EXHIBIT 10.14
================================================================================



                           LOAN AND SECURITY AGREEMENT



                                  by and among



                    THE OLD EVANGELINE DOWNS, L.L.C. ("OED")

                                       and

             THE OLD EVANGELINE DOWNS CAPITAL CORP. ("OED CAPITAL")

                                  as Borrowers,



                                       and

              EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO

                                  as Borrowers,


                     THE LENDERS THAT ARE SIGNATORIES HERETO

                                 as the Lenders,



                                       and

                           WELLS FARGO FOOTHILL, INC.

                    as the Arranger and Administrative Agent



                         Dated as of September 22, 2003



================================================================================



<PAGE>

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

                                                                            Page
                                                                            ----

1.    DEFINITIONS AND CONSTRUCTION...........................................1

      1.1   Definitions......................................................1

      1.2   Accounting Terms................................................17

      1.3   Code............................................................17

      1.4   Construction....................................................17

      1.5   Schedules and Exhibits..........................................18

2.    LOAN AND TERMS OF PAYMENT.............................................18

      2.1   Advances........................................................18

      2.2   Repayment of Advances...........................................19

      2.3   Borrowing Procedures and Settlements............................19

      2.4   Payments........................................................23

      2.5   [Intentionally Omitted].........................................25

      2.6   Interest:  Rates, Payments, and Calculations....................25

      2.7   [Intentionally Omitted].........................................26

      2.8   Crediting Payments..............................................26

      2.9   Designated Account..............................................26

      2.10  Maintenance of Loan Account; Statements of Obligations..........27

      2.11  Fees............................................................27

      2.12  [Intentionally Omitted].........................................28

      2.13  Registered Notes................................................28

      2.14  Capital Requirements............................................28

      2.15  Joint and Several Liability of Borrowers........................28

3.    CONDITIONS; TERM OF AGREEMENT.........................................31

      3.1   Conditions Precedent to Initial Extension of Credit.............31

      3.2   Conditions Subsequent to Initial Extension of Credit............33

      3.3   Conditions Precedent to all Extensions of Credit................33

      3.4   Term............................................................33

      3.5   Effect of Termination...........................................34

      3.6   Early Termination by Borrowers..................................34

4.    CREATION OF SECURITY INTEREST.........................................34

      4.1   Grant of Security Interest......................................34



                                      -i-
<PAGE>

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

                                                                            Page
                                                                            ----

      4.2   Negotiable Collateral...........................................34

      4.3   [Intentionally Omitted].........................................35

      4.4   Delivery of Additional Documentation Required...................35

      4.5   Power of Attorney...............................................35

      4.6   Right to Inspect................................................35

      4.7   [Intentionally Omitted].........................................35

      4.8   Letter of Credit................................................35

5.    REPRESENTATIONS AND WARRANTIES........................................36

      5.1   No Encumbrances.................................................36

      5.2   [Intentionally Omitted].........................................36

      5.3   [Intentionally Omitted].........................................36

      5.4   Equipment.......................................................36

      5.5   Location of Equipment...........................................36

      5.6   [Intentionally Omitted].........................................36

      5.7   Location of Chief Executive Office; FEIN........................36

      5.8   Due Organization and Qualification; Subsidiaries................36

      5.9   Due Authorization; No Conflict..................................37

      5.10  Litigation......................................................38

      5.11  No Material Adverse Change......................................38

      5.12  Fraudulent Transfer.............................................38

      5.13  Employee Benefits...............................................38

      5.14  Environmental Condition.........................................38

      5.15  Brokerage Fees..................................................39

      5.16  Intellectual Property...........................................39

      5.17  Leases..........................................................39

      5.18  DDAs............................................................39

      5.19  Complete Disclosure.............................................39

      5.20  Indebtedness....................................................39

      5.21  Licenses and Permits............................................39

                                      -ii-
<PAGE>

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

                                                                            Page
                                                                            ----
6.    AFFIRMATIVE COVENANTS.................................................40

      6.1   Accounting System...............................................40

      6.2   Reporting.......................................................40

      6.3   Financial Statements, Reports, Certificates.....................41

      6.4   [Intentionally Omitted].........................................43

      6.5   [Intentionally Omitted].........................................43

      6.6   Maintenance of Properties.......................................43

      6.7   Taxes...........................................................43

      6.8   Insurance.......................................................44

      6.9   Location of Equipment...........................................45

      6.10  Compliance with Laws............................................45

      6.11  Leases..........................................................45

      6.12  Brokerage Commissions...........................................45

      6.13  Existence.......................................................45

      6.14  Environmental...................................................46

      6.15  Disclosure Updates..............................................46

      6.16  Government Authorization........................................46

      6.17  License Renewals................................................46

      6.18  Licenses and Permits............................................46

7.    NEGATIVE COVENANTS....................................................47

      7.1   Indebtedness....................................................47

      7.2   Liens...........................................................48

      7.3   Restrictions on Fundamental Changes.............................48

      7.4   Disposal of Assets..............................................48

      7.5   Change Name.....................................................48

      7.6   Guarantee.......................................................48

      7.7   Nature of Business..............................................48

      7.8   Prepayments and Amendments......................................48

      7.9   Change of Control...............................................49

      7.10  [Intentionally Omitted].........................................49

                                      -iii-
<PAGE>

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

                                                                            Page
                                                                            ----

