<PAGE>   1

                                                                [EXECUTION COPY]



                   AMENDMENT NO. 1 TO PARTICIPATION AGREEMENT


     THIS AMENDMENT NO. 1 TO PARTICIPATION AGREEMENT (this "Amendment No. 1"),
dated as of March 28, 1997, among BL DEVELOPMENT CORP., a Minnesota corporation,
as Lessee and Construction Agent; GRAND CASINOS, INC., a Minnesota corporation,
and certain of its Subsidiaries listed therein, as Guarantors; HANCOCK BANK, not
in its individual capacity, but solely as Lessor, Borrower and Trustee; the
persons listed therein, as Lenders; BANK OF SCOTLAND, WELLS FARGO BANK, NATIONAL
ASSOCIATION (successor by merger to First Interstate Bank of Nevada), and
SOCIETE GENERALE, as Co-Agents; CREDIT LYONNAIS, LOS ANGELES BRANCH, as Lead
Manager; and BA LEASING & CAPITAL CORPORATION, a California corporation, as
Arranger and Agent.


                              W I T N E S S E T H:


     WHEREAS, Lessee, Guarantors, Trustee (both in its individual and trust
capacities), the Lenders, the Co-Agents, the Lead Manager and Agent are parties
to a Participation Agreement, dated as of May 10, 1996 (as amended or otherwise
modified to the date hereof, the "Participation Agreement");

     WHEREAS, Lessee has requested, among other things, a waiver of compliance
with certain financial covenants contained in the Participation Agreement
arising from payment by the Parent under the Guaranty of certain amounts to
complete construction and installation of the Hotel as well as amendments to
certain other financial covenants contained therein, as more fully set forth
herein; and

     WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth, to grant such requested waiver and to so amend
the Participation Agreement, but only upon the terms and conditions set forth
below;

     NOW, THEREFORE, in consideration of the waiver and other agreements herein
contained, the parties hereto agree as follows:
<PAGE>   2


                                     PART I

                                  DEFINITIONS

         SUBPART 1.1.
                      Certain Definitions.  Unless otherwise defined in
Appendix 1 to the Participation Agreement, capitalized terms used in this
Amendment No. 1, including its preamble and recitals, have the following
meanings (such meanings to be equally applicable to the singular and plural
forms thereof):

         "Amendment No. 1" is defined in the preamble.

         "Amendment No. 1 Effective Date" is defined in Subpart 5.1.

         "Participation Agreement" is defined in the first recital.

                                    PART II

              AMENDMENTS TO APPENDIX 1 TO PARTICIPATION AGREEMENT

         Effective on (and subject to the occurrence of) the Amendment No. 1
Effective Date, Appendix 1 to the Participation Agreement is amended in
accordance with this Part II.  Except to the extent amended by this Amendment
No. 1, Appendix 1 to the Participation Agreement is and shall continue to be in
full force and effect and is hereby ratified and confirmed in all respects.

         SUBPART 2.1. Amendments to Appendix 1 to the Participation Agreement.

         (a)  Section D of Appendix 1 to the Participation Agreement is hereby
amended by inserting the following definitions in their alphabetically
appropriate places:

                 "Amendment No. 1" means Amendment No. 1 to Participation
         Agreement, dated as of March 28, 1997, among the Lessee and
         Construction Agent; the Guarantors; the Lessor, Borrower and Trustee;
         the Lenders; the Co-Agents; the Lead Manager; and Agent, amending the
         Participation Agreement as then in effect.

                 "Amendment No. 1 Effective Date" means the first date on which
         all of the conditions precedent set forth in Subpart 5.1 of Amendment
         No. 1 shall be satisfied or waived by all of the Lenders, but in no
         event shall such date be later than March 28, 1997.

                 "Limited Guaranty" means the Limited Guaranty, dated as March
         28, 1997, made by Parent in favor of each of the Beneficiaries defined
         therein.





                                       2
<PAGE>   3


                 "Option Agreement" means the Option Agreement, dated as of
         March 28, 1997, between Parent and First Security Trust Company of
         Nevada.

                 "Qualified Stratosphere Subsidiary" means all Persons that are
         consolidated with Stratosphere Corporation for financial reporting
         purposes in accordance with GAAP, except any Subsidiary that owns,
         leases or otherwise controls any assets formerly owned, leased or
         otherwise controlled by Parent or any of Parent's Consolidated
         Subsidiaries.

