on December 31 closing market prices for publicly traded debt and
carrying value for capitalized leases, because

F - 17
<PAGE> 184
capitalized leases are not considered material to the total.

For a description of the Mortgage Notes, the Junior Mortgage Notes and
the Senior Facility, see "New Debt Securities" and "Senior Facility" in Note 2.
Interest on the Mortgage Notes is payable semi-annually on March 15 and
September 15 in each year. Interest on the Junior Mortgage Notes is payable
semi-annually on June 15 and December 15 in each year.

The Company owns a 10-acre parcel of land in Atlantic City underlying
the Showboat Casino Hotel which parcel is subject to a 99-year net lease (the
"Showboat Lease") which expires in 2082. The Showboat Notes are non-recourse
notes, secured by a mortgage encumbering that 10-acre parcel, by a collateral
assignment of the Showboat Lease, and by a pledge of any proceeds of the sale
of such mortgage and collateral assignment.

Interest on the Showboat Notes consists of a pass-through (subject to
certain adjustments) of the lease payments received under the Showboat Lease.
See Note 11 for a description of the Showboat Lease. Interest is payable
semi-annually on January 15 and July 15.

The effective interest rates on the Company's publicly held debt at
December 31, 1994 were as follows: Mortgage Notes - 13.9%; Junior Mortgage
Notes - 14.6%; and Showboat Notes - 11.2%. No principal payments are required
during the next five years on the Mortgage Notes, the Junior Mortgage Notes or
the Showboat Notes.

NOTE 8 - SHAREHOLDERS' EQUITY

RII is authorized to issue 100,000,000 shares of RII Common Stock,
120,000 shares of Class B Stock and 10,000,000 shares of preferred stock. Of
the 39,694,172 shares of RII Common Stock outstanding at December 31, 1994,
20,000,000 were issued in 1990 as the Company emerged from bankruptcy
proceedings; 20,000 were awarded to certain members of RII's Board of Directors
in 1991; 137,234 were issued in settlement of certain claims ("Other Class 3C
Claims") against RII and certain of its subsidiaries which were outstanding in
1989 when the Company entered bankruptcy proceedings; 16,984,438 were issued in
May 1994 in exchange for the Series Notes pursuant to the Restructuring;
612,500 were issued to financial advisers in May 1994 in settlement of certain
recapitalization costs; and 1,940,000 were issued as of August 1994 to an
affiliate of Griffin Group in satisfaction of the final payment due under the
Griffin Services Agreement. Additional shares of RII Common Stock may be
issued in the future in settlement of remaining Other Class 3C Claims.

See Note 2 for a description of Class B Stock issued as part of Units
and the Griffin Warrant. See Note 10 for a description of notes receivable
from related parties.

NOTE 9 - STOCK OPTION PLANS

Pursuant to the Plan, the 1990 SOP was terminated, although

F - 18
<PAGE> 185
holders of options granted under that plan retain their options, and the 1994
SOP was adopted. The 1994 SOP allows for the granting of options to purchase
up to 5% of the outstanding RII Common Stock, assuming the exercise of (i) the
Griffin Warrant, (ii) all options granted under the 1990 SOP and outstanding as
of the Effective Date and (iii) the maximum allowable options to be granted
under the 1994 SOP. The 1994 SOP is to be administered by an Option Committee
of RII's Board of Directors. In accordance with the 1994 SOP, on June 7, 1994
the four members serving on that committee were each granted options to
purchase 10,000 shares of RII Common Stock. One half of these options are
exercisable immediately and the remainder become exercisable on June 7, 1995.
On August 1, 1994 RII granted options to purchase 998,500 shares of RII Common
Stock to certain officers and other employees of RII and RIH. These options
are to vest 25% per year on the first four anniversaries of the date granted.

Options to purchase the following shares of RII Common Stock were
outstanding at December 31, 1994:

<TABLE>
<CAPTION>
Exercise Options Options
Plan Price Outstanding Exercisable
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
1990 SOP $1.875 1,420,381 1,420,381

1994 SOP $1.03125 1,038,500 20,000
--------- ---------
2,458,881 1,440,381
========= =========
- ---------------------------------------------------------------------------------
</TABLE>

No shares were issued in connection with the exercise of stock options
during 1992, 1993 or 1994.

NOTE 10 - RELATED PARTY TRANSACTIONS

License and Services Agreements

Pursuant to the Company's 1990 plan of reorganization, Merv Griffin,
Chairman of RII's Board of Directors, Griffin Group, and RII entered into a
License and Services Agreement. Pursuant to this agreement, for the two years
ended September 16, 1992, RII was granted a non-exclusive license to use Mr.
Griffin's name and likeness to promote its facilities and operations and Mr.
Griffin agreed to act as Chairman of the Board of RII and to provide certain
other services without compensation, subject to certain conditions relating
principally to the continuation of his control of the Company.

In April 1993, RII, RIH and Griffin Group entered into the Griffin
Services Agreement effective as of September 17, 1992. Pursuant to this
agreement, Griffin Group granted RII and RIH a non-exclusive license to use the
name and likeness of Merv Griffin to advertise and promote the Company's
facilities and operations. Also pursuant to the Griffin Services Agreement,
Mr. Griffin is to provide certain services to the Company, including serving as
Chairman of the Board of RII and as a host, producer and featured

F - 19
<PAGE> 186
performer in various shows to be presented in Resorts Casino Hotel, and
furnishing marketing and consulting services.

The Griffin Services Agreement is to continue until September 17, 1997
and provides for earlier termination under certain circumstances including,
among others, a change of control (as defined) of the Company and Mr. Griffin
ceasing to serve as Chairman of the Board of RII.

The Griffin Services Agreement provides for compensation to Griffin
Group in the amount of $2,000,000 for the year ended September 16, 1993, and in
specified amounts for each of the following years, which increase at
approximately 5% per year. In accordance with the Griffin Services Agreement,
upon signing, the Company paid Griffin Group $4,100,000, representing
compensation for the first two years. Thereafter, the Griffin Services
Agreement called for annual payments on September 17, each representing a
prepayment for the year ending two years hence. In lieu of paying in cash, at
the Company's option, the Company could satisfy its obligation to make any of
the payments required under the Griffin Services Agreement by reducing the
amount of the Group Note described below. In September 1993 the Company
notified Griffin Group that it would satisfy its obligation to make the
$2,205,000 payment for the year ending September 16, 1995 by reducing the Group
Note by that amount. In May 1994, as part of the Restructuring, RII reduced
the Group Note by $2,310,000 in satisfaction of the payment due in September
1994 for the year ending September 16, 1996. The final payment required under
the Griffin Services Agreement, $2,425,000, was to be due in September 1995.
On August 1, 1994, following review and approval by the independent members of
RII's Board of Directors, RII agreed to issue 1,940,000 shares of RII Common
Stock to an affiliate of Griffin Group in satisfaction of this final payment
obligation. The closing price of RII Common Stock on the date of the agreement
was $1.0625 per share. The shares are not registered under the Securities Act
of 1933 and are restricted securities. In the event of an early termination of
the Griffin Services Agreement, and depending on the circumstances of such
early termination, all or a portion of the compensation paid to Griffin Group
in respect of the period subsequent to the date of termination may be required
to be repaid to the Company.

The Griffin Services Agreement also provided for the issuance of the
Griffin Warrant described in Note 2 on the Effective Date.

In the Griffin Services Agreement the Company agreed to indemnify,
defend and hold harmless Griffin Group and Mr. Griffin against certain claims,
losses and costs, and to maintain certain insurance coverage with Mr. Griffin
and Griffin Group as named insureds.

Notes Receivable from Related Parties

Pursuant to the Company's 1990 plan of reorganization, in September
1990 RII received $12,345,000 in cash and an $11,000,000 promissory note (the
"Griffin Note") from Merv Griffin for certain

F - 20
<PAGE> 187
shares of RII Common Stock purchased by him. In April 1993, in accordance with
the Griffin Services Agreement, Mr. Griffin made a partial payment of
$4,100,000 on this note comprised of $3,477,000 principal and $623,000 accrued
interest. The Griffin Note, which then had a remaining balance of $7,523,000,
was cancelled and a new note from Griffin Group, the Group Note, in the amount
of $7,523,000 was substituted therefor. The Group Note was unconditionally
guaranteed as to principal and interest by Mr. Griffin and bore interest at the
rate of 3%. As noted above, the balance of the Group Note was reduced by
$2,205,000 in September 1993 and by $2,310,000 in May 1994 in satisfaction of
fees due to Griffin Group under the Griffin Services Agreement. Also in May
1994, as part of the Restructuring, Griffin Group repaid the remaining
principal balance of $3,008,000 and accrued interest thereon.

Other

The Company reimbursed Griffin Group $296,000, $219,000 and $396,000
for charter air services related to Company business rendered in 1994, 1993 and
1992, respectively.

In 1994 the Company incurred charges from unaffiliated parties of
$394,000 in producing the live television broadcast of "Merv Griffin's New
Year's Eve Special" from Resorts Casino Hotel. For each of the 1993 and 1992
productions of "Merv Griffin's New Year's Eve Special," which also were
broadcast live on television, the Company paid $100,000 and provided certain
facilities, labor and accommodations to subsidiaries of January Enterprises,
Inc., of which Merv Griffin formerly was Chairman.

Antonio C. Alvarez II, a shareholder of Alvarez & Marsal, Inc., was a
member of the Board of Directors of RII from September 1990 until the Effective
Date. In 1994 the Company paid Alvarez & Marsal, Inc. $225,000 and issued
112,500 shares of RII Common Stock as compensation for financial advisory
services rendered in connection with the Restructuring. The Company paid
Alvarez & Marsal, Inc. $300,000 for financial advisory services rendered in
1992.

NOTE 11 - SHOWBOAT LEASE

The Company leases to a subsidiary ("ACS") of Showboat, Inc., a resort
and casino operator, approximately 10 acres of land adjacent to the Boardwalk
in Atlantic City. Under the 99-year net lease, lease payments are payable in
equal monthly installments on the first day of each month. The lease payments
for the lease year ending March 31, 1995, total $8,326,000. The lease payments
are adjusted annually, as of April 1, for changes in the consumer price index.

Pursuant to the lease agreement, the Company is unable to transfer its
interest in the lease, other than to an affiliate, without giving ACS the
opportunity to purchase such interest at terms no less favorable than agreed to
by any other party.

F - 21
<PAGE> 188
As described in Note 7, the Showboat Notes are secured by a mortgage
encumbering the real property which is subject to the Showboat Lease, by a
collateral assignment of the Showboat Lease, and by a pledge of any proceeds of
the sale of such mortgage and collateral assignment. Lease payments under the
Showboat Lease are required to be passed-through to holders of the Showboat
Notes.

NOTE 12 - RETIREMENT PLANS

RII and certain of its subsidiaries participate, and certain of RII's
former subsidiaries participated, in a defined contribution plan covering
substantially all of their non-union, full-time employees. The Company makes
contributions to this plan based on a percentage of eligible employee
contributions. Total pension expense for this plan was $683,000, $804,000 and
$767,000 in 1994, 1993 and 1992, respectively.

In addition to the plan described above, union and certain other
employees of RIH and certain former subsidiaries of RII are covered by
multi-employer defined benefit pension plans to which the subsidiaries make, or
made, contributions. The Company's pension expense for these plans totalled
$1,066,000, $1,392,000 and $1,403,000 in 1994, 1993 and 1992, respectively.

NOTE 13 - WRITE-DOWN OF NON-OPERATING REAL ESTATE

The Company owns various non-operating sites in Atlantic City, New
Jersey, which are available for sale. Certain of these properties could be
developed while others are designated as wetlands. Based on a study of these
properties directed by the initial post-Restructuring Board of Directors of
RII, which Board was named as part of the Plan, the Company determined that
write-downs totalling $20,525,000 were appropriate in order to properly reflect
the net realizable value of these properties.

NOTE 14 - INCOME TAXES

As discussed in Note 1, the Company adopted SFAS 109 effective January
1, 1993. There was no effect on the accompanying Consolidated Statements of
Operations nor was there a cumulative effect of adopting SFAS 109.

