Document:

_______________________________________
This Mortgage was prepared by and after
recording should be returned to:  __________________________________

                 MORTGAGE, FIXTURE FILING AND SECURITY AGREEMENT

            This MORTGAGE, FIXTURE FILING AND SECURITY AGREEMENT (this
"Mortgage"), made this ____ day of __________, by GREATE BAY HOTEL AND CASINO,
INC., a corporation duly organized and existing under the laws of the State of
New Jersey and having its principal place of business at the Sands Hotel and7
Casino, Indiana Avenue and Brighton Park, Atlantic City, New Jersey 08401 (the
"Mortgagor"), in favor of [_______________________________] , a national banking
association having its corporate trust office at____________________________, as
Trustee (the "Mortgagee") under the Indenture described below on its own behalf
and on behalf of the holders from time to time of the Securities referred to
below (the "Holders").

                               W I T N E S S E T H

            WHEREAS, the Mortgagor is the owner of a fee simple interest in
certain land and air spaces situated in the City of Atlantic City, County of
Atlantic, State of New Jersey ("Atlantic City"), being more particularly
described on Schedule A-1 attached hereto and by this reference made a part
hereof (the "Casino Land") and the improvements now or hereafter constructed on
the Casino Land, a portion of which constitute the Sands Hotel and Casino and
Parking Garage (the "Sands");

            WHEREAS, the Mortgagor is the owner of a fee simple interest in
certain land and air spaces situated in Atlantic City, being more particularly
described on Schedule A-2 attached hereto and by this reference made a part
hereof (the "Office Land") and the improvements now or hereafter constructed on
the Office Land;

            WHEREAS, the Mortgagor is the owner of certain land situated in the
City of Atlantic City, County of Atlantic, State of New Jersey, being more
particularly described on Schedule A-3 attached hereto and by this reference
made a part hereof (the "Expansion Land" and the improvements now or hereafter
constructed on the Expansion Land (the Casino Land, the Office Land, and the
Expansion Land being collectively referred to herein as the "Land");

            WHEREAS, the Mortgagor is the owner of an easement interest in the
parcels of real property situated in Atlantic City more particularly described
on Schedule A-4 attached hereto and by this reference made a part hereof (the
"Easement") and the improvements now or hereafter constructed on the Easement;

            WHEREAS, the Easement was granted to the Mortgagor and the Claridge
Casino Hotel pursuant to that certain Ordinance No. 103 of Atlantic City dated
October 7, 1987 and was recorded January 29, 1993 in the Atlantic County, New
Jersey Clerk's Office in Deed Book 5463, Page 228 (the "Easement Ordinance");

<PAGE>

            WHEREAS, pursuant to an Indenture, dated as of the date hereof (as
the same may hereafter be amended, supplemented or otherwise modified, the
"Indenture", capitalized terms not otherwise defined herein are used herein as
defined therein), among the Mortgagor, the Mortgagee, GB Holdings, Inc., a
Delaware corporation ("Holdings") and GB Property Funding Corp., a Delaware
corporation (the "Company"), the Company is issuing, on the date hereof, $110
million of 11% First Mortgage Notes Due 2005 (the "First Mortgage Notes" or the
"Securities");

            WHEREAS, this Mortgage is being executed and delivered pursuant to
the terms and conditions set forth in the Indenture and is entitled to the
benefits thereof (all capitalized terms used herein without definition which are
defined in the Indenture being used herein as defined therein);

            WHEREAS, the Mortgagor has guaranteed the punctual payment
(including applicable notice and/or grace periods) of the principal of and any
interest on the Securities, whether at maturity, by acceleration or otherwise,
and payment and performance by the Company, Holdings and the Mortgagor of their
other respective obligations (including the payment of fees and expenses) under
the Indenture and with respect to the Securities pursuant to the guarantee
contained in Article 12 of the Indenture (as the same may hereafter be amended,
supplemented or otherwise modified from time to time, the "Guarantee"); and

            WHEREAS, it is a condition precedent to the issuance of the
Securities that the obligations of Mortgagor under the Guarantee be secured by,
among other things, this Mortgage.

            NOW THEREFORE, in consideration of the premises and for other good
and valuable consideration, receipt of which is hereby acknowledged, the
Mortgagor agrees as follows:

            TO SECURE:

            The payment and performance by the Mortgagor of all of its
obligations, covenants and duties, including, but not limited to, obligations to
make payment of all principal, interest (including any interest that accrues
after the filing of a petition of the type referred to in Sections 501(7) and
501(8) of the Indenture) fees, expenses and other amounts payable under the
Guarantee, this Mortgage, the Indenture and any other Security Document,
including all amounts that constitute part of such obligations and would be owed
by the Company, Holdings or the Mortgagor to the Mortgagee but for the fact that
they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Company, Holdings or the
Mortgagor, (all of such obligations, covenants and duties referred to in this
paragraph being called, collectively, the "Liabilities").

            The Mortgagor hereby grants to the Mortgagee on behalf of the
Mortgagee and of the Holders, a security interest in, and the Mortgagor hereby
mortgages to the Mortgagee on its own behalf and on behalf of the Holders, all
of its estate, right, title and interest in, to and under, or derived from, the
following property:

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<PAGE>

            The Land, together with all right, title and interest of the
Mortgagor now owned or hereafter acquired, if any, in and to the streets, the
land lying in the bed of any streets, roads, avenues, alleys, passages and
sidewalks; and all reversionary rights with respect to the vacation of said
streets, roads, avenues, alleys, passages and sidewalks, open or proposed, in
front of, adjoining or abutting the Land to the center line thereof and any air
spaces thereover and all and singular the reversions or remainders in and to the
Land and the tenements, hereditaments, easements (in gross and/or appurtenant),
rights-of-way or use, rights (including alley, drainage, crop, timber,
agricultural, horticultural, mineral, water, ditch, reservoir, oil and gas
rights), privileges, royalties and appurtenances to the Land, now or hereafter
belonging or in anywise appertaining thereto, including any such estate, right,
title, interest in, to or under any agreement or right granting, conveying or
creating, for the benefit of the Land, any easement, right or license in any way
affecting the said property and other property and in, to or under any streets,
ways, alleys, vaults, gores or strips of land adjoining the Land and or any
parcel thereof, or in or to the air space over the Land, and all rights of
ingress and egress by motor vehicles to parking facilities on or within the
Land, and all claims or demands of the Mortgagor, either at law or in equity, in
possession or expectancy, of, in or to the same;

            TOGETHER WITH all right, title and interest of the Mortgagor to the
Easement, any interest in any fee, greater or lesser title to the Easement that
Mortgagor may own or hereafter acquire and all credits, deposits, options,
privileges and rights of Mortgagor under the Easement and the Easement Ordinance
(including all rights of use, occupancy and enjoyment) and under any amendments,
supplements, extensions, renewals, restatements, replacements and modifications
thereof (including, without limitation, (i) the right to give consents, (ii) the
right to receive moneys payable to Mortgagor, (iii) the right, if any, to
purchase the real property subject to the Easement and (iv) the right to
terminate or modify the Easement);

            TOGETHER WITH all right, title and interest of the Mortgagor to the
interests granted to the Mortgagor by Atlantic City pursuant to that certain
Ordinance of Atlantic City of Atlantic City, New Jersey, No. 70, dated August 1,
1986;

            TOGETHER WITH all buildings, structures, facilities and other
improvements now or hereafter located on the Land or the Easement, including,
without limitation, the Sands and all building material, building equipment,
supplies and fixtures of every kind and nature now or hereafter located on the
Land or the Easement or attached to, or contained in any such buildings,
structures or facilities including, without limitation, all of the same which
may be or become a part of the Sands, and all additions thereto and betterments,
renewals, substitutions and replacements thereof, in each case only to the
extent the same is both: (i) owned by the Mortgagor or in which the Mortgagor
has or shall acquire an interest and (ii) now or hereafter located on the Land
or the Easement (all of the foregoing hereinafter collectively called the
"Improvements") (the Land and the Easement together with the Improvements are
hereinafter collectively referred to as the "Premises");

            TOGETHER WITH all machinery, apparatus, equipment, materials,
fittings, fixtures and all appurtenances and additions thereto and betterments,
renewals, substitutions and replacements thereof, owned by the Mortgagor or in
which the Mortgagor has or shall acquire an interest, to the extent that the
same are now or hereafter located on, attached to or contained in

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<PAGE>

the Premises or placed on any part thereof, though not attached thereto
(including, without limitation, the elevated, enclosed and motorized pedestrian
walkway currently constructed upon the Easement (the "People-Mover") and the
equipment, fittings, materials and all appurtenances and additions thereto and
betterments, renewals, substitutions, replacements, proceeds and products
thereof, which are incorporated in, or a part of or are necessary for the
operation of the People-Mover (all of the foregoing; including the People-Mover,
hereinafter collectively called the "Fixtures"; the Premises and the Fixtures
together being collectively referred to as the "Mortgaged Premises"), including,
without limitation, any of the foregoing that constitute heating, lighting,
plumbing, ventilating, air conditioning, refrigerating, gas, steam, electrical,
incinerating and/or compacting plants, systems, fixtures and equipment, security
systems, elevators, escalators, hoists, cleaning systems, call systems,
sprinkler systems and other fire prevention and extinguishing apparatus and
materials, loading and unloading apparatus, landscaping, motors, machinery,
pipes, ducts, conduits, dynamos, engines, compressors, generators, boilers,
furnaces, pumps, tanks, appliances, equipment, shops, girders, beams, fittings
and fixtures; the Mortgagee shall have, in addition to all rights and remedies
provided in the Indenture, the Security Agreement, dated as of the date hereof,
made by the Mortgagor to the Mortgagee (the "Security Agreement"), the
Collateral Assignment of Leases, dated as of the date hereof, made by the
Mortgagor to the Mortgagee, this Mortgage and any other agreements, commitments
and undertakings made by the Mortgagor to the Mortgagee, all of the rights and
remedies of a "secured party" under said Uniform Commercial Code. If the Lien of
this Mortgage is subject to a security interest covering any property described
in this paragraph, then all of the right, title and interest of the Mortgagor in
and to any and all such property is hereby assigned to the Mortgagee, together
with the benefits of all deposits and payments now or hereafter made thereon by
or on behalf of the Mortgagor;

            TOGETHER WITH all of the Mortgagor's interest in the leases,
subleases, lettings and licenses of, and all other contracts and agreements
affecting, the Land, the Easement, the Improvements and the Fixtures, or any
part thereof, now or hereafter entered into, and all modifications, supplements,
additions, extensions, renewals and replacements thereof, and all right, title
and interest of the Mortgagor thereunder, including cash and securities
deposited thereunder as security the right to receive and collect the rents,
additional rents, increases in rents, security deposits, advance rents, income,
proceeds, earnings, revenues, issues and profits payable thereunder and the
rights to enforce, whether at law or in equity or by any other means, all
provisions thereof, and any other benefits derived or to be derived therefrom,
including, without limitation, any security deposits made by the Space Tenants
(as hereinafter defined), and the right to apply the same to the payment of the
Liabilities subject to the terms and provisions of this Mortgage;

            TOGETHER WITH all other property, of every kind and nature, which
may from time to time be subjected to the Lien hereof by the Mortgagor through a
supplement to this Mortgage or by anyone on its behalf or with its consent, or
which may come into the possession of or be subject to the control of the
Mortgagee pursuant to this Mortgage;

            TOGETHER WITH all unearned premiums, accrued, accruing or to accrue
under insurance policies now or hereafter obtained by the Mortgagor with respect
to the Mortgaged Premises, and the Mortgagor's interest in and to all proceeds
of the conversion and the interest

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<PAGE>

payable thereon, voluntary or involuntary, of the Mortgaged Premises or any part
thereof, to the extent the same are property of the Mortgagor, into cash or
liquidated claims, including without limitation, but subject to the provisions
of this Mortgage and the Indenture, proceeds of casualty insurance, title
insurance or other insurance maintained on the Premises and the Fixtures
(excluding the proceeds of all worker's compensation insurance and personal or
general liability insurance), and the right to collect and receive the same and
all awards or payments, including interest thereon, hereafter made to the
Mortgagor for the taking by eminent domain of the whole or any part of the Land,
Easement or Mortgaged Premises or the use thereof, or any easement therein,
including any awards or payments for changes of grade of streets or any other
injury to or decrease in the value of the Land, Easement or Mortgaged Premises,
which said awards and payments, subject to the terms of this Mortgage and the
Indenture, are hereby assigned to the Mortgagee on its own behalf and on behalf
of the Holders, who is hereby authorized, subject to the terms of this Mortgage
and of the Indenture, to collect and receive the proceeds thereof and to give
proper receipts and acquittances therefor, and to apply the same toward the
payment of the Liabilities, at any time secured hereby, notwithstanding the fact
that the amount thereof may not then be due and payable and toward the
reasonable counsel fees, costs and disbursements incurred by the Mortgagee in
connection with the collection of such award or payments, and any and all
refunds of real estate taxes which may become due to the Mortgagor and any and
all deposits by the Mortgagor with providers of utilities and other services to
the Premises; and the Mortgagor hereby agrees, upon request, to make, execute
and deliver any and all assignments and other instruments sufficient for the
purpose of assigning said awards or payments to the Mortgagee on its own behalf
and on behalf of the Holders, free, clear and discharged of any encumbrances
(other than encumbrances permitted hereunder or under the Indenture) of any kind
or nature whatsoever;

            TOGETHER WITH all of the Mortgagor's right, title and interest in
all proceeds, both cash and non cash, of the foregoing which may be sold or
otherwise disposed of pursuant to the terms hereof;

            TOGETHER WITH any and all monies now or hereafter on deposit for the
payment of real estate taxes or special assessments against the Mortgaged
Premises or for the payment of premiums on fire or other property insurance
covering the Mortgaged Property (hereinafter defined).

            All of the foregoing real and personal property and rights and
interests in property and awards are herein collectively referred to as the
"Mortgaged Property".

Notwithstanding anything to the contrary herein contained, it is expressly
agreed that the Mortgaged Property shall not include and Mortgagee shall not
have a Lien, as that term is defined in the Indenture, on or any rights with
regard to (i) the Excluded Property, as that term is defined in the Security
Agreement; (ii) any real property interest, fee or leasehold, acquired by
Mortgagor after the date hereof, whether or not contiguous to the Land (the
"Excluded Land") and any buildings, structures, facilities, fixtures, other
improvements and/or personal property then or thereafter located on or used in
connection with the Excluded Land; and (iii) the property located at 32 North
Texas Avenue, Atlantic City, New Jersey and the warehouse located in Mystic
Island, New Jersey.

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<PAGE>

            TO HAVE AND TO HOLD the Mortgaged Property unto the Mortgagee, its
successors and assigns, to its and their own proper use, benefit and behalf
forever.

            PROVIDED ALWAYS, and these presents are upon the express condition
that, if (i) the outstanding principal of the Securities, and any interest which
may become due thereon and any other sums which may become due in connection
therewith shall be paid in full in accordance with the terms of the Securities,
the Indenture and hereof and if all of the Liabilities shall be performed and
paid in full or (ii) the Indenture is otherwise discharged, then these presents
and the estate hereby created shall cease, determine and be void and the
Mortgagee agrees that at such time, upon the request of the Mortgagor, it shall
execute and deliver such documents and take all action as may be reasonably
requested by the Mortgagor to be necessary to terminate this Mortgage of record.

            AND the Mortgagor represents and warrants to and covenants with the
Mortgagee on its own behalf and on behalf of the Holders that, to the best of
its knowledge, it has and at all times hereafter will have good and marketable
fee simple title to the Premises (except that in the case of the Easement, the
Mortgagor shall maintain its interest) and the Mortgagor covenants that its
estate, right, title and interest in and to the Premises is free and clear of
all taxes, Liens, and encumbrances whatsoever, except as appears in Schedule B
attached hereto and made a part hereof; provided however, that the Mortgager and
Mortgagee acknowledge and agree that: (x) all security interest and other rights
in the Mortgaged Property and any other Collateral shall be, and hereby are,
subject and inferior to any Liens heretofore or hereafter created from time to
time in connection with the incurrence of Working Capital Indebtedness; and (y)
notwithstanding anything to the contrary hereunder or in the Indenture or in the
other Security Documents, the Mortgagor and its subsidiaries may incur Liens and
Indebtedness (including, without limitation, Liens on the Mortgaged Property and
other Collateral) permitted by the Indenture. In connection with any of the
foregoing, Mortgagee will, at the request of Mortgagor, enter into such
intercreditor agreements, standstill agreements, subordination agreements and
other documents as shall be appropriate under the circumstances for the benefit
of the holder of such other Indebtedness or of the superior liens.

            The Mortgagor further covenants with the Mortgagee on its own behalf
and on behalf of the Holders as follows:

            1. Payment of Liabilities. As set forth in the Guarantee, the
Mortgagor will pay, or cause to be paid, the Liabilities secured by this
Mortgage and shall perform all conditions, covenants and obligations on the part
of the Mortgagor in accordance with the terms of the Guarantee, the Indenture,
the Security Documents and this Mortgage, including, without limitation,
applicable notice and grace periods.