      7.11  Distributions; Management Fees..................................49

      7.12  Accounting Methods..............................................49

      7.13  Investments.....................................................49

      7.14  Transactions with Affiliates....................................49

      7.15  Suspension......................................................50

      7.16  Compensation....................................................50

      7.17  Use of Proceeds.................................................50

      7.18  Change in Location of Chief Executive Office;
            Equipment with Bailees..........................................50

      7.19  Securities Accounts.............................................50

      7.20  Financial Covenants.............................................50

8.    EVENTS OF DEFAULT.....................................................51

9.    THE LENDER'S RIGHTS AND REMEDIES......................................54

      9.1   Rights and Remedies.............................................54

      9.2   Remedies Cumulative.............................................56

10.   TAXES AND EXPENSES....................................................56

11.   WAIVERS; INDEMNIFICATION..............................................56

      11.1  Demand; Protest.................................................56

      11.2  The Lender Group's Liability for Collateral.....................57

      11.3  Indemnification.................................................57

12.   NOTICES...............................................................57

13.   CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER............................59

14.   ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS............................60

      14.1  Assignments and Participations..................................60

15.   AMENDMENTS; WAIVERS...................................................63

      15.1  Amendments and Waivers..........................................63

      15.2  Replacement of Holdout Lender...................................64

      15.3  No Waivers; Cumulative Remedies.................................64

16.   AGENT; THE LENDER GROUP...............................................65

      16.1  Appointment and Authorization of Agent..........................65

      16.2  Delegation of Duties............................................66

                                      -iv-

<PAGE>

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

                                                                            Page
                                                                            ----

      16.3  Liability of Agent..............................................66

      16.4  Reliance by Agent...............................................66

      16.5  Notice of Default or Event of Default...........................66

      16.6  Credit Decision.................................................67

      16.7  Costs and Expenses; Indemnification.............................67

      16.8  Agent in Individual Capacity....................................68

      16.9  Successor Agent.................................................68

      16.10 Lender in Individual Capacity...................................68

      16.11 Withholding Taxes...............................................69

      16.12 Collateral Matters..............................................71

      16.13 Restrictions on Actions by Lenders; Sharing of Payments.........71

      16.14 Agency for Perfection...........................................72

      16.15 Payments by Agent to the Lenders................................72

      16.16 Concerning the Collateral and Related Loan Documents............72

      16.17 Field Audits and Examination Reports; Confidentiality;
            Disclaimers by Lenders; Other Reports and Information...........73

      16.18 Several Obligations; No Liability...............................74

17.   GENERAL PROVISIONS....................................................74

      17.1  Effectiveness...................................................74

      17.2  Section Headings................................................74

      17.3  Interpretation..................................................74

      17.4  Severability of Provisions......................................75

      17.5  Amendments in Writing...........................................75

      17.6  Counterparts; Telefacsimile Execution...........................75

      17.7  Revival and Reinstatement of Obligations........................75

      17.8  Integration.....................................................75

      17.9  Parent as Agent for Borrowers...................................75

      17.10 Non-Recourse Liability..........................................76


                                       -v-

<PAGE>


                             EXHIBITS AND SCHEDULES

Exhibit A-1        Form of Assignment and Acceptance
Exhibit C-1        Form of Compliance Certificate

Schedule A-1       Agent's Account
Schedule C-1       Commitments
Schedule D-1       Designated Account
Schedule P-1       Permitted Liens
Schedule 5.5       Locations of Equipment
Schedule 5.7       Chief Executive Office; FEIN
Schedule 5.8(b)    Capitalization of Borrowers
Schedule 5.8(c)    Capitalization of Borrowers' Subsidiaries
Schedule 5.10      Litigation
Schedule 5.14      Environmental Matters
Schedule 5.16      Intellectual Property
Schedule 5.18      Demand Deposit Accounts
Schedule 5.20      Permitted Indebtedness
Schedule 5.21      Licenses and Permits
Schedule 7.17      Equipment to be Purchased