         (b)     The following definitions contained in Section D of Appendix 1
to the Participation Agreement are hereby amended in their entirety to read as
set forth below:

                 "Commitment Termination Date" means the earlier of (i) the
         Completion Date, (ii) May 31, 1997 and (iii) such earlier date on
         which the Commitments shall terminate as provided in the Operative
         Documents.

                 "Consolidated Fixed Charges" means, for each Computation
         Period (except as provided in clause (v) below), the sum of (i)
         Consolidated Interest Expense payable in cash, plus (ii) capitalized
         interest accrued by the Parent and its Consolidated Subsidiaries for
         such period, plus (iii) the aggregate amount of all federal, state,
         local and foreign income taxes currently due and payable by the Parent
         and its Consolidated Subsidiaries for such period, plus (iv)
         Maintenance Capital Expenditures of the Parent and its Consolidated
         Subsidiaries which for purposes of this clause (iv) shall not be less
         than one and two percent of consolidated gross revenues of such
         Persons for the periods from the Closing Date through June 29, 1997,
         and from June 30, 1997 through the Final Maturity Date, respectively,
         plus (v) the aggregate amount of scheduled amortization of all Debt of
         the Parent and its Consolidated Subsidiaries for the next following
         Computation Period, plus (vi) without duplication, the aggregate
         amount of all capital contributions and payments made by the Parent to
         Stratosphere Corporation under the Standby Equity Commitment
         Agreement.

                 "Consolidated Subsidiary" means all Persons that are
         consolidated with Parent for financial reporting purposes in
         accordance with GAAP, excluding Stratosphere Corporation, Stratosphere
         Gaming Corporation and any Qualified Stratosphere Subsidiary should
         any one become a Consolidated Subsidiary on Parent's consolidated
         financial statements.  Any investment of Parent or any of its
         Consolidated Subsidiaries in Stratosphere Corporation or Stratosphere
         Gaming Corporation or nay Consolidated Subsidiary thereof shall be
         taken into account in determining the Consolidated Net Worth of
         Parent.


         "Fiscal Year" means any 52 or 53 week period ending on the Sunday in
December or January closest to December 31; any reference to a Fiscal Year with
a number corresponding to any calendar year refers to the Fiscal Year ended on
the Sunday closest to December 31st of such





                                       3
<PAGE>   4

calendar year (e.g., "1996 Fiscal Year" refers to the Fiscal Year ended on
Sunday, December 29, 1996).



                 "Fiscal Quarter" means any quarter of a Fiscal Year consistent
         with GAAP.

                 "Hotel Site" means from the date hereof until such date as
         Trustee shall have complied with all the provisions of Subpart 5.4(a)
         of Amendment No. 1, the parcel of real property described on Exhibit B
         to the Lease, and thereafter the parcel of real property described on
         Exhibit D to Amendment No. 1.


                                    PART III

                     AMENDMENTS TO PARTICIPATION AGREEMENT

         Effective on (and subject to the occurrence of) the Amendment No. 1
Effective Date, the Participation Agreement is amended in accordance with this
Part III.  Except to the extent amended by this Amendment No. 1, the
Participation Agreement is and shall continue to be in full force and effect
and is hereby ratified and confirmed in all respects.

         SUBPART 3.1.    Amendments to Article III.
                      

         (a)  Section 3.4 of the Participation Agreement is hereby amended by
adding at the end of clause (d) thereof the following:

               "(e)      Water and Sewer Easement.  Lessee shall have delivered
          to Agent and Trustee:

                         (i)     a duly executed document in recordable form
                 and in substance reasonably acceptable to Agent and Trustee,
                 granting to Trustee a limited, nonexclusive easement across
                 the Land running in favor of the Hotel Site, to assure that
                 sewer and water services can be made available to the Hotel
                 Site (in the event that the Trustee occupies or assumes
                 control over the Hotel Site), which easements shall terminate
                 upon the earlier of (i) the date on which the indebtedness
                 secured by the Deed of Trust is satisfied or (ii) the date, if
                 any, that Lessee and BL Utility Corp., a Minnesota corporation
                 ("BL Utility"), transfer ownership of or grant a long term
                 lease to the related sewer and water facilities to an
                 unrelated third party and such third party delivers to Agent
                 and Trustee a certificate in form and substance acceptable to
                 Agent and Trustee stating that it is currently providing and
                 shall continue to provide sewer and water utilities to the
                 Hotel Site in an amount sufficient to meet the then required
                 demands for the





                                       4
<PAGE>   5

                 Hotel.  The foregoing easement shall be a present and current
                 grant of rights in and to the Land.  Notwithstanding the
                 foregoing, Agent and Trustee agree not to exercise any such
                 right unless and until (i) Agent or Trustee, as the case may
                 be, acquires possession or control of the Hotel pursuant to
                 the terms of the Operative Documents and (ii) Lessee shall
                 fail to cause BL Utility to enter into a service contract
                 acceptable to Agent and Trustee which provides standard and
                 customary terms and provisions for the delivery and service of
                 sewer and water utilities to the Hotel and Hotel Site.