            2. Insurance.

            2.1 The Mortgagor shall at its own expense at all times maintain or
cause to be maintained on all of the Mortgaged Property and all other personal
property subject to the Security Agreement: (x) insurance satisfying the
requirements of clauses (c) and (d) below; and (y) property and liability
insurance against such risks, in such amounts and in such form, as is

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usually carried by companies engaged in a business similar to the business
conducted by Mortgagor in Atlantic City, New Jersey, provided however, that in
no event shall Mortgagor be required to obtain insurance in excess of any of the
following: (a) commercial liability insurance (including blanket contractual
liability insurance, innkeeper's liability, products liability and elevator
liability) covering all claims for bodily injury, including death, or property
damage occurring on, in or about the Mortgaged Premises and the adjoining
sidewalks and passageways in an amount of not less than $50,000,000 combined
single limit as respects bodily injury and property damage in respect of any one
occurrence provided that the primary policy, providing liability limits of
$1,000,000 per occurrence and $1,000,000 in the aggregate for bodily injury
liability and property damage liability, as such limits are defined in standard
endorsement L6108 entitled: "Amendment - Limits of Liability (Single Limit)
(Individual Coverage Aggregate Limit)", and such insurance may be excess to a
$500,000 self-insured retention per occurrence and may be subject to $500,000
combined single limit sublimit for coverage provided for the care, custody and
control of property, a $250,000 per loss/aggregate sublimit for Innkeeper's
Property Damage Liability, a $250,000 per loss/aggregate sublimit for Hotel Safe
Deposit Box Liability, a $250,000 per occurrence limit for real property fire
liability, and a $250,000 in the aggregate, a $1,000,000 aggregate limit for
personal injury liability, liquor liability, advertising liability and pollution
liability; during any period of alterations or improvements in, on or to the
Mortgaged Premises, the Mortgagor will cause to have the commercial liability
insurance policy endorsed to provide owners and contractors protective liability
coverage including completed operations liability coverage or maintain separate
policies with respect to such coverage; (b) workers' compensation insurance
(including employer's liability insurance) for all employees of the Mortgagor
engaged on or with respect to the Mortgaged Property in such amounts as are
required by law; (c) physical damage insurance covering the Improvements and
Fixtures for loss or damages resulting from the perils of fire, lightning and
such other risks and hazards as are provided under the current standard
"Extended Coverage Endorsement" and vandalism and malicious mischief coverage
for 100% of the full replacement value of the Improvements and Fixtures
(excluding footings and foundations) on condition that the policy contains an
"agreed amount endorsement" and that no co-insurance provisions would be
applicable, provided that the property policy limit may be subject to a total
limit of $200,000,000 for all loss arising out of one occurrence subject to a
sublimit of $100,000,000 unless the loss is caused by fire, lightning, removal,
wind and hail, leakage from fire protective equipment, explosion, smoke,
aircraft and vehicles, sonic shock wave, riot, civil commotion and vandalism,
molten material, and in which case the $100,000,000 sublimit will not apply, a
sublimit of $35,000,000 in the aggregate for loss due to earthquake, a sublimit
of $5,000,000 in the aggregate for loss caused by flood, a sublimit of
$1,000,000 for property in transit, a sublimit of $1,000,000 on newly acquired
property, a sublimit of $105,000,000 for business interruption loss defined to
include net profit plus certain continuing expenses except ordinary payroll
expenses, a $50,000,000 sublimit for general boiler and machinery coverage, and
a maximum deductible of $500,000 for each loss and a 72-hour exclusion for any
time element loss; (d) insurance on all Equipment and all Inventory (as such
terms are defined in the Security Agreement and included in the "Collateral"
therein) against loss or damage by reason of any hazard referred to in
subsection (c) and subject to the conditions stated in subsection (c) of this
subsection 2.1 in an amount of 100 percent of the full replacement value
thereof; (e) insurance against loss of rents/business interruption by reason of
any hazard covered under the insurance required under subsections (c) and (d) of
this subsection 2.1 in an

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amount sufficient to avoid any co-insurance penalty, and subject to the
conditions stated in subsection (c); and (f) insurance against such other risks
of damages, hazards, casualties and contingencies, but only if and only to the
extent and in such amounts that insurance against such other risks, hazards,
casualties or contingencies shall then be commonly carried by prudent owners and
lessees of buildings or improvements in the locality similar in character,
construction, use and occupancy to the Improvements, appurtenances, and Fixtures
and equipment on or constituting a part of the Mortgaged Property; all such
insurance, after providing for costs of collection. The Mortgagor will duly and
punctually comply, or cause compliance with, all of the material terms and
conditions of any insurance policy covering or applicable to the Mortgaged
Property, whether or not expressly required hereunder, all material requirements
of the issuer of any such policy, and all orders, rules and other requirements
of the National Board of Fire Underwriters (or any body exercising similar
functions) binding upon the Mortgagor or applicable to or affecting the
Mortgaged Property or any use or condition thereof. The types, terms,
conditions, coverages and policy limits of insurance maintained pursuant to this
subsection 2.1 may be increased, decreased, amended, supplemented or otherwise
modified from time to time to the extent available and at a reasonable cost to
reflect what prudent owners and/or lessees of buildings or improvements similar
in type and locality to the Mortgaged Property would carry, as certified to the
Mortgagee in an Officer's Certificate (as defined herein) of the Mortgagor.

            2.2 All insurance required pursuant to subsection 2.1 hereof shall
be evidenced by valid and enforceable policies, in form and substance, and
issued by and distributed among insurers of recognized responsibility having an
A.M. Best Company rating of at least A or B and a financial size category of
Class VII or above, and authorized to do business in the State of New Jersey.
The originals of all such policies, or certified duplicate copies or
certificates thereof (accompanied by photostats of the policies as soon as
available), shall be delivered to the Mortgagee concurrently with the execution
and delivery of this Mortgage and, thereafter (i) all quotations, synopses and
letters of amendment thereto in respect of proposed coverage, as well as
definitive insurance binders relating to the renewal or replacement policies,
shall be delivered to the Mortgagee as soon as reasonably practicable prior to
the expiration of the policy or policies to be renewed or replaced and (ii) all
renewal or replacement policies, or certified duplicate copies or certificates
thereof (accompanied by photostats of the policies), shall be delivered to the
Mortgagee as soon as reasonably practicable after the expiration date of the
policy or policies to be renewed or replaced, in each case accompanied by
evidence that all premiums currently payable with respect to such policies have
been paid in full.

            2.3 Except in the case of workers' compensation, general and
personal liability and loss of rents/business interruption insurance, all
insurance policies at any time required by this Section 2 shall (a) provide as
follows: (i) the insureds named therein shall include the Mortgagee on its own
behalf and on behalf of the Holders and the Mortgagor, as their respective
interests may appear, (ii) all losses payable thereunder in amounts less than or
equal to $1,000,000 shall be payable directly to the Mortgagor, (iii) all losses
payable thereunder in excess of $1,000,000 shall be payable to the Mortgagee on
its own behalf and on behalf of the Holders pursuant to a standard mortgagee
clause naming the Mortgagee on its

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<PAGE>

own behalf and on behalf of the Holders, as their interests may appear, with
loss payable to the Mortgagee on its own behalf and on behalf of the Holders
without contribution, and (iv) all losses thereunder in excess of $10,000,000
shall be adjusted by the Mortgagor with the prior consent of the Mortgagee
(which consent shall not be unreasonably withheld); (b) such policies may not be
canceled or amended without at least thirty (30) days' prior written notice to
the Mortgagee; and (c) no act, omission or negligence of the Mortgagor, or its
agents, servants or employees, or of any Space Tenant under any Space Lease (as
defined in Section 24.4 hereof) or any of their agents, servants or employees
which might otherwise result in a forfeiture of such insurance or any part
thereof, shall in any way affect the validity or enforceability of, or the
amounts which may be collected under, any of such insurance with respect to the
Mortgagee. All losses payable to the Mortgagee pursuant to subsection
2.3(a)(iii) shall be assigned and paid directly to the Mortgagee for deposit
into the Collateral Account to be held and applied in accordance with Sections
1018 and 1404 of the Indenture and Section 9.3 hereof. The policy or policies of
insurance of the character described in subsections (a), (b), (c), (d), (e) and
(f) of subsection 2.1 hereof may consist of blanket policies insuring the
Mortgaged Premises and other property of the Mortgagor; provided that such
policy or policies shall set forth the amount of insurance in force thereunder
applicable to the Mortgaged Premises and any sublimits in such blanket policy
applicable to the Mortgaged Premises, which amounts shall be not less than the
amounts required pursuant to this Section 2 and shall otherwise comply with the
provisions of this Section 2 and shall afford the same protections to the
Mortgagee as would be provided by policies individually applicable to the
Mortgaged Premises, provided that if a portion of such policy covers the
insurance to be given in Section 2, the total coverage afforded under such
portion shall be on an "occurrence" basis, and provided further that if the
Mortgagor converts any insurance policy from an "occurrence" to a "claims" basis
(or vice versa), the Mortgagor shall cause the risk to be covered by such policy
to be continuously insured against notwithstanding such change. If,
notwithstanding the provisions of subsection 2.3(a)(iii) hereof, any insurance
proceeds in excess of $1,000,000 are made payable to the Mortgagor, rather than
to the Mortgagee as required, the Mortgagor shall promptly deliver such
proceeds, in the form received but with any necessary endorsements, to the
Mortgagee and the Mortgagor hereby irrevocably appoints the Mortgagee as its
attorney-in-fact, coupled with an interest, to endorse and/or transfer any such
payment to the name of the Mortgagee on its own behalf and on behalf of the
Holders. All proceeds of the insurance shall be held and disbursed in accordance
with Sections 1018 and 1404 of the Indenture and Section 9.3 hereof.

            2.4 If the Mortgagee on its own behalf and on behalf of the Holders
shall by any manner acquire the title or estate of the Mortgagor in or to any
portion of the Mortgaged Premises, it shall thereupon, to the extent such
insurance policies are not blanket insurance policies of the Mortgagor, become
the sole and absolute owner of all insurance policies held by or required
hereunder to be delivered to the Mortgagee, affecting such portion, with the
sole right to collect and retain all unearned premiums thereon, and the
Mortgagor shall be entitled only to a credit, in reduction of the then
outstanding Liabilities secured hereby, in the amount of any cancellation refund
actually received by the Mortgagee. To the extent applicable the Mortgagor
agrees, immediately upon demand, to execute and deliver such assignments or
other authorizations or instruments as may be necessary or desirable to
effectuate the foregoing.

            2.5 In the event that the Mortgagor fails to (i) provide, maintain
or keep in force the insurance policies required pursuant to subsection 2.1
hereof or (ii) deliver and furnish

                                       9
<PAGE>

to the Mortgagee the original policies of insurance (or certified duplicate
copies or certificates thereof, accompanied by photostats of the policies) or
definitive binders relating to renewal or replacement policies pursuant to
subsection 2.2 hereof prior to the expiration, cancellation or amendment of
existing policies, the Mortgagee on its own behalf and on behalf of the Holders
may at its sole option upon prior written notice to Mortgagor (but in no event
shall the Mortgagee be so obligated) obtain such insurance, and the Mortgagor
will pay all premiums thereon promptly upon demand by the Mortgagee, with
interest thereon, from the date on which such premiums are paid by the Mortgagee
until the Mortgagor shall reimburse the Mortgagee for such amounts, at a rate of
interest equal to the prime rate plus 2% per annum from time to time announced
by the Mortgagee, and such sums, until paid, shall be secured by this Mortgage.

            2.6 The Mortgagor shall not take out separate insurance concurrent
in form or contributing in the event of loss with that required to be obtained
and maintained under this Section 2. Subject to the foregoing, any insurance
effected by the Mortgagor on any part of the Mortgaged Premises whether or not
required under this Mortgage, shall be for the mutual benefit of the Mortgagee
on its own behalf and on behalf of the Holders and the Mortgagor and shall be
subject to all other provisions of this Mortgage.

            3. Alterations.

            3.1 Neither the Improvements nor the Fixtures (except as permitted
in the Indenture or this Mortgage) shall be removed, demolished or materially
altered, except that the Mortgagor may: (a) make non-structural alterations to
the extent that such alterations constitute alterations in the normal course of
business, including removal and reconstruction of interior walls and relocation
of hotel and casino facilities; (b) replace the Fixtures or any part thereof on
the terms and conditions set forth in the Indenture and (c) make any other
alteration, structural or non-structural, (A) with an estimated cost of less
than $500,000; (B) with a cost estimated by the architect, engineer or general
contractor supervising such alteration to be in excess of $500,000 but not
exceeding $2,000,000 after the Mortgagor shall have given written notice to the
Mortgagee of such alteration; (C) with a cost estimated by the architect,
engineer or general contractor supervising such alteration to be in excess of
$2,000,000 but not exceeding $20,000,000 after the Mortgagor shall have given
written notice to the Mortgagee of such alteration, together with an Officer's
Certificate of the Mortgagor that such alteration complies with items (i)
through (ix) below, inclusive, and either (I) the Mortgagee shall have approved
such alteration in writing, such approval not to be unreasonably withheld or
delayed or (II) the Holders of at least 25% in principal amount of Outstanding
Securities shall have approved such alteration; and (D) with a cost estimated by
the architect, engineer or general contractor supervising such alteration to be
in excess of $20,000,000 after the Mortgagor shall have given written notice to
the Mortgagee, together with a duly authorized certificate from an officer of
the Mortgagor (an "Officer's Certificate") that such alteration will comply with
items (i) through (viii), below, inclusive, and based on the information
provided in such certificate and the documentation required to be provided under
this subsection to the Mortgagee, the Holders of at least 25% in principal
amount of Outstanding Securities shall have approved such alteration.

                                       10
<PAGE>

            The items with which the Officer's Certificate shall state the
Mortgagor will comply, as set forth above with regard to alterations or
Improvements made to the Mortgaged Premises under this Section 3.1, are as
follows:

            (i) any change or alteration, once commenced, shall be made
promptly, in good and workmanlike manner and in compliance with all material
requirements of applicable law ("Legal Requirements");

            (ii) appropriate builder's risk (if the total cost of the proposed
change or alteration exceeds Two Million Dollars ($2,000,000)), workers'
compensation, and general liability insurance shall be maintained for any work
in progress;

            (iii) the Mortgaged Premises shall be kept free of Liens for labor
and materials supplied or claimed to have been supplied in connection with such
change or alterations or in the event that such Liens have been filed against
the Mortgaged Premises, the Mortgagor shall either satisfy such Liens, stay
their effect, bond against or otherwise secure against each to the reasonable
satisfaction of the Mortgagee;

            (iv) such alterations will not materially and adversely affect the
value, character and usefulness of the Mortgaged Premises;

            (v) such alterations shall not cause (a) the Sands (inclusive of any
such completed alterations) to fail to qualify (absent a waiver by the Casino
Control Commission of such nonqualifying condition(s)) as a licensed
hotel/casino under the Casino Control Act or (b) the Sands to fail to be
independently qualifiable (exclusive of any such alterations) at all times as a
licensed hotel/casino under the Casino Control Act;

            (vi) any alteration or replacement Fixture, upon completion or
replacement, as the case may be, shall be subject to the Lien of this Mortgage,
the Lien created by the security agreement made a part of this Mortgage or the
Lien of the Security Agreement and shall be free from any title retention,
security agreement or other encumbrance, except the Lien of this Mortgage and
the other Security Documents and encumbrances permitted under Section 1014 of
the Indenture;

            (vii) no Event of Default shall have occurred or be continuing or
occur as a result of the proposed alteration or replacement;

            (viii) with respect to any proposed alteration with a cost estimated
by the architect, engineer or general contractor supervising such alteration to
be in excess of $2,000,000 but less than $20,000,000, the Mortgagor shall submit
to the Mortgagee (a) copies of all materials relating thereto when filed with
the Casino Control Commission, (b) if no materials relating thereto are to be
filed with the Casino Control Commission and the estimated cost of such project
is in excess of $5,000,000, a description of such proposed alteration (which
shall include the type of financing, if any, the estimated cost, the parties
involved and the estimated date of completion), and copies of all available
plans and specifications in connection therewith, no later than 45 days prior to
commencement of such proposed alteration and (c) final

                                       11
<PAGE>

plans, specifications and Casino Control Commission approvals of such alteration
no later than 90 days after completion thereof;

            (ix) with respect to any proposed alteration with a cost estimated
by the architect, engineer or general contractor supervising such alteration to
be in excess of $20,000,000, the Mortgagor shall submit to the Mortgagee all
materials described in item (viii) above as well as any additional information
reasonably required by the Holders to review such proposed alteration; and

            (x) the Mortgagor will pay all reasonable expenses of the Mortgagee
in connection with any consent of the Mortgagee required pursuant to this
Section 3, including, without limitation, in connection with the review of any
plans and specifications in connection therewith.

            3.2 Mortgagor will at all times maintain sufficient parking spaces
for the use of the Sands which shall in no event be less than approximately
1,675 spaces.

            4. Estoppel Certificates. The Mortgagor, within 10 days after a
request by the Mortgagee, will furnish a written statement, duly acknowledged,
and in form for recording, of the amount due on this Mortgage and the Mortgagor
will deliver such a statement further setting forth whether any offsets or
defenses exist against the Liabilities. The Mortgagee, within 10 days after
request from the Mortgagor, will furnish a written statement, duly acknowledged
and in form for recording of the amount due on the Mortgage and stating whether
it has received written notice of or has actual knowledge of any defaults
existing hereunder and containing such other information as the Mortgagor may
reasonably request.

            5. Impositions.

            5.1 The Mortgagor will pay or cause to be paid as and when due and
payable, and before they become delinquent, all Impositions (as such term is
defined in subsection 5.4.4 hereof) levied upon the Mortgaged Property, or any
part thereof for which the Mortgagor and/or the Mortgaged Property, or any part
thereof, shall be assessed or chargeable and will cause tenants under Major
Leases (as such term is defined in the Collateral Assignment of Leases, dated of
even date herewith, made by Mortgagor to Mortgagee) to comply with all lease
provisions or contracts relating to payment of such Impositions. Notwithstanding
the foregoing, if by law any Imposition may at the option of the taxpayer be
paid in installments (whether or not interest shall accrue on the unpaid balance
thereof), the Mortgagor may cause to be paid or to pay the same (and any accrued
interest on the unpaid balance of such Imposition) in installments as they fall
due and before any fine, penalty, further interest or cost may be added thereto;
provided that no Event of Default (as defined in Section 12 hereof) shall then
exist under this Mortgage and that payment in installments would not create or
cause to be created any Lien on the Mortgaged Premises or any portion thereof
which could be levied upon prior to the failure to pay a then due installment.