Because the exchange of the Series Notes occurred pursuant to a plan
confirmed by the Bankruptcy Court, any cancellation of debt income realized by
reason of the consummation of the Plan is excludable from the Company's federal
taxable income. In 1994 the Company recorded a current federal tax provision
of $300,000 representing the estimated alternative minimum tax ("AMT")
resulting from utilization of net operating loss ("NOL") carryforwards to
offset the taxable income generated in 1994. This taxable income was primarily
due to the sale of the Paradise Island operations. Though this sale generated
a $72,463,000 loss for book purposes, the tax bases of the assets and equity
sold were significantly less than the book bases. The NOL's utilized were
available to the Company under the provisions of the Internal

F - 22
<PAGE> 189
Revenue Code for gains existing as of the date of change in ownership. The
current federal tax provision was offset by a deferred federal tax benefit of
the same amount resulting from the AMT credit carryforward.

NOL's were generated for federal tax purposes in 1993 and 1992,
therefore no current federal tax provision was recorded in those years. During
1992 the Company received federal income tax refunds of $1,348,000 when the
audit of the Company's 1981 and 1982 tax returns was completed. Such amount
was recorded as a federal income tax benefit in 1992.

In August 1993 tax law changes were enacted which resulted in an
increase in the Company's federal income tax rate. The increase resulted in a
$1,000,000 increase in the Company's deferred income tax liability and a
deferred income tax provision of the same amount.

No state tax provision was recorded in 1994, 1993 or 1992 due to the
utilization of state NOL carryforwards in states where the Company generated
taxable income.

Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax liabilities and assets as
of December 31 were as follows:

<TABLE>
<CAPTION>
(In Thousands of Dollars) 1994 1993
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Basis differences on property and
equipment used in operations $ (52,600) $ (92,800)
Other (2,800) (2,400)
--------- ---------
Total deferred tax liabilities (55,400) (95,200)
--------- ---------

Deferred tax assets:
Net operating loss carryforwards 195,800 259,900
Basis differences on property not used
in operations 15,200 6,900
Book reserves not yet deductible
for tax 12,900 17,100
Basis differences on debt 10,000 15,100
Tax credit carryforwards 3,100 2,900
Other 5,900 5,300
--------- ---------
Total deferred tax assets 242,900 307,200

Valuation allowance for deferred tax
assets (241,200) (266,000)
--------- ---------
Deferred tax assets, net of valuation
allowance 1,700 41,200
--------- ---------

Net deferred tax liabilities $ (53,700) $ (54,000)
========= =========
</TABLE>

F - 23
<PAGE> 190
The effective income tax rate on the loss before income taxes and
extraordinary items varies from the statutory federal income tax rate as a
result of the following factors:

<TABLE>
<CAPTION>
1994 1993 1992
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory federal income
tax rate (35.0%) (35.0%) (34.0%)

Net operating losses for
which no tax benefit
was recognized 37.2% 34.7% 33.6%

Income taxes refunded (2.5%)

Other, including impact
of increase in tax rate
in 1993 (2.2%) 1.3% .4%
----- ----- -----

Effective tax expense
(benefit) rate 0.0% 1.0% (2.5%)
===== ===== =====
- ---------------------------------------------------------------------------------------------
</TABLE>

For federal income tax purposes the Company had NOL carryforwards of
approximately $559,000,000 at December 31, 1994. Of this amount,
approximately $177,000,000 is not limited as to use and expires from 2005
through 2008. Due to the change of ownership of RII in 1990, the balance of
the NOL carryforwards (the "Pre-Change NOL's"), which expires from 1999 through
2005, is limited in its availability to offset future taxable income of the
Company. These Pre-Change NOL's are available to offset gains on sales of
assets which were owned by the Company at the date of the change in ownership
of the Company and which are sold within five years of that date, or, by
September 1995. Assuming no further qualifying asset sales take place within
the required period, all but approximately $83,000,000 of the Pre-Change NOL's
are expected to expire unutilized.

At December 31, 1994, RIH had approximately $136,000,000 of NOL
carryforwards in New Jersey, which expire from 1995 through 1997. Also at that
date the Company had significant NOL carryforwards in Florida, which expire
from 1995 through 2008.

Also, for federal income tax purposes, the Company had tax credit
carryforwards of $3,100,000 at December 31, 1994 which expire from 1998 through
2009.

The source of loss before income taxes and extraordinary items was as
follows:

<TABLE>
<CAPTION>
(In Thousands of Dollars) 1994 1993 1992
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. source loss $(106,487) $(81,542) $(41,526)
Foreign source earnings (loss) 7,596 (19,622) (13,276)
----- -------- --------

Loss before income taxes
and extraordinary items $ (98,891) $(101,164) $(54,802)
========= ========= ========
</TABLE>

F - 24
<PAGE> 191
NOTE 15 - STATEMENTS OF CASH FLOWS

Supplemental disclosures required by Statement of Financial Accounting
Standards No. 95, "Statement of Cash Flows," are presented below.

<TABLE>
<CAPTION>
(In Thousands of Dollars) 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Reconciliation of net earnings
(loss) to net cash provided
by operating activities:
Net earnings (loss) $ 91,117 $(102,164) $ (53,454)
Adjustments to reconcile net
earnings (loss) to net cash
provided by operating
activities:
Extraordinary items (190,008)
Loss on SIHL Sale 72,463
Write-down of non-operating
real estate 20,525
Depreciation 17,250 27,924 25,322
Amortization (principally
debt discounts) 15,046 51,254 37,569
Interest expense settled by
issuance of long-term debt 40,268 31,165
Provision for doubtful
receivables 1,212 2,889 4,047
Provision for discount on
CRDA obligations, net of
amortization 1,456 1,538 1,447
Deferred tax provision
(benefit) (300) 1,000
Recapitalization costs 5,232 8,789 2,848
Proceeds from Litigation
Trust (2,542)
Net loss on sales of
property and equipment 107 220 113
Net (increase) decrease in
receivables (913) 2,236 2,744
Net (increase) decrease in
inventories and prepaid
expenses 3,967 (849) 429
Net (increase) decrease in
deferred charges and
other assets 1,073 (416) (1,499)
Net increase (decrease) in
accounts payable and
accrued liabilities 14,463 11,327 (10,299)
--------- ------- --------

Net cash provided by
operating activities $ 50,148 $ 44,016 $ 40,432
========= ========== ==========
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

F - 25
<PAGE> 192
<TABLE>
<CAPTION>
(In Thousands of Dollars) 1994 1993 1992
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Non-cash investing and
financing transactions:

Exchange of Series Notes for:
New Debt Securities
(at estimated market value) $135,300
SIHL Shares (at estimated
market value) 60,000
RII Common Stock (at
estimated market value) 24,415
Other liabilities 125

Exchange of Griffin Note
for Group Notes $7,523

Reduction in Group Note
applied to prepaid services 2,310 2,205

Issuance of RII Common Stock
for prepaid services 2,060

Issuance of RII Common Stock
in settlement of certain
recapitalization costs 865

Increase in liabilities for
additions to property and
equipment and other assets 80 632 $112

Reclassifications to other
assets from receivables
and property and equipment 450 337

Other Class 3C Claims settled
for RII Common Stock and
Series B Notes 227
- -----------------------------------------------------------------------------------------------

</TABLE>

NOTE 16 - COMMITMENTS AND CONTINGENCIES

CRDA

The Casino Control Act, as originally adopted, required a licensee to
make investments equal to 2% of the licensee's gross revenue (as defined in the
Casino Control Act) (the "investment obligation") for each calendar year,
commencing in 1979, in which such gross revenue exceeded its "cumulative
investments" (as defined in the Casino Control Act). A licensee had five years
from the end of each calendar year to satisfy this investment obligation or
become liable for an "alternative tax" in the same amount. In 1984 the New
Jersey legislature amended the Casino Control Act so that these provisions

F - 26
<PAGE> 193
now apply only to investment obligations for the years 1979 through 1983.

Effective for 1984 and subsequent years, the amended Casino Control
Act requires a licensee to satisfy its investment obligation by purchasing
bonds to be issued by the CRDA, or by making other investments authorized by
the CRDA, in an amount equal to 1.25% of a licensee's gross revenue. If the
investment obligation is not satisfied, then the licensee will be subject to an
investment alternative tax of 2.5% of gross revenue. Since 1985, a licensee
has been required to make quarterly deposits with the CRDA against its current
year investment obligation.

An analysis of RIH's investment obligations under the Casino Control
Act and RIH's means of settlement since 1979 follows:

<TABLE>
<CAPTION>
(In Thousand of Dollars) 1973-1983 1984-1994 Total
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment obligations $(21,637) $(32,296) $ (53,933)

Means of settlement:
Housing related investments
under audit 13,104 13,104

Housing related investments
previously approved 1,000 1,000

CRDA deposits/bond purchases 7,533 31,523 39,056
----- ------ --------

Remaining investment obligation
at December 31, 1994, which
was deposited in January 1995 $ -0- $ (773) $ (773)
===== ======== ========
- ------------------------------------------------------------------------------------
</TABLE>

With regard to the housing related investments under audit, in January
1988 the CRDA notified the Company of its interpretation as to the periods of
time during which expenditures could be made to satisfy investment obligations.
CRDA's interpretation differs from RIH's and if found to be correct would
decrease the amount of RIH's qualifying expenditures by approximately
$5,000,000 to $6,000,000. RIH believes that its interpretation is correct and
intends to contest this issue.

F - 27
<PAGE> 194
behalf of the Treasury identifying $10,165,000 of project development costs
available for investment credit towards the investment obligation. This leaves
a total of $2,939,000 of housing related investments under audit in question.
The Company has notified the Treasury that it takes exception to the Treasury's
computation of amounts due. Further, the Company believes that the $2,939,000
of housing related investments in question will be found, under further audit,
to have been satisfied.

These matters have been dormant for some time. The Company was
verbally contacted by the Treasury in late 1993 regarding the Treasury's
proposal for a resolution of these matters, but has had no communication since
then. If the CRDA's interpretation as to the periods of time during which
qualifying expenditures can be made is found to be correct, or if the
Treasury's issue is determined adversely, RIH could be required to pay the
relevant amount in cash to the CRDA. In the opinion of management, based upon
advice of counsel, the aggregate liability, if any, arising from these issues
will not have a material adverse effect on the accompanying consolidated
financial statements.

As reflected in the table above, through December 31, 1994, RIH had
made CRDA deposits/bond purchases totalling $39,056,000. However, in August
1989 RIH donated $12,048,000 to the CRDA in exchange for which RIH was relieved
of its obligation to purchase CRDA bonds of $18,193,000. Because RIH already
had the $18,193,000 for bond purchases on deposit with the CRDA, the difference
between this amount and the amount of the donation, or $6,145,000, was refunded
to RIH in August 1989. Thus, at December 31, 1994, RIH had a remaining balance
of $5,286,000 face value of bonds issued by the CRDA and had $15,577,000 on
deposit with the CRDA. These bonds and deposits, net of an estimated discount
charged to expense to reflect the below-market interest rate payable on the
bonds, were recorded as other assets in the Company's Consolidated Balance
Sheets.

RIH records charges to expense to reflect the below-market interest
rate payable on the bonds it may have to purchase to fulfill its investment
obligation at the date the obligation arises. The charges in 1994, 1993 and
1992 for discounts on obligations arising in those years were $1,461,000,
$1,541,000 and $1,451,000 respectively.

Litigation

RII and certain of its subsidiaries are defendants in certain
litigation. In the opinion of management, based upon advice of counsel, the
aggregate liability, if any, arising from such litigation will not have a
material adverse effect on the accompanying consolidated financial statements.

NOTE 17 - GEOGRAPHIC AND BUSINESS SEGMENT INFORMATION

Schedules of geographic and business segment information relating to
(i) revenues, (ii) contribution to consolidated loss before income taxes and
extraordinary items and (iii) identifiable assets, depreciation and capital
additions are included in "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - RII."

F - 28
<PAGE> 195
REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholder
Resorts International Hotel, Inc.

We have audited the accompanying consolidated balance sheets of
Resorts International Hotel, Inc. as of December 31, 1994 and 1993, and the
related consolidated statements of operations, changes in shareholder's equity
(deficit), and cash flows for each of the three years in the period ended
December 31, 1994. Resorts International Hotel, Inc. is an indirect wholly
owned subsidiary of Resorts International, Inc. 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.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated financial
position of Resorts International Hotel, Inc. at December 31, 1994 and 1993,
and the consolidated results of its operations and its cash flows for each of
the three years in the period ended December 31, 1994, in conformity with
generally accepted accounting principles.