                          (ii)    Lessee shall have leased the property
                 identified on Exhibit A to Amendment No. 1 to Trustee for
                 inclusion in the reconfigured Hotel Site as described on
                 Exhibit D to Amendment No. 1 in a manner acceptable to Agent
                 and Trustee.

                 (f)      Legal Description; Amendments.  Lessee shall have
        delivered to Agent (with copies for the Trustee and the Lenders):

                          (i)      a legal description of the Hotel Site
                 (reflecting the addition of the parcel of land described on
                 Exhibit A to Amendment No. 1 and the subtraction of the parcel
                 of land described on Exhibit E to Amendment No. 1), certified
                 by a surveyor;

                          (ii)     amendments, in recordable form, of the
                 Improvements Deed, the Ground Lease, the Deed of Trust (Resort
                 Hotel), Lease, Trust Agreement and Security Agreement
                 reflecting the revised boundaries of the Hotel Site;

                          (iii) a fully executed release of Liens, except for
                 Permitted Liens, relating to the parcel of land described on
                 Exhibit A to Amendment No. 1 from the Indenture Trustee and
                 any other party who may have a Lien on such real property;

                          (iv)     revised fixture filings (in proper form for
                 filing with the appropriate filing location) regarding the
                 Hotel;

                          (v)      updated mortgagee's construction loan title
                 insurance policies (or endorsements to the existing
                 mortgagee's construction loan title insurance policies) issued
                 by the Title Insurance Company pursuant to Section 3.3(c)
                 hereof in form and substance satisfactory to the Agents with
                 respect to the Hotel Site, insuring that the interests created
                 by the Deed of Trust relating to the Hotel Site (reflecting
                 the addition of the parcel of land described on Exhibit A to
                 Amendment No. 1 and the subtraction of the parcel of land
                 described on Exhibit E to Amendment No. 1) and the Lease
                 constitute valid first Liens on the Hotel Site (reflecting the
                 new boundaries thereof) and the leasehold interest free and
                 clear of





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<PAGE>   6

                 all defects and encumbrances, except for Permitted Liens,
                 unless otherwise approved by the Agents and its counsel in
                 writing; and

                          (vi)     such other approvals, opinions or documents
                 as the Agents may reasonably request, including, without
                 limitation, an opinion concerning the documents and items in
                 Amendment No. 1 of Watkins, Ludlam & Stennis, P.A. in form and
                 substance substantially similar to its opinion delivered on
                 May 10, 1996, including an opinion that the Agent has remedies
                 customarily obtained by lenders in Mississippi and can
                 foreclose on the Hotel Site notwithstanding the location of
                 the Hotel Site within a planned unit development.

                 All of the above-referenced documents will be in form and
        substance satisfactory to the Agents."

        SUBPART 3.2. Amendments to Article V.

        (a)  Section 5.16 of the Participation Agreement is hereby amended and
restated in its entirety to read as set forth below:

                 "SECTION 5.16.  Financial Covenants.

                          (a)  Fixed Charge Coverage.  Parent shall maintain a
                 ratio of Consolidated Adjusted EBITDA to Consolidated Fixed
                 Charges, calculated as of the last day of each Computation
                 Period, of not less than the ratio set forth below:


<TABLE>
<CAPTION>
        Period                                    Ratio
        ------                                    -----
        <S>                                      <C>
        through 12/28/97                         1.15:1.00
        12/29/97 and thereafter                  1.25:1.00
</TABLE>

                          (b)  Consolidated Net Worth.  The Consolidated Net
                 Worth of the Parent shall not at any time for the Fiscal Year
                 ended December 29, 1996 be less than $439,672,000 and
                 thereafter be less than an amount equal to the sum of (x)
                 $439,672,000 plus (1) 75% of Consolidated Net Income of the
                 Parent beginning with the first Fiscal Quarter of the 1997
                 Fiscal Year (but excluding any Consolidated Net Losses for any
                 Fiscal Quarter incurred on or after the Fiscal Quarter
                 commencing December 30, 1996) and calculated quarterly
                 thereafter for each subsequent Fiscal Quarter, plus (2)
                 beginning December 30, 1996 and thereafter, 100% of the
                 proceeds from the issuance by the Parent of an equity interest
                 in the Parent or a Subsidiary (other than Stratosphere
                 Corporation and its Subsidiaries) to one or more Persons
                 unaffiliated with Parent, or the Ownership Percentage





                                       6
<PAGE>   7

     Interest of the proceeds from the issuance by a Subsidiary (other than
     Stratosphere Corporation and its Subsidiaries) of an equity interest in
     such Subsidiary to one or more Persons unaffiliated with the Parent.