            5.2 The Mortgagor will pay any taxes (including, without limitation,
stamp taxes, but excluding (a) income taxes assessed by the United States
government or the State of

                                       12
<PAGE>

New Jersey or any other State or any political subdivision of any of them, (b)
franchise, estate or similar taxes based upon or measured by income) imposed on
the Mortgagee on its own behalf and on behalf of the Holders, their successors
or assigns, by reason of the holding of this Mortgage or any of the Securities,
as the case may be, or the receipt of the interest payable thereunder.

            5.3 Unless manifestly erroneous, the certificate, advice or bill of
the appropriate official designated by law to make or issue the same or to
receive payment or any Imposition, which such certificate, advice or bill
indicates the nonpayment of such Imposition, shall be prima facie evidence that
such Imposition is due and unpaid at the time of the making or issuance of such
certificate, advice or bill.

            5.4 The Mortgagor shall have the right, at Mortgagor's sole cost,
after giving notice to the Mortgagee to contest the amount or validity, in whole
or in part, of any Imposition, or to seek a reduction in the valuation of the
Mortgaged Property or any portion thereof as assessed for real estate or
personal property tax purposes by appropriate proceedings diligently conducted
in good faith and where the amount so contested or for which a reduction is
sought is in excess of $2,000,000, the Mortgagor shall also prior to
commencement of such contest or proceeding have complied with the provisions of
subsections 5.4.1 through 5.4.5, inclusive, hereof or made payment of such
Imposition unless such payment would operate as a bar to such contest or
interfere materially with the prosecution thereof, in which event the Mortgagor
may postpone or defer payment of such Imposition after compliance with the
provisions of subsections 5.4.1 through 5.4.5, inclusive, hereof if:

            5.4.1 Neither the Mortgaged Property nor any part thereof would by
reason of such postponement or deferment be in danger of being forfeited or lost
prior to final determination of such contest or proceeding and the Mortgagee
shall not, by virtue of the contest or proceeding, be in any danger of criminal
liability and neither the Mortgaged Property nor any part thereof by any
interest therein would be subject to the imposition of any lien for which the
Mortgagor has not furnished adequate security as provided below; and

            5.4.2 Subject to the provisions of the first paragraph of Section
5.4, the Mortgagor shall either have (a) deposited with the Mortgagee in trust
the amount (at the option of the Mortgagor in cash or in the form of a letter of
credit) so contested and unpaid, together with all interest and penalties in
connection therewith and all charges that may or might be assessed against or
become a charge on the Mortgaged Property or any part thereof as estimated by
the Mortgagee, in such proceedings or (b) posted with the Mortgagee a bond
issued by a surety company reasonably satisfactory to the Mortgagee, whereby
such surety undertakes to pay such Imposition, interest, penalties and charges
(x) in the event that the Mortgagor shall fail to pay the same upon the final
disposition of the contest (including appeals), or (y) in the event that the
Mortgaged Property or any part thereof is in danger of being sold, forfeited or
lost during the pendency of such contest or (z) if the Mortgagor fails to
increase the amount of such bond as hereinafter provided. Any deposit made by
the Mortgagor with the Mortgagee under the provisions of this subsection 5.4.2,
together with any additions thereto made pursuant to this subsection 5.4.2,
shall be held in trust and, at the request of the Mortgagor, invested in
Collateral Investments (as defined in the Security Agreement), and the interest
on such deposits shall be

                                       13
<PAGE>

disposed of as hereinafter provided. Upon the termination of any such proceeding
(including appeals), or if the Mortgagor should so elect, at any time prior
thereto, the Mortgagor shall pay the amount of such Imposition or part thereof
as finally determined in such proceeding (or appeal), the payment of which may
have been deferred during the prosecution of such proceeding (or appeal),
together with any costs, fees, interest, penalties or other liabilities in
connection therewith, and upon such payment, the Mortgagee shall return any
amount deposited with it together with interest, if any, received thereon with
respect to such Imposition. Such payment, at the request of the Mortgagor, shall
be made by the Mortgagee out of the amount deposited with it pursuant to clause
(a) of this subsection 5.4.2 with respect to such Imposition, to the extent that
such amount is sufficient therefor, and any balance due shall be paid by the
Mortgagor and any balance remaining shall be paid to the Mortgagor together with
interest, if any, received thereon. If, at any time during the continuance of
such proceeding, the Mortgagee shall reasonably deem the amount deposited with
it or provided by bond insufficient, the Mortgagor shall, within ten (10) days
after demand, make an additional deposit of, or increase the amount of its
letter of credit or bond by, such additional amount as the Mortgagee may request
to cover payment of the items set forth in this subsection 5.4.2, and upon
failure of the Mortgagor so to do, the Mortgagee may, after 10 days following
written notice from the Mortgagee to the Mortgagor, apply the amount theretofore
deposited with it (or the Mortgagee may submit for payment the letter of credit
and apply the amount thereof, or may require application of the bonded amount by
the surety company, if a bond has been furnished) to or on account of the
payment, removal or discharge of such Imposition and the interest and penalties
in connection therewith and any costs, fees or other liability accruing in any
such proceeding, or any part of any of the same and the balance, if any, shall
be returned to the Mortgagor. The Mortgagor shall, during the continuance of any
contest (including appeals) referred to herein and at its sole cost and expense,
provide the Mortgagee with such information relating to the same as the
Mortgagee may reasonably request. If, at any time during the continuance of such
proceeding, the Mortgaged Property or any part thereof is, in the judgment of
the Mortgagee, in any reasonable danger of being sold, forfeited or lost, the
Mortgagee may require, after ten (10) days' notice to the Mortgagor, that the
amount theretofore deposited with it be applied to the payment of such
Imposition (or the Mortgagee may submit for payment the letter of credit and
apply the amount thereof, or may require application of the bonded amount by the
surety company, if a bond has been furnished) in the manner provided in the
preceding sentence. Notwithstanding anything contained herein to the contrary,
no such deposit held by the Mortgagee, or any part thereof, shall be returned to
the Mortgagor so long as any Event of Default shall exist hereunder. The
Mortgagee shall act as the holder, in trust, of the monies, if any, deposited by
the Mortgagor pursuant to this subsection 5.4.2.

            5.4.3 The Mortgagor will exhibit to the Mortgagee the original
receipts (or copies thereof) or other proof reasonably satisfactory to the
Mortgagee of the payment of all real estate taxes within 30 days after the same
are required to be paid by the Mortgagor in compliance with subsection 5.1
hereof. Concurrently with the delivery of the financial statements and other
information required by Section 1009 of the Indenture, Mortgagor shall for all
other Impositions deliver to the Mortgagee quarterly an Officer's Certificate
that, to the best knowledge of such officer, all such Impositions have been paid
and that, to the best of such officer's knowledge, the aggregate of all unpaid
amounts on such Impositions do not exceed $25,000, except for Impositions which
are being contested in accordance with the provisions of the first paragraph of

                                       14
<PAGE>

subsection 5.4. The Mortgagor shall immediately notify the Mortgagee of the
receipt by the Mortgagor of any notice that any Imposition has not been paid
when due and shall, at the same time, furnish to the Mortgagee a copy of such
notice of non-payment.

            5.4.4 "Impositions" shall mean all duties, taxes (including sales
and use taxes), water, sewer and other rents, rates and charges, assessments
(including, without limitation, all assessments for public improvements or
benefit, whether or not commenced or completed prior to the date hereof),
charges for public or private utilities, highway services, communication
services, sprinkler systems, protective services and levies, license and permit
fees, inspection fees and other authorization fees and other charges, ordinary
or extraordinary, whether foreseen or unforeseen, of any kind and nature
whatsoever, including interest or penalties thereon, which prior to or during
the term of this Mortgage will have been or may be laid, levied, assessed or
imposed upon or become due and payable out of or in respect of, or become a Lien
on the Mortgaged Property or any part thereof, or the occupancy, use or
possession of or activity conducted on the Mortgaged Property or any part
thereof or which are levied or assessed against the income received by the
Mortgagor from all or any part of the Mortgaged Property by virtue of any
present or future law, order or ordinance of the United states of America or of
any state, county or local government or of any department, office or bureau
thereof or of any other governmental authority (such governments or other
authorities being collectively referred to herein as a "Governmental Authority")
having or claiming jurisdiction over the Mortgagor and/or the Mortgaged Premises
or any part thereof. The term "Impositions" shall not include (a) income taxes
assessed by the United States government or the State of New Jersey or any other
State or any political subdivision of any of them, or (b) franchise, estate or
similar taxes based upon or measured by income.

            6. Changes in Method of Taxation.

            6.1 In the event of the passage after the date hereof of any law
applicable to the Mortgaged Premises or any part thereof, (i) deducting from the
value of the Mortgaged Premises, for the purposes of taxation, any Lien thereon,
or changing in any way the laws for the taxation of mortgages or debts secured
by mortgages or the manner of collection of any such taxes, or (ii) imposing a
tax, either directly or indirectly, on this Mortgage or any other documents
evidencing or securing the Liabilities, in each case, the result of which
affects adversely the Mortgagee, the Mortgagee shall have the right to declare,
by written notice delivered to Mortgagor, that an Event of Default will occur
hereunder one hundred twenty (120) days from the giving of such written notice
unless the Mortgagor is exempt from such tax or, if not exempt from such tax, is
permitted by law to pay the whole of such tax (or to provide funds to the
Mortgagee to pay such taxes) and assumes as an obligation and Liability secured
hereby the obligation to make all payments (or provide funds to the Mortgagee to
pay such taxes) of any tax so imposed until full payment of the Liabilities. The
Mortgagor shall promptly notify the Mortgagee of the occurrence of any of the
events set forth in clauses (i) or (ii) of this Section 6.1.

            6.2 The Mortgagor shall not have, nor will claim nor demand nor be
entitled to receive, any credit or credits by virtue of the payment of taxes as
provided herein against the Liabilities or the other sums payable as provided
herein and in the Securities secured hereby, and such taxes shall be paid
without abatement of or deduction from, and without counterclaim or

                                       15
<PAGE>

setoff against such principal, interest and other sums, for any reason,
including, without limitation, for so much of the taxes assessed against the
Mortgaged Premises as is equal to the tax rate applied to the amount due on this
Mortgage or any part thereof, and no deduction shall otherwise be made or
claimed from the taxable value of the Mortgaged Premises, or any part thereof,
by reason of the indebtedness secured by this Mortgage.

            7. Expenses of Litigation. If an action to foreclose this Mortgage
or to collect any of the Liabilities is commenced or any other action or
proceeding is commenced to which the Mortgagee is or becomes a party or in which
the Mortgagee is defending or upholding the Lien of this Mortgage, or in which
the Mortgagee is served in with any legal process, discovery notice or subpoena
relating to this Mortgage, all reasonable sums paid by the Mortgagee for the
expense of any such litigation or appearance or action in response to any such
legal process, discovery notice or subpoena (including attorneys' fees and
disbursements associated with legal costs) shall be paid by the Mortgagor within
thirty (30) days after notice has been given by the Mortgagee to the Mortgagor,
together with interest thereon on such amounts as have actually been paid by the
Mortgagee to third parties at a rate of interest equal to the greater of the
prime rate of the Mortgagee plus 2% per annum, and such amounts shall be a Lien
on the Mortgaged Property prior to any other right or title to, interest in or
claim upon the Mortgaged Property subordinate to the Lien of this Mortgage, and
shall be secured by this Mortgage, and, in any action or proceeding to foreclose
this Mortgage, or to recover or collect any of the Liabilities, the provisions
of law respecting the recovery of costs, disbursements and allowances shall
prevail unaffected by this covenant.

            However, if such action or proceeding is not one relating to the
enforcement of the rights of any Holders or the Lien of this Mortgage, the
Mortgagee shall promptly notify the Mortgagor of such action or proceeding and
the Mortgagor may participate in the conduct of such action or proceeding at the
Mortgagor's sole cost and expense.

            8. Maintenance. Subject to the Mortgagor's rights of alteration
pursuant to Section 3 hereof, the Mortgagor will maintain and operate the Sands
at a quality level at least as high as that existing on the date hereof and keep
the Mortgaged Property in good condition and repair (subject to ordinary wear
and tear), will not commit or suffer any waste of the Mortgaged Property and
will comply with, or cause to be complied with, all statutes, ordinances and
requirements of any Governmental Authority to which the Mortgaged Property are
subject and which failure to comply therewith would have a materially adverse
effect on the Mortgaged Property. Notwithstanding the foregoing, the Mortgagor
shall have the right to contest the application of any such statute, ordinance
or requirement of a Governmental Authority; provided that, if such statute or
ordinance or requirement of a Governmental Authority imposes an immediate fine
or monetary Imposition in an amount in excess of $2,000,000 upon the Mortgaged
Premises for the failure to comply with such ordinance or requirement, the
Mortgagor shall either pay such fine or monetary imposition and file an action
for recovery thereof or deposit with Mortgagee, in the manner described in
Section 5.4.2 hereof, an amount reasonably determined by the Mortgagee to be
sufficient to protect the Mortgagee's interest (on its own behalf and on behalf
of the Holders). Subject to the provisions of Section 9.3 hereof, the Mortgagor
will promptly repair, restore, replace or rebuild any part of the Mortgaged
Premises now or hereafter subject to the Lien of this Mortgage which may be
damaged or destroyed by any

                                       16
<PAGE>

casualty whatsoever, free from Liens and encumbrances, except the Lien of this
Mortgage and the other Security Documents and the encumbrances permitted by
Section 1029 of the Indenture, without regard to the adequacy of any insurance
proceeds, provided that the insurance proceeds are made available to the
Mortgagor pursuant to Section 9 of this Mortgage. The Mortgagor will do all
other things reasonably required for the maintenance and continuance of all such
services in respect of Impositions to the extent required to fulfill the
obligations set forth in this Section 8.

            9. Destruction: Restoration; Condemnation.

            9.1 Definitions. (a) "Substantial Destruction" shall, for purposes
of this Mortgage, mean a casualty or loss or condemnation to the Mortgaged
Premises which will close down more than 200 hotel rooms or more than 50% of the
square footage of the Sands, in either event for a period of more than 120 days.

            (b) "Restoration" shall, for purposes of this Mortgage, mean the
replacement, rebuilding or repairing of damaged, destroyed or, in the case of a
condemnation, remaining areas of the Mortgaged Premises or the repair or
replacement of the Mortgaged Premises not so condemned, in either case as nearly
as possible to the condition, character and size of the Mortgaged Premises
immediately prior to such damage, destruction or condemnation to comply with the
Casino Control Act and all other material Legal Requirements and all material
requirements of any insurance policy covering or applicable to the Mortgaged
Premises including, without limitation, all material requirements of any issuer
of such policy and any applicable board of underwriters.

            9.2 Destruction. If the Mortgaged Premises, or any part thereof,
shall be destroyed or damaged by fire or any other casualty, the Mortgagor shall
give prompt notice thereof to the Mortgagee. If the Mortgagor does not promptly
make proof of loss after a casualty, the Mortgagee may make proof of loss, and
each insurance company concerned is hereby authorized and directed to make
payment for such loss directly to the Mortgagor and/or the Mortgagee on its own
behalf and on behalf of the Holders as their interests appear in accordance with
the provisions of subsection 2.3 hereof. In all instances where the insurance
proceeds are less than $1,000,000, the Mortgagor shall use such proceeds only
for Restoration. In all instances of destruction or casualty as aforesaid where
the insurance proceeds exceed $1,000,000, the insurance proceeds shall be
deposited into and held in the Collateral Account and applied in accordance with
Section 1018 of the Indenture and subsection 9.3 hereof. In the event that the
Mortgagee releases such proceeds to the Mortgagor, the Mortgagor shall be
obligated to restore or repair the Mortgaged Premises. In the event of
foreclosure of the Mortgaged Premises or other transfer of title to the
Mortgaged Premises in extinguishment of the indebtedness under the Securities
and this Mortgage, all right, title and interest of the Mortgagor in and to any
insurance policies then in force shall pass to the purchaser or grantee and the
Mortgagor hereby appoints the Mortgagee its attorney-in-fact, in the Mortgagor's
name, to assign and transfer all such policies and proceeds to such purchaser or
grantee, and the Mortgagor shall be entitled only to a credit in reduction of
the then outstanding Liabilities secured hereby in the amount of the
cancellation refund actually received by the Mortgagee. The Mortgagor agrees,
within fifteen (15) days following such foreclosure and written request by the
Mortgagee, to execute and

                                       17
<PAGE>

deliver such assignments or other authorizations or instruments as may be
necessary or desirable to effectuate the foregoing.

            9.3 Restoration.

            If any insurance proceeds or condemnation award (including interest
thereon, the "Restoration Funds"), held by the Mortgagee in the Collateral
Account or otherwise are to be applied to the Restoration of the Mortgaged
Premises or any portion thereof as determined in this Section 9.3 or Section
1018 of the Indenture, the Mortgagor shall promptly restore, replace or rebuild
the damaged or destroyed Mortgaged Premises and such Restoration shall be
performed only in accordance with the following conditions:

            1. In the event the cost estimated by the architect supervising the
      Restoration (the "Estimated Restoration Cost") is less than $2,000,000,
      the Mortgagor shall diligently use the Restoration Funds to restore and
      repair the Mortgaged Premises provided that any proceeds remaining after
      the Restoration may be retained by the Mortgagor; provided further,
      however, that if any Event of Default shall occur and then exist, the
      Restoration Funds shall be paid over to the Mortgagee to be applied in
      accordance with the terms of the Indenture.

            2. Intentionally Omitted.

            3. Prior to commencement of the Restoration or at any time during
      the Restoration, if the Estimated Restoration Costs exceeds the amount of
      the Restoration Funds by a sum greater than or equal to $2,000,000, the
      amount of such excess shall be paid by the Mortgagor to the Mortgagee in
      the form of cash or a letter of credit (reasonably acceptable in form and
      substance to the Mortgagee) to be added to the Restoration Funds in the
      Collateral Account and in the event such shortfall is less than the sum of
      $2,000,000, the Mortgagor shall pay such shortfall on an ongoing basis
      during the course of the Restoration.

