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

                                 FIRST AMENDMENT

                                   - TO THE -

                              EMPLOYMENT AGREEMENT

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


     THIS FIRST AMENDMENT TO THE EMPLOYMENT AGREEMENT ("Second Amendment") is
made and entered into as of the 12th day of June, 1998 ("Effective Date") by and
between GREATE BAY HOTEL AND CASINO, INC. ("Employer") and J. GARY LUDERITZ
("Employee").

                              W I T N E S S E T H:

     WHEREAS, Employer and Employee entered into that certain Employment
Agreement dated as of December 1, 1995 ("the Agreement") under the terms and
pursuant to the conditions set forth in the Employment Agreement, a copy of
which is attached as Exhibit "A", (the "Agreement"); and,

     WHEREAS, Employer and Employee are desirous of modifying the Agreement in
accordance with the Order of Judge Wizmur of the United States Bankruptcy Court
for the District of New Jersey dated June 12, 1998 (the "Order"); and,

     WHEREAS, Paragraph 15 of the Agreement requires that the Employment
Agreement "may not be amended, modified, changed or altered except by a writing
signed by both Employer and Employee";


<PAGE>


     NOW, THEREFORE, for and in consideration of the foregoing recitals, and in
consideration of the mutual covenants, agreement, understandings, undertakings,
representations, warranties and promises hereinafter set forth, and intending to
be legally bound thereby, Employer and Employee do hereby covenant and agree as
follows:

     1. AMENDMENT TO PARAGRAPH 6 OF THE AGREEMENT.

     The provisions of Paragraph 6 of the Agreement are modified solely to
extend the Term from that stated therein to the period ending on November 30,
2000.

     2. AMENDMENT TO PARAGRAPH 8(B) OF THE AGREEMENT.

     The language of Paragraph 8(b) of the Agreement is deleted and replaced
with the following:

          The Base Salary, shall be adjusted ("the Base Salary Adjustment") on
          each of the anniversary dates of the Effective Date of this Agreement
          (each "an Adjustment Date"). The Base Salary Adjustment shall be the
          product of the Base Salary times the difference between the CPI
          Comparison Period and the CPI Base Period. For the purpose of this
          paragraph, the Base Salary shall include any previous Base Salary
          Adjustments, the CPI shall be the Consumer Price Index for all Urban
          Consumers for Phila., Pa. All Items (1982-1984=100) issued by the
          United States Department of Labor, Bureau of Labor Statistics or any
          successor agency ("the Bureau"), the CPI Base Period shall be the CPI
          most recently published by the Bureau as of March 31, 1997 for the
          first Adjustment Date and the CPI Comparison Period used for the
          preceding Adjustment date for succeeding Adjustment Dates, and the CPI
          Comparison Period shall be the most recently published CPI by the
          Bureau as of March 31 just prior to the Adjustment Date. Nothing in
          this paragraph shall permit any increase of the Base Salary at an
          Adjustment Date to exceed five (5) percent or a decrease in Base
          Salary at an Adjustment Date except that the Board of Directors may
          authorize an increase in the Base Salary up to five percent of the
          Base Salary effective on any Adjustment Date. In the event that the
          Bureau ceases to use the 1982-1984 average of 100 as the basis of
          calculation of the CPI or ceases to publish the CPI, or a substantial
          change is 


                                      -2-
<PAGE>


          made in the "market basket" of items used in determining the CPI, the
          Employer shall in good faith substitute another index or comparable
          statistic to measure the change in the cost of living in the
          Philadelphia metropolitan area.

     For the purpose of the this First Amendment, the parties acknowledge that
the anniversary date of the Agreement was previously changed to April 1 of each
year.

     3. AMENDMENT TO PARAGRAPH 8(D) OF THE AGREEMENT. 

     In the case of a termination without Cause, which does not entitle Employee
to Severance Pay under the Severance Pay Policy approved by Order of Judge
Wizmur dated January 26, 1998, as amended by Order of Judge Wizmur dated March
31, 1998, and as applicable to Employee by the Order, Paragraph 8(d) of the
Agreement is modified solely to limit the periodic payments described therein to
the lesser of the remaining Term of the Agreement or two (2) years.

     4. RATIFICATION OF THE AGREEMENT. Except as otherwise modified by this
First Amendment, Employer and Employee hereby ratify and affirm the terms and
conditions of the Agreement.


                                      -3-
<PAGE>


     IN WITNESS WHEREOF AND INTENDING TO BE LEGALLY BOUND THEREBY, the parties
hereto have executed and delivered this First Amendment as of the year and date
first above written.


ATTEST:                                   GREATE BAY HOTEL AND CASINO, INC.


                           
/s/ FREDERICK H. KRAUS                    By: /s/ TIMOTHY A. EBLING
---------------------------------             ---------------------------------
    Frederick H. Kraus                            Timothy A. Ebling
    Secretary                                     Executive Vice President



WITNESS:                                  EMPLOYEE


/s/ JEANNE FACCADIO                           /s/ J. GARY LUDERITZ
---------------------------------             ---------------------------------
    Jeanne Faccadio                               J. Gary Luderitz


                                       -4-