          (c)  Consolidated Adjusted Senior Funded Debt/Consolidated Adjusted
     EBITDA Ratio.  Parent shall maintain a ratio of Consolidated Adjusted
     Senior Funded Debt to Consolidated Adjusted EBITDA, calculated as of the
     last day of each Computation Period, of not greater than the ratio set
     forth below:

<TABLE>
<CAPTION>
                           Period                            Ratio
                           ------                            -----
<S>                                                         <C>
12/29/96                                                    4.00:1.00
3/30/97                                                     4.00:1.00
6/29/97                                                     4.75:1.00
9/28/97                                                     4.50:1.00
12/28/97 through 12/26/98                                   4.00:1.00
12/27/98 through 12/30/2000                                 3.50:1.00
12/31/2000 and thereafter                                   3.00:1.00
</TABLE>

     (d)  Consolidated Adjusted Total Funded Debt/Consolidated Adjusted EBITDA
Ratio.  Parent shall maintain a ratio of Consolidated Adjusted Total Funded Debt
to Consolidated Adjusted EBITDA, calculated as of the last day of each
Computation Period, of not greater than the ratio set forth below:

<TABLE>
<CAPTION>
                           Period                            Ratio
                           ------                            -----
<S>                                                         <C>
12/29/96                                                    4.00:1.00
3/30/97                                                     4.00:1.00
6/29/97                                                     4.75:1.00
9/28/97                                                     4.50:1.00
12/28/97 and thereafter                                     4.00:1.00
</TABLE>

     (e)  For purposes of computing the financial covenants set forth in
Sections 5.16(a), (c) and (d), acquisitions, dispositions and discontinued
operations that have been made by Parent or any of its Consolidated
Subsidiaries, including all mergers, consolidations and dispositions, during the
Computation Period, shall be calculated on a pro forma basis assuming that all
such acquisitions, dispositions, discontinued operations, mergers





                                       7
<PAGE>   8

          and consolidations (and the reduction of any associated fixed charge
          obligations resulting therefrom) had occurred on the first day of the
          Computation Period in question".

     (b)  A new Section 5.23 is hereby added to Article V of the Participation
Agreement to read as follows:

               "SECTION 5.23. Fiscal Year.  Neither Lessee nor Parent shall
          change its Fiscal Year for financial accounting purposes without the
          prior written consent of the Required Lenders.

     (c)  A new Section 5.24 is hereby added to Article V of the Participation
Agreement to read as follows:

               "SECTION 5.24. Restrictions on Indebtedness.  The first
          $100,000,000 of Debt described in clause (i) of such definition
          incurred by Lessee, Construction Agent, any Guarantor or Parent on or
          after the Amendment No. 1 Effective Date will be used solely for
          capital expenditures by Parent, Parent's Subsidiaries, Stratosphere
          Corporation or Stratosphere Corporation's Subsidiaries."

     (d)     Sections 5.14 (a) and (b) of the Participation Agreement are hereby
amended to require the Parent and the Lessee to deliver to the Trustee, each
Lender and the Agent consolidating statements of Parent and its Consolidated
Subsidiaries (including Stratosphere Corporation and Stratosphere Gaming
Corporation) of operations, cash flows and common shareholders' equity, in each
case setting forth in comparative form the figures for the preceding Fiscal Year
or portion of the Fiscal Year, as the case may be, as well as the financial and
other information previously set forth in Sections 5.14(a) and (b).  Such
consolidating financial statements shall be delivered together with the
consolidated financial statements of Parent in accordance with Sections 5.14(a)
and (b):

          SUBPART 3.3. Amendment to Schedule VIII.

          Part I of Schedule VIII of the Participation Agreement is hereby
amended and restated in its entirety to read as set forth in Exhibit B.

          SUBPART 3.4. Amendment to Exhibit Q.

          Exhibit Q of the Participation Agreement is hereby amended and
restated in its entirety to read as set forth in Exhibit C.