            4. If no Default or Event of Default shall have occurred and be
      continuing, all proceeds of loss of rents/business interruption insurance
      payable as a result of any damage or destruction affecting the Mortgaged
      Premises shall be paid first, to the Mortgagee in an amount sufficient to
      pay, when due, all Liabilities, including the interest on and the
      principal of the Securities, for so long as the interruption shall
      continue or until coverage is exhausted, and second, to the Mortgagor. If
      a Default or Event of Default shall have occurred and be continuing, all
      such proceeds of loss of rents/business interruption insurance shall be
      paid to the Mortgagee. The Mortgagee shall hold such proceeds in trust
      and, at the direction of the Mortgagor, shall invest such proceeds in the
      type of investments set forth in clauses (a) through (d) in the definition
      of "Cash Equivalents" in the Indenture (such investments being referred to
      hereafter as "Cash Equivalents". The Mortgagee shall apply or cause to be
      applied the proceeds and such income received thereon to the payment of
      taxes, insurance premiums, rents, interest on and principal of the
      Securities, and the normal operating expenses of the Mortgaged

                                       18
<PAGE>

      Property from and after the date of the occurrence of such damage or
      destruction until the completion of the necessary Restoration, if any, or
      until the exhaustion of such proceeds, whichever first occurs. Upon
      completion of such Restoration, any remainder of such loss of
      rents/business interruption insurance proceeds in the hands of the
      Mortgagee shall, provided that no Event of Default shall be continuing
      hereunder, be paid to the Mortgagor with interest received thereon, if
      any.

            5. Except as provided in Section 1018 of the Indenture, nothing in
      this Section 9 shall relieve the Mortgagor of its duty to repair, restore,
      rebuild or replace the Mortgaged Property following damage or destruction
      by fire or other casualty or partial condemnation in the event that no or
      inadequate proceeds of insurance are available to defray the cost of such
      repairing, restoring, rebuilding or replacement. In addition, nothing
      contained herein shall relieve the Mortgagor of its duty to pay all
      Liabilities subsequent to the occurrence of any fire or other casualty or
      condemnation; provided, however, that, if the Mortgagee is applying the
      proceeds of business interruption insurance or temporary taking proceeds
      to the payment of the principal and accrued interest under the Securities,
      the Mortgagor shall not be required to make double payments.

            9.4 Condemnation/Eminent Domain. (a) Immediately upon obtaining
knowledge or the institution of any proceedings for the condemnation or taking,
either permanent or temporary, by eminent domain of the Mortgaged Premises or
any portion thereof, the Mortgagor will notify the Mortgagee of the pendency of
such proceedings. The Mortgagee may, but shall not be obligated to, participate
in any such proceedings, and the Mortgagor shall from time to time deliver to
the Mortgagee all instruments requested by it to permit such participation.
Except as otherwise provided herein, the Mortgagor shall, at its expense,
diligently prosecute any such proceeding and shall consult with the Mortgagee,
its attorneys and experts and cooperate with them in any defense of any such
proceedings. The Mortgagor will not enter into any agreement for the taking or
conveyance of the Mortgaged Premises or any material part thereof, with anyone
authorized to acquire the same by eminent domain or in condemnation unless the
Mortgagor shall have delivered to the Mortgagee an Officer's Certificate from
the Mortgagor that such agreement is fair and reasonable in light of all of the
circumstances.

            (b) All awards and proceeds of condemnation in respect of any of the
Mortgaged Premises shall be applied in the same manner provided in Section 9.3
hereof in respect of damage or destruction.

            10. Inspection. The Mortgagee and any persons authorized by the
Mortgagee shall have the right to enter and inspect the Mortgaged Premises upon
reasonable notice at all reasonable times, but shall undertake such inspections
in such a manner as to minimize disruption and interference of the operation
thereof.

            11. Assignment of Rents, Issues and Profits.

            (a) Subject to the limitations contained herein, the Mortgagor
hereby assigns to the Mortgagee on its own behalf and on behalf of the Holders
the rents, issues and profits

                                       19
<PAGE>

derived from (i) all leases of the Mortgaged Premises now or hereafter entered
into by the Mortgagor and (ii) all occupancy, license and concession agreements
in respect of any part of the Mortgaged Premises now or hereafter entered into,
all as further collateral security for the payment of the Liabilities, and the
Mortgagor grants to the Mortgagee the right to enter the Mortgaged Premises for
the purpose of collecting the same and to lease the Mortgaged Property, or any
part thereof, and to apply said rents, issues and profits on account of the
Liabilities. This assignment, grant and right to apply rents, issues and profits
shall continue in effect until the Liabilities are paid in full, but the
Mortgagee hereby waives the right to enter the Mortgaged Premises and/or to
collect said rents, issues and profits, and the Mortgagor shall be entitled to
collect, receive, use and retain said rents, issues and profits, until the
occurrence of and during the continuation of an Event of Default; such right of
the Mortgagor to exercise all such rights, including the right to collect,
receive, use and retain said rents, issues and profits may be revoked by the
Mortgagee upon the occurrence of and during the continuation of an Event of
Default by the Mortgagee giving written notice of such revocation to the
Mortgagor. The Mortgagor shall not accept prepayments of installments of rent
under the leases which payments would, in the aggregate for all such leases,
exceed the sum of $1,000,000 (except for tenant finish work performed with
respect to any such lease). If, following the occurrence of an Event of Default,
the Mortgagee shall thereafter elect to discontinue the exercise of any right or
remedy assigned or granted to the Mortgagee on its own behalf and on behalf of
the Holders pursuant to this Section 11 or such Event of Default has otherwise
been cured, the Mortgagor's rights under this subsection 11(a) shall be
automatically reinstated, subject to the same or any other right or remedy
hereunder being reasserted at any time and from time to time following any
subsequent Event of Default. Anything herein to the contrary notwithstanding,
the rights of the Mortgagor to collect or retain any sums shall not apply to
amounts to be used by Mortgagor to cure an Event of Default or otherwise make
any payment in respect of Securities or make any payment or perform any
obligation under the Indenture or other Security Document (all of which, whether
paid to Mortgagor or Mortgagee, shall be made available to Mortgagor for such
purpose).

            (b) The granting of the assignment created in Section 11(a) hereof
shall not, prior to entry upon and taking of possession of the Mortgaged
Property by the Mortgagee, be deemed or construed to constitute the Mortgagee in
possession nor thereafter or at any time or in any event obligate the Mortgagee
to perform or discharge any obligation of the Mortgagor or to appear in or
defend any action or proceeding relating to the Mortgaged Property or the leases
relating thereto nor shall the Mortgagee be liable in any way for any injury or
damage to person or property sustained by any individual or individuals in or
about the Mortgaged Property and the Mortgagor agrees to indemnify and hold
harmless the Mortgagee against any and all such liability, loss or damage,
except for losses occurring as the result of gross negligence or willful
misconduct on the part of the Mortgagee.

            12. Events of Default. The occurrence of one or more of the
following events shall constitute an "Event of Default" (occurring for any
reason whatsoever, whether voluntary or involuntary, or by operation o(pound)
law or pursuant to or in compliance with any judgment, decree or order of any
court or of any Legal Requirement or otherwise):

            (a) any Event of Default, as defined in the Indenture; or

                                       20
<PAGE>

            (b) upon the assignment of any of the rents, issues, profits or
leases of any portion of the Mortgaged Property, or any part thereof, to anyone
other than the Mortgagee on its own behalf and on behalf of the Holders without
the prior written consent of the Mortgagee, except as permitted in the
Indenture, and such assignments of rents, issues, profits or leases are not
rescinded or otherwise voided following the giving by the Mortgagee to the
Mortgagor of 30 days' written notice thereof; or

            (c) in the event of a lease, assignment or other transfer of any
portion of the Mortgaged Property other than as permitted in the Indenture, this
Mortgage or as Permitted Encumbrances, and such lease or other transfer is not
rescinded or otherwise voided following the giving by the Mortgagee to the
Mortgagor of 30 days' written notice thereof; or

            (d) the event that the Mortgagee declares that an Event of Default
has occurred in accordance with Section 6.1.

            13.1 Remedies. Upon the occurrence of an Event of Default hereunder,
in addition to its remedies contained in the Indenture, the Mortgagee on its own
behalf and on behalf of the Holders may take any or all of the following
actions, at the same or at different times:

            (a) Possession. Enter upon and take possession of the Mortgaged
Property, and lease and let the Mortgaged Property, or any part thereof, and
receive all the rents, issues and profits thereof which are overdue, due or to
become due, and apply the same, after payment of all reasonably necessary
charges and expenses, on account of the amounts hereby secured, and the
Mortgagee is hereby given and granted full power and authority to do any act or
thing, which the Mortgagor might or could legally do in connection with the
management and operation of the Mortgaged Property. The granting of the
authority so created shall not, prior to entry upon and taking of possession of
the Mortgaged Property by the Mortgagee, be deemed or construed to constitute
the Mortgagee in possession nor thereafter or at any time or in any event
obligate the Mortgagee to perform or discharge any obligation of the Mortgagor
or to appear in or defend any action or proceeding relating to the Mortgaged
Property or the leases relating thereto nor shall the Mortgagee be liable in any
way for any injury or damage to person or property sustained by any individual
or individuals in or about the Mortgaged Property and the Mortgagor agrees to
indemnify and hold harmless the Mortgagee against any and all such liability,
loss or damage, except for losses occurring as the result of gross negligence or
willful misconduct on the part of the Mortgagee.

            (b) Foreclosure. Institute an action of mortgage foreclosure, or
take other action as the law may allow, at law or in equity, for the enforcement
of this Mortgage, and proceed thereon to final judgment and execution of the
entire unpaid balance of the Liabilities including costs of suit, interest and
reasonable attorneys' fees. In case of any sale of the Mortgaged Property by
virtue of judicial proceedings, the Mortgaged Property may be sold in one parcel
and as an entirety or in such parcels, manner or order as the Mortgagee in its
sole discretion may elect. The failure to make any tenants parties defendant to
a foreclosure proceeding and to foreclose their rights will not be asserted by
the Mortgagor as a defense in any proceeding instituted by the Mortgagee to
collect any of the Liabilities.

                                       21
<PAGE>

            (c) Appointment of Receiver. Without notice to the Mortgagor,
appoint a receiver of the rents, issues and profits of the Mortgaged Property
without the necessity of proving either the depreciation or the inadequacy of
the value of the security or the insolvency of the Mortgagor or any person who
may be legally or equitably liable to pay moneys secured hereby and the
Mortgagor and each such person waives such proof and hereby consents to the
appointment of a receiver.

            (d) Excess Monies. Apply on account of the unpaid Liabilities and
the interest thereon or on account of any arrearages of interest thereon, or on
account of any balance due to the Mortgagee after a foreclosure sale of the
Mortgaged Property, or any part thereof, any unexpended moneys still retained by
the Mortgagee that were paid by the Mortgagor to the Mortgagee for the payment
of, or as security for the payment of, taxes, assessments, municipal or
governmental rates, charges, Impositions, Liens, water or sewer rents, or
insurance premiums, if any, or in order to secure the performance of some other
act by or obligation of the Mortgagor.

            (e) Other Remedies. Exercise any and all other rights and remedies
granted under this Mortgage or now or hereafter existing in equity, at law, by
virtue of statute or otherwise, including, without limitation, the right and
power to sell the whole or any portion of the Mortgaged Property according to
law.

            13.2 Remedies, Cumulative and Concurrent. The rights and remedies of
the Mortgagee on its own behalf and on behalf of the Holders as provided in this
Mortgage and the other documents securing the indebtedness evidenced by the
Securities will be cumulative and concurrent and may be pursued separately,
successively or together against the Mortgagor or against other obligors or
against the Mortgaged Property, or any one or more of them, in the sole and
absolute discretion of the Mortgagee, and may be exercised as often as occasion
for such pursuit arises. The failure to exercise any such right or remedy will
not be construed as a waiver or release of that right or remedy. The Mortgagee's
consent to any act or omission by subsequent act or omission or a waiver of the
need for such consent in any future or other instance.

            13.3 Waiver of Exemptions; Marshalling. Subject to any contrary
provisions contained in this Mortgage, the Mortgagor hereby waives and releases,
to the extent permitted by law:

            (a) All benefit that might accrue to the Mortgagor by virtue of any
      present or future law exempting the Mortgaged Property, or any part of the
      proceeds arising from any sale of the Mortgaged Property. from attachment,
      levy or sale on execution; and

            (b) Exemption from civil process; and

            (c) Redemption or extension of time for payment; and

            (d) Any right to have the Mortgaged Property marshalled.

            13.4 Discontinuance of Proceedings. If the Mortgagee has proceeded
to enforce any right under the Guarantee, the Indenture, the Securities or this
Mortgage or any other document securing the Liabilities and such proceedings
have been discontinued or abandoned for

                                       22
<PAGE>

any reason, then in every such case, the Mortgagor and the Mortgagee will be
restored to their former positions and the rights, remedies and powers of the
Mortgagee will continue as if no such proceedings had been taken.

            13.5 Application of Proceeds. In the event of any sale of the
Mortgaged Property by foreclosure, through suit in equity, by publication or
otherwise, the proceeds of any such sale shall be applied in the manner set
forth in Section 506 of the Indenture.

            14. No Waivers, Etc. Any failure by the Mortgagee to insist upon the
strict performance by the Mortgagor of any of the terms and provisions of this
Mortgage shall not be deemed to be a waiver of any of the terms and provisions
hereof, and the Mortgagee, notwithstanding any such failure, shall have the
right thereafter to insist upon the strict performance by the Mortgagor of any
and all of the terms and provisions of this Mortgage to be performed by the
Mortgagor; neither the Mortgagor nor any other person now or hereafter obligated
for the payment of the whole or any part of the sums now or hereafter secured by
this Mortgage, including, but not limited to, any guarantor, shall be relieved
of such obligation by reason of the failure of the Mortgagee to comply with any
request of the Mortgagor, or of any other person so obligated, to take action to
foreclose this Mortgage or otherwise enforce any of the provisions of this
Mortgage or any provisions relating to the Liabilities including the
indebtedness evidenced by the Securities, or by reason of the release,
regardless of consideration, of the whole or any part of the security held for
the indebtedness evidenced by the Securities or the Liabilities, or by reason of
any agreement or stipulation between any subsequent owner or owners of the
Mortgaged Property and the Mortgagee extending the time of payment or modifying
the terms of the Securities or this Mortgage, without first having obtained the
consent of the Mortgagor or such other person and, in the last-mentioned event,
the Mortgagor and all such other persons shall continue to be liable to make
such payments according to the terms of any such agreement of extension or
modification unless expressly released and discharged in writing by the
Mortgagee; the Mortgagee may release, regardless of consideration and without
the necessity for any notice to or consent by the holder of any subordinate Lien
on the Mortgaged Property as may be permitted pursuant to the terms of the
Indenture, any part of the security held for the indebtedness evidenced by the
Securities or the Liabilities without, as to the remainder of the security,
impairing or affecting the Lien of this Mortgage or the priority of such Lien
over any subordinate Lien; the holder of any subordinate Lien on the Mortgaged
Property shall have no right to terminate any lease affecting the same, or any
part thereof, whether or not such lease be subordinate to this Mortgage; and the
Mortgagee may resort for the payment of the indebtedness evidenced by the
Securities or the Liabilities secured to any other security therefor held by the
Mortgagee in such order and manner as the Mortgagee may elect.

            15. Revenue Stamps. If at any time the United States of America or
the State of New Jersey shall require internal revenue or other stamps to be
affixed to the Securities or this Mortgage, the Mortgagor will pay for the same,
together with any interest or penalties imposed in connection therewith.

            16. Notices. (a) Any request, demand, authorization, direction,
notice, consent, waiver or other document provided or permitted by this Mortgage
to be made upon, given or furnished to, or filed with:

                                       23
<PAGE>

            (1) the Mortgagee shall be sufficient for every purpose hereunder if
in writing and mailed postage prepaid, by registered or certified mail, return
receipt requested, or delivered personally, to the Mortgagee at:

            [_________________________________________]

with a copy, in the case of any notice from the Mortgagor to the Mortgagee,
given in one of the foregoing manners to:

                  [____________________________________________]

(provided that any failure by the Mortgagor to furnish such a copy shall not
affect the sufficiency of any such request, demand, authorization, direction,
notice, consent, waiver or other document with respect to the Mortgagee); and

            (2) the Mortgagor shall be sufficient for every purpose hereunder if
in writing and mailed postage prepaid, registered or certified mail, return
receipt requested, or delivered personally, to the Mortgagor, addressed to it
at:

                  The Sands Hotel and Casino
                  Indiana Avenue and Brighton Park
                  Atlantic City, New Jersey 08401
                  Attention:  Frederick H. Karus, Esq.

or at any other address previously furnished in writing to the Mortgagee by the
Mortgagor, with a copy given in one of the foregoing manners to:

                  _____________________________

and also to the Guarantor at the address provided in the Indenture (provided
that any failure to furnish such copies shall not affect the sufficiency of any
such demand, request, authorization, direction, notice, consent, waiver or other
document provided or permitted to be made, given or furnished in connection with
this mortgage).

            (b) In the event that a notice is given by personal delivery as
provided in this Section 16, the party giving such notice shall, within three
days after such personal delivery, also give such notice by mail as provided in
subsection 16(a) above, provided that such notice shall be effective as of the
date of personal delivery.

            17. Modification; Amendment. This Mortgage may not be modified,
amended, discharged, waived in whole or in part except by an agreement in
writing signed by the party against whom enforcement of any such modification,
amendment, discharge or waiver is sought.

            18. Partial Invalidity. In the event any one or more of the
provisions contained in this Mortgage shall for any reason be held to be
invalid, illegal or unenforceable, in

                                       24
<PAGE>

any respect, such invalidity, illegality or unenforceability shall not affect
any other provision hereof, but each shall be construed as if such invalid,
illegal or unenforceable provision had never been included.