/S/ ERNST & YOUNG LLP

Philadelphia, Pennsylvania
February 17, 1995,
except for Note 2,
as to which the date is
February 27, 1995

F - 29
<PAGE> 196
Resorts International Hotel, Inc.
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)

<TABLE>
<CAPTION>
December
----------------------------------
Assets 1994 1993
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash (including cash equivalents
of $12,695 and $11,446) $ 26,876 $ 25,947
Receivables, net 6,232 5,114
Interest receivable from affiliate 1,125
Note receivable from affiliate 50,000
Inventories 1,793 1,754
Prepaid expenses 8,566 5,642
-------- --------
Total current assets 43,467 89,582
-------- --------

Property and equipment:
Land and land rights 53,060 53,250
Land improvements 158 158
Hotels and other buildings 108,051 104,475
Furniture, machinery and equipment 45,097 40,456
Construction in progress 41 802
-------- --------
206,407 199,141
Less accumulated depreciation (48,906) (35,821)
-------- --------
Net property and equipment 157,501 163,320

Deferred charges and other assets 11,766 11,262
-------- --------

$212,734 $264,164
======== ========
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Consolidated Financial Statements of RIH.

F - 30
<PAGE> 197
Resorts International Hotel, Inc.
CONSOLIDATED BALANCE SHEETS
(In Thousand of Dollars, except par value)

<TABLE>
<CAPTION>
Liabilities and Shareholder's December 31,
------------------------------------
Equity (Deficit) 1994 1993
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable and accrued liabilities $ 24,365 $ 24,900
Interest payable to affiliate 4,113
Notes payable to affiliate 325,000
Due to RII 4,411 42,859
-------- ---------
Total current liabilities 32,889 392,759
-------- ---------

Notes payable to affiliate, net of
unamortized discounts 125,309
--------

Deferred income taxes 19,400 19,400
-------- ---------

Commitments and contingencies (Note 12)

Shareholder's equity (deficit):
Common stock - $1 par value - 1,000,000
and 100 shares outstanding 1,000
Capital in excess of par (excess of
liabilities over assets at August 31,
1990 reorganization) 21,366 (198,829)
Retained earnings 12,770 50,834
-------- ---------
Total shareholder's equity (deficit) 35,136 (147,995)
-------- ---------

$212,734 $ 264,164
======== =========
- -------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Consolidated Financial Statements of RIH.

F - 31
<PAGE> 198
Resorts International Hotel, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands of Dollars)

<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------------------
1994 1993 1992
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Casino $250,482 $244,116 $233,780
Rooms 7,134 6,974 8,766
Food and beverage 14,609 15,926 16,056
Other casino/hotel revenues 4,508 4,463 4,138
-------- -------- --------
276,733 271,479 262,740
-------- -------- --------
Expenses:
Casino 143,748 141,608 127,847
Rooms 3,243 3,402 3,582
Food and beverage 15,823 17,710 17,658
Other casino/hotel operating expenses 34,759 34,764 33,281
Selling, general and administrative 36,101 39,352 39,292
RII parent services fee 9,082 8,911 8,629
Depreciation 13,186 13,664 11,402
-------- -------- --------
255,942 259,411 241,691
-------- -------- --------

Earnings from operations 20,791 12,068 21,049

Other income (deductions):
Interest income 3,623 7,615 7,576
Interest expense (10,858) (193) (395)
Amortization of debt discounts (757)
Recapitalization costs (975) (2,727) (874)
-------- -------- --------

Earnings before income taxes and
extraordinary item 11,824 16,763 27,356

Income tax expense (400) (10,942)
-------- -------- --------

Earnings before extraordinary item 11,824 16,363 16,414
Extraordinary item 4,008
-------- -------- --------

Net earnings $ 15,832 $ 16,363 $ 16,414
======== ======== ========
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Consolidated Financial Statements of RIH.

F - 32
<PAGE> 199
Resorts International Hotel, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)

<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------------------
1994 1993 1992
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 274,467 $ 272,150 $ 261,462
Cash paid to suppliers and employees (242,154) (250,281) (229,911)
--------- --------- ---------
Cash flow from operations before
interest and income taxes 32,313 21,869 31,551
Interest received 1,296 10,973 4,204
Interest paid (6,745) (193) (395)
Income taxes paid to parent (10,942)
--------- --------- ---------
Net cash provided by operating
activities 26,864 32,649 24,418
--------- --------- ---------

Cash flows from investing activities:
Payments for property and equipment (7,744) (21,013) (15,495)
Purchase of 12,899 Units (6,740)
CRDA deposits and bond purchases (3,044) (3,025) (2,871)
Proceeds from sale of property and
equipment 116
--------- --------- ---------
Net cash used in investing
activities (17,412) (24,038) (18,366)
--------- --------- ---------

Cash flows from financing activities:
Distribution to GGRI (12,262)
Advances from (repayments to) RII 4,788 (515) 1,582
Recapitalization costs paid to RII (975) (2,727) (874)
Repayments of non-affiliated debt (74) (2,065) (1,003)
--------- --------- --------
Net cash used in financing
activities (8,523) (5,307) (295)
--------- --------- --------

Net increase in cash and cash
equivalents 929 3,304 5,757

Cash and cash equivalents at beginning
of period 25,947 22,643 16,886
--------- --------- --------

Cash and cash equivalents at end of
period $ 26,876 $ 25,947 $ 22,643
========= ========= =========
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Consolidated Financial Statements of RIH.

F - 33
<PAGE> 200
Resorts International Hotel, Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S
EQUITY (DEFICIT)
(In Thousands of Dollars)

<TABLE>
<CAPTION>
Capital in excess
of par (excess of
liabilities over
RIH assets at
common August 31, 1990 Retained
stock reorganization) earnings
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at December 31, 1991 $ -0- $(198,829) $ 18,057

Net earnings for year 1992 16,414
------ --------- --------

Balance at December 31, 1992 -0- (198,829) 34,471

Net earnings for year 1993 16,363
------ --------- --------

Balance at December 31, 1993 -0- (198,829) 50,834

Distribution of RIH
Promissory Note and RIH
Junior Promissory Note
to RII (38,168) (53,896)

Shares issued to GGRI in
exchange for the RIH-GGRI
Notes 1,000 324,000

Distribution of RIB Note and
accrued interest thereon to
GGRI (53,375)

Distribution to GGRI (12,262)

Net earnings for year 1994 15,832
------ --------- --------

Balance at December 31, 1994 $1,000 $ 21,366 $ 12,770
====== ========= ========
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Consolidated Financial Statements of RIH.

F - 34
<PAGE> 201
Resorts International Hotel, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Resorts International Hotel, Inc. ("RIH") owns and operates Merv
Griffin's Resorts Casino Hotel ("Resorts Casino Hotel"), a casino/hotel complex
located in Atlantic City, New Jersey. Prior to May 3, 1994, RIH was a direct,
wholly owned subsidiary of Resorts International, Inc. ("RII"). As part of a
restructuring (the "Restructuring") of certain publicly held debt securities of
RII (the "Series Notes") which was effective on May 3, 1994 (the "Effective
Date"), RIH became a wholly owned subsidiary of GGRI, Inc. ("GGRI"), which is a
wholly owned subsidiary of RII.

Principles of Consolidation

The consolidated financial statements include the accounts of RIH and
its subsidiaries. All significant intercompany balances and transactions have
been eliminated in consolidation.

Revenue Recognition

RIH records as revenue the win from gaming activities which represents
the difference between amounts wagered and amounts won by patrons. Revenues
from hotel and related services and from theater ticket sales are recognized at
the time the related service is performed.

Complimentary Services

<TABLE>
<CAPTION>
(In Thousands of Dollars) 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Rooms $ 4,016 $ 3,728 $ 3,010
Food and beverage 14,547 16,250 16,709
Other casino/hotel operations 7,404 7,216 6,174
------- ------- -------

Total allocated to casino $25,967 $27,194 $25,893
======= ======= =======
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

F - 35
<PAGE> 202
Cash Equivalents

RIH considers all of its short-term money market securities purchased
with maturities of three months or less to be cash equivalents. The carrying
value of cash equivalents approximates fair value due to the short maturity of
these instruments.

Inventories

Inventories of provisions, supplies and spare parts are carried at the
lower of cost (first-in, first-out) or market.

Property and Equipment

Property and equipment are depreciated over their estimated useful
lives using the straight-line method for financial reporting purposes.

Casino Reinvestment Development Authority ("CRDA") Obligations

Under the New Jersey Casino Control Act ("Casino Control Act"), RIH is
obligated to purchase CRDA bonds, which will bear a below-market interest rate,
or make an alternative qualifying investment. RIH charges to expense an
estimated discount related to CRDA investment obligations as of the date the
obligation arises based on fair market interest rates of similar quality bonds
in existence as of that date. On the date RIH actually purchases the CRDA
bond, the estimated discount previously recorded is adjusted to reflect the
actual terms of the bonds issued and the then existing fair market interest
rate for similar quality bonds.

The discount on CRDA bonds purchased is amortized to interest income
over the life of the bonds using the effective interest rate method.

Income Taxes

RIH and RII's other domestic subsidiaries file consolidated federal
income tax returns with RII.

Effective January 1, 1993, RIH adopted the liability method of
accounting prescribed by Statement of Financial Accounting Standards No. 109
("SFAS 109"), "Accounting for Income Taxes." Although RIH is a member of a
consolidated group for federal income tax purposes, RIH applies SFAS 109 on a
separate return basis for financial reporting purposes.

Prior to the adoption of SFAS 109, RIH had agreed with RII to provide
for federal and state income taxes using a combined rate of 40%. Material
transactions which would have been subject to combined tax rates significantly
different from the 40% rate were to be separately tax effected. The resulting
liability was settled on a current basis.

NOTE 2 - RESTRUCTURING OF RII'S SERIES NOTES

RII and GGRI, RII's subsidiary which guaranteed the Series Notes,

F - 36
<PAGE> 203
proposed the Restructuring of the Series Notes which was accomplished through a
prepackaged bankruptcy plan of reorganization (the "Plan"). On March 21, 1994,
after receiving the requisite acceptances for confirmation of the Plan from
holders of the Series Notes and equity interests in RII, RII and GGRI filed
their prepackaged bankruptcy cases with the United States Bankruptcy Court for
the District of Delaware (the "Bankruptcy Court"). The Plan was confirmed by
the Bankruptcy Court on April 22, 1994 and on the Effective Date all conditions
to the effectiveness of the Plan were either met or waived and the Plan became
effective.

Pursuant to the Plan, the Series Notes were exchanged for, among other
things, $125,000,000 principal amount of 11% Mortgage Notes (the "Mortgage
Notes") due September 15, 2003 and $35,000,000 principal amount of 11.375%
Junior Mortgage Notes (the "Junior Mortgage Notes") due December 15, 2004.
Hereinafter the Mortgage Notes and the Junior Mortgage Notes, collectively, are
referred to as the "New Debt Securities." The New Debt Securities were issued
by Resorts International Hotel Financing, Inc. ("RIHF"), a subsidiary of RII,
and are guaranteed by RIH. The accrual of interest and amortization of
discounts on the New Debt Securities commenced on May 3, 1994. Also pursuant
to the Plan, RIHF, RIH and RII entered into the senior note purchase agreement
(the "Senior Facility") described below.

The Mortgage Notes are secured by a $125,000,000 promissory note made
by RIH (the "RIH Promissory Note"), the terms of which mirror the terms of the
Mortgage Notes. The RIH Promissory Note and RIH's guaranty of the Mortgage
Notes are secured by liens on the Resorts Casino Hotel, consisting of RIH's fee
and leasehold interests in the Resorts Casino Hotel, the contiguous parking
garage and property, all additions and improvements thereto, and related
personal property. The liens securing the Mortgage Notes will be subordinated
to the lien securing the Senior Facility Notes (described below), if the Senior
Facility Notes are issued.

The Junior Mortgage Notes are secured by a $35,000,000 promissory
note made by RIH (the "RIH Junior Promissory Note"), the terms of which mirror
the terms of the Junior Mortgage Notes. In certain circumstances, interest
payable on the Junior Mortgage Notes may be satisfied by the issuance of
additional Junior Mortgage Notes, in which case the balance of the RIH Junior
Promissory Note would increase accordingly. The RIH Junior Promissory Note and
RIH's guaranty of the Junior Mortgage Notes are also secured by liens on the
Resorts Casino Hotel property as described above. The liens securing the
Junior Mortgage Notes will be subordinated to the lien securing the Senior
Facility Notes, if the Senior Facility Notes are issued, and are subordinated
to the liens securing the Mortgage Notes.