                                    PART IV





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<PAGE>   9
                                        
                           CONSENT TO CERTAIN ACTIONS

     SUBPART 4.1. Consent.  Effective on (and subject to the occurrence of) the
Amendment No. 1 Effective Date, and in reliance upon the representations and
warranties contained herein, the Trustee, Agent and Lenders hereby consent to:

               (a)      the mergers of GCI Biloxi Hotel Acquisition Corporation
          into Grand Casinos of Mississippi, Inc.- Biloxi and of GCI Gulfport
          Hotel Acquisition Corporation into Grand Casinos of Mississippi, Inc.-
          Gulfport all and hereby acknowledge receipt of notice thereof;

               (b)      the relocation of Parent's chief executive offices prior
          to the date hereof to a location in the same county and state without
          notice to Trustee, Agent and Lenders;

               (c)      Parent's failure to deliver to Trustee and Agent the
          Financial Covenant Compliance Certificate for the Fiscal Quarter ended
          December, 1996 required pursuant to Section 5.6(b) of the
          Participation Agreement; and

               (d)      the certification by Lessee that commercial operation of
          the Hotel is reasonably expected to commence no later than three
          months from March 31, 1997 and hereby acknowledge receipt of notice by
          Construction Agent requesting the extension of the Construction
          Termination Date for three months.

     SUBPART 4.2. No Default.  In order to induce the Lenders to (a) consent to
the actions set forth in Subpart 4.1 and (b) agree to the amendments set forth
in Article III, Lessee, Construction Agent and each Guarantor hereby jointly and
severally represent and warrant that, after giving effect to the consent to
actions set forth above and the amendments set forth in Article III, no Event of
Default has occurred and is continuing, and each of the representations and
warranties contained in the Participation Agreement and the other Operative
Documents (other than any representation or warranty which expressly relates to
a different date) is true and correct in all material respects as of the date
hereof as if made on the date hereof.


                                     PART V

        CONDITIONS TO EFFECTIVENESS, REPRESENTATIONS AND WARRANTIES AND
                              ADDITIONAL COVENANTS

     SUBPART 5.1. Effective Date.  This Amendment No. 1 shall be and become
effective as of the date (the "Amendment No. 1 Effective Date") upon the prior
or concurrent satisfaction of each of the conditions precedent set forth in this
Subpart 5.1.





                                       9
<PAGE>   10

     (a)  Execution of Certain Documents.  Agent shall have received: (i)
counterparts of this Amendment No. 1 duly executed by Lessee, each Guarantor,
Trustee, Lenders, Co-Agents, Lead Manager, and Agent (or evidence thereof
satisfactory to the Agent); (ii) the Option Agreement duly executed by Parent
and First Security Trust Company of Nevada; and (iii) the Limited Guaranty duly
executed by Parent.

     (b)  Resolutions, Incumbency, etc..  Agent shall have received (with copies
for the Trustee and each Lender) a certificate, dated the date hereof, of the
Secretary or Assistant Secretary of each of the Lessee and each Guarantor,
respectively, as to

               (i)  resolutions of the Board of Directors of such Person then in
          full force and effect authorizing the execution, delivery and
          performance of this Amendment No. 1,

               (ii)  the incumbency and signatures of those officers of such
          Person authorized to act with respect to this Amendment No. 1, and

               (iii)  the Articles or Certificate of Incorporation of such
          Person as in effect on the date hereof (certified by the Secretary of
          State or similarly applicable Governmental Authority), of its state of
          incorporation as of a recent date and the by-laws of such Person as in
          effect on the date hereof, upon which certificates each Lender may
          conclusively rely until it shall have received a further certificate
          of the Secretary of the Lessee or such Guarantor, as the case may be,
          canceling or amending such prior certificate.

     (c)  Fees.   All reasonable fees and expenses of Mayer, Brown & Platt in
connection with the negotiation, execution and delivery of this Amendment No. 1
and the transactions contemplated herein shall have been paid in full.

     (d)  Opinions of Counsel.  Agent shall have received (with copies for the
Trustee and each Lender) an opinion, dated as of the date hereof and addressed
to the Agent, the Lenders and the Trustee, from Maslon Edelman Borman & Brand,
counsel to the Lessee and Guarantors, in form and substance acceptable to the
Agent.

     (e)  Accuracy of Representations and Warranties; No Default. On the
Amendment No. 1 Effective Date, Agent shall have received (with copies for the
Trustee and each Lender) certificates of the Secretary or Assistant Secretary of
each Guarantor and Lessee stating that after giving effect to this Amendment No.
1, all of the representations and warranties of the Lessee and each Guarantor
contained in the Participation Agreement and in Subpart 5.3 shall be true and
correct on and as of the Amendment No. 1 Effective Date in all material respects
as though made on and as of that date and no Default has occurred and is
continuing.