            19. No Subordinate Financing. The Mortgagor shall not execute or
deliver, or suffer to exist, any pledge, security agreement, or mortgage (other
than this Mortgage and the Permitted Encumbrances) covering all or any portion
of the Mortgaged Property except as expressly permitted under Section 1014 of
the Indenture.

            20. Intentionally Omitted.

            21. Security Agreement. It is the intention of the parties hereto
that this Mortgage shall constitute a security agreement within the meaning of
the Uniform Commercial Code with respect to the Fixtures, and that a security
interest shall attach thereto for the benefit of the Mortgagee to secure the
Liabilities and all other sums and charges which may become due hereunder or
secured hereby. The Mortgagor hereby authorizes the Mortgagee to file financing
and continuation statements with respect to the Fixtures in which the Mortgagor
has a mortgageable interest, without the signature of the Mortgagor whenever
lawful and, upon written request, the Mortgagor shall promptly prepare and
execute financing and continuation statements reasonable and necessary to
establish and maintain a valid security interest hereunder in form reasonably
satisfactory to the Mortgagee to further evidence and secure the Mortgagee's
interest in the Fixtures, and shall pay all filing fees in connection therewith.
Upon the occurrence of an Event of Default under this Mortgage, the Mortgagee,
pursuant to Section 9-501(4) of the Uniform Commercial Code, as said Section is
currently constituted or may be hereafter amended, shall have the option of
proceeding as to both real and personal property in accordance with its rights
and remedies in respect of the real property, in which event the default
provisions of the Uniform Commercial Code shall not apply. The parties agree
that in the event that the Mortgagee elects to proceed with respect to the
Fixtures separately from the real property, ten (10) days' notice of the sale of
the Fixtures shall be reasonable notice.

            22. Successors and Assigns. All covenants of the Mortgagor contained
in this Mortgage are imposed solely and exclusively for the benefit of' the
Mortgagee on its own behalf and on behalf of the Holders and its successors and
assigns, and no other person shall have standing to require compliance with such
covenants or shall, under any circumstances, be deemed to be a beneficiary of
such covenant, any or all of which may be freely waived in whole or in part by
the Mortgagee at any time if in its sole discretion it deems it advisable to do
so. But all such covenants of the Mortgagor shall run with the Land and bind the
Mortgagor, the successors and assigns of the Mortgagor (and each of them) and
all subsequent owners, encumbrancers and tenants of the Mortgaged Premises, and
shall enure to the benefit of the Mortgagee, its successors and assigns. The
word "Mortgagor" shall be construed as if it read "Mortgagors" whenever the
sense of this Mortgage so requires and shall include all successors and assigns
of the Mortgagor. The word "Mortgagee" shall be construed to mean the Mortgagee
named herein and the successors and assigns thereof. The Mortgagor understands
and agrees that whenever herein the Mortgagee's consent is required, the
Mortgagee may be obligated, prior to giving such consent, to obtain the
agreement of the Holders as required in the Indenture and, in such event, the
Mortgagee's obligation to deliver any such consent to the Mortgagor shall be

                                       25
<PAGE>

subject to the Mortgagee first obtaining the required Holders' consent. All
covenants, agreements and obligations of the Mortgagee hereunder shall inure to
the benefit of the Mortgagor and its successors and assigns and shall be binding
upon the Mortgagee, Holders, participants and their respective successors and
assigns.

            23. Governing Law. This Mortgage and all matters relating or
pertaining to this Mortgage shall be governed, construed and enforced by and
under the laws of the State of New Jersey.

            24. Space Leases.

            24.1 All Space Leases of all or any portion of the Mortgaged
Property hereafter entered into after the date hereof by the Mortgagor (i) will
be subordinated to the Lien created by this Mortgage unless Mortgagee directs
otherwise and (ii) shall provide that following the sale of the Mortgaged
Property or any part thereof through foreclosure or otherwise, or following
conveyance of the Mortgaged Property or any part thereof by deed or assignment
in lieu of foreclosure, the Space Tenant under each such Space Lease will, upon
ten (10) days' written notice from the purchaser of the Mortgaged Property or
any part thereof (or its assignee) given within sixty (60) days after the sale
thereof, attorn to such purchaser or assignee as the direct tenant of such
purchaser or assignee.

            24.2 The Mortgagor shall duly and punctually perform and serve all
of the material terms, covenants and conditions of the Space Leases required to
be performed and observed by it as landlord thereunder substantially in
accordance with the terms thereof. The Mortgagor will further do all things
reasonably necessary to preserve and keep unimpaired its rights under all Space
Leases. The Mortgagor shall require all Space Tenants to observe, keep and
perform all material covenants and agreements imposed upon them under the Space
Leases. The Mortgagor shall appear in and defend any action or proceeding
arising under or in any manner connected with any of the Space Leases.

            24.3 The Mortgagor shall furnish to the Mortgagee a copy of each
Space Lease promptly after its execution. At any time, and from time to time,
upon request and on reasonable notice from the Mortgagee. the Mortgagor shall
deliver to the Mortgagee a schedule of all Space Leases then in effect, which
schedule shall include the following: (i) the name of the Space Tenant under the
Space Lease; (ii) a description of the space leased thereunder in form
satisfactory to the Mortgagee, including but not limited to the approximate
number of square feet leased thereunder, type of activity performed under such
lease and type of space leased; (iii) the rental rate, including any
escalations, if any; (iv) the term of the Space Lease and a description of any
renewal options; and (v) such other information as the Mortgagee may reasonably
request.

            24.4 "Space Leases" shall mean any and all leases, licenses,
concessions or other agreements (written now or hereafter in effect), which
grant a possessory interest in and to, or the right to use part of the Mortgaged
Property. "Space Tenant" shall mean the tenant or other user or occupant of such
part of the Improvements.

                                       26
<PAGE>

            25. Indenture. This Mortgage has been executed and delivered
pursuant to the terms of the Indenture and is entitled to the benefits of the
Indenture.

            26. Further Assurances. The Mortgagor will, at any time and from
time to time after the execution and delivery of this Mortgage, promptly upon
request, execute and deliver such further deeds of trust, mortgages, instruments
of further assurances and other documents and do such further acts and things as
the Mortgagee may reasonably request in order to evidence further the Lien and
security interest of this Mortgage, pursuant to its terms and to protect further
the security of the Mortgagee on its own behalf and on behalf of the Holders,
and otherwise to effect fully the purposes of this Mortgage.

            27. Escrowed Sums. In order to more fully protect the security of
this Mortgage and to insure the payment of Impositions and insurance premiums,
from and after the occurrence of an Event of Default hereunder and until such
Event of Default is cured, the Mortgagor shall pay to the Mortgagee and as
"Escrowed Sums", in monthly installments in advance, an amount equal to the pro
rata sum of (a) Impositions (estimated wherever necessary) to become due for the
tax year during which such payment is so directed and (b) the insurance premiums
for the same year for those insurance policies as are required hereunder. If the
Mortgagee determines that any amounts theretofore paid by the Mortgagor are
insufficient for the payment in full of such Impositions and insurance premiums,
the Mortgagee shall notify the Mortgagor of the increased amounts required to
provide a sufficient fund, whereupon the Mortgagor shall pay to the Mortgagee,
within thirty (30) days thereafter the additional amount as stated in such
notice by the Mortgagee. The Escrowed Sums shall be held by the Mortgagee and
upon written request of the Mortgagor invested in Cash Equivalents and shall not
be commingled with the Mortgagee's other funds and shall be paid directly by the
Mortgagee to the applicable Governmental Authority or the insurance companies
entitled thereto. Upon assignment of its rights under this Mortgage, the
Mortgagee shall have the right to pay over the balance of the Escrowed Sums then
in its possession to the assignee and upon assumption of such liability by the
assignee, the Mortgagee on its own behalf and on behalf of the Holders shall
become completely released from all liability with respect thereto. Upon full
payment of the Liabilities or at such earlier time as the Mortgagee may elect,
the balance of the Escrowed Sums in the Mortgagee's possession shall be paid
over to the Mortgagor and no other party shall have any right or claim thereto.
If no Event of Default shall be continuing hereunder, the Escrowed Sums shall,
at the option of the Mortgagee, be repaid to the Mortgagor in sufficient time to
allow the Mortgagor to satisfy the Mortgagor's obligations under this Mortgage
to pay Impositions and the required insurance premiums; or be paid directly by
the Mortgagee to the applicable Governmental Authority and the insurance company
entitled thereto. If an Event of Default shall be continuing hereunder, however,
the Mortgagee shall have the additional option of crediting the full amount of
the Escrowed Sums against the Liabilities. Notwithstanding anything to the
contrary contained in this Section 27 or elsewhere in this Mortgage, the
Mortgagee hereby reserves the right to waive the payment by the Mortgagor to the
Mortgagee of the Escrowed Sums, and, in the event that the Mortgagee does so
waive such payment, it shall be without prejudice to the Mortgagee's rights to
insist, at any subsequent time or times, that such payments be made in
accordance herewith.

                                       27
<PAGE>

            28. Release by Mortgagee. Any release of, regardless of
consideration, any part of the Mortgaged Property or any other collateral
security for any of the Liabilities or the indebtedness evidenced by the
Securities will not in any way impair, affect, subordinate or release the Lien
or security interests created in or evidenced by this Mortgage or its stature as
a Lien and security interest in and to the Mortgaged Property. For payment of
the Liabilities or the indebtedness evidenced by the Securities, the Mortgagee
may resort to the security of the Mortgage and/or any other security held by the
Mortgagee on its own behalf and on behalf of the Holders in such order and
manner as the Mortgagee may elect. The Mortgagee may, to the full extent that it
may lawfully do so, pursue any one or more remedies permitted or referred to
hereunder or under applicable law to enforce the provisions of this Mortgage, to
collect the Liabilities or the indebtedness evidenced by the Securities or to
realize upon the security given therefor at the same time or at different times
without in any way impairing or waiving its right to pursue any other remedy or
remedies so provided.

            29. Waiver of Damages. Except as to claims arising out of the
negligence or willful misconduct of the Mortgagee, the Mortgagor further waives
any claim against the Mortgagee for consequential, special or punitive damages
arising in connection with the Indenture, this Mortgage or any of the other
documents securing the Securities, and further waives the right to interpose any
defense based on any statute of limitations or any claim of laches arising in
connection with the Indenture or this Mortgage and any setoff or counterclaim of
any nature or description.

            30. Unenforceability. If any term, covenant, condition or provision
of this Mortgage or the application thereof to any circumstance or to any
person, firm or corporation shall be invalid or unenforceable to any extent the
remaining terms, covenants, conditions and provisions of this Mortgage. or the
application thereof to any circumstances or to any Person, other than those as
to which any term, covenant, condition or provision is held invalid or
unenforceable, shall not be affected or impaired thereby and each remaining
term, covenant, condition and provision of this Mortgage shall be valid and
shall be enforceable to the fullest extent permitted by law.

            31. Spill Compensation and Control Act and
                Environmental Cleanup Responsibility Act.

                Industrial Site Remediation Act.

      A. Representations and Warranties.

            For the purposes of this Section 31, the Mortgagor makes the
following representations only as to properties owned by it and solely on its
own behalf:

            (1) To the best of the Mortgagor's knowledge, none of the real
property owned and/or occupied by the Mortgagor, and located in the State of New
Jersey, including, but not limited to the Mortgaged Premises, has ever been used
by previous owners and/or operators to refine, produce, store, handle, transfer,
process, transport, generate, manufacture, treat or dispose of "Hazardous
Substances", as such term is defined in N.J.S.A. 58:10-23.11b(k), and the

                                       28
<PAGE>

Mortgagor has not in the past used, nor does intend in the future to use, its
said real property, including, but not limited to the Mortgaged Premises, for
the purpose of refining, producing, storing, handling, transferring, processing,
transporting, generating, manufacturing, treating or disposing of said
"Hazardous Substances".

            (2) None of the real property owned and/or occupied by it and
located in the State of New Jersey, including, but not limited to the Mortgaged
Premises, has been or is now being used or, to the best of Mortgagor's
knowledge, has been used as a "Major Facility", as such term is defined in
N.J.S.A. 58:10-23.11b(1), and said real property, including, but not limited to
the Mortgaged Premises, will not be used as a "Major Facility" after completion
of any construction, renovation, restoration and other developmental work which
the Mortgagor may undertake thereon.

            (3) To the best of the Mortgagor's knowledge, no Lien has been
attached to any revenues or any real or personal property owned by the
Mortgagor, and located in the State of New Jersey, including, but not limited
to, the Mortgaged Premises, as a result of the chief executive of the New Jersey
Spill Compensation Fund expending monies from said fund to pay for "Damages", as
such term is defined in N.J.S.A. 58:10-23.11(g) and/or "Cleanup and Removal
Costs", as such term is defined in N.J.S.A. 58:10-23 11b(d), arising from an
intentional or unintentional action or omission of the Mortgagor or any previous
owner and/or operator of said real property, including, but not limited to the
Mortgaged Premises, resulting in the releasing, spilling, pumping, pouring,
emitting, emptying or dumping of "Hazardous Substances", as such term is defined
in N.J.S.A. 58.10-23. llb(k), into the waters of the State of New Jersey or onto
lands from which it might flow or drain into said waters or into waters outside
the jurisdiction of the State of New Jersey where damage may have resulted to
the lands, waters, fish, shellfish, wildlife, biota, air and other resources
owned, managed, held in trust or otherwise controlled by the State of New
Jersey.

            (4) To the best of Mortgagor's knowledge, the Mortgagor has not
received a summons, citation, directive, letter or other written communication
from the New Jersey Department of Environmental Protection concerning any
intentional or unintentional action or omission on the Mortgagor's part
resulting in the releasing, spilling, leaking, pumping, pouring, emitting,
emptying or dumping of "Hazardous Substances", as such term is defined in
N.J.S.A. 58:10-23.11b(k), into the waters or onto the lands of the State of New
Jersey, or into the waters outside the jurisdiction of the State of New Jersey
resulting in damage to the lands, waters, fish, shellfish, wildlife, biota, air
and other resources owned, managed, held in trust or otherwise controlled by and
within the jurisdiction of the State of New Jersey.

            (5) To the best of the Mortgagor's knowledge, none of the real
property owned and/or occupied by the Mortgagor and located in the State of New
Jersey, including, but not limited to the Mortgaged Property, has ever been used
by previous owners and/or operators to generate, manufacture, refine, transport,
treat, store, handle or dispose of "Hazardous Substances", or "Hazardous
Wastes", as such terms are defined in N.J.A.C. 7:1-3.3, and the Mortgagor does
not intend to use any of its real property, including, but not limited to the
Mortgaged Property for such purposes.

                                       29
<PAGE>

            (6) In connection with the purchase of the Mortgaged Premises and
any other real property acquired by the Mortgagor on or after January 1, 1984,
the Mortgagor required that the Seller of said real property, including the
Mortgaged Property, comply with the provisions of the New Jersey Industrial Site
Responsibility Act (N.J.S.A. 13:1k-6 et seq.) and the Seller did comply
therewith.

            (7) If and to the extent required by applicable law, the Mortgagor
has conducted a complete and thorough on-site inspection of the Mortgaged
Property, including, but not limited to, a geohydrological survey of soil and
sub-surface conditions as well as other tests, to determine the presence of
"Hazardous Substances" or "Hazardous Wastes", as such terms are defined in
N.J.A.C. 7:1-3.3, and the Mortgagor found no evidence of the presence of said
"Hazardous Substances" or Hazardous Wastes" on or in the Mortgaged Property.

            B. Covenants.

            (1) If the Mortgagor is presently an owner or operator of a "Major
Facility" in the State of New Jersey, as such term is defined in N.J.S.A.
58:10-23.11b(1), or if the Mortgagor ever becomes such an owner or operator,
then the Mortgagor shall furnish the New Jersey Department of Environmental
Protection with all the information required by N.J.S.A. 58:10-23.11d to the
extent applicable.

            (2) The Mortgagor shall not cause or permit to exist, as a result of
an intentional or unintentional action or omission on its part, a releasing,
spilling, leaking, pumping, emitting, pouring, emptying or dumping of a
"Hazardous Substance", as such term is defined in N.J.S.A. 58:10-23.11b(k) into
waters of the State of New Jersey or onto the lands from which it might flow or
drain into said waters. or into waters outside the jurisdiction of the State of
New Jersey where damage may result to the lands, waters, fish, shellfish,
wildlife, biota, air and other resources owned, managed, held in trust or
otherwise controlled by the State of New Jersey unless said spill, leak, etc. is
pursuant to and in compliance with the conditions of a permit issued by the
appropriate federal or state governmental authorities.

            (3) So long as the Mortgagor shall own or operate any real property
located in the State of New Jersey, which is used as a "Major Facility", as such
term is defined in N.J.S.A. 58:10-23.11b(1), the Mortgagor shall duly file or
cause to be duly filed with the Director of the Division of Taxation in the New
Jersey Department of the Treasury, a tax report or return and shall pay or make
provision for the payment of all taxes due therewith, all in accordance with and
pursuant to N.J.S.A. 58:10-23.11h to the extent applicable.

            (4) In the event that there shall be filed a Lien against the
Mortgaged Premises by the New Jersey Department of Environmental Protection,
pursuant to and in accordance with the provisions of N.J.S.A. 58:10-23.11f(f),
as a result of the chief executive of the New Jersey Spill Compensation Fund
having expended monies from said fund to pay for "Damages", as such term is
defined in N.J.S.A. 58:10-23.11g. and/or "Cleanup and Removal Costs", as such
term is defined in N.J.S.A. 58:10-23.11b(d), arising from an intentional or
unintentional action or omission of the Mortgagor, resulting in the releasing,
spilling, pumping, pouring, emitting, emptying or dumping of "Hazardous
Substances", as such term is defined in N.J.S.A.