                                     -vi-

<PAGE>


                                                                  Execution Copy


                           LOAN AND SECURITY AGREEMENT
                           ---------------------------

      THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into as of
September 22, 2003 by and among, on the one hand, the lenders  identified on the
signature pages hereof (such lenders,  together with their respective successors
and assigns,  are referred to hereinafter  each  individually  as a "Lender" and
collectively   as  "Lenders"),   WELLS  FARGO   FOOTHILL,   INC.,  a  California
corporation, as the arranger and administrative agent for the Lenders ("Agent"),
and, on the other hand, THE OLD EVANGELINE  DOWNS,  L.L.C., a Louisiana  limited
liability company ("Parent"), THE OLD EVANGELINE DOWNS CAPITAL CORP., a Delaware
corporation   ("OED   Capital"),   and  each  of  Parent's  other   wholly-owned
Subsidiaries  identified  on the  signature  pages  hereof  (such  Subsidiaries,
together  with  Parent  and  OED  Capital,  are  referred  to  hereinafter  each
individually as a "Borrower," and  individually  and  collectively,  jointly and
severally, as "Borrowers").

      The parties agree as follows:

1.    DEFINITIONS AND CONSTRUCTION.

1.1 Definitions.  As used in this Agreement,  the following terms shall have the
following definitions:

      "Accounts" means all of Borrowers' now owned or hereafter  acquired right,
title,  and interest with respect to "accounts"  (as that term is defined in the
Code), and any and all supporting obligations in respect thereof.

      "Additional Documents" has the meaning set forth in Section 4.4.

      "Administrative Borrower" has the meaning set forth in Section 16.10.

      "Advance"  means any  Tranche  A Advance  or any  Tranche B  Advance,  and
"Advances" means all Tranche A Advances and all Tranche B Advances.

      "Affiliate"  means,  as  applied  to any  Person,  any other  Person  who,
directly or indirectly,  controls,  is controlled by, or is under common control
with,  such  Person.  For  purposes  of this  definition,  "control"  means  the
possession,  directly or  indirectly,  of the power to direct the management and
policies of a Person,  whether through the ownership of Stock,  by contract,  or
otherwise.

      "Agent"  means Wells Fargo  Foothill,  solely in its capacity as agent for
the Lenders hereunder, and any successor thereto.

      "Agent's Account" means the account identified on Schedule A-1.

      "Agent Advances" has the meaning set forth in Section 2.3(e)(i).



<PAGE>

      "Agent's  Liens"  means the Liens  granted by  Borrowers  to Agent for the
benefit of the Lender Group under this Agreement or the other Loan Documents.

      "Agent-Related   Persons"  means  Agent,  together  with  its  Affiliates,
officers, directors, employees and agents.

      "Agreement" has the meaning set forth in the preamble hereto.

      "Assignee" has the meaning set forth in Section 14.1(a).

      "Assignment and Acceptance" means an Assignment and Acceptance in the form
of Exhibit A-1.

      "Authorized  Person" means any officer or other employee of Administrative
Borrower.

      "Availability Termination Date" means March 1, 2004.
       -----------------------------

      "Bankruptcy  Code" means the United States  Bankruptcy  Code, as in effect
from time to time.

      "Base Rate" means,  the rate of interest  announced  within Wells Fargo at
its  principal   office  in  San  Francisco  as  its  "prime  rate",   with  the
understanding  that the  "prime  rate" is one of Wells  Fargo's  base rates (not
necessarily  the  lowest of such  rates)  and  serves as the  basis  upon  which
effective  rates of interest are  calculated  for those loans  making  reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as Wells Fargo may designate.

      "Base Rate Margin" means two and one-half percentage points (2.50%).

      "Beneficial  Owner" or "beneficial owner" has the meaning attributed to it
in Rules  13d-3 and 13d-5  under the  Exchange  Act (as in effect on the Closing
Date) whether or not otherwise applicable.

      "Benefit Plan" means a "defined benefit plan" (as defined in Section 3(35)
of ERISA) for which any  Borrower or any  Subsidiary  or ERISA  Affiliate of any
Borrower has been an "employer" (as defined in Section 3(5) of ERISA) within the
past six years.

      "Board of Directors" means the board of directors (or comparable managers)
of Parent or any committee thereof duly authorized to act on behalf thereof.

      "Books" means all of each Borrower's now owned or hereafter acquired books
and records (including all of its Records indicating, summarizing, or evidencing
its assets  (including the  Collateral) or  liabilities,  all of each Borrower's
Records relating to its or their business operations or financial condition, and
all of its or their goods or general intangibles related to such information).

      "Borrower" and "Borrowers"  have the respective  meanings set forth in the
preamble to this Agreement.



                                      -2-
<PAGE>

      "Borrowing" means a borrowing hereunder of an Advance.

      "Business Day" means any day that is not a Saturday,  Sunday, or other day
on which  national  banks are  authorized or required to close in New York,  New
York.

      "Capital  Lease"  means a lease that is  required  to be  capitalized  for
financial reporting purposes in accordance with GAAP.