F - 37
<PAGE> 204
restrictions on making loans to an affiliate or other person other than (x)
intercompany advances to RII not in excess of $1,000,000 in the aggregate at
any time outstanding and (y) loans to RII from the proceeds of the Senior
Facility (or similar working capital facility), provided, however, that RIH can
make certain loans or engage in certain credit transactions in the operation of
Resorts Casino Hotel, if such loans or credit transactions are in the ordinary
course of business of operating a casino/hotel and (iii) restrictions from
entering into certain transactions with affiliates on terms less favorable to
RIH or its subsidiaries than an arm's length transaction. In this regard, the
Indentures specifically permit affiliated transactions in connection with the
Senior Facility, the Griffin Services Agreement described in Note 8, the parent
services agreement with RII which provides for payment of the three percent
services fee described in Note 8, and a tax sharing agreement with RII which
limits RIH's tax payments to RII to reimbursements of cash payments made by RII
for income or alternative minimum taxes arising from the earnings or operations
of RIH.

The Senior Facility among RIHF, RII and RIH and certain funds and
accounts advised or managed by Fidelity Management & Research Company
("Fidelity"), as amended in February 1995, is available for a single borrowing
of up to $19,738,000 during the period ending May 2, 1996, through the issuance
of notes (the "Senior Facility Notes"). If issued, the Senior Facility Notes
will bear interest at 11.75% and will be due in 2002. The Senior Facility
Notes will be senior obligations of RIHF secured by a promissory note from RIH
in an aggregate principal amount of up to $19,738,000 payable in amounts and at
times necessary to pay the principal of and interest on the Senior Facility
Notes. The Senior Facility Notes will be guaranteed by RIH and secured by a
lien on the Resorts Casino Hotel property as described above. The Senior
Facility Notes will also be secured by a pledge by GGRI of all issued and
outstanding shares of RIH common stock. In addition, the Senior Facility Notes
will be guaranteed by RII, which guaranty will be secured by a pledge of all
the issued and outstanding stock of GGRI and RIHF. Market interest rates and
other economic conditions, among other factors, will determine if it is
appropriate for RIHF to draw on the Senior Facility.

The Restructuring also prescribed the following transactions between
RIH and its affiliates:

- RIH issued the RIH Promissory Note and the RIH Junior Promissory Note
in repayment of RIH's balance due to RII on the Effective Date with
the remainder a distribution to RII. RIH's retained earnings of
$53,896,000 at April 30, 1994 was included in that distribution.

- GGRI exchanged the $325,000,000 RIH-GGRI Notes (see Note 7) for
999,900 shares of common stock of RIH. In order to accomplish this,
RIH authorized an additional 4,997,500 shares of its common stock.

- RII contributed to GGRI the 100 shares of common stock of RIH which
RII owned. This resulted in RIH's becoming a wholly owned subsidiary
of GGRI and an indirect subsidiary of RII. RIH now has

F - 38
<PAGE> 205
a total of 5,000,000 shares of common stock authorized, of which
1,000,000 shares are issued and outstanding.

- RIH distributed to GGRI, as a return of surplus, the $50,000,000 RIB
Note (see Note 5) and accrued interest thereon.

- RIH distributed all of its cash and cash equivalents in excess of
$15,000,000 as of the Effective Date to GGRI. GGRI distributed such
cash to RII so that RII, in turn, could distribute Excess Cash (as
defined in the Plan) to holders of Series Notes.

For pro forma effects of the Restructuring on continuing operations of
RIH assuming the Restructuring occurred on January 1, 1994 see "PRO FORMA
FINANCIAL DATA - RIH."

NOTE 3 - CASH EQUIVALENTS

Cash equivalents at December 31, 1994 included a reverse repurchase
agreement (U.S. Treasury Notes purchased under an agreement to resell those
notes) with National Westminster Bank NJ in the amount of $6,317,000 under
which RIH had not taken delivery of the underlying securities. The agreement
matured on January 3, 1995. RIH's cash equivalents at December 31, 1994 also
included U.S. Treasury Bills.

NOTE 4 - RECEIVABLES

Components of receivables at December 31 were as follows:

<TABLE>
<CAPTION>
(In Thousands of Dollars) 1994 1993
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Gaming $ 8,035 $ 8,116
Less allowance for doubtful accounts (3,819) (4,498)
------- -------

4,216 3,618
------- -------
Non-gaming:
Hotel and related 799 534
Other 1,299 1,002
------- -------
2,098 1,536
Less allowance for doubtful accounts (82) (40)
------- -------

2,016 1,496
------- -------

$ 6,232 $ 5,114
======= =======
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

NOTE 5 - NOTE RECEIVABLE FROM AFFILIATE

In 1988, RIH loaned $50,000,000 pursuant to a pre-arranged
back-to-back loan to Resorts International (Bahamas) 1984 Limited ("RIB"), an
indirect wholly owned subsidiary of RII which was disposed of as part of the

F - 39
<PAGE> 206
Restructuring, in exchange for a promissory note (the "RIB Note"). Such note
was payable on demand and bore interest at 13 1/2% per annum, with interest
payments due each May 1 and November 1. Pursuant to the Restructuring, RIH
distributed the RIB Note and accrued interest thereon to GGRI as a return of
surplus. See Note 2.

NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Components of accounts payable and accrued liabilities at December 31
were as follows:
<TABLE>
<CAPTION>
(In Thousands of Dollars) 1994 1993
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Accrued payroll and related taxes
and benefits $ 9,417 $ 9,159
Accrued gaming taxes, fees and
related assessments 7,064 6,620
Customer deposits and unearned
revenues 2,152 3,363
Trade payables 1,410 1,847
Other accrued liabilities 4,322 3,911
------- -------
$24,365 $24,900
======= =======
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

NOTE 7 - NOTES PAYABLE TO AFFILIATES

As described in Note 2, on May 3, 1994, RIH issued the RIH Promissory
Note and the RIH Junior Promissory Note (collectively, the "New RIH Notes") to
RII. RII then transferred the New RIH Notes to RIHF in exchange for the
Mortgage Notes and the Junior Mortgage Notes, and RIH amended and restated the
New RIH Notes making them payable to RIHF.

In November 1994, RIH purchased $12,899,000 principal amount of Junior
Mortgage Notes through the purchase of 12,899 Units (each $1,000 principal
amount of Junior Mortgage Notes is traded as a "Unit" along with one share of
RII's class B redeemable common stock) at a price of $6,740,000. The resulting
gain of $4,008,000 is reported as an extraordinary item.

The carrying value and fair value by component of Notes Payable to
Affiliate at December 31, 1994 were as follows:

F - 40
<PAGE> 207

<TABLE>
<CAPTION>
Carrying Fair
Value Value
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
RIH Promissory Note $125,000 $83,750
Less unamortized discount (18,123)
--------
106,877
--------

RIH Junior Promissory Note $ 35,000
Less principal amount of Junior
Mortgage Notes held by RIH (12,899)
--------
22,101 13,040
Less unamortized discount (3,669)
--------
18,432
-------- -------

$125,309 $96,790
======== =======
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

The fair values presented above are based on December 31 closing
market prices for RIHF's publicly traded debt because RIHF's debt is (i)
dependent on the New RIH Notes for debt service and (ii) collateralized and
guaranteed by RIH.

For a description of the RIH Promissory Note and the RIH Junior
Promissory Note see Note 2. Interest on the RIH Promissory Note is payable
semi-annually on March 15 and September 15 in each year. Interest on the RIH
Junior Promissory Note is payable semi-annually on June 15 and December 15 in
each year. The effective interest rates on the RIH Promissory Note and the RIH
Junior Promissory Note are 13.9% and 14.6%, respectively. No principal
payments are required during the next five years on the RIH Promissory Note or
the RIH Junior Promissory Note.

In 1988, GGRI issued $325,000,000 principal amount of publicly traded
notes. GGRI loaned the proceeds of the notes to RIH in exchange for, among
other things, $325,000,000 of promissory notes payable to GGRI (the "RIH-GGRI
Notes"). The RIH-GGRI Notes, as amended in 1992, were payable on demand after
April 15, 1994 and were non-interest bearing, but the principal amount accreted
according to a schedule. Pursuant to the Restructuring, GGRI exchanged the
RIH-GGRI Notes for 999,900 shares of common stock of RIH. See Note 2.

The RIH-GGRI Notes and the RIB Note described in Note 5 related to
intercompany loans which were not anticipated to be repaid in the ordinary
course of business. In light of this and the fact that RII had proposed the
Restructuring of the Series Notes, which proposal included the cancellation of
both the RIH-GGRI Notes and the RIB Notes through a series of transactions, it
was not practical to estimate the fair values of the RIH-GGRI Notes or the RIB
Note at December 31, 1993.

F - 41
<PAGE> 208

NOTE 8 - RELATED PARTY TRANSACTIONS

RIH recorded the following income and expenses from RII and its other
subsidiaries:

Expenses:
Parent services fee to RII $ 9,082 $8,911 $8,629
Property rentals to RII 325 325 325
Interest & amortization of
discounts on notes payable to
RIHF 11,604
------- ------ ------

$21,011 $9,236 $8,954
======= ====== ======
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

RII charges RIH the parent services fee of three percent of gross
revenues for administrative and other services.

In addition to the above, charges for insurance costs are allocated to
RIH based on relative amounts of operating revenue, payroll, property value, or
other appropriate measures. Also, recapitalization costs reflected on the
consolidated statements of operations represent RIH's allocated portion of
RII's consolidated recapitalization costs.

License and Services Agreement

In April 1993, RII, RIH and The Griffin Group, Inc. (the "Griffin
Group"), a corporation controlled by Merv Griffin, Chairman of the Board of
RII, entered into a license and services agreement (the "Griffin Services
Agreement") effective as of September 17, 1992, upon the expiration of a
previous license and services agreement. Pursuant to the Griffin Services
Agreement, Griffin Group granted RII and RIH a non-exclusive license to use the
name and likeness of Merv Griffin to advertise and promote facilities and
operations of RII and its subsidiaries. Also pursuant to the Griffin Services
Agreement, Mr. Griffin is to provide certain services to RII and RIH, including
serving as Chairman of the Board of RII and as a host, producer and featured
performer in various shows to be presented in Resorts Casino Hotel, and
furnishing marketing and consulting services.

The Griffin Services Agreement is to continue until September 17, 1997
and provides for earlier termination under certain circumstances including,
among others, a change of control (as defined) of RII and RIH and Mr. Griffin
ceasing to serve as Chairman of the Board of RII.

The Griffin Services Agreement provides for compensation to Griffin
Group in the amount of $2,000,000 for the year ended September 16, 1993, and

F - 42
<PAGE> 209
in specified amounts for each of the following years, which increase at
approximately 5% per year. In accordance with the Griffin Services Agreement,
upon signing, RIH paid Griffin Group $4,100,000, representing compensation for
the first two years. Thereafter, the Griffin Services Agreement called for
annual payments on September 17, each representing a prepayment for the year
ending two years hence. In the event of an early termination of the Griffin
Services Agreement, and depending on the circumstances of such early
termination, all or a portion of the compensation paid to Griffin Group in
respect of the period subsequent to the date of termination may be required to
be repaid to RII and RIH.

In the Griffin Services Agreement RII and RIH agreed to indemnify,
defend and hold harmless Griffin Group and Mr. Griffin against certain claims,
losses and costs, and to maintain certain insurance coverage with Mr. Griffin
and Griffin Group as named insureds.

As part of the Restructuring, the payment due Griffin Group on
September 17, 1994 was settled by applying $2,310,000 as a reduction of the
balance of a note payable to RII by Griffin Group. On August 1, 1994,
following review and approval by the independent members of RII's Board of
Directors, RII agreed to issue 1,940,000 shares of common stock of RII to an
affiliate of Griffin Group in satisfaction of the final payment obligation of
RIH and RII under the Griffin Services Agreement. This payment of $2,425,000
would have been due on September 17, 1995. The closing price of RII's common
stock on the date of the agreement was $1.0625 per share. The shares are not
registered under the Securities Act of 1933 and are restricted securities.

Other

RIH reimbursed Griffin Group $207,000, $130,000 and $25,000 for
charter air services related to RIH business rendered in 1994, 1993 and 1992,
respectively.

In 1994 RIH incurred charges from unaffiliated parties of $394,000 in
producing the live television broadcast of "Merv Griffin's New Year's Eve
Special" from Resorts Casino Hotel. For each of the 1993 and 1992 productions
of "Merv Griffin's New Year's Eve Special," which also were broadcast live on
television, RIH paid $100,000 and provided certain facilities, labor and
accommodations to subsidiaries of January Enterprises, Inc., of which Merv
Griffin formerly was Chairman.