                                       30
<PAGE>

58:10-23.11b(k) into the waters of the State of New Jersey or onto lands from
which it might flow or drain into said waters, then the Mortgagor shall, within
thirty (30) days from the date that the Mortgagor is given notice that the Lien
has been placed against the Mortgaged Premises or within such shorter period of
time in the event that the State of New Jersey has commenced steps to cause the
Mortgaged Premises to be sold pursuant to the Lien, either (i) pay the claim and
remove the Lien from the Mortgaged Premises, or (ii) furnish (a) a bond
reasonably satisfactory to the Mortgagee in the amount of the claim out of which
the Lien arises, (b) a cash deposit in the amount of the claim out of which the
Lien arises, or (c) other security reasonably satisfactory to the Mortgagee in
an amount sufficient to discharge the claim out of which the Lien arises (a
commitment of a reputable title insurance company to affirmatively insure over
or omit such claim shall constitute such reasonably satisfactory security).

            (5) Should the Mortgagor cause or permit any intentional or
unintentional action or omission resulting in the releasing, spilling, leaking,
pumping, pouring, emitting, emptying or dumping of "Hazardous Substances", as
such term is defined in N.J.S.A. 58:10-23.11b(k), into the waters or onto the
lands of the State of New Jersey, or into the waters outside the jurisdiction of
the State of New Jersey resulting in damage to the lands, waters, fish,
shellfish, wildlife, biota, air or other resources owned, managed or held in
trust or otherwise controlled by the State of New Jersey, without having
obtained a permit issued by the appropriate governmental authorities, the
Mortgagor shall promptly clean up such spill, leak, pumping, pouring, emission,
emptying or dumping, if so required by the Department of Environmental
Protection in accordance with the provisions of the New Jersey Spill
Compensation and Control Act and all other applicable law.

      C. Exceptions

            Notwithstanding Subsection A and B above.

            (1) With respect to Lot 12 in Block 47 of the Tax Map of the City of
Atlantic City, two underground oil storage tanks were abandoned in place in
accordance with applicable regulations of its New Jersey Department of
Environmental Protection ("NJDEP") and the Mortgagor maintains an above ground
oil storage tank on ???? property.

            (2) The prior owner of Lots 1-6, 9, and 10 in Block 47 abandoned in
place 3 underground storage tanks, (the "Midtown Bala Properties"), completed
product recovery operations and well closure activities with respect to spilled
oil product which respect to one such tank, and received "no further action"
letters from the NJDEP with respect to such company to remove asbestos from its
Midtown Bala Properties improvements prior to the demolition thereof.

            (3) The Sands may store small quantities of substances that may be
"hazardous" substances to use in the ordinary course of operating its casino
hotel.

            32. Each of the provisions of this Mortgage is subject to and shall
be enforced in compliance with the provisions of the Casino Control Act.

                                       31
<PAGE>

            33. In this Mortgage, whenever the context so requires, the
masculine gender shall include the feminine and/or neuter and the singular
number shall include the plural and conversely in each case.

            THE MORTGAGOR ACKNOWLEDGES THAT THE MORTGAGOR HAS RECEIVED FROM THE
MORTGAGEE WITHOUT CHARGE A TRUE COPY OF THIS INSTRUMENT STAMPED "COPY" AND ON
WHICH SUCH COPY IS A CERTIFICATION BY THE MORTGAGEE THAT SUCH INSTRUMENT IS A
TRUE COPY OF THIS MORTGAGE.

            34. Notwithstanding anything to the contrary herein contained or
contained in the Indenture, the Security Agreement or any document executed in
connection therewith: (i) Mortgagor shall have the right to sell, transfer and
convey (the "Sale") the Mortgaged Property in whole or in part (including,
without limitation, in a transaction involving a parcel of Land together with
all Improvements and Fixtures thereon and all Space Leases pertaining thereto)
(the parcel(s) which is the subject of such Sale is hereinafter referred to as
the "Conveyed Property") and in connection therewith obtain from Mortgagee a
release of the Conveyed Property from the Lien of this Mortgage and the Security
Agreement provided that such Sale is made in accordance with the provisions of
Section 1017 of the Indenture as if such Sale was an Asset Sale, as that term is
defined in the Indenture, regardless of whether such Sale was in fact an Asset
Sale. In connection therewith, Mortgagee shall execute, acknowledge and deliver
to Mortgagor such documents as Mortgagor may reasonable require to effectuate
such release; and (ii) Mortgagor shall have the right to lease (the "Lease") the
Mortgaged Property in whole or in part (a parcel of Land together with all
Improvements and Fixtures thereon and all Space Leases pertaining thereto) (the
parcel(s) which is the subject of such Lease is hereinafter referred to as the
"Leased Property") pursuant to a long term ground lease or operating lease and
in connection therewith obtain from Mortgagee a nondisturbance agreement
reasonably satisfactory to Mortgagor to such Lease provided that the rentals
provided for in such Lease, in the aggregate, represents the fair market value
of a lease of the Leased Property at that time.

                                     * * * *

                                       32
<PAGE>

            IN WITNESS WHEREOF, the Mortgagor has caused this Mortgage to be
signed in its name.

GREATE BAY HOTEL AND CASINO, INC.

By:___________________________________
      Name:
      Title:

Attest:

By:____________________________________

                                       33
<PAGE>

COUNTY OF _______________)
                                  )   ss:
STATE OF ________________)

On _______________________ before me, the subscriber, personally appeared
______________________ who being by me duly sworn according to law on his oath
saith that he is the Secretary of Greate Bay Hotel and Casino, Inc., a New
Jersey corporation, the above-named Mortgagor; that the seal affixed to
aforesaid Mortgage is the corporate seal of the said corporation; that
__________________ is the President of the said corporation; that he saw the
said __________________ sign the Mortgage as the act and deed of said
corporation, he being thereunto duly authorized; and that he signed his name to
the Mortgage as an attesting witness.

                                    ____________________________
                                    Secretary

Subscribed before me this _______ day of ________________.

_____________________
Notary Public

                                       34
<PAGE>

STATE OF _______________)
                               ): ss
COUNTY OF ______________)

            BE IT REMEMBERED, that on this ______ day of _______________, before
me, the subscriber, a Notary Public of the State of New York, personally
appeared, ________________, the President of GREATE BAY HOTEL AND CASINO, INC.,
a New Jersey corporation and the assignor named in the within instrument, who I
am satisfied is the person who executed the within instrument, as President of
said corporation, and he acknowledged that he signed, sealed with the proper
corporate seal and delivered the same as such officer, that the within
instrument is the voluntary act and deed of such corporation made by virtue of
authority of its board of directors, on behalf of and as the voluntary act and
deed of the corporation, for the uses and purposes therein expressed, and that
he received a true copy of the within instrument on behalf of the assignor named
therein.

                                    ______________________________________
                                    Notary Public of the State of New York

                                       35SECURITY AGREEMENT

                               September 29, 2000

                                      From

                           GB PROPERTY FUNDING CORP.,
                       GREATE BAY HOTEL AND CASINO, INC.,
                                       AND
                                GB HOLDINGS, INC.

                                       to

                WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION

                                   as Trustee

<PAGE>

                               TABLE OF CONTENTS

                                                                         PAGE(s)
                                                                         -------
SECTION 1
        Grant of Security......................................................2
SECTION 2
        Security for Obligations...............................................4
SECTION 3
        Grantors Remain Liable.................................................4
SECTION 4
        Delivery of Security Collateral and Account Collateral.................4
SECTION 5
        Maintaining the Pledged Accounts.......................................4
SECTION 6
        Investing of Amounts in the Pledged Accounts...........................5
SECTION 7
        Release of Amounts.....................................................5
SECTION 8
        Representations and Warranties.........................................5
SECTION 9
        Certain Covenants......................................................6
SECTION 10
        As to Equipment and Inventory..........................................7
SECTION 11
        Insurance..............................................................8
SECTION 12
        Place of Perfection; Records; Collection of Receivables................8
SECTION 13
        Voting Rights; Dividends; Etc..........................................9
SECTION 14
        As to the Assigned Agreements.........................................10
SECTION 15
        Payments Under the Assigned Agreements................................10
SECTION 16
        Trustee Appointed Attorney-in-Fact....................................10
SECTION 17
        Trustee May Perform...................................................11
SECTION 18
        The Trustee's Duties..................................................11
SECTION 19
        Remedies..............................................................11
SECTION 20
        Registration Rights...................................................12

<PAGE>

SECTION 21
        Expenses..............................................................13
SECTION 22
        Security Interest Absolute............................................13
SECTION 23
        Amendments; Waivers; Etc..............................................13
SECTION 24
        Addresses for Notices.................................................13
SECTION 25
        Continuing Security Interest; Assignments Under the Indenture.........13
SECTION 26
        Release and Termination...............................................14
SECTION 27
        Casino Control Act....................................................15
SECTION 28
        Regulatory Matters....................................................15
SECTION 29
        The Mortgages.........................................................16
SECTION 30
        Governing Law; Terms..................................................16

<PAGE>

Schedule I       -    Pledged Shares and Pledged Debt

Schedule II      -    Assigned Agreements

Schedule III     -    Locations of Equipment and Inventory

Schedule IV      -    Trade Names

<PAGE>

                               SECURITY AGREEMENT

            SECURITY AGREEMENT dated September __, 2000 made by each of GB
PROPERTY FUNDING CORP., a Delaware corporation having its principal office at
c/o Sands Hotel and Casino (the "Company"), GREATE BAY HOTEL AND CASINO, INC., a
New Jersey corporation ("GBHC") and GB HOLDINGS, INC., a Delaware corporation
("Holdings"), each with an office at Indiana Avenue & Brighton Park, Atlantic
City, New Jersey 08401 to WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, a
national banking association, as trustee (the "Trustee") (in such capacity,
together with any successor appointed pursuant to the Indenture, the "Trustee")
for the Holders under an Indenture dated as of September 29, 2000 among the
Company, as Issuer, the Trustee and each of GBHC and Holdings, as Guarantors
(such Indenture, as it may be amended, supplemented or otherwise modified from
time to time in accordance with its terms, the "Indenture"). Each of the
Company, GBHC, and Holding and each Additional Collateral Grantor is hereinafter
referred to, individually, as a "Grantor" and, collectively, the "Grantors".
Capitalized terms not otherwise defined in this Agreement shall have the
meanings set forth in the Indenture.

            PRELIMINARY STATEMENTS.

            (1) Each of the Company, the Trustee, GBHC and Holdings has entered
into the Indenture pursuant to which the Company will issue, and GBHC and
Holdings will each guarantee, on the date hereof up to $110,000,000 aggregate
principal amount of 11% First Mortgage Notes Due 2005 (the "First Mortgage
Notes"or the "Securities").

            (2) The First Mortgage Notes are being issued in replacement of
those certain 10 7/8% First Mortgage Notes of the Company in the original
principal amount of $185,000,000 due 2004 (the "Original First Mortgage Notes")
that are being discharged and replaced by The First Mortgage Notes as a result
of the Confirmation of the Fifth Amended Joint Plan (the "Reorganization") of
Reorganization under Chapter 11 prepared by the Official Committee of Unsecured
Creditors and High River, by the United States Bankruptcy Court for the District
of New Jersey (the "Bankruptcy Court") on August 11, 2000.

            (3) GBHC has also opened a special account (the "Collateral
Account") with PNC Bank (the "Bank") at its offices at Edison, New Jersey,
Account No. 8102693449, in the name of GBHC but under the sole dominion and
control of the Trustee and subject to the terms of this Agreement. GBHC will
deposit upon receipt thereof, Collateral Proceeds, if any, received by it from
Asset Sales and Events of Loss in the Collateral Account, as provided in the
Indenture. The Collateral Account is hereinafter referred to as the "Pledged
Account".

            (4) Each Grantor is the owner of the shares of stock (the "Shares")
described opposite such Grantor's name in Part I of Schedule I hereto and issued
by the entity set forth therein.

            (5) It is a condition precedent to the execution of the Indenture by
the Trustee that each of the Grantors shall have granted to the Trustee the
assignment and security interest and made the pledge and assignment contemplated
by this Agreement.

<PAGE>

            NOW, THEREFORE, in consideration of the premises, each Grantor
hereby agrees with the Trustee for its benefit and the ratable benefit of the
Holders as follows:

            SECTION 1. Grant of Security. Each Grantor, hereby assigns and
pledges to the Trustee, as secured party, for its benefit and the ratable
benefit of the Holders, and hereby grants to the Trustee, as secured party, for
its benefit and the ratable benefit of the Holders, a security interest in (and
only in and to), the following, to the extent owned by such Grantor as of the
date hereof (collectively, the "Collateral"):

            (a) all of such Grantor's right, title and interest owned as of the
      date hereof, in and to all equipment in all of its forms, wherever
      located, including, but not limited to, all plant furnishings, fixtures,
      gaming equipment, computers, electric data processing equipment,
      telecommunications equipment, office equipment, transportation equipment
      (including, without limitation, the "People Mover", as such term is
      defined in the Mortgage), other fixed assets, handling and delivery
      equipment, furniture, appliances, vehicles and books and records, parts
      (including spare parts) and accessories, whether installed thereon or
      affixed thereto (any and all of the foregoing being the "Equipment");

            (b) all of such Grantor's right, title and interest owned as of the
      date hereof, in and to inventory of such Grantor, including, but not
      limited to, all goods, merchandise, raw materials, work in process,
      finished goods, goods held for manufacture, processing, the providing of
      services or sale, use or consumption in the operation of such Grantor's
      business (including, without limitation, provisions in storerooms,
      refrigerators, kitchens, pantries, beverages in wine cellars or bars,
      fuel, supplies and similar items), goods in which such Grantor has an
      interest in mass or a joint or other interest or right of any kind
      (including, without limitation, goods in which such Grantor has an
      interest or right as consignee) and goods that are returned to or
      repossessed by such Grantor, and all accessions thereto and products
      thereof and documents therefor (any and all of the foregoing being the
      "Inventory");

            (c) all of such Grantor's right, title and interest owned as of the
      date hereof, in all accounts receivables, contract rights, chattel paper,
      general intangibles, intellectual property, goodwill, tradenames,
      copyrights, trademarks, permits, licenses, authorizations, plans and
      specifications, and all rights now existing in and to all security
      agreements, leases and other contracts securing or otherwise relating to
      the foregoing, (any and all of the foregoing, to the extent not referred
      to in clause (d), (e) or (f) below, being the "Receivables," and any and
      all such leases, security agreements, and other contracts being the
      "Related Contracts");

            (d) all of such Grantor's right, title and interest owned as of the
      date hereof, in all of the following (the "Security Collateral"):

                  (i) the Shares (such Shares, being, collectively, the "Pledged
            Shares"), the certificates representing the Pledged Shares, and all
            dividends paid in additional shares of stock of GBHC or the Company,
            from time to time received,

                                       2
<PAGE>

            receivable or otherwise distributed in respect of or in exchange for
            any or all of the Pledged Shares; and

                  (ii) and any other indebtedness for borrowed money owed to
            Holdings, GBHC, the Company or any other Grantor by any obligor and
            the instruments evidencing the same other than: (x) Indebtedness
            between or among any of Holdings, GBHC and the Company and (y)
            Gaming Related Items (collectively, the "Pledged Debt");

            (e) all of such Grantor's right, title and interest owned as of the
      date hereof, in and to the agreements listed on Schedule II, to which such
      Grantor is now a party, in each case as such agreements may be amended or
      otherwise modified from time to time (collectively, the "Assigned
      Agreements"), including, without limitation, (i) all rights of such
      Grantor under such Assigned Agreements to assert claims arising out of or
      for breach of or default under the Assigned Agreements and (ii) the right
      of such Grantor to terminate the Assigned Agreements, to perform
      thereunder and to compel performance and otherwise exercise all remedies
      thereunder (all such Collateral being the "Agreement Collateral");

            (f) all of the following (collectively, the "Account Collateral"):

                  (i) the Collateral Account, all funds held therein and all
            certificates and instruments, if any, from time to time representing
            or evidencing the Collateral Account or any instrument thereof;

                  (ii) all notes, certificates of deposit, checks and other
            instruments from time to time hereafter delivered to or otherwise
            possessed by the Trustee or the Pledged Account for or on behalf of
            the relevant Grantor in substitution for or as an addition to any or
            all of the then existing Account Collateral; and

                  (iii) all interest, dividends, cash, instruments and other
            property from time to time received, receivable or otherwise
            distributed in respect of any or all of the then existing Account
            Collateral; and

            (g) to the limited extent required under Section 1404 of the
      Indenture to be deposited in the Pledged Account as the result of an Asset
      Sale or Event of Loss: all proceeds of any and all of the foregoing
      Collateral (including, without limitation, proceeds that constitute
      property of the types described in clauses (a) - (f) of this Section 1)
      including proceeds in the form of payments under insurance (whether or not
      the Trustee is the loss payee thereof), or any indemnity, warranty or
      guaranty, payable by reason of loss or damage to or otherwise with respect
      to any of the foregoing Collateral.

            Anything in this Agreement, in the Indenture or any of the other
      Security Documents to the contrary, notwithstanding, the foregoing
      provisions of this Section 1 shall not apply to and the terms
      "Collateral", "Equipment", "Inventory", "Receivables" "Related Contracts",
      "Security Collateral" "Pledged Debt" "Assigned Agreements",

                                       3
<PAGE>

      "Agreement Collateral" and "Account Collateral" shall not include or
      deemed to include to any extent (any and all of the following, the
      "Excluded Property") (i) any CRDA Investments, (ii) any accounts
      receivable consisting solely of gaming debt; (iii) any other revenues,
      receivables or rights of payment arising out of the conduct of casino
      operations or other gaming activities (collectively, the "Gaming Related
      Items"); (iv) cash or cash equivalents other than those held in the
      Collateral Account; (v) any real property or interests therein (except,
      with respect to this clause (v), as specifically set forth in the
      Mortgage); or (vi) any assets or property or interest therein acquired
      after the date hereof.