      "Capitalized  Lease  Obligation"  means any  Indebtedness  represented  by
obligations under a Capital Lease.

      "Cash  Collateral  and  Disbursement  Agreement"  means that  certain Cash
Collateral and Disbursement Agreement,  dated as of February 25, 2003, among the
Indenture Trustee,  U.S. Bank National  Association,  as Disbursement Agent, the
Construction Consultant and Borrowers.

      "Cash  Equivalents"  means (a)  marketable  direct  obligations  issued or
unconditionally  guaranteed by the United States or issued by any agency thereof
and  backed by the full  faith and  credit of the  United  States,  in each case
maturing  within 1 year from the date of  acquisition  thereof,  (b)  marketable
direct  obligations  issued by any state of the United  States or any  political
subdivision  of any such state or any public  instrumentality  thereof  maturing
within  1 year  from  the  date  of  acquisition  thereof  and,  at the  time of
acquisition,  having the highest rating  obtainable  from either S&P or Moody's,
(c) commercial paper maturing no more than 270 days from the date of acquisition
thereof  and,  at the time of  acquisition,  having a rating  of A-1 or P-1,  or
better,  from S&P or  Moody's,  and (d)  certificates  of  deposit  or  bankers'
acceptances  maturing within 1 year from the date of acquisition  thereof either
(i)  issued by any bank  organized  under the laws of the  United  States or any
state  thereof  which  bank  has a rating  of A or A2,  or  better,  from S&P or
Moody's,  or (ii)  certificates of deposit less than or equal to $100,000 in the
aggregate  issued by any other bank  insured by the  Federal  Deposit  Insurance
Corporation.

      "Change of Control"  means the  occurrence  of any of the  following:  (1)
during any period of two  consecutive  calendar  years,  individuals  who at the
beginning of such period  constituted the Managers of Parent  (together with any
new Managers  whose election as a Manager or whose  nominations  for election by
Parent's  members or  stockholders,  was approved by a majority of Managers then
still in office who were  either  Managers  at the  beginning  of such period or
whose election or nomination for election was previously so approved)  cease for
any reason to constitute a majority of such  Managers then in office;  provided,
however, that there shall be no Change of Control pursuant to this clause (1) if
during such  two-year  period any of the Excluded  Persons  continue to (i) own,
directly or indirectly, a majority of the Voting Stock of Parent or (ii) control
or manage, directly or indirectly,  the day-to-day operations of Parent; (2) any
Person  (other than an  Excluded  Person) is or becomes  the  Beneficial  Owner,
directly or  indirectly,  of more than 50% of the aggregate  voting power of the
Voting  Stock of Parent,  or  conversely,  any Person  that  beneficially  owns,
directly or indirectly,  a majority of the aggregate  voting power of the Voting
Stock of Parent on the Closing Date becomes the  Beneficial  Owner,  directly or
indirectly,  of less than a majority of the voting  power of the Voting Stock of
Parent;  (3) Borrowers adopt a plan of  liquidation;  (4) the direct or indirect
sale, transfer,  conveyance or other disposition (other than by way of merger or
consolidation),  in  one  or  a  series  of  related  transactions,  of  all  or
substantially all of the properties or assets of Parent and the Subsidiaries, in




                                      -3-
<PAGE>

each case,  taken as a whole,  to any Person other than Parent,  a Subsidiary or
the Excluded Persons,  or (5) the first day on which Parent fails to own 100% of
the issued and  outstanding  Stock of OED Capital.  As used in this  definition,
"Person"  (including  any group that is deemed to be a "Person") has the meaning
given by Section 13(d) of the Exchange Act, whether or not applicable.

      "Closing Date" means September 22, 2003.

      "Closing Date Business Plan" means the set of Projections of Borrowers for
the 3 year period  following the Closing Date (on a year by year basis,  and for
the 1 year period  following the Closing  Date,  on a month by month basis),  in
form  and  substance   (including  as  to  scope  and  underlying   assumptions)
satisfactory to Agent.

      "Code" means the New York Uniform  Commercial Code, as in effect from time
to time.

      "Collateral" means the Tranche A Collateral and the Tranche B Collateral.

      "Collateral  Access Agreement" means a landlord waiver,  bailee letter, or
acknowledgement agreement of any lessor, warehouseman,  processor, consignee, or
other Person in possession of, having a Lien upon, or having rights or interests
in the Equipment, in each case, in form and substance satisfactory to Agent.

      "Collections" means all cash, checks, notes, instruments,  and other items
of  payment  (including  insurance  proceeds  and  proceeds  of cash  sales)  of
Borrowers.