NOTE 9 - RETIREMENT PLANS

RIH has a defined contribution plan in which substantially all
non-union employees are eligible to participate. Employees of certain other
affiliated companies are also eligible to participate in this plan. RIH and
other subsidiaries of RII make contributions to the plan based on a percentage
of eligible employee contributions. RIH's pension expense for this plan was
$637,000, $681,000 and $665,000 for the years 1994, 1993 and 1992,
respectively.

F - 43
<PAGE> 210

Union employees are covered by various multi-employer pension plans to
which contributions are made by RIH and other unrelated employers. RIH's
pension expense for these plans was $842,000, $844,000 and $827,000 for the
years 1994, 1993 and 1992, respectively.

NOTE 10 - INCOME TAXES

As discussed in Note 1, RIH adopted SFAS 109 effective January 1,
1993. In connection with the adoption of SFAS 109 RIH's deferred tax liability
of $19,000,000 as of January 1, 1993 was transferred to RIH from RII. There
were no other effects on the accompanying financial statements.

In 1994 RIH's current federal provision of $1,100,000 was offset by a
deferred federal benefit of the same amount resulting from the recognition of
the carryback of future deductible amounts.

In August 1993 tax law changes were enacted which resulted in an
increase in RIH's federal income tax rate. The increase resulted in a $400,000
increase in RIH's deferred income tax liability and a deferred income tax
provision of the same amount. The provision for income taxes in 1993 also
includes a current federal provision of $2,600,000 related to federal taxable
income generated in 1993, which is offset by a deferred federal benefit of
$2,600,000 resulting from the recognition of the carryback of future deductible
amounts.

No state tax provision was recorded in 1994 or 1993 due to the
utilization of state net operating loss ("NOL") carryforwards.

As described in Note 1, in 1992 RIH had an agreement with RII to
provide for federal and state income taxes at a combined rate of 40%. In 1992
this resulted in income tax expense of $10,942,000.

Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of RIH's deferred tax liabilities and assets as of
December 31 were as follows:

F - 44
<PAGE> 211

<TABLE>
<CAPTION>
(In Thousands of Dollars) 1994 1993
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities - basis
differences on property and equipment $(21,000) $(20,800)
-------- --------

Deferred tax assets:
Net operating loss carryforwards 65,800 65,800
Book reserves not yet deductible for tax 10,000 10,400
Tax credit carryforwards 2,100 2,000
Other 2,400 2,400
-------- --------
Total deferred tax assets 80,300 80,600

Valuation allowance for deferred tax assets (78,700) (79,200)
-------- --------
Deferred tax assets, net of valuation
allowance 1,600 1,400
-------- --------

Net deferred tax liabilities $(19,400) $(19,400)
======== ========
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

The effective income tax rate on earnings before income taxes and
extraordinary items varies from the statutory federal income tax rate as a
result of the following factors:

<TABLE>
<CAPTION>
1994 1993
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Statutory federal income tax rate 35.0% 35.0%

Deferred income tax benefit based on
reversal of temporary differences (15.0%) (19.5%)

Net operating loss utilization (23.1%) (16.3%)

Other, including impact of increase
in tax rate in 1993 3.1% 3.2%
------ -----

Effective tax rate 0.0% 2.4%
====== ======
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

For federal tax purposes RIH had NOL carryforwards of approximately
$188,000,000 at December 31, 1994 which expire from 2003 through 2005. These
loss carryforwards were produced in periods prior to a change in ownership of
the consolidated group of which RIH is a part; therefore, these loss
carryforwards are limited in their availability to offset future taxable
income. For federal tax purposes, this limitation is considered to be owned by
a common parent and would not be available to RIH unless the parent made an
affirmative election to allocate some of the limitation to RIH. Such election
would not be made until such time as RIH ceases to be a member of the group.

For financial reporting purposes, the tax provision has been computed
as if RIH were entitled to a full allocation of the group's limitation. This

F - 45
<PAGE> 212
has the effect of reducing RIH's current tax provision; any remaining current
tax provision of RIH is fully offset by a deferred tax benefit based on the
reversal of temporary differences. Pursuant to the tax sharing agreement
provided for in the Indentures, RIH is not permitted to make any tax payments
to RII unless RII is in a taxpaying position on a consolidated basis.

At December 31, 1994, RIH had NOL carryforwards in New Jersey of
approximately $136,000,000, which expire from 1995 through 1997.

Also, for federal tax purposes, RIH had tax credit carryforwards of
$2,100,000 at December 31, 1994, which expire from 1998 through 2009.

NOTE 11 - STATEMENTS OF CASH FLOWS

Supplemental disclosure required by Statement of Financial Accounting
Standards No. 95, "Statement of Cash Flows," are presented below.

<TABLE>
<CAPTION>
(In Thousands of Dollars) 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Reconciliation of net earnings to net
cash provided by operating activities:
Net earnings $ 15,832 $16,363 $16,414
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Extraordinary gain on purchase of
12,899 Units (4,008)
Depreciation 13,186 13,664 11,402
Provision for discount on CRDA
obligations, net of amortization 1,456 1,538 1,447
Amortization of debt discounts 757
Provision for doubtful receivables 297 901 1,414
Deferred tax provision 400
Recapitalization costs 975 2,727 874
Net loss on sale of property 8 323 8
Net increase in receivables (1,415) (609) (346)
Net (increase) decrease in interest
receivable from affiliate (2,250) 3,375 (3,375)
Net increase in inventories and
prepaid expenses (2,963) (3,992) (580)
Net (increase) decrease in deferred
charges and other assets 1,164 (754) (1,309)
Net increase in interest payable to
affiliate 4,113
Net decrease in accounts payable
and accrued liabilities (288) (1,287) (1,531)
-------- ------- -------

Net cash provided by operating
activities $ 26,864 $32,649 $24,418
======== ======= =======
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

F - 46
<PAGE> 213
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Non-cash investing and financing
transactions:
<S> <C> <C> <C>
Distribute RIH Promissory Note and
RIH Junior Promissory Note as:
Repayment of advances from RII $ 43,236
Distribution to RII 92,064

Exchange RIH-GGRI Notes for shares
of RIH common stock 325,000

Distribute RIB Note and accrued
interest thereon to GGRI 53,375

Increase in liabilities for additions
to property and equipment and other
assets 80 $632 $112
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

NOTE 12 - COMMITMENTS AND CONTINGENCIES

CRDA

An analysis of RIH's investment obligations under the Casino Control
Act and RIH's means of settlement since 1979 follows:

F - 47
<PAGE> 214
<TABLE>
<CAPTION>
(In Thousand of Dollars) 1973-1983 1984-1994 Total
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment obligations $(21,637) $(32,296) $(53,933)

Means of settlement:
Housing related investments
under audit 13,104 13,104

Housing related investments
previously approved 1,000 1,000

CRDA deposits/bond purchases 7,533 31,523 39,056
-------- -------- --------

Remaining investment obligation
at December 31, 1994, which was
deposited in January 1995 $ -0- $ (773) $ (773)
======== ======== ========
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

With regard to the housing related investments under audit, in January
1988 the CRDA notified RIH of its interpretation as to the periods of time
during which expenditures could be made to satisfy investment obligations.
CRDA's interpretation differs from RIH's and if found to be correct would
decrease the amount of RIH's qualifying expenditures by approximately
$5,000,000 to $6,000,000. RIH believes that its interpretation is correct and
intends to contest this issue.

RIH also received a letter dated November 9, 1989, from the State of
New Jersey Department of the Treasury (the "Treasury") stating that the housing
related investments made by RIH were not sufficient to meet its investment
obligation for the years 1979 through 1983. The letter also stated that
alternative tax in the amount of $21,637,000 was due for those years, in
addition to penalties and interest thereon which amounted to $12,514,000 as of
the date of the letter. As set forth in the table above, RIH believes that
$8,533,000 of such obligations have been settled; $7,533,000 in cash and
$1,000,000 by previously approved housing related investments. Also, RIH has
received audit reports issued by an agency acting on behalf of the Treasury
identifying $10,165,000 of project development costs available for investment
credit towards the investment obligation. This leaves a total of $2,939,000 of
housing related investments under audit in question. RIH has notified the
Treasury that it takes exception to the Treasury's computation of amounts due.
Further, RIH believes that the $2,939,000 of housing related investments in
question will be found, under further audit, to have been satisfied.

These matters have been dormant for some time. RIH was verbally
contacted by the Treasury in late 1993 regarding the Treasury's proposal for a
resolution of these matters, but has had no communication since then. If the
CRDA's interpretation as to the periods of time during which qualifying
expenditures can be made is found to be correct, or if the Treasury's issue is
determined adversely, RIH could be required to pay the relevant amount in cash
to the CRDA. In the opinion of management, based upon advice of

F - 48
<PAGE> 215
counsel, the aggregate liability, if any, arising from these issues will not
have a material adverse effect on the accompanying consolidated financial
statements.

Litigation

RIH is a defendant in certain litigation. In the opinion of
management, based upon advice of counsel, the aggregate liability, if any,
arising from such litigation will not have a material adverse effect on the
accompanying consolidated financial statements.

F - 49
<PAGE> 216
REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholder
Resorts International Hotel Financing, Inc.

We have audited the accompanying balance sheets of Resorts
International Hotel Financing, Inc. ("RIHF") as of December 31, 1994 and 1993,
and the related statements of operations and cash flows for the year ended
December 31, 1994. RIHF is a wholly owned subsidiary of Resorts International,
Inc. 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.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of RIHF at December
31, 1994 and 1993, and the results of its operations and its cash flows for the
year ended December 31, 1994, in conformity with generally accepted accounting
principles.

/S/ ERNST & YOUNG LLP

Philadelphia, Pennsylvania
February 17, 1995,
except for Note 2,
as to which the date is
February 27, 1995

F - 50
<PAGE> 217
Resorts International Hotel Financing, Inc.
BALANCE SHEETS
(In Thousands of Dollars, except par value)

<TABLE>
<CAPTION>
December 31,
---------------------------------
1994 1993
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
- ------

Current assets - interest receivable
from affiliate $ 4,113

Notes receivable from affiliate, net
of unamortized discounts 125,309
-------- -----
$129,422 $ -0-
======== ======

Liabilities and Shareholder's Equity
- ------------------------------------

Current liabilities - accrued interest
payable $ 4,113

Long-term debt, net of unamortized
discounts 125,309

Shareholder's equity - common stock
$.01 par value - 1 share outstanding
-------- -----

$129,422 $ -0-
======== ======
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Financial Statements of RIHF.

F - 51
<PAGE> 218
Resorts International Hotel Financing, Inc.
STATEMENT OF OPERATIONS
(In Thousands of Dollars)

<TABLE>
<CAPTION>
December 31,
1994
- -----------------------------------------------------------------------------------------------------------
<S> <C>
Revenues:
Affiliated interest income $10,847
Amortization of discounts on affiliated
notes receivable 757
-------
11,604
-------
Expenses:
Interest expense 10,847
Amortization of debt discounts 757
-------
11,604
-------

Net earnings $ -0-
=======
- -----------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Financial Statements of RIHF.

F - 52
<PAGE> 219
Resorts International Hotel Financing, Inc.
STATEMENT OF CASH FLOWS
(In Thousands of Dollars)

<TABLE>
<CAPTION>
December 31,
1994
- ------------------------------------------------------------------------------------------------------------
<S> <C>
Cash flows from operating activities:
Interest received $ 6,734
Interest paid (6,734)
-------
Net cash provided by operating activities -0-
-------

Net increase in cash and cash equivalents -0-
Cash and cash equivalents at beginning of period -0-
-------
Cash and cash equivalents at end of period $ -0-
=======
- ------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Financial Statements of RIHF.

F - 53
<PAGE> 220
Resorts International Hotel Financing, Inc.

NOTES TO FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND OPERATIONS

Resorts International Hotel Financing, Inc. ("RIHF") was incorporated
under the laws of the State of Delaware in June 1993. RIHF, a wholly owned
subsidiary of Resorts International, Inc. ("RII"), was organized to issue the
public debt securities described in Note 2 in connection with a plan of
reorganization of RII. RIHF is authorized to issue 1,000 shares of common
stock with a par value of $.01 per share. One share was issued to RII for $10
in October 1993.

Until the issuance of the securities described in Note 2 in May of
1994, RIHF had no operations. Therefore no Statements of Operations or Cash
Flows are presented for 1993.