            SECTION 2. Security for Obligations. This Agreement secures, in the
case of the Company, all of the Company's payment obligations now or hereafter
existing under or with respect to the Securities, the Indenture or any of the
Security Documents and, in the case of GBHC and Holdings, all of its obligations
with respect to their Guarantees, in each case whether for principal, interest
(including, without limitation, interest after the filing of a petition
initiating any proceeding referred to in Section 501(7) or (8) of the
Indenture), premium, fees, expenses or otherwise (all such obligations being the
"Secured Obligations"). Without limiting the generality of the foregoing, this
Agreement secures the payment of all amounts that constitute part of the Secured
Obligations and would be owed by the Company, GBHC or Holdings to the Trustee or
the Holders under or with respect to the Securities, the Indenture, the
Guarantees or any of the Security Documents but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving any Grantor.

            SECTION 3. Grantors Remain Liable. Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements of such Grantor included in the Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by the
Trustee of any of the rights hereunder shall not release any Grantor from any of
its duties or obligations under the contracts and agreements included in the
Collateral and (c) neither the Trustee nor any Holder shall have any obligation
or liability under the contracts and agreements included in the Collateral by
reason of this Agreement, nor shall the Trustee or any Holder be obligated to
perform any of the obligations or duties of any person thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.

            SECTION 4. Delivery of Security Collateral and Account Collateral.
All certificates or instruments representing or evidencing Security Collateral
or Account Collateral shall be delivered to and held by or on behalf of the
Trustee pursuant hereto and shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to the
Trustee.

            SECTION 5. Maintaining the Pledged Account. Until such time as the
Indenture shall have been satisfied or discharged in accordance with Sections
401 or 1302 thereof, BHC will maintain the Pledged Account with the Bank, or
such other bank that is acceptable to the Trustee (the Bank, or any other such
bank being the "Pledged Account Bank"). The Pledged Account shall be subject to
such applicable laws, and such applicable regulations of the Board of Governors
of the Federal Reserve System and of any other appropriate banking or
governmental authority, as may now or hereafter be in effect.

                                       4
<PAGE>

            SECTION 6. Investing of Amounts in the Pledged Account. The Trustee
will upon receipt of the written instructions of GBHC from time to time, subject
to the provisions of Sections 7 and 20 hereof, instruct the Pledged Account Bank
to (a) invest amounts on deposit in the Pledged Account in such Cash Equivalents
(as such term is defined in the Indenture, except that, as used herein, such
definition shall not be limited to the extent owned by Holdings or any of its
Subsidiaries) in the name of the Trustee as GBHC may select and (b) invest
interest paid on the Cash Equivalents referred to in clause (a) above, and
reinvest other proceeds of any such Cash Equivalents that may mature or be sold
in each case in such Cash Equivalents in the name of the Trustee as to which all
actions required by Section 9(e) shall have been taken as GBHC may select (the
Cash Equivalents referred to in clauses (a) and (b) above being, collectively,
the "Collateral Investments").

            SECTION 7. Interest. Interest and proceeds that are not invested or
reinvested in Collateral Investments as provided in the immediately preceding
Section shall be deposited and held in the Pledged Account.

            SECTION 8. Representations and Warranties. Each Grantor represents
and warrants as follows:

            (a) All of the Equipment and Inventory are located at the places
      specified in Schedule III hereto. The chief place of business and chief
      executive office of such Grantor and the office where such Grantor keeps
      its records concerning the Receivables, and all originals of all chattel
      paper that evidence Receivables, are located at the address first
      specified above with respect to such Grantor. None of the Receivables is
      evidenced by a promissory note or other instrument.

            (b) Such Grantor is the legal and beneficial owner of the Collateral
      with respect to which it is granting a security interest pursuant to this
      Agreement free and clear of any Lien, except for the security interest
      created by this Agreement, Liens in favor of the Trustee and Liens
      permitted by the Indenture. No effective financing statement or other
      instrument similar in effect covering all or any part of the Collateral is
      on file in any recording office, except such as may have been filed in
      favor of the Trustee relating to this Agreement or any other Security
      Document. All of the Trade Names of such Grantor are listed on Schedule IV
      hereto.

            (c) The Pledged Shares have been duly authorized and validly issued
      and are fully paid and non-assessable.

            (d) The Shares constitute all of the issued and outstanding shares
      of the Company and GBHC. On the date hereof Holdings has no Subsidiaries
      with substantial operations or more than de minimis assets, other than
      GBHC, the Company, and Lieber Check Cashing, LLC, whose sole member is
      GBHC.

            (e) This Agreement, the pledge of the Security Collateral pursuant
      hereto and the pledge and assignment of the Agreement Collateral and the
      Account Collateral

                                       5
<PAGE>

      pursuant hereto create a valid and perfected first priority security
      interest in the Collateral, except as otherwise permitted or contemplated
      herein, or under the Indenture or the Security Documents. All filings and
      other actions necessary or desirable to perfect the security interest
      granted hereunder have been duly taken.

            (f) No consent of any other Person and no authorization, approval or
      other action by (except for such consents, authorizations, approvals or
      other actions as shall have been obtained and shall be in full force and
      effect on or before the date hereof), and no notice to or filing with, any
      governmental authority or regulatory body or other third party is required
      either (i) for the grant by such Grantor of the assignment and security
      interest granted hereby, or for the execution, delivery or performance of
      this Agreement by such Grantor, (ii) for the perfection or maintenance of
      the pledge, assignment and security interest created hereby, except for
      the filing of financing and continuation statements under the Uniform
      Commercial Code, which financing statements have been duly filed, or (iii)
      for the exercise by the Trustee of its voting or other rights provided for
      in this Agreement or the remedies in respect of the Collateral pursuant to
      this Agreement, except as may be required by applicable law or in the
      Indenture, or in connection with the disposition of any portion of the
      Security Collateral by laws affecting (A) the offering and sale of
      securities generally and (B) the Gaming Laws.

            (g) The Inventory in which GBHC is granting a security interest
      pursuant to this Agreement has been produced by GBHC in compliance with
      all requirements of the Fair Labor Standards Act.

            SECTION 9. Certain Covenants. Until such time as the Indenture shall
have been satisfied or discharged in accordance with Sections 401 or 1302
thereof, each Grantor will:

            (a) Compliance with Laws, Etc. Comply, and cause each of its
      Subsidiaries to comply, in all material respects, with all applicable
      laws, rules, regulations and orders, such compliance to include, without
      limitation, compliance with the Employment Retirement Income Security Act
      of 1974, as amended, and the Racketeer Influenced and Corrupt
      Organizations Chapter of the Organized Crime Control Act of 1970.

            (b) Payment of Taxes, Etc. Pay and discharge, and cause each of its
      Subsidiaries to pay and discharge, before the same shall become delinquent
      (i) all taxes, assessments and governmental charges or levies imposed upon
      it or upon the Collateral and (ii) all lawful claims that, if unpaid,
      might by law become a Lien upon the Collateral in accordance with, and to
      the extent required under, Section 1005 of the Indenture.

            (c) Production of Inventory. Produce, and cause each of its
      Subsidiaries to produce, all Inventory, if any, in which such Grantor is
      granting a security interest in compliance with all requirements of the
      Fair Labor Standards Act.

            (d) Visitation Rights: Maintenance of Books and Records. Permit the
      Trustee or any agents or representatives thereof at any reasonable time
      and from time to time to examine and make copies of and abstracts from the
      records and books of account of, and

                                       6
<PAGE>

      visit the properties of, such Grantor and any of its subsidiaries, and to
      discuss the affairs, finances and accounts of such Grantor and any of its
      subsidiaries with any of their officers or directors and with their
      independent public accountants and, at its own cost and expense, keep
      reasonably satisfactory and reasonably complete records of the Collateral
      including, without limitation, all payment received or receivable with
      respect thereto and all other dealings with the Collateral.

            (e) Further Assurances. From time to time at the sole expense of
      such Grantor:

            (i) promptly execute and deliver all further instruments and
      documents, and take all further action, that may be necessary or
      desirable, or that the Trustee may request, in order to perfect and
      protect any pledge, assignment or security interest granted or purported
      to be granted hereby or to enable the Trustee to exercise and enforce its
      rights and remedies hereunder with respect to any Collateral; and

            (ii) furnish to the Trustee statements and schedules further
      identifying and describing the Collateral and such other reports in
      connection with the Collateral as the Trustee may reasonably request, all
      in reasonable detail.

            Each Grantor hereby authorizes the Trustee to file one or more
      financing or continuation statements, and amendments thereto, relating to
      all or any part of the Collateral without the signature of such Grantor
      where permitted by law. A photocopy or other reproduction of this
      Agreement or any financing statement covering the Collateral or any part
      thereof shall be sufficient as a financing statement where permitted by
      law.

            SECTION 10. As to Equipment and Inventory. (a) Each Grantor shall
keep the Equipment and Inventory with respect to which such Grantor is granting
a security interest pursuant to this Agreement at the places therefor specified
in Section 8(a) or, upon 30 days' prior written notice to the Trustee, at such
other places in a jurisdiction where all action required by Section 9(e) shall
have been taken with respect to such Equipment and Inventory.

            (b) Each Grantor shall cause the Equipment with respect to which
such Grantor is granting a security interest pursuant to this Agreement to be
maintained and preserved in the good condition, repair and working order. Each
Grantor shall promptly furnish to Trustee a statement with respect to any
material loss or material damage to any of such Equipment.

            (c) Each Grantor shall pay promptly when due all property and other
taxes, assessments and governmental charges or levies imposed upon, and all
claims (including claims for labor, materials and supplies) against, the
Equipment and Inventory with respect to which such Grantor is granting a
security interest pursuant to this Agreement; provided, however, that Holdings
shall not be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings. In producing the
Inventory with respect to which such Grantor is granting a security interest
pursuant to this Agreement, such Grantor shall comply with all requirements of
the Fair Labor Standards Act.

                                       7
<PAGE>

            SECTION 11. Insurance. (a) Each Grantor shall, at its own expense,
maintain insurance with respect to the Equipment and Inventory with respect to
which it is granting a security interest pursuant to this Agreement in such
amounts, against such risks and in such form, as is usually carried by companies
engaged in a business similar to the business conducted by such Grantor and in
the case of GBHC, by companies engaged in business in Atlantic City, New Jersey
similar to the business conducted by GBHC. Each policy for liability insurance
shall, to the extent available on a commercially reasonable basis, provide for
all losses to be paid on behalf of the Trustee, the Holders and such Grantor as
their interests may appear, and each policy for property damage insurance shall
provide that all losses (A) in excess of $1,000,000 or (B) which are paid or
incurred while a Default under the Indenture is in existence and continuing,
shall be paid directly to the Trustee. Each such policy shall in addition, to
the extent available on a commercially reasonable basis, (i) name such Grantor
and the Trustee as insured parties thereunder (without any representation or
warranty by or obligation upon the Trustee) as their interests may appear, (ii)
contain the agreement by the insurer that any loss thereunder shall be payable
to the Trustee notwithstanding any action, inaction or breach of representation
or warranty by such Grantor (other than the failure to make required payments),
(iii) provide that there shall be no recourse against the Trustee for payment of
premiums or other amounts with respect thereto and (iv) provide that at least 10
days' prior written notice of cancellation or of lapse shall be given to the
Trustee by the insurer. Each Grantor shall, if so requested by the Trustee,
deliver to the Trustee original or duplicate policies of such insurance and, as
often as the Trustee may reasonably request, a report of a reputable insurance
broker with respect to such insurance. Further, each Grantor shall, at the
request of the Trustee, duly execute and deliver instruments of assignment of
such insurance policies to comply with the requirements of Section 9(e) and
cause the insurers to acknowledge notice of such assignment.

            (b) Reimbursement under any liability insurance maintained by any
Grantor pursuant to this Section 11 may be paid directly to the Person who shall
have incurred liability covered by such insurance. In case of any Event of Loss
involving Collateral Trustee shall make the proceeds of any insurance available
to Grantor to permit compliance with the terms of the Indenture and the Security
Documents and such Grantor shall make or cause to be made the necessary repairs
to or replacements of such Equipment or Inventory to the extent required by
Section 1006 of the Indenture.

            SECTION 12. Place of Perfection; Records; Collection of Receivables.
(a) Each Grantor shall keep its chief place of business and chief executive
office and the office where it keeps its records concerning the Collateral, and
the original copies of documents included in the Collateral and all originals of
all chattel paper that evidence Receivables, at the location therefor specified
in Section 8(a) or, upon 30 days' prior written notice to the Trustee, at such
other locations in a jurisdiction where all actions required by Section 9(e)
shall have been taken with respect to the Collateral. Each Grantor will hold and
preserve such records, documents and chattel paper and will permit
representatives of the Trustee at any time during normal business hours to
inspect and make abstracts from such records and chattel paper.

            (b) Except as otherwise provided in this subsection (b), each
Grantor shall continue to collect, at its own expense, all amounts due or to
become due such Grantor under the Receivables. In connection with such
collections, such Grantor may take (and, at the Trustee's

                                       8
<PAGE>

direction, shall take) such action as such Grantor or the Trustee may deem
necessary or advisable to enforce collection of the Receivables; provided,
however, that the Trustee shall have the right at any time, upon the occurrence
and during the continuance of an Event of Default and upon written notice to
such Grantor of its intention to do so, to notify the obligors under any
Receivables of the assignment of such Receivables to the Trustee and to direct
such obligors to make payment of all amounts due or to become due to such
Grantor thereunder directly to the Trustee and, upon such notification and at
the expense of such Grantor, to enforce collection of any such Receivables, and
to adjust, settle or compromise the amount or payment thereof, in the same
manner and to the same extent as such Grantor might have done. After receipt by
such Grantor of the notice from the Trustee referred to in the proviso to the
immediately preceding sentence, (i) all amounts and proceeds (including
instruments) received by such Grantor in respect of the Receivables shall be
received in trust for the benefit of the Trustee hereunder, shall be segregated
from other funds of such Grantor and shall be forthwith paid over to the Trustee
in the same form as so received (with any necessary indorsement) to be deposited
at the option of the Trustee in the Collateral Account or another special
pledged account maintained by the Trustee and, thereafter, applied in accordance
with Section 19(b) hereof, other than amounts to be used to cure any such Event
of Default or otherwise make any payment in respect of the Securities or make
any payment or perform any obligation under the Indenture or other Security
Documents (all of which, whether paid to the Grantor or the Trustee, shall be
made available to the Grantor for such purposes) and (ii) such Grantor shall not
adjust, settle or compromise the amount or payment of any Receivable, release
wholly or partly any obligor thereof, or allow any credit or discount thereon.

            SECTION 13. Voting Rights; Dividends; Etc.:

            (a) (i) Each Grantor shall continue to be and shall be entitled to
      be, the record owner of all of the Security Collateral and shall be
      entitled to exercise or refrain from exercising any and all voting and
      other consensual rights pertaining to the Security Collateral or any part
      thereof.

            (ii) Each Grantor shall be entitled to receive and retain any and
      all cash dividends and interest paid in respect of the Security
      Collateral. All certificates distributed in respect of any stock dividends
      shall be, and shall be forthwith delivered to the Trustee to hold as,
      Security Collateral and shall, if received by such Grantor, be received in
      trust for the benefit of the Trustee, be segregated from the other
      property of any Grantor and be forthwith delivered to the Trustee as
      Security Collateral in the same form as so received. Each Grantor shall,
      upon the request of the Trustee, promptly execute such documents and
      perform such acts as may be necessary or advisable to give effect to this
      paragraph (ii).

            (iii) The Trustee shall execute and deliver (or cause to be executed
      and delivered) to any Grantor all such proxies and other instruments as
      such Grantor may reasonably request for the purpose of enabling such
      Grantor to exercise the voting and other rights that it is entitled to
      exercise pursuant to paragraph (i) above and to receive the dividends or
      interest payments that it is authorized to receive and retain pursuant to
      paragraph (ii) above.

                                       9
<PAGE>

            (b) Upon the occurrence and during the continuance of an Event of
Default:

            (i) All rights of each Grantor to receive the dividends and interest
      payments that it would otherwise be authorized to receive and retain
      pursuant to Section 13(a)(ii) shall automatically cease, and all such
      rights shall thereupon become vested in the Trustee, which shall thereupon
      have the sole right to receive and hold as Security Collateral such
      dividends and interest payments, in each case other than amounts to be
      used by a Grantor to cure any such Event of Default or otherwise make any
      payment in respect of the Securities or make any payment or perform any
      obligation under the Indenture or other Security Documents (all of which,
      whether paid to the Grantor or the Trustee, shall be made available to the
      Grantor for such purposes).

            (ii) All dividends and interest payments that are received by any
      Grantor contrary to the provisions of paragraph (i) of this Section 13(b)
      shall be received in trust for the benefit of the Trustee, shall be
      segregated from other funds of any Grantor and shall be forthwith paid
      over to the Trustee as Security Collateral in the same form as so received
      (with any necessary indorsement).

            SECTION 14. As to the Assigned Agreements. Each Grantor shall, at
its own expense furnish to the Trustee promptly upon receipt thereof copies of
all notices, and, upon the written request of the Trustee, copies of all
requests and other documents received by such Grantor under or pursuant to the
Assigned Agreements, and from time to time (A) furnish to the Trustee such
information and reports regarding the Collateral as the Trustee may reasonably
request and (B) upon request of the Trustee, make to each other party to any
Assigned Agreement such demands and requests for information and reports or for
action as such Grantor is entitled to make thereunder.

            SECTION 15. Payments Under the Assigned Agreements. Upon the
occurrence and during the continuation of an Event of Default, all payments due
or to become due under or in connection with such Assigned Agreement shall be
received in trust for the benefit of the Trustee hereunder, shall be segregated
from other property and funds of any Grantor and shall be forthwith paid over to
the Trustee in the same form as so received (with any necessary indorsement) to
be deposited in the Collateral Account and, thereafter, applied by the Trustee
in accordance with Section 19(b) hereof, in each case other than amounts to be
used by the Grantors to cure any such Event of Default or otherwise make any
payment in respect of the Securities or make any payment or perform any
obligation under the Indenture or the other Security Documents (all of which,
whether paid to the Grantor or the Trustee shall be made available to the
Grantor for such purposes).