      "Commitment" means, with respect to each Lender, its Tranche A Commitment,
its Tranche B Commitment, or its Total Commitment, as the context requires, and,
with  respect to all  Lenders,  their  Tranche A  Commitments,  their  Tranche B
Commitments,  or their Total Commitments,  as the context requires, in each case
as such  Dollar  amounts  are set forth  beside  such  Lender's  name  under the
applicable  heading on Schedule C-1 or on the signature  page of the  Assignment
and  Acceptance  pursuant  to which such  Lender  became a Lender  hereunder  in
accordance with the provisions of Section 14.1.

      "Compliance Certificate" means a certificate  substantially in the form of
Exhibit C-1 delivered by the chief financial officer of Parent to Agent.

      "Construction  Consultant"  means  ABACUS  Project  Management,  Inc.,  an
Arizona corporation.

      "Contractor" means W.G. Yates & Sons Construction Company.

      "Control  Agreement"  means a  control  agreement,  in form and  substance
satisfactory to Agent, executed and delivered by the applicable Borrower, Agent,
and the applicable securities  intermediary with respect to a Securities Account
or a bank with respect to a DDA.

      "Daily  Balance"  means,  with respect to each day during the term of this
Agreement, the amount of an Obligation owed at the end of such day.



                                      -4-
<PAGE>

      "DDA" means any checking or other demand deposit account maintained by any
Borrower.

      "Default" means an event,  condition,  or default that, with the giving of
notice, the passage of time, or both, would be an Event of Default.

      "Defaulting  Lender"  means any Lender  that fails to make any Advance (or
other  extension  of credit)  that it is required to make  hereunder on the date
that it is required to do so hereunder.

      "Defaulting Lender Rate" means (a) the Base Rate for the first 3 days from
and after the date the  relevant  payment  is due,  and (b)  thereafter,  at the
interest  rate then  applicable  to Advances  (inclusive of the Base Rate Margin
applicable thereto).

      "Designated  Account"  means that certain DDA of  Administrative  Borrower
identified on Schedule D-1.

      "Designated  Account Bank" means Bank One, N.A., whose address is P.O. Box
3248, Lafayette, LA 70502 and whose ABA number is 065400137.

      "Disbursement Letter" means an instructional letter executed and delivered
by  Administrative  Borrower to Agent  regarding the  extensions of credit to be
made on the Closing  Date,  the form and substance of which is  satisfactory  to
Agent.

      "Dollars" or "$" means United States dollars.

      "EBITDA"  means,  with  respect to any  fiscal  period,  Parent's  and its
Subsidiaries  consolidated net earnings (or loss), minus extraordinary gains and
interest  income,  plus interest  expense,  income taxes,  and  depreciation and
amortization for such period, as determined in accordance with GAAP.

      "Eligible Transferee" means (a) a commercial bank organized under the laws
of the United States, or any state thereof, and having total assets in excess of
$250,000,000,  (b) a  commercial  bank  organized  under  the laws of any  other
country  which is a member of the  Organization  for  Economic  Cooperation  and
Development  or a political  subdivision of any such country and which has total
assets in excess of  $250,000,000,  provided that such bank is acting  through a
branch or agency located in the United States, (c) a finance company,  insurance
company,  or other  financial  institution  or fund that is  engaged  in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in excess of
$250,000,000,  (d) any Affiliate  (other than  individuals) of a Lender that was
party  hereto as of the  Closing  Date,  (e) so long as no Event of Default  has
occurred  and  is   continuing,   any  other   Person   approved  by  Agent  and
Administrative Borrower, and (f) during the continuation of an Event of Default,
any other Person approved by Agent.

      "Environmental Actions" means any complaint,  summons,  citation,  notice,
directive, order, claim, litigation,  investigation,  judicial or administrative
proceeding,  judgment,  letter,  or other  communication  from any  Governmental
Authority,  or any third party  involving  violations



                                      -5-
<PAGE>

of  Environmental  Laws or releases of Hazardous  Materials from (a) any assets,
properties,  or businesses of any Borrower or any  predecessor in interest,  (b)
from  adjoining  properties or  businesses,  or (c) from or onto any  facilities
which received Hazardous  Materials generated by any Borrower or any predecessor
in interest.

      "Environmental  Law"  means any  applicable  federal,  state,  provincial,
foreign or local statute, law, rule,  regulation,  ordinance,  code, binding and
enforceable guideline, binding and enforceable written policy, or rule of common
law now or hereafter  in effect and in each case as amended,  or any judicial or
administrative  interpretation thereof, including any judicial or administrative
order, consent decree or judgment, to the extent binding on Borrowers,  relating
to  the  environment,  employee  health  and  safety,  or  Hazardous  Materials,
including CERCLA; RCRA; the Federal Water Pollution Control Act, 33 USC ss. 1251
et seq.; the Toxic  Substances  Control Act, 15 USC, ss. 2601 et seq.; the Clean
Air Act, 42 USC ss. 7401 et seq.;  the Safe Drinking Water Act, 42 USC. ss. 3803
et seq.;  the Oil Pollution Act of 1990, 33 USC. ss. 2701 et seq.; the Emergency
Planning and the Community Right-to-Know Act of 1986, 42 USC. ss. 11001 et seq.;
the  Hazardous  Material  Transportation  Act, 49 USC ss. 1801 et seq.;  and the
Occupational  Safety and Health  Act, 29 USC.  ss.651 et seq.  (to the extent it
regulates occupational exposure to Hazardous Materials);  any state and local or
foreign counterparts or equivalents, in each case as amended from time to time.