NOTE 2 - NOTES RECEIVABLE FROM AFFILIATE AND LONG-TERM DEBT

RII's Reorganization

RII and GGRI, Inc. ("GGRI"), a subsidiary of RII and the guarantor of
RII's Senior Secured Redeemable Notes which were due April 15, 1994 (the
"Series Notes"), proposed a restructuring (the "Restructuring") of the Series
Notes which was accomplished through a prepackaged bankruptcy plan of
reorganization (the "Plan"). On March 21, 1994, after receiving the requisite
acceptances for confirmation of the Plan from holders of the Series Notes and
equity interests in RII, RII and GGRI filed their prepackaged bankruptcy cases
with the United States Bankruptcy Court for the District of Delaware (the
"Bankruptcy Court"). The Plan was confirmed by the Bankruptcy Court on April
22, 1994 and on May 3, 1994 (the "Effective Date") all conditions to the
effectiveness of the Plan were either met or waived and the Plan became
effective.

Pursuant to the Plan, the Series Notes were exchanged for, among other
things, $125,000,000 principal amount of 11% Mortgage Notes (the "Mortgage
Notes") due September 15, 2003 and $35,000,000 principal amount of 11.375%
Junior Mortgage Notes (the "Junior Mortgage Notes") due December 15, 2004.
Hereinafter the Mortgage Notes and the Junior Mortgage Notes, collectively, are
referred to as the "New Debt Securities." The New Debt Securities were issued
by RIHF and guaranteed by Resorts International Hotel, Inc. ("RIH"), RII's
subsidiary that owns and operates Merv Griffin's Resorts Casino Hotel ("Resorts
Casino Hotel") in Atlantic City, New Jersey. Also pursuant to the Plan, RIHF,
RIH and RII entered into the senior note purchase agreement (the "Senior
Facility") described below.

F - 54
<PAGE> 221
In order to accomplish RII's exchange of the Series Notes, the
Restructuring provided for RIHF to issue the New Debt Securities in exchange
for a $125,000,000 promissory note receivable from RIH (the "RIH Promissory
Note") and a $35,000,000 promissory note receivable from RIH (the "RIH Junior
Promissory Note").

The Junior Mortgage Notes were issued as part of "Units" with shares
of RII's class B redeemable common stock (the "Class B Stock"). Each Unit
comprises $1,000 principal amount of Junior Mortgage Notes and one share of
Class B Stock. Junior Mortgage Notes may not be transferred separately from
the related shares of Class B Stock. Holders of Class B Stock are entitled to
elect one-third of the Board of Directors of RII and under certain
circumstances they would be entitled to elect a majority of RII's Board of
Directors. Approximately 35,000 Units were issued pursuant to the Plan.

New Debt Securities

The Mortgage Notes are secured by the RIH Promissory Note, the terms
of which mirror the terms of the Mortgage Notes. The RIH Promissory Note and
RIH's guaranty of the Mortgage Notes are secured by liens on the Resorts Casino
Hotel, consisting of RIH's fee and leasehold interests comprising the Resorts
Casino Hotel, the contiguous parking garage and property, all additions and
improvements thereto, and related personal property. The liens securing the
Mortgage Notes will be subordinated to the lien securing the Senior Facility
Notes (described below), if the Senior Facility Notes are issued.

The Junior Mortgage Notes are secured by the RIH Junior Promissory
Note, the terms of which mirror the terms of the Junior Mortgage Notes. In
certain circumstances, interest payable on the Junior Mortgage Notes may be
satisfied by the issuance of additional Junior Mortgage Notes, in which case
the balance of the RIH Junior Promissory Note would increase accordingly. The
RIH Junior Promissory Note and RIH's guaranty of the Junior Mortgage Notes are
also secured by liens on the Resorts Casino Hotel property as described above.
The liens securing the Junior Mortgage Notes will be subordinated to the lien
securing the Senior Facility Notes, if the Senior Facility Notes are issued,
and are subordinated to the liens securing the Mortgage Notes.

The indentures pursuant to which the Mortgage Notes and the Junior
Mortgage Notes were issued (collectively, the "Indentures") prohibit RIHF from
paying dividends, from making other distributions in respect of its capital
stock, and from purchasing or redeeming its capital stock, with certain
exceptions.

The Indentures also contain certain other restrictive covenants on the
part of RIHF, including (i) limitations on incurring additional indebtedness,
with certain exceptions; (ii)

F - 55
<PAGE> 222
restrictions on making loans to an affiliate or other person other than (x)
intercompany advances to RII not in excess of $1,000,000 in the aggregate at
any time outstanding and (y) indebtedness evidenced by the RIH Senior Facility
Promissory Note (defined below), the RIH Promissory Note and the RIH Junior
Promissory Note and (iii) restrictions from entering into transactions with
affiliates, other than transactions entered into in connection with the Senior
Facility, on terms less favorable to RIHF than an arm's length transaction.

In November 1994, RIH purchased 12,899 Units comprising $12,899,000
principal amount of Junior Mortgage Notes and 12,899 shares of Class B Stock at
a price of $6,740,000. Although these notes held by RIH have not been
cancelled and remain outstanding legally, the accompanying financial statements
include the RIH Junior Promissory Note, the Junior Mortgage Notes and related
interest income, expense and cash flow amounts net of reductions related to the
notes held by RIH.

The carrying value and fair value by component of long-term debt at
December 31 were as follows:

<TABLE>
<CAPTION>
1994
- ----------------------------------------------------------------------------------------------------------------------
Carrying Fair
(In Thousands of Dollars) Value Value
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mortgage Notes $125,000 $83,750
Less unamortized discount (18,123)
--------
106,877
--------

Junior Mortgage Notes 35,000
Less notes held by RIH (12,899)
--------
22,101 13,040
Less unamortized discount (3,669)
--------
18,432
-------- -------

$125,309 $96,790
======== =======
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

The fair value presented above for RIHF's long-term debt is based on
December 31 closing market prices.

Interest on the Mortgage Notes is payable semi-annually on March 15
and September 15 in each year. Interest on the Junior Mortgage Notes is
payable semi-annually on June 15 and December 15 in each year.

The effective interest rates on RIHF's publicly held debt at December
31, 1994 were as follows: Mortgage Notes - 13.9% and Junior Mortgage Notes -
14.6%. No principal payments are required during the next five years on the
Mortgage Notes or the Junior Mortgage Notes.

F - 56
<PAGE> 223
Senior Facility

The Senior Facility among RIHF, RII and RIH and certain funds and
accounts advised or managed by Fidelity Management & Research Company, as
amended in February 1995, is available for a single borrowing of up to
$19,738,000 during the period ending May 2, 1996, through the issuance of notes
(the "Senior Facility Notes"). If issued, the Senior Facility Notes will bear
interest at 11.75% and will be due in 2002. The Senior Facility Notes will be
senior obligations of RIHF secured by a promissory note from RIH in an
aggregate principal amount of up to $19,738,000 (the "RIH Senior Facility
Promissory Note") payable in amounts and at times necessary to pay the
principal of and interest on the Senior Facility Notes. The Senior Facility
Notes will be guaranteed by RIH and secured by a lien on the Resorts Casino
Hotel property as described above. The Senior Facility Notes will also be
secured by a pledge by GGRI of all issued and outstanding shares of RIH common
stock. In addition, the Senior Facility Notes will be guaranteed by RII, which
guaranty will be secured by a pledge of all the issued and outstanding stock of
GGRI and RIHF. Market interest rates and other economic conditions, among
other factors, will determine if it is appropriate for RII or RIH to draw on
the Senior Facility.

NOTE 3 - STATEMENT OF CASH FLOWS

Supplemental disclosures required by Statement of Financial Accounting
Standards No. 95, "Statement of Cash Flows," are presented below.

<TABLE>
<CAPTION>
December 31,
1994
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
Reconciliation of net earnings to net cash provided
by operating activities:
Net earnings $ -0-
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Amortization of debt discounts 757
Amortization of discounts on affiliated notes
receivable (757)
Net increase in interest receivable from
affiliate (4,113)
Net increase in accrued interest payable 4,113
--------

Net cash provided by operating activities: $ -0-
========

Non-cash investing and financing transactions:
Exchange of New Debt Securities for the RIH
Promissory Note and the RIH Junior Promissory
Note (at estimated market value) $135,300
</TABLE>

F - 57
<PAGE> 224
Resorts International, Inc.
SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
(In Thousands of Dollars, except per share data)

The table below reflects selected quarterly financial data for the years 1994
and 1993.

<TABLE>
<CAPTION>
1994 1993
----------------------------------------------- -------------------------------------------------
For the Quarter First Second Third Fourth First Second Third Fourth
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues (A) $111,872 $ 90,816 $79,760 $70,568 $114,154 $106,697 $117,007 $101,706
======== ======== ======= ======= ======== ======== ======== ========

Earnings (loss) from
operations (A) $ 8,112 $(79,764) $15,056 $ 8,026 $ 9,106 $ 1,791 $ 9,783 $ (7,782)
Recapitalization costs(B) (4,382) (5,406) 1,300 3,256 (593) (1,156) (3,130) (3,910)
Proceeds from Litigation
Trust 2,542
Other income (deductions),
net (C) (30,006) (5,184) (6,571) (5,870) (21,411) (26,003) (25,757) (32,102)
-------- -------- ------- ------- -------- -------- -------- --------

Earnings (loss) before
income taxes and
extraordinary items (23,734) (90,354) 9,785 5,412 (12,898) (25,368) (19,104) (43,794)
Income tax expense (1,000)
-------- --------- ------- ------- -------- --------------------- --------

Earnings (loss) before
extraordinary items (23,734) (90,354) 9,785 5,412 (12,898) (25,368) (20,104) (43,794)
Extraordinary items
(B and D) 187,300 (1,300) 4,008
-------- -------- ------- ------- -------- -------- -------- --------

Net earnings (loss) $(23,734) $ 96,946 $ 8,485 $ 9,420 $(12,898) $(25,368) $(20,104) $(43,794)
======== ======== ======= ======= ======== ======== ======== ========

Per share data (E):
Earnings (loss) before
extraordinary items $ (1.18) $ (2.86) $ .25 $ .14 $ (.64) $ (1.26) $ (1.00) $ (2.17)
Extraordinary items 5.93 (.03) .10
-------- -------- ------- --------------------------------------------------------------
Net earnings (loss) $ (1.18) $ 3.07 $ .22 $ .24 $ (.64) $ (1.26) $ (1.00) $ (2.17)
======== ======== ======= ======= ======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(A) The Company's Paradise Island operations were disposed of on May 3,
1994, through the SIHL Sale, as part of the Restructuring. Earnings
(loss) from operations for the second quarter of 1994 includes a loss
of $73,108,000 on the SIHL Sale and a $20,525,000 charge for the
write-down of non-operating real estate in Atlantic City. Earnings
(loss) from operations for the fourth quarter of 1994 includes a
credit adjustment of $645,000 to the loss on SIHL Sale. See Notes 2
and 13 of Notes to Consolidated Financial Statements.

F - 58
<PAGE> 225
(B) In October 1994, after settlement of the majority of recapitalization
costs and updating estimates of unbilled costs and costs still to be
incurred, the Company determined that the cash balance required to
pay such costs was $1,300,000 less than originally anticipated. This
determination resulted in the $1,300,000 reclassification from
recapitalization costs to extraordinary items reported in the third
quarter of 1994. Recapitalization costs in the fourth quarter of
1994 represent credits resulting from the reversal of restructuring
reserves provided in connection with the Company's 1990 plan of
reorganization.
(C) Includes interest income, interest expense and amortization of debt
discounts.
(D) See Notes 2 and 7 of Notes to Consolidated Financial
Statements.
(E) Earnings per share for the four quarters of 1994 do not add to the
total reported for the year due to changes in the average number of
shares outstanding during the year.

F - 59
<PAGE> 226
Resorts International Hotel, Inc.
SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
(In Thousands of Dollars)

The table below reflects selected quarterly financial data for the years 1994
and 1993.