            SECTION 16. Trustee Appointed Attorney-in-Fact. Effective upon and
during the continuance of an Event of Default, each Grantor hereby irrevocably
appoints the Trustee as its attorney-in-fact, with full authority in the place
and stead of such Grantor and in the name of such Grantor, to take any action
and to execute any instrument that is necessary to accomplish the purposes of
this Agreement.

                                       10
<PAGE>

            SECTION 17. Trustee May Perform. If any Grantor fails to perform any
agreement contained herein, the Trustee may itself, but shall have no obligation
to, perform, or cause performance of, such agreement, and the expenses of the
Trustee incurred in connection therewith shall be payable by such Grantor under
Section 21.

            SECTION 18. The Trustee's Duties. The powers conferred on the
Trustee hereunder are solely to protect its interest and the interests of
Holders in the Collateral. Except for (i) duties specifically imposed under this
Agreement, (ii) the safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder and (ii) duties imposed
under the Trust Indenture Act of 1939, as amended, and the Indenture, the
Trustee shall have no duty as to any Collateral, as to ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Security Collateral, whether or not the Trustee or
any Holder has or is deemed to have knowledge of such matters, or as to the
taking of any necessary steps to preserve rights against any parties or any
other rights pertaining to any Collateral.

            SECTION 19. Remedies. If any Event of Default under the Indenture
shall have occurred and be continuing:

            (a) The Trustee may exercise in respect of the Collateral, in
      addition to other rights and remedies provided for herein, in the
      Indenture or any other Security Document or otherwise available to it, all
      the rights and remedies of a secured party upon default under the Uniform
      Commercial Code in effect in the State of New Jersey at such time (the
      "N.J. Uniform Commercial Code") (whether or not the N.J. Uniform
      Commercial Code applies to the affected Collateral) and also may (i)
      require any Grantor to, and such Grantor hereby agrees that it will at its
      expense and upon request of the Trustee forthwith, assemble all or part of
      the Collateral as directed by the Trustee and make it available to the
      Trustee at a place to be designated by the Trustee that is reasonably
      convenient to both parties and (ii) without notice except as specified
      below, sell the Collateral or any part thereof in one or more parcels at
      public or private sale, at any of the Trustee's offices or elsewhere, for
      cash, on credit or for future delivery, and upon such other terms as the
      Trustee may deem commercially reasonable. Each Grantor agrees that, to the
      extent notice of sale shall be required by law, at least ten days' notice
      to such Grantor of the time and place of any public sale or the time after
      which any private sale is to be made shall constitute reasonable
      notification. The Trustee shall not be obligated to make any sale of
      Collateral regardless of notice of sale having been given. The Trustee may
      adjourn any public or private sale from time to time by announcement at
      the time and place fixed therefor, and such sale may, without further
      notice, be made at the time and place to which it was so adjourned.

            (b) Any cash proceeds received by the Trustee in respect of any sale
      of, collection from, or other realization upon all or any part of the
      Collateral in accordance with this Agreement may, except as otherwise
      contemplated in this Agreement, in the discretion of the Trustee, be held
      by the Trustee as collateral for, and/or then or at any time thereafter
      applied (after payment of any amounts payable to the Trustee pursuant to
      Section 21) in whole or in part by the Trustee for the ratable benefit of
      the Holders

                                       11
<PAGE>

      against, all or any part of the Secured Obligations in the order specified
      by Section 506 of the Indenture. Any surplus of such cash or cash proceeds
      held by the Trustee and remaining after payment in full of all the Secured
      Obligations shall be paid over to Grantor of the security interest created
      hereby with respect to such Collateral or to whomsoever may be lawfully
      entitled to receive such surplus.

            (c) The Trustee may exercise any and all rights and remedies of any
      Grantor under or in connection with the Collateral.

            (d) All payments received by any Grantor in respect of the
      Collateral shall be received in trust for the benefit of the Trustee,
      shall be segregated from other funds of any Grantor and, subject to the
      terms of this Agreement, shall be forthwith paid over to the Trustee in
      the same form as so received (with any necessary indorsement).

            (e) The Trustee may, without notice to any Grantor except as
      required by law and at any time or from time to time, charge, set-off and
      otherwise apply all or any part of the Secured Obligations against the
      Collateral Account.

            SECTION 20. Registration Rights. If the Trustee shall determine to
exercise its right to sell all or any of the Security Collateral pursuant to
Section 19, each Grantor agrees that, upon request of the Trustee, it will, at
its own expense:

            (a) execute and deliver, and cause each issuer of the Security
      Collateral contemplated to be sold and the directors and officers thereof
      to execute and deliver, all such instruments and documents, and do or
      cause to be done all such other acts and things, as may be necessary or,
      in the opinion of the Trustee, advisable to register such Security
      Collateral under the provisions of the Securities Act of 1933, as from
      time to time amended (the "Securities Act"), to cause the registration
      statement relating thereto to become effective and to remain effective for
      such period as prospectuses are required by law to be furnished and to
      make all amendments and supplements thereto as necessary or advisable, all
      in conformity with the requirements of the Securities Act and the rules
      and regulations of the Securities and Exchange Commission applicable
      thereto;

            (b) use its best efforts to qualify the Security Collateral under
      the state securities or "Blue Sky" laws and to obtain all necessary
      governmental approvals for the sale of the Security Collateral, as
      requested by the Trustee;

            (c) cause each such issuer to make available to its security
      holders, as soon as practicable, an earnings statement that will satisfy
      the provisions of Section 11(a) of the Securities Act;

            (d) provide the Trustee with such other information as may be
      necessary or advisable to enable the Trustee to effect the sale of such
      Security Collateral; and

            (e) do or cause to be done all such other acts and things as may be
      necessary to make such sale of the Security Collateral or any part thereof
      valid and binding and in compliance with applicable law.

                                       12
<PAGE>

The Trustee is authorized, in connection with any sale of the Security
Collateral pursuant to Section 19, to deliver or otherwise disclose to any
prospective purchaser of the Security Collateral any registration statement or
prospectus, and all supplements and amendments thereto, prepared pursuant to
clause (a) above provided to it.

            Each Grantor acknowledges the impossibility of ascertaining the
amount of damages that would be suffered by the Trustee or the Holders by reason
of the failure by such Grantor to perform any of the covenants contained in this
Section and, consequently, agrees that, if such Grantor shall fail to perform
any of such covenants, it shall pay, as liquidated damages and not as a penalty,
an amount equal to the value of the Security Collateral on the date the Trustee
shall demand compliance with this Section; provided that such payments shall not
exceed the amount of the Secured Obligations and shall be applied to reduce the
Secured Obligations.

            SECTION 21. Expenses. Each Grantor will upon demand pay to the
Trustee the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, that the Trustee
may incur in connection with (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection from or
other realization upon, any of the Collateral, (iii) the exercise or enforcement
of any of the rights of the Trustee or the Holders hereunder or (iv) the failure
by any Grantor to perform or observe any of the provisions hereof, and all
amounts so incurred by the Trustee shall be entitled to the benefits of the
Indenture.

            SECTION 22. Actions. The obligations of each Grantor (other than the
Company) under this Agreement are independent of the Company's obligations under
the Securities, and a separate action or actions may be brought and prosecuted
against any Grantor (other than the Company) to enforce this Agreement,
irrespective of whether any action is brought against the Company or whether the
Company is joined in any such action or actions..

            SECTION 23. Amendments; Waivers; Etc. Amendment or waivers of any
provision of this Agreement shall be governed solely by the terms of the
Indenture.

            SECTION 24. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing (including telecopier,
telegraphic, telex or cable communication) and, mailed, telegraphed, telecopied,
telexed, cabled or delivered to any Grantor or to the Trustee, as the case may
be, in each case addressed to it at its address set forth in the Indenture or,
as to any party, at such other address as shall be designated by such party in a
written notice to each other party complying as to delivery with the terms of
this Section. All such notices and other communications shall, when mailed,
telecopied, telegraphed, telexed or cabled, respectively, be effective when
deposited in the mails, telecopied, delivered to the telegraph company,
confirmed by telex answerback or delivered to the cable company, respectively,
addressed as aforesaid.

            SECTION 25. Continuing Security Interest; Assignments Under the
Indenture. This Agreement shall create a continuing security interest in the
Collateral and, except as contemplated in the Indenture shall (a) remain in full
force and effect until the date on which the

                                       13
<PAGE>

Secured Obligations shall have been paid in full or the Indenture shall have
been satisfied and discharged in accordance with the terms thereof, (b) be
binding upon each Grantor, its successors and assigns, (c) inure, together with
the rights and remedies of the Trustee hereunder, to the benefit of the Trustee,
the Holders and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause (c), any Holder may assign or
otherwise transfer all or any portion of its rights and obligations under the
Securities held by it to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to such Holder
herein or otherwise, in each case as provided in Section 305 of the Indenture.

            Each Grantor shall have the right to sell, transfer and convey (the
"Sale") the Collateral in whole or in part the Collateral which is the subject
of such Sale is hereinafter referred to as the "Conveyed Property") and in
connection therewith to obtain from the Trustee a release of the Conveyed
Property from the Lien of this Security Agreement provided that such Sale is
made in accordance with the provisions of Section 1017 of the Indenture as if
such Sale was an Asset Sale, as that term is defined in the Indenture regardless
of whether such Sale was in fact an Asset Sale. In connection therewith, the
Trustee shall execute, acknowledge and deliver to Grantor such documents as
Grantor may reasonable require to effectuate such release.

            The parties hereto agree that: (i) all security interest and other
rights in Collateral granted hereunder or under the Indenture or the other
Security Documents shall be, and hereby are, subject and inferior to any Liens
heretofore or hereafter created from time to time in connection with the
incurrence of Working Capital Indebtedness; and (ii) notwithstanding anything to
the contrary hereunder, in the Indenture or in the Security Documents, the
Grantors and their Subsidiaries may incur Liens and Indebtedness (including,
without limitation, Liens on Collateral) permitted by the Indenture. In
connection with any of the foregoing, the Trustee will, at the request of a
Grantor, enter into such intercreditor agreements, standstill agreements,
subordination agreements and other documents as shall be appropriate under the
circumstances for the benefit of the holder of such other Indebtedness or Liens.

            SECTION 26. Release and Termination. (a) On the date on which the
Secured Obligations shall have been paid in full or the Indenture shall have
been satisfied and discharged in accordance with the terms thereof, or as
otherwise contemplated in the Indenture, the pledge, assignment and security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to the Grantors. Upon any such termination, the Trustee, at the
appropriate Grantor's request and expense, will return to such Grantor such of
the Collateral in its possession as shall not have been sold, transferred or
otherwise applied pursuant to the terms of the Securities, the Indenture or any
Security Document, and will execute and deliver to such Grantor such documents
prepared by such Grantor and delivered to the Trustee as such Grantor shall
reasonably request to evidence such termination.

            (b) Upon satisfaction of the applicable conditions set forth in the
Indenture, the Trustee will take the applicable action specified therein
regarding the release of any Collateral.

                                       14
<PAGE>

            SECTION 27. Casino Control Act. Each of the provisions of this
Agreement is subject to, and shall be enforced in compliance with, the
provisions of the Casino Control Act, to the extent applicable, and the
regulations promulgated thereunder, unless such provisions are in conflict with
the TIA, in which case the TIA shall control.

            SECTION 28. Regulatory Matters. (a) Upon the occurrence and during
the continuation of an Event of Default, each Grantor shall take, and shall
cause each issuer of any of the Pledged Shares to take, all action that the
Trustee may request in the exercise of its rights and remedies hereunder, which
includes the right to require such Grantor or any issuer of any of the Pledged
Shares to transfer or assign the Pledged Shares to any party or parties. In
furtherance of this right, each Grantor shall, and shall cause each issuer of
the Pledged Shares, (i) to cooperate fully with the Trustee in obtaining all
approvals and consents from each governmental authority that the Trustee may
deem necessary or advisable to accomplish any such transfer or assignment of any
part of the Pledged Shares and (ii) to prepare, execute and file with any
Governmental Authority any application, request for consent, certificate or
instrument that the Trustee may deem necessary or advisable to accomplish any
such transfer or assignment of any part of the Pledged Shares. If any Grantor
fails to execute, or fails to cause each issuer or owner of the Pledged Shares
to execute, such applications, requests for consent, certificates or
instruments, the clerk of any court that has jurisdiction over the Security
Documents may execute and file the same on behalf of such Grantor.

            (b) To enforce the provisions of this Section 28, upon the
occurrence and during the continuation of an Event of Default, the Trustee is
authorized to request the consent or approval of any Governmental Authority to a
voluntary or an involuntary transfer of control of any issuer of any of the
Pledged Shares. In connection with the exercise of its remedies under this
Agreement, the Trustee may obtain the appointment of a trustee or receiver to
assume, upon receipt of all necessary judicial or other Governmental Authority
consents or approvals, control of any issuer of any of the Pledged Shares. Such
trustee or receiver shall have all rights and powers provided to it by law or by
court order or provided to the Trustee under this Agreement.

            (c) Notwithstanding anything to the contrary contained in this
Agreement:

                  (i) the Trustee will not take any action hereunder that would
      constitute or result in any transfer of control of any issuer of any of
      the Pledged Shares without obtaining all necessary approvals; provided
      that the Trustee and the Holders shall be entitled to rely on the advice
      of regulatory counsel selected by the Trustee to determine whether
      approvals of any Governmental Authority are required; and

                  (ii) the Trustee shall not foreclose on, sell, transfer or
      otherwise dispose of, or exercise any right to vote or consent with
      respect to, any of the Pledged Shares as provided herein or take any other
      action that would affect the operational, voting or other control of the
      issuer of any Pledged Shares, unless such action is taken in accordance
      with the applicable provisions of the Gaming Laws.

            (d) Each Grantor acknowledges that the approval of each appropriate
Governmental Authority to the transfer of control of an issuer of Pledged Shares
may be

                                       15
<PAGE>

required, that the ownership thereof is integral to the Trustee's realization of
the value of such Pledged Shares, that there is no adequate remedy at law for
failure by such Grantor to comply with the provisions of this Section 28 and
that such failure could not be adequately compensatable in damages and,
therefore, each Grantor agrees that the provisions of this Section 28 may be
specifically enforced.

            SECTION 29. The Mortgages. In the event that any of the Collateral
hereunder is also subject to a valid and enforceable Lien under the terms of any
Mortgage and the terms of such Mortgage are inconsistent with the terms of this
Agreement, then with respect to such Collateral, the terms of such Mortgage
shall be controlling in the case of real property and fixtures, and contracts
and agreements relating to the lease of real property, and the terms of this
Agreement shall be controlling in the case of all other Collateral.

            SECTION 30. Governing Law; Terms. This Agreement shall be governed
by and construed in accordance with the laws of the State of New Jersey, except
to the extent that the validity or perfection of the security interest
hereunder, or remedies hereunder, in respect of any particular Collateral are
governed by the laws of a jurisdiction other than the State of New Jersey.
Unless otherwise defined herein or in the Indenture, terms used in Article 9 of
the N.J. Uniform Commercial Code are used herein as therein defined.

                                       16
<PAGE>

            IN WITNESS WHEREOF, the Trustee and each Grantor have caused this
Agreement to be duly executed and delivered by its officer "hereunto duly
authorized as of the date first above written.

                                  GB PROPERTY FUNDING CORP.,
                                  a Delaware corporation

                                  By:_________________________________________
                                     Name: Timothy A. Ebling
                                     Title: Executive Vice-President

                                  GREATE BAY HOTEL AND CASINO, INC.,
                                  a New Jersey corporation

                                  By:_________________________________________
                                     Name: Timothy A. Ebling
                                     Title: Executive Vice-President

                                  GB HOLDINGS, INC., a Delaware corporation

                                  By:_________________________________________
                                     Name: Timothy A. Ebling
                                     Title: Executive Vice-President

                                  WELLS FARGO BANK MINNESOTA,
                                  NATIONAL ASSOCIATION, a national
                                  banking association, as Trustee

                                  By:_________________________________________
                                     Name:____________________________________
                                     Title:___________________________________

                                       17
<PAGE>

                                   SCHEDULE I

                         PLEDGED SHARES AND PLEDGED DEBT

<TABLE>
<CAPTION>
                                                                                      Percentage
                                                               Stock                      of
                                   Class of                 Certificate    Number     Outstanding
Owner            Stock Issuer       Stock      Par Value      No(s).      of Shares     Shares*
-----            ------------      -------     ----------   ----------   ---------    -----------
<S>              <C>                <C>        <C>               <C>         <C>         <C>
GB Holdings,     GB Property        Common     $1.00/share       2           100         100%
Inc.             Funding Corp.

GB Holdings,     Greate Bay         Common       no par          4           100         100%
Inc.             Hotel and                        value
                 Casino, Inc.
                 ("GBHC")
</TABLE>

*  As of September 29, 2000

<PAGE>

                                   SCHEDULE II

                               ASSIGNED AGREEMENTS

1. That certain Software License Agreement dated as of June 27, 1998 between,
among others, Greate Bay Hotel & Casino, Inc. and Advanced Casino Systems
Corporation.

<PAGE>

                                SCHEDULE III

                    LOCATIONS OF EQUIPMENT AND INVENTORY

             1.     Radio and Bay View Roads
                    Mistic Islands, Ocean County,
                    New Jersey 08087

             2.     Sands Hotel and Casino
                    Indiana Avenue and Brighton Park
                    Atlantic City, Atlantic County
                    New Jersey 08401

             (Note: includes the casino-hotel complex, and the parking garages)

             3.     136 South Kentucky Avenue
                    Atlantic City, Atlantic County
                    New Jersey 08401

             4.     30-42 North Texas Avenue
                    Atlantic City, Atlantic County
                    New Jersey 08401

<PAGE>

                                   SCHEDULE IV

                                   TRADE NAMES

The Sands Hotel and Casino

Sands Casino Hotel

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