      "Environmental  Liabilities  and Costs"  means all  liabilities,  monetary
obligations,  Remedial Actions, losses, damages, punitive damages, consequential
damages,  treble  damages,  costs and expenses  (including all reasonable  fees,
disbursements  and expenses of counsel,  experts,  or consultants,  and costs of
investigation  and  feasibility  studies),  fines,  penalties,   sanctions,  and
interest  incurred  as a result  of any  claim  or  demand  by any  Governmental
Authority or any third party, and which relate to any Environmental Action.

      "Environmental Lien" means any Lien in favor of any Governmental Authority
for Environmental Liabilities and Costs.

      "Equipment" means all of Borrowers' now owned or hereafter acquired right,
title, and interest with respect to equipment, machinery, machine tools, motors,
furniture,  furnishings,  fixtures,  vehicles (including motor vehicles), tools,
parts, goods (other than consumer goods, farm products, or Inventory),  wherever
located,  including  all  attachments,  accessories,  accessions,  replacements,
substitutions, additions, and improvements to any of the foregoing.

      "ERISA"  means the Employee  Retirement  Income  Security Act of 1974,  as
amended, and any successor statute thereto.

      "ERISA  Affiliate"  means (a) any Person subject to ERISA whose  employees
are  treated as employed by the same  employer  as the  employees  of a Borrower
under IRC  Section  414(b),  (b) any trade or  business  subject to ERISA  whose
employees  are treated as employed by the same  employer as the  employees  of a
Borrower  under IRC Section  414(c),  (c) solely for  purposes of Section 302 of
ERISA and Section 412 of the IRC,  any  organization  subject to ERISA that is a
member of an affiliated  service group of which a Borrower is a member under IRC
Section  414(m),  or (d) solely for purposes of Section 302 of ERISA and Section
412 of the



                                      -6-
<PAGE>

IRC,  any  Person  subject  to ERISA  that is a party to an  arrangement  with a
Borrower and whose  employees  are  aggregated  with the employees of a Borrower
under IRC Section 414(o).

      "Event of Default" has the meaning set forth in Section 8.

      "Exchange  Act" means the  Securities  Exchange Act of 1934,  as in effect
from time to time.

      "Excluded  Person"  means (a) PGC;  (b) PGP;  (c) PGP  Investors;  (d) OED
Acquisition,  (e) M. Brent  Stevens,  Michael S.  Luzich  and any  Affiliate  or
Manager  of PGP,  PGC,  PGP  Investors,  M. Brent  Stevens or Michael S.  Luzich
(collectively, the "Existing Holders"), (f) any trust, corporation,  partnership
or other  entity (i)  controlled  by the  Existing  Holders  and  members of the
immediate  family  of the  Existing  Holders  or (ii) 80% of the  beneficiaries,
stockholders, partners or owners of which consist solely of the Existing Holders
and  members  of  the  immediate  family  of the  Existing  Holders  or (g)  any
partnership,  the sole general  partners of which consist solely of the Existing
Holders and members of the immediate facility of the Existing Holders.

      "Fee  Letter"  means  that  certain  fee  letter,  dated  as of even  date
herewith,  between  Borrowers and Agent,  in form and substance  satisfactory to
Agent.

      "FEIN" means Federal Employer Identification Number.

      "Fixed Price Contract" means that certain Agreement,  dated as of February
25, 2003, between Parent and Contractor, as amended,  restated,  supplemented or
otherwise modified from time to time.

      "Funding Date" means the date on which a Borrowing occurs.

      "GAAP" means generally  accepted  accounting  principles as in effect from
time to time in the United States, consistently applied.

      "Gaming Authority" means any agency, authority, board, bureau, commission,
department,  office or  instrumentality  of any nature  whatsoever of the United
States of America or foreign government (including Native American governments),
any state, province or city or other political subdivision thereof,  whether now
or  hereafter  existing,  or any  officer or  official  thereof,  including  the
Louisiana  Regulatory  Authorities,  and any  other  agency  with  authority  to
regulate any gaming or racing operation (or proposed gaming or racing operation)
owned, managed or operated by Parent or any of its Subsidiaries.