<TABLE>
<CAPTION>
1994 1993
------------------------------------------- ---------------------------------------------------
For the Quarter First Second Third Fourth First Second Third Fourth
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues $58,873 $72,220 $77,679 $67,961 $60,336 $67,678 $80,800 $62,665
======= ======= ======= ======= ======= ======= ======= =======

Earnings (loss) from
operations $(1,691) $ 6,988 $11,445 $ 4,049 $ 2,444 $ 2,565 $10,796 $(3,737)

Recapitalization costs (604) (371) (198) (317) (1,065) (1,147)

Other income (deductions),
net (A) 1,920 (2,240) (4,319) (3,353) 1,796 1,763 1,882 1,981
------- ------- ------- ------- ------- ------- ------- -------

Earnings (loss) before
income taxes and
extraordinary item (375) 4,377 7,126 696 4,042 4,011 11,613 (2,903)

Income tax expense (400)
------- ------- ------- ------- ------- ------- ------- -------

Earnings (loss) before
extraordinary item (375) 4,377 7,126 696 4,042 4,011 11,213 (2,903)

Extraordinary item 4,008
------- ------- ------- ------- ------- ------- ------- -------

Net earnings (loss) $ (375) $ 4,377 $ 7,126 $ 4,704 $ 4,042 $ 4,011 $11,213 $(2,903)
======= ======= ======= ======= ======= ======= ======= =======
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(A) Includes interest income, interest expense and amortization of debt
discounts.

F - 60
<PAGE> 227

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the amended costs and expenses payable
by the Company in connection with the sale of the Mortgage Notes, Units and
Common Stock registered. All items are estimated except the SEC registration
fee.

<TABLE>
<S> <C>
SEC registration fee . . . . . . . . . . . . . . $ 44,393
Printing . . . . . . . . . . . . . . . . . . . . 65,000
Legal fees and expenses . . . . . . . . . . . . 235,000
Accounting fees and expenses . . . . . . . . . . 12,000
Transfer agent fees . . . . . . . . . . . . . . . 40,200
Miscellaneous . . . . . . . . . . . . . . . . . . 28,407
-------
Total $425,000
========
</TABLE>

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

This Item 15 is amended to add the following:

On August 1, 1994, RII agreed to issue 1,940,000 shares of RII's
Common Stock to Atlantic Resorts Holdings, Inc., an affiliate of The Griffin
Group, Inc., a company controlled by Merv Griffin, Chairman of the Board of
Directors of RII. The shares have been issued by RII without their
registration in reliance upon the exemption provided by Section 4(2) of the
Securities Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

A. Exhibits

This Item 16.A. is amended to add the following exhibits:

<PAGE> 228

<TABLE>
<CAPTION>
Exhibit
Numbers Exhibit
------- -------
<S> <C>
8.01(a) Opinion of Gibson, Dunn & Crutcher regarding tax matters.

10.34(c) Letter agreement between RII and Griffin Group regarding issuance of
shares of RII's common stock in satisfaction of payment obligation
pursuant to Griffin Services Agreement. (Incorporated by reference to
Exhibit (10) to registrant's Form 10-Q Quarterly Report for the quarter
ended June 30, 1994, in File No. 1-4748.)

10.65(a) Letter agreement dated February 27, 1995, amending Exhibit 10.65 hereto.
(Incorporated by reference to Exhibit (10)(n)(3) to RII's Form 10-K
Annual Report for the fiscal year ended December 31, 1994, in File No.
1-4748.)

12.01(a) RII Computation of Ratio of Earnings to Fixed Charges.

12.02(a) RIH Computation of Ratio of Earnings to Fixed Charges.

12.03(a) RII Computation of Pro Forma Ratio of Earnings to Fixed Charges.

12.04(a) RIH Computation of Pro Forma Ratio of Earnings to Fixed Charges.

21.01(a) Subsidiaries of RII. (Incorporated by reference to Exhibit (21) to
RII's Form 10-K Annual Report for the year ended December 31, 1994 on
File No. 1-4748.)

23.01(a) Consent of Ernst & Young LLP.

23.02(a) Consent of Gibson, Dunn & Crutcher (Incorporated by reference to exhibit
8.01(a)).
</TABLE>

II-2
<PAGE> 229
B. Financial Statement Schedules

FINANCIAL STATEMENT SCHEDULES FOR RESORTS
INTERNATIONAL, INC. AND SUBSIDIARIES

Report of Independent Auditors

Schedule I - Condensed Financial Information of Resorts
International, Inc.

Schedule II - Valuation Accounts

FINANCIAL STATEMENT SCHEDULES FOR RESORTS
INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES

Report of Independent Auditors

Schedule II - Valuation Accounts

Financial statement schedules not included have been omitted because
they are either not applicable or the required information is shown in the
consolidated financial statements or notes thereto.

II-3
<PAGE> 230
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrants have duly caused this registration statement or amendment thereto
to be signed on their behalf by the undersigned, thereunto duly authorized, in
the City of Atlantic City, State of New Jersey, on May 3, 1995.

RESORTS INTERNATIONAL, INC.

By /s/ Matthew B. Kearney
-----------------------------
Matthew B. Kearney Executive
Vice President - Finance

RESORTS INTERNATIONAL HOTEL, INC.

By /s/ Matthew B. Kearney
-----------------------------
Matthew B. Kearney Executive
Vice President

RESORTS INTERNATIONAL HOTEL
FINANCING, INC.

By /s/ Matthew B. Kearney
-----------------------------
Matthew B. Kearney
President

II-4
<PAGE> 231

Pursuant to the requirements of the Securities Act of 1933, this
registration statement or amendment thereto has been signed by the following
persons in the capacities indicated on May 3, 1995.

<TABLE>
<CAPTION>
RESORTS INTERNATIONAL, INC.
<S> <C> <C>
By /s/ Merv Griffin Chairman of the Board
-----------------------------

By /s/ Thomas E. Gallagher Director and President
----------------------------- (Principal Executive Officer)

By /s/ William J. Fallon Director
-----------------------------

By /s/ Jay M. Green Director
-----------------------------

By Director
-----------------------------
Charles Masson

By Director
-----------------------------
Vincent J. Naimoli

By /s/ Matthew B. Kearney Executive Vice President -
----------------------------- Finance (Principal Financial
Officer)

By /s/ David G. Bowden Vice President - Controller
----------------------------- (Principal Accounting Officer)

</TABLE>

<TABLE>
<CAPTION>
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
<S> <C> <C>
By /s/ Matthew B. Kearney Director and President
----------------------------- (Principal Executive,
Financial and Accounting
Officer)

By /s/ Lawrence Cohen Director
-----------------------------
</TABLE>

<TABLE>
<CAPTION>
RESORTS INTERNATIONAL HOTEL, INC.
<S> <C> <C>
By /s/ Matthew B. Kearney Director and Executive
----------------------------- Vice President (Principal
Executive, Financial and
Accounting Officer)

By /s/ Lawrence Cohen Director
-----------------------------
</TABLE>

II-5
<PAGE> 232

Report of Independent Auditors

The Board of Directors and Shareholders
Resorts International, Inc.

We have audited the consolidated financial statements of Resorts
International, Inc. as of December 31, 1994 and 1993, and for each of the three
years in the period ended December 31, 1994 and have issued our report thereon
dated February 17, 1995, except for Note 2, as to which the date is February
27, 1995 (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 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.

/S/ ERNST & YOUNG LLP

Philadelphia, Pennsylvania
February 17, 1995

S-1
<PAGE> 233
SCHEDULE I

Resorts International, Inc.
(Registrant)
BALANCE SHEETS
(In Thousands of Dollars)

<TABLE>
<CAPTION>
December 31,
---------------------------
Assets 1994 1993
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash (including cash equivalents
of $8,625 and $16,868) $ 8,627 $ 16,902
Restricted cash equivalents 5,388 12,903
Receivables 277 914
Prepaid expenses 965 1,006
-------- --------
Total current assets 15,257 31,725

Property and equipment, net of
accumulated depreciation of $118
and $419 88,007 102,042

Net advances to subsidiaries 43,008 157,453

Investments in subsidiaries, at
cost plus equity in earnings (3,417) 214,993
-------- --------

$142,855 $506,213
======== ========
- ---------------------------------------------------------------------------------------------
</TABLE>

See Notes to Financial Statements.

S-2
<PAGE> 234
SCHEDULE I

Resorts International, Inc.
(Registrant)
BALANCE SHEETS
(In Thousands of Dollars, except par value)

<TABLE>
<CAPTION>
December 31,
Liabilities and Shareholders' ---------------------------------
Equity (Deficit) 1994 1993
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Current liabilities:
Current maturities of long-term
debt, net of unamortized discounts $ 466,129
Accounts payable and accrued liabilities $ 11,375 34,347
--------- ---------
Total current liabilities 11,375 500,476
--------- ---------

Long-term debt, net of unamortized
discounts 87,149 84,881
--------- ---------

Deferred income taxes 34,300 34,600
--------- ---------

Commitments and contingencies (Note E)

$ 142,855 $ 506,213
========= =========
- ---------------------------------------------------------------------------------------------
</TABLE>

See Notes to Financial Statements.

S-3
<PAGE> 235
SCHEDULE I

Resorts International, Inc.
(Registrant)
STATEMENTS OF OPERATIONS
(In Thousands of Dollars)

<TABLE>
<CAPTION>
For the Year Ended December 31,
-----------------------------------------
1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Real estate related and other revenues $ 9,143 $ 8,383 $ 8,138
--------- --------- --------

Expenses:
Real estate related 1,785 1,278 1,241
Corporate expense, net of management fees (6,444) (4,143) 247
Depreciation 51 89 129
Write-down of non-operating real estate 12,775
Loss on SIHL Sale 74,019
--------- --------- --------

82,186 (2,776) 1,617
--------- ---------- --------

Earnings (loss) from operations (73,043) 11,159 6,521

Other income (deductions):
Interest income 1,032 1,909 3,784
Interest expense (24,404) (57,000) (40,361)
Amortization of debt discounts (14,289) (51,203) (37,569)
Recapitalization costs (1,236) (2,727) (874)
Proceeds from Litigation Trust 847
--------- --------- --------
Loss before equity in net earnings (loss) of subsidiaries,
registrant income taxes and extraordinary item (111,093) (97,862) (68,499)

Equity in net earnings (loss) of subsidiaries 16,195 (3,704) 2,703
--------- ---------- --------

Loss before registrant income taxes and extraordinary item (94,898) (101,566) (65,796)

Income tax benefit (expense) 15 (598) 12,342
--------- ---------- --------

Loss before extraordinary item (94,883) (102,164) (53,454)

Extraordinary item 186,000
--------- --------- --------

Net earnings (loss) $ 91,117 $(102,164) $(53,454)
========= ========= ========
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Financial Statements.

S-4
<PAGE> 236
SCHEDULE I

Resorts International, Inc.
(Registrant)
STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)

<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------------
1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 8,609 $ 8,383 $ 8,138
Management fees from subsidiaries 11,053 13,546 13,913
Cash paid to suppliers and employees (8,015) (11,429) (16,308)
--------- -------- --------
Cash flow from operations before interest and income taxes 11,647 10,500 5,743
Interest received 1,306 2,562 4,024
Interest paid (8,250) (8,199) (7,970)
Income taxes refunded (paid) and received from (paid to)
subsidiaries (711) 308 12,478
--------- -------- --------
Net cash provided by operating activities 3,992 5,171 14,275
--------- -------- --------

Cash flows from investing activities:
Cash proceeds from SIHL Sale 70,147
Proceeds from sales of property 534
Proceeds from prior year sale of property 2,484
Proceeds from sales of short-term money market securities
with maturities greater than three months 1,200
Payments for property and equipment (36) (107) (26)
Repayments from (advances to) subsidiaries 1,632 (7,909) (11,376)
--------- -------- --------
Net cash provided by (used in) investing activities 72,277 (8,016) (7,718)
--------- -------- --------

Cash flows from financing activities:
Excess Cash and cash proceeds of SIHL Sale distributed to
noteholders (103,434)
Dividends received from subsidiary 12,262
Payments of recapitalization costs (4,742) (2,270) (3,440)
Collection of note receivable from related party 3,008 3,477
Proceeds from Litigation Trust 847
--------- -------- --------
Net cash provided by (used in) financing activities (92,059) 1,207 (3,440)
--------- -------- --------

Net increase (decrease) in cash and cash equivalents (15,790) (1,638) 3,117
Cash and cash equivalents at beginning of period 29,805 31,443 28,326
--------- -------- --------
Cash and cash equivalents at end of period $ 14,015 $ 29,805 $ 31,443
========= ======== ========
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Financial Statements.

S-5
<PAGE> 237
SCHEDULE I

Resorts International, Inc.
(Registrant)
NOTES TO FINANCIAL STATEMENTS

Note A - General

The Notes to Consolidated Financial Statements contained elsewhere in this
report are an integral part of the registrant's financial statements and should
be read in conjunction therewith.