                                       10
<PAGE>   11

          (f)  Legal Details, etc.  Agent and its counsel shall have received
     (with copies for the Trustee and each Lender) all information, and such
     counterpart originals or such certified or other copies of such materials,
     as Agent or its counsel may reasonably request, and all legal matters
     incident to the effectiveness of this Amendment No. 1 shall be satisfactory
     to Agent and its counsel.  All documents executed or submitted pursuant
     hereto or in connection herewith shall be satisfactory in form and
     substance to Agent and its counsel.

     SUBPART 5.2. Limitation.  Except as expressly provided hereby, all of the
representations, warranties, terms, covenants and conditions of the
Participation Agreement and each other Operative Document shall remain unamended
and unwaived and shall continue to be, and shall remain, in full force and
effect in accordance with their respective terms.  The amendments, modifications
and consents set forth herein shall be limited precisely as provided for herein,
and shall not be deemed to be a waiver of, amendment of, consent to or
modification of any other term or provision of the Participation Agreement or of
any term or provision of any other Operative Document or other instrument
referred to therein or herein, or of any transaction or further or future action
on the part of Lessee, any Guarantor or any other Person which would require the
consent of Agent or any of the Lenders under the Participation Agreement or any
such other Operative Document or instrument.

     SUBPART 5.3.  Representations and Warranties.  Lessee and each Guarantor
jointly and severally represent and warrant to Trustee, Lenders, and Agents as
of the Amendment No. 1 Effective Date as follows:

          (a)  Attached hereto as Exhibit D is a true and complete legal
     description of the Hotel Site, reflecting the addition of the property
     identified on Exhibit A hereto and subtracting the property to be conveyed
     to Lessee pursuant to Subpart 5.4(a), upon which the Hotel is being built.

          (b)  All utility services necessary for the operation and use of the
     Hotel and Hotel Site are provided by persons or entities unaffiliated with
     Lessee or Parent excluding water and sewer utilities services.

          (c)  The financial projections and assumptions delivered to Agent by
     Parent and Lessee for purposes of amending the financial covenants
     contained in Subpart 3.2 is based upon good faith estimates and assumptions
     believed by the Parent and Lessee to be reasonable on the Amendment No. 1
     Effective Date.

          (d)  No fact is known to the Parent or the Lessee which may have a
     Material Adverse Effect that has not been set forth in the December 29,
     1996 financial statements or disclosed to Trustee, Lenders and Agents in
     connection with the preparation of this Amendment No. 1 or otherwise
     notified to Trustee, Lenders, and Agents prior to the Amendment No. 1
     Effective Date.





                                       11
<PAGE>   12


          SUBPART 5.4. Additional Covenants of Trustee, Co-Agents and Lenders.

               (a)  Upon transfer of the property identified on Exhibit A hereof
          to Trustee and compliance by Lessee with Section 3.4(f)(ii) through
          (v) of the Participation Agreement, Lenders shall direct the Trustee
          to convey all right, title and interest to the property identified on
          Exhibit E attached hereto to Lessee by quitclaim deed on an "as-is,
          where-is" basis without representations or warranties except that such
          property is free of any Lessor Liens.

               (b)  If at any time the Trustee, any Co-Agent, any of the Lenders
          or their respective successors or assigns shall acquire fee ownership
          or take possession or control of the Hotel, then upon the request of
          the Lessee, they and Lessee agree to execute and deliver a reciprocal
          easement agreement that mutually benefits and burdens each of the
          Hotel Site and Land for the sole purpose of unrestricted shared
          parking over and on each of said parcels of Land, which agreement
          shall contain standard and customary terms reasonably acceptable to
          each of the parties thereto and the Lenders.


                                    PART VI

                                 MISCELLANEOUS

     SUBPART 6.1. Cross-References.  References in this Amendment No. 1 to any
Part or Subpart are, unless otherwise specified, to such Part or Subpart of this
Amendment No. 1.

     SUBPART 6.2. Operative Document Pursuant to Participation Agreement. This
Amendment No. 1 is an Operative Document executed pursuant to the Participation
Agreement and shall (unless otherwise expressly indicated therein) be construed,
administered and applied in accordance with the terms and provisions of the
Participation Agreement.

     SUBPART 6.3. Successors and Assigns.  This Amendment No. 1 shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.

     SUBPART 6.4. Counterparts, etc.  This Amendment No. 1 may be executed by
the parties hereto in several counterparts, each of which when executed and
delivered shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.