      "Gaming  Equipment" means all Equipment  composed of slot machines,  video
poker machines, and all other gaming equipment and related signage,  accessories
and peripheral equipment.

      "Gaming  License"  means any material  license,  franchise,  registration,
qualification,  findings  of  suitability  or other  approval  or  authorization
required  to own,  lease,  operate or  otherwise  conduct  or manage  riverboat,
dockside or  land-based  gaming  activities,  including  racing  facilities  and
activities,  in  any  state  or  jurisdiction  in  which  Parent  or  any of its
Subsidiaries conduct business or propose to conduct business (including, without
limitation, all



                                      -7-
<PAGE>

such  licenses  granted  by  the  Louisiana  Regulatory  Authorities),  and  all
applicable liquor licenses.

      "Governing  Documents" means, with respect to any Person,  the certificate
or articles of incorporation, by-laws, or other organizational documents of such
Person.

      "Governmental  Authority"  means  any  federal,  state,  local,  or  other
governmental or administrative body,  instrumentality,  department, or agency or
any court, tribunal, administrative hearing body, arbitration panel, commission,
or other similar dispute-resolving panel or body.

      "Hazardous  Materials" means (a) substances that are defined or listed in,
or otherwise  classified  pursuant to, any  applicable  laws or  regulations  as
"hazardous   substances,"  "hazardous  materials,"  "hazardous  wastes,"  "toxic
substances,"  or any other  formulation  intended to define,  list,  or classify
substances  by  reason  of   deleterious   properties   such  as   ignitability,
corrosivity,   reactivity,   carcinogenicity,   reproductive  toxicity,  or  "EP
toxicity",  (b) oil, petroleum,  or petroleum derived  substances,  natural gas,
natural gas liquids,  synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any  radioactive  materials,  and (d)  asbestos  in any  form  or  electrical
equipment  that  contains  any oil or  dielectric  fluid  containing  levels  of
polychlorinated biphenyls in excess of 50 parts per million.

      "Indebtedness"  means (a) all  obligations  for  borrowed  money,  (b) all
obligations evidenced by bonds, debentures,  notes, or other similar instruments
and all  reimbursement  or other  obligations  in  respect of letters of credit,
bankers acceptances,  interest rate swaps, or other financial products,  (c) all
obligations  under Capital Leases,  (d) all obligations or liabilities of others
secured by a Lien on any asset of a Borrower or its  Subsidiaries,  irrespective
of whether such obligation or liability is assumed,  (e) all obligations for the
deferred  purchase  price of assets  (other  than  trade  debt  incurred  in the
ordinary  course of business and repayable in accordance  with  customary  trade
practices),  and  (f) any  obligation  guaranteeing  or  intended  to  guarantee
(whether directly or indirectly guaranteed,  endorsed,  co-made,  discounted, or
sold with recourse) any obligation of any other Person.

      "Indemnified Liabilities" has the meaning set forth in Section 11.3.

      "Indemnified Person" has the meaning set forth in Section 11.3.

      "Indenture"  means that certain  Indenture  dated as of February 25, 2003,
among the Borrowers and the Indenture Trustee as in effect on such date.

      "Indenture  Accounts"  means (a)  Collateral  Accounts  (as defined in the
Indenture) and (b) the Excess Cash Flow Account (as defined in the Indenture).

      "Indenture Trustee" means (a) U.S. Bank National  Association,  a National
Association,  in its  capacity  as  trustee  under  the  Indenture,  or (b)  any
successor trustee under the Indenture from time to time.



                                      -8-
<PAGE>

      "Insolvency  Proceeding" means any proceeding  commenced by or against any
Person under any  provision of the  Bankruptcy  Code or under any other state or
federal bankruptcy or insolvency law,  assignments for the benefit of creditors,
formal or informal moratoria, compositions, extensions generally with creditors,
or proceedings seeking reorganization, arrangement, or other similar relief.

      "Intercompany  Subordination  Agreement"  means a subordination  agreement
executed and delivered by Borrowers  and Agent,  the form and substance of which
is satisfactory to Agent.

      "Inventory"  means all Borrowers' now owned or hereafter  acquired  right,
title, and interest with respect to inventory,  including goods held for sale or
lease or to be furnished under a contract of service, goods that are leased by a
Borrower as lessor,  goods that are furnished by a Borrower  under a contract of
service, and raw materials,  work in process, or materials used or consumed in a
Borrower's business.

      "Investment"  means,  with respect to any Person,  any  investment by such
Person  in any  other  Person  (including  Affiliates)  in the  form  of  loans,
guarantees,  advances,  or  capital  contributions  (excluding  (a)  commission,
travel,  and similar  advances to officers and  employees of such Person made in
the  ordinary  course of  business,  and (b) bona fide  Accounts  arising in the
ordinary course of business consistent with past practices),  purchases or other
acquisitions  for  consideration  of Indebtedness or Stock,  and any other items
that are or would be classified as  investments  on a balance sheet  prepared in
accordance with GAAP.