Note B - Restructuring of Series Notes

See Note 2 of Notes to Consolidated Financial Statements for a description
of the Restructuring.

Note C - Long-term Debt

The Showboat Notes described in Note 7 of Notes to Consolidated Financial
Statements are the registrant's only long-term debt outstanding at December 31,
1994. There are no principal payments required under such debt until the year
2000.

If the Senior Facility Notes described in Note 2 of Notes to Consolidated
Financial Statements are issued, they will be guaranteed by the registrant.

Note D - Dividends

As part of the Restructuring, the registrant received cash dividends
totalling $12,262,000 from subsidiaries in order for the registrant to make
certain distributions called for by the Plan.

Note E - Commitments and Contingencies

The registrant is a defendant in certain litigation. In the opinion of
management, based upon advice of counsel, the aggregate liability, if any,
arising from such litigation will not have a material adverse effect on the
accompanying financial statements.

S-6
<PAGE> 238
SCHEDULE II

Resorts International, Inc. and
Subsidiaries
VALUATION ACCOUNTS
(In Thousands of Dollars)

<TABLE>
<CAPTION>
Balance at Additions Balance at
beginning charged to end of
of period expenses SIHL Sale Deductions (A) period
---------- ---------- --------- -------------- ----------
<S> <C> <C> <C> <C> <C>
For the year ended December 31, 1994:

Allowance for doubtful receivables:
Gaming $6,598 $ 846 $(2,248) $(1,377) $3,819
Other 1,276 366 (1,511) (49) 82
------ ------ ------- ------- ------
$7,874 $1,212 $(3,759) $(1,426) $3,901
====== ====== ======= ======= ======

For the year ended December 31, 1993:

Allowance for doubtful receivables:
Gaming $6,952 $2,336 $(2,690) $6,598
Other 1,212 553 (489) 1,276
------ ------ ------- ------
$8,164 $2,889 $(3,179) $7,874
====== ====== ======= ======

For the year ended December 31, 1992:

Allowance for doubtful receivables:
Gaming $8,169 $3,098 $(4,315) $6,952
Other 1,709 949 (1,446) 1,212
------ ------ ------- ------
$9,878 $4,047 $(5,761) $8,164
====== ====== ======= ======
</TABLE>

(A) Write-off of uncollectible accounts, net of recoveries.

S-7
<PAGE> 239
Report of Independent Auditors

The Board of Directors and Shareholder
Resorts International Hotel, Inc.

We have audited the consolidated financial statements of Resorts
International Hotel, Inc. as of December 31, 1994 and 1993, and for each of the
three years in the period ended December 31, 1994 and have issued our report
thereon dated February 17, 1995, except for Note 2, as to which the date is
February 27, 1995 (included elsewhere in this Registration Statement). Our
audits also included the financial statement schedule listed in Item 16(B) of
this Registration Statement. This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion on our
audits.

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

/S/ ERNST & YOUNG LLP

Philadelphia, Pennsylvania
February 17, 1995

S-8
<PAGE> 240
Resorts International Hotel, Inc. and Subsidiaries
VALUATION ACCOUNTS
(In Thousands of Dollars)

<TABLE>
<CAPTION>
Balance at Additions Balance at
beginning charged to end of
of period expenses Deductions (A) period
---------- ---------- -------------- ----------
<S> <C> <C> <C> <C>
For the year ended December 31, 1994:

Allowance for doubtful receivables:
Gaming $4,498 $ 237 $ (916) $3,819
Other 40 60 (18) 82
------ ------ ------- ------
$4,538 $ 297 $ (934) $3,901
====== ====== ======= ======

For the year ended December 31, 1993:

Allowance for doubtful receivables:
Gaming $4,200 $ 901 $ (603) $4,498
Other 48 (8) 40
------ ------ ------- ------
$4,248 $ 901 $ (611) $4,538
====== ====== ======= ======

For the year ended December 31, 1992:

Allowance for doubtful receivables:
Gaming $5,326 $1,334 $(2,460) $4,200
Other 327 80 (359) 48
------ ------ ------- ------
$5,653 $1,414 $(2,819) $4,248
====== ====== ======= ======
</TABLE>

(A) Write-off of uncollectible accounts, net of recoveries.

S-9
<PAGE> 241
EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
Numbers Exhibit
------- -------
<S> <C>
8.01(a) Opinion of Gibson, Dunn & Crutcher regarding tax matters.

12.01(a) RII Computation of Ratio of Earnings to Fixed Charges.

12.02(a) RIH Computation of Ratio of Earnings to Fixed Charges.

12.03(a) RII Computation of Pro Forma Ratio of Earnings to Fixed Charges.

12.04(a) RIH Computation of Pro Forma Ratio of Earnings to Fixed Charges.

23.01(a) Consent of Ernst & Young LLP.
</TABLE>

<PAGE> 1
EXHIBIT 8.01(a)

GIBSON, DUNN & CRUTCHER
LAWYERS
200 Park Avenue
New York, New York 10166-0193

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

(212) 351-4000
TELEX: 177920 GIBTRASK NYK
FACSIMILE: (212) 949-7606

April 28, 1995

Resorts International, Inc.
1133 Broadwalk
Atlantic City, NJ 08401

Re: Resorts International, Inc. ("RII"), Resorts
International Hotel Financing, Inc. ("RIHF")
and Resorts International Hotel, Inc. ("RIH")
Form S-1 Registration Statement
File No. 33-53371

Gentlemen:

We have acted as special tax counsel to RII, a Delaware corporation, RIHF,
a Delaware corporation, and RIH, a New Jersey corporation (collectively, the
"Registrants"), in connection with the registration under the Securities Act of
1933 of 11% Mortgage Notes due 2003 issued by RIHF (the "Mortgage Notes"),
11.375% Junior Mortgage Notes due 2004 issued by RIHF (the "Junior Mortgage
Notes"), shares of Common Stock issued by RII, par value $.01 per share (the
"Common Stock") and shares of Class B Redeemable Common Stock issued by RII,
par value $.01 per share (the "Class B Common Stock") (the Mortgage Notes,
Junior Mortgage Notes, Common Stock and Class B Common Stock as registered
under the above-referenced Form S-1 Registration Statement No. 33-53371,
collectively are referred to as the "Registered Securities"). The Registered
Securities are to be offered for public resale by certain Selling
Securityholders. At your request we have examined the section of the
prospectus under the caption "Certain Federal Income Tax Considerations"
contained in Post-Effective Amendment No. 1 to the Form S-1 Registration
Statement to be filed with the Securities and
<PAGE> 2
Resorts International, Inc.
April 28, 1995
Page 2

Exchange Commission (as post-effectively amended, the "Registration Statement")
in connection with the registration of the Registered Securities. The
Registered Securities are to be offered in the manner described in the
Registration Statement.

We hereby confirm our opinions set forth under the caption "Certain
Federal Income Tax Considerations" in the Registration Statement.

We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name under the caption
"Certain Federal Income Tax Considerations" in the Registration Statement and
the Prospectus which forms a part thereof.

Very truly yours,

/s/ Gibson, Dunn & Crutcher
---------------------------
GIBSON, DUNN & CRUTCHER

<PAGE> 1
EXHIBIT 12.01(a)

RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In Thousands of Dollars)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1994
-----------------
<S> <C>
Earnings available for fixed charges:

Loss before income taxes and
extraordinary item . . . . . . . . . . . . . . . . . . $(98,891)

Interest and amortization of
debt discount . . . . . . . . . . . . . . . . . . . . . 50,317

Portion (one-third) of rental
charges . . . . . . . . . . . . . . . . . . . . . . . . 1,269
-------

Earnings available for fixed
charges . . . . . . . . . . . . . . . . . . . . . . . $(47,305)
=========

Fixed charges:
Interest and amortization of
debt discount . . . . . . . . . . . . . . . . . . . . . $ 50,317

Portion (one-third) of rental
charges . . . . . . . . . . . . . . . . . . . . . . . . 1,269
--------

Total fixed charges . . . . . . . . . . . . . . . . . . $ 51,586
========

Ratio of earnings to fixed
charges(a) . . . . . . . . . . . . . . . . . . . . . . . -
=========
</TABLE>

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

(a) Earnings were insufficient to cover fixed charges by $98,891,000 for the
year ended December 31, 1994.

<PAGE> 1
EXHIBIT 12.02(a)

RESORTS INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In Thousands of Dollars)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1994
-----------------
<S> <C>
Earnings available for fixed charges:

Earnings before income
taxes and extraordinary item . . . . . . . . . . . . . $11,824

Interest and amortization of
debt discount . . . . . . . . . . . . . . . . . . . . . 11,615

Portion (one-third) of rental
charges . . . . . . . . . . . . . . . . . . . . . . . . 916
------
Earnings available for fixed
charges . . . . . . . . . . . . . . . . . . . . . . . $24,355
=======

Fixed charges:
Interest and amortization of
debt discount . . . . . . . . . . . . . . . . . . . . . $11,615

Portion (one-third) of rental
charges . . . . . . . . . . . . . . . . . . . . . . . . 916
-------

Total fixed charges . . . . . . . . . . . . . . . . . . $12,531
=======

Ratio of earnings to fixed
charges . . . . . . . . . . . . . . . . . . . . . . . . . 1.94
=======
</TABLE>

<PAGE> 1
EXHIBIT 12.03 (a)

RESORTS INTERNATIONAL, INC. AND
SUBSIDIARIES COMPUTATION OF PRO FORMA
RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
FOR THE
YEAR ENDED
DECEMBER
--------
31, 1994
--------
<S> <C>
Pro forma earnings available for fixed charges:

Loss before income taxes . . . . . . . . . . . . . . . . . . . . . $(11,012)

Interest and amortization of debt discount . . . . . . . . . . . . 28,609

Portion (one-third) of rental charges . . . . . . . . . . . . . . 821
-------

Earnings available for fixed charges . . . . . . . . . . . . $18,418
=======
Pro forma fixed charges:

Interest and amortization of debt discount . . . . . . . . . . . . $28,609

Portion (one-third) of rental charges . . . . . . . . . . . . . . 821
=======

Total fixed charges . . . . . . . . . . . . . . . . . . . . . $29,430
=======
Pro forma ratio of earnings to fixed
charges (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . -
-------------------- =======
</TABLE>

(a) Pro forma earnings were insufficient to cover fixed charges by
$11,012,00 for the year ended December 31, 1994

<PAGE> 1
EXHIBIT 12.04 (a)

RESORTS INTERNATIONAL HOTEL, INC. AND
SUBSIDIARIES COMPUTATION OF PRO FORMA
RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSAND OF DOLLARS)
<TABLE>
<CAPTION>
FOR THE
YEAR
ENDED
DECEMBER
--------
31, 1994
--------

<S> <C>
Pro forma earnings available for fixed charges:

Earnings before income taxes . . . . . . . . . . . . . . . . . . $4,162

Interest and amortization of debt discount . . . . . . . . . . . 18,002

Portion (one-third) of rental charges . . . . . . . . . . . . . 916
------

Earnings available for fixed charges . . . . . . . . . . . $23,080
=======

Pro forma fixed charges:

Interest and amortization of debt discount . . . . . . . . . . . $18,002

Portion (one-third) of rental charges . . . . . . . . . . . . . 916
-------

Total fixed charges . . . . . . . . . . . . . . . . . . . . $18,918
=======

Pro forma ratio of earnings to fixed charges . . . . . . . . . . . 1.22
====
</TABLE>

<PAGE> 1
EXHIBIT 23.01 (a)

CONSENT

We consent to the reference to our firm under the caption "Experts" and to the
use of our reports, as outlined in the following table, in the Registration
Statement (Form S-1 No. 33-53371) and related Prospectus of Resorts
International, Inc., Resorts International Hotel Financing, Inc., and Resorts
International Hotel, Inc. for the registration of the 11% Mortgage Notes due
2003, 11.375% Junior Mortgage Notes due 2004, and Class B Common Stock, par
value $.01 per share.

Resorts International, Inc. February 17, 1995, and February 17,
1995 except for Note 2, as to which
the date is February 27, 1995

Resorts International Hotel, Inc. February 17, 1995, and February 17,
1995 except for Note 2, as to which
the date is February 27, 1995

Resorts International Hotel February 17, 1995, except for
Financing, Inc. Note 2, as to which the date is
February 27, 1995

/s/ Ernst & Young LLP

Philadelphia, Pennsylvania
May 4, 1995