     SUBPART 6.5. Governing Law.  THIS AMENDMENT NO. 1 SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.





                                       12
<PAGE>   13


     SUBPART 6.6. Guarantor Affirmation and Consent.  By its signature below,
each Guarantor under the Guaranty hereby acknowledges and consents to this
Amendment No. 1 and the amendments to the Participation Agreement as amended
hereby, and the terms and provisions hereof.  Each Guarantor hereby reaffirms as
of the Amendment No. 1 Effective Date its covenants and agreements contained in
the Guaranty, including as such covenants and agreements may be modified by this
Amendment No. 1, and further confirms that as of the Amendment No. 1 Effective
Date (both before and after giving effect to the effectiveness to this Amendment
No. 1), the Guaranty is and shall continue to be in full force and effect and is
hereby ratified and confirmed in all respects except that upon the effectiveness
of this Amendment No. 1, all references in the Guaranty to the "Operative
Documents", "Participation Agreement", "thereunder", "thereof", or words of like
import shall mean the Participation Agreement, as the case may be, as in effect
and amended by this Amendment No. 1.

     SUBPART 6.7. Lender Confirmation.  Execution and delivery to Agent by a
Lender of a counterpart to this Amendment No. 1 shall be deemed confirmation by
such Lender that (i) all conditions precedent in Subpart 5.1 have been fulfilled
to the satisfaction of such Lender and (ii) the decision of such Lender to
execute and deliver to Agent an executed counterpart to this Amendment No. 1 was
made by such Lender independently and without reliance on Agent or any other
Lender as to the satisfaction of any condition precedent set forth in Subpart
5.1.



     IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to
be executed by their respective officers hereunto duly authorized as of the day
and year first above written.

                                 BL DEVELOPMENT CORP., as Lessee


                                 By     /s/ Timothy J. Cope            
                                   -----------------------------------
                                   Name: Timothy J. Cope
                                   Title: CFO

                                 GRAND CASINOS, INC., as Guarantor


                                 By     /s/ Timothy J. Cope            
                                   -----------------------------------
                                   Name: Timothy J. Cope
                                   Title: CFO



                                     13
<PAGE>   14

                                 GRAND CASINOS RESORTS, INC., as Guarantor

                                 By  /s/ Timothy J. Cope           
                                   ----------------------------------     
                                   Name:   Timothy J. Cope
                                   Title: CFO

                                 GRAND CASINOS OF MISSISSIPPI, INC. 
                                  - GULFPORT, as Guarantor

                                 By  /s/ Timothy J. Cope           
                                   ----------------------------------
                                   Name: Timothy J. Cope
                                   Title: CFO

                                 GRAND CASINOS OF MISSISSIPPI, INC. 
                                  - BILOXI, as Guarantor

                                 By  /s/ Timothy J. Cope           
                                   ----------------------------------
                                   Name: Timothy J. Cope
                                   Title: CFO




                                     14
<PAGE>   15


                             GRAND CASINOS OF BILOXI THEATER, INC., 
                               as Guarantor


                             By  /s/ Timothy J. Cope          
                               ------------------------------ 
                               Name: Timothy J. Cope
                               Title: CFO

                             GCI BILOXI HOTEL ACQUISITION 
                               CORPORATION, as Guarantor


                             By  /s/ Timothy J. Cope          
                               ------------------------------
                               Name: Timothy J. Cope
                               Title: CFO


                             GCI GULFPORT HOTEL ACQUISITION 
                               CORPORATION, as Guarantor


                             By  /s/ Timothy J. Cope            
                               ------------------------------
                               Name: Timothy J. Cope
                               Title: CFO


                             MILLE LACS GAMING CORPORATION, as 
                               Guarantor


                             By  /s/ Timothy J. Cope           
                               ------------------------------
                               Name: Timothy J. Cope
                               Title: CFO

                             GRAND CASINOS OF LOUISIANA, INC. 
                               TUNICA - BILOXI, as Guarantor


                             By  /s/ Timothy J. Cope           
                               ------------------------------
                               Name: Timothy J. Cope
                               Title: CFO




                                     15
<PAGE>   16

                                 GRAND CASINOS OF LOUISIANA, INC. - 
                                   COUSHATTA, as Guarantor


                                 By   /s/ Timothy J. Cope            
                                   ----------------------------------
                                   Name: Timothy J. Cope
                                   Title: CFO


                                 GCA ACQUISITION SUBSIDIARY, INC., as Guarantor

                                 By   /s/ Timothy J. Cope            
                                   ----------------------------------
                                   Name: Timothy J. Cope
                                   Title: CFO

                                 HANCOCK BANK, not in its individual capacity, 
                                  but solely as Lessor, Borrower and Trustee


                                 By   /s/ H. Arnold Wethey            
                                   ----------------------------------
                                   Name: H. Arnold Wethey
                                   Title: Vice President and Trust Officer

                                 BA LEASING & CAPITAL CORPORATION, not 
                                   in its individual capacity, but solely as 
                                   Agent


                                 By   /s/ Sonia T. Delen              
                                   ----------------------------------
                                   Name: Sonia T. Delen
                                   Title: Assistant Vice President

                                 BA LEASING & CAPITAL CORPORATION, as 
                                   Lender


                                 By   /s/ Kim Lee               
                                   ----------------------------------
                                   Name: Kim Lee
                                   Title: Assistant Vice President




                                     16
<PAGE>   17


                                   BANK OF SCOTLAND, as Co-Agent and as Lender

                                   By     /s/ Annie Chin Tat                    
                                     --------------------------------------
                                     Name: Annie Chin Tat
                                     Title: Assistant Vice President

                                   WELLS FARGO BANK, NATIONAL 
                                     ASSOCIATION (successor by merger to FIRST 
                                     INTERSTATE BANK OF NEVADA), as Co-
                                     Agent and as Lender


                                   By     /s/ Brad Peterson          
                                     --------------------------------------
                                     Name: Brad Peterson
                                     Title: Vice President

                                   SOCIETE GENERALE, as Co-Agent and as Lender


                                   By     /s/ Maureen E. Kelly       
                                     --------------------------------------
                                     Name: Maureen E. Kelly
                                     Title: Vice President

                                   CREDIT LYONNAIS, LOS ANGELES BRANCH, 
                                     as Lead Manager and as Lender


                                   By     /s/ Robert Ivosevich         
                                     --------------------------------------
                                     Name: Robert Ivosevich
                                     Title: Senior Vice President


                                   THE CIT GROUP/EQUIPMENT FINANCING, 
                                     INC., as Lender

                                   By     /s/ Thomas L. Abbate             
                                     -------------------------------------- 
                                     Name: Thomas L. Abbate
                                     Title: Executive Vice President



                                     17
<PAGE>   18


                                  UNITED STATES NATIONAL BANK OF 
                                    OREGON, as Lender


                                  By    /s/ Dale Parshall            
                                    ---------------------------------------
                                    Name: Dale Parshall
                                    Title: Assistant Vice President


                                  THE FIRST NATIONAL BANK OF BOSTON, as 
                                    Lender

                                  By    /s/  Reginald T. Dawson 
                                    ---------------------------------------
                                    Name: Reginald T. Dawson
                                    Title: Director

                                  IMPERIAL BANK, as Lender


                                  By    /s/ Steven Johnson                
                                    ---------------------------------------
                                    Name: Steven Johnson
                                    Title: Senior Vice President

                                  TRUSTMARK NATIONAL BANK, as Lender


                                  By    /s/ John W. Ray Jr. 
                                    --------------------------------------     
                                    Name: John W. Ray, Jr.
                                    Title: Vice President

                                  FIRST SECURITY BANK, N.A., as Lender


                                  By    /s/ David P. Williams
                                    --------------------------------------
                                    Name: David P. Williams
                                    Title: Vice President



                                     18
<PAGE>   19


                                   FIRST NATIONAL BANK OF COMMERCE, as 
                                     Lender


                                   By     /s/ Louis Ballero             
                                     --------------------------------------- 
                                     Name: Louis Ballero
                                     Title: Senior Vice President


                                   HANCOCK BANK, as Lender


                                   By     /s/ John S. Hall                   
                                     --------------------------------------
                                     Name: John S. Hall
                                     Title: Senior Vice President

                                   DEPOSIT GUARANTY NATIONAL BANK, as 
                                     Lender


                                   By     /s/ Larry C. Ratzlaff             
                                     -------------------------------------- 
                                     Name: Larry C. Ratzlaff
                                     Title: Senior Vice President



                                     19
<PAGE>   20
                            EXHIBIT LIST

EXHIBIT A            Description of Land to be Included in Reconfigured
                     Hotel Site

EXHIBIT B            Litigation matters required to be disclosed 
                     pursuant to Section 4.1(d)

EXHIBIT C            Financial Covenant Compliance Certificate

EXHIBIT D            Amended Legal Description of Hotel Site

EXHIBIT E            Description of Land to be Excluded from Original 
                     Hotel Site





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