      "IRC" means the Internal  Revenue Code of 1986,  as in effect from time to
time.

      "Lender" has the meaning set forth in the preamble to this Agreement.

      "Lender Group" means,  individually and collectively,  each of the Lenders
and Agent.

      "Lender Group Expenses" means all (a) costs or expenses  (including taxes,
and insurance  premiums) required to be paid by a Borrower under any of the Loan
Documents that are paid or incurred by the Lender Group,  (b) the actual fees or
charges  paid or  incurred  by  Agent in  connection  with  the  Lender  Group's
transactions  with  Borrowers,  including,  fees or  charges  for  photocopying,
notarization, couriers and messengers, telecommunication, public record searches
(including tax lien,  litigation,  and UCC searches and including  searches with
the patent and trademark  office,  the copyright  office,  or the  department of
motor vehicles), filing, recording,  publication,  appraisal (including periodic
Collateral  appraisals  or  business  valuations  to the  extent of the fees and
charges (and up to the amount of any limitation)  contained in this  Agreement),
real  estate  surveys,   real  estate  title  policies  and  endorsements,   and
environmental   audits,  (c)  costs  and  expenses  incurred  by  Agent  in  the
disbursement  of funds to or for the account of Borrowers  (by wire  transfer or
otherwise), (d) charges paid or incurred by Agent resulting from the dishonor of
checks,  (e) reasonable  costs and expenses paid or incurred by the Lender Group
to correct any default or enforce any  provision  of the Loan  Documents,  or in
gaining possession of, maintaining,  handling,  preserving,  storing,  shipping,
selling,  preparing  for sale, or  advertising  to sell the  Collateral,  or any
portion thereof,  irrespective of whether a sale is consummated,  (f) audit fees
and expenses of Agent related to audit  examinations  of the Books to the extent
of the fees and charges  (and up to the amount of any  limitation)  contained in
this



                                      -9-
<PAGE>

Agreement,  (g) reasonable costs and expenses of third party claims or any other
suit paid or incurred by the Lender Group in  enforcing  or  defending  the Loan
Documents  or in  connection  with  the  transactions  contemplated  by the Loan
Documents or the Lender Group's  relationship with any Borrower or any guarantor
of  the  Obligations,  (h)  Agent's  reasonable  fees  and  expenses  (including
attorneys  fees)  incurred  in  advising,   structuring,   drafting,  reviewing,
administering,  or amending the Loan Documents,  and (i) Agent and each Lender's
reasonable fees and expenses (including attorneys fees) incurred in terminating,
enforcing  (including  attorneys fees and expenses incurred in connection with a
"workout,"  a  "restructuring,"  or  an  Insolvency  Proceeding  concerning  any
Borrower or in  exercising  rights or  remedies  under the Loan  Documents),  or
defending the Loan  Documents,  irrespective  of whether suit is brought,  or in
taking any Remedial Action concerning the Collateral.

      "Lender-Related  Person" means,  with respect to any Lender,  such Lender,
together with such Lender's Affiliates, and the officers, directors,  employees,
and agents of such Lender or any of such Lender's Affiliates.

      "Letter of Credit" means that certain  Letter of Credit issued in favor of
Agent  by  Wells  Fargo  in a face  amount  of  $3,200,000.00,  and in form  and
substance acceptable to the Lender Group.

      "Lien" means any interest in an asset securing an obligation owed to, or a
claim by, any Person other than the owner of the asset,  whether  such  interest
shall be based on the common law,  statute,  or contract,  whether such interest
shall be recorded or perfected,  and whether such  interest  shall be contingent
upon the  occurrence  of some future  event or events or the  existence  of some
future  circumstance or  circumstances,  including the lien or security interest
arising  from a mortgage,  deed of trust,  encumbrance,  pledge,  hypothecation,
assignment, deposit arrangement,  security agreement,  conditional sale or trust
receipt,  or from a lease,  consignment,  or bailment for security  purposes and
also   including    reservations,    exceptions,    encroachments,    easements,
rights-of-way,  covenants,  conditions,  restrictions,  leases,  and other title
exceptions and encumbrances affecting Real Property.

      "Loan Account" has the meaning set forth in Section 2.10.

      "Loan Documents" means this Agreement, the Disbursement Letter, the Letter
of Credit,  the Fee Letter,  the  Officers'  Certificate,  the  Management  Fees
Subordination Agreement,  the Intercompany  Subordination Agreement, any note or
notes executed by a Borrower in connection  with this Agreement and payable to a
member of the Lender Group, and any other agreement  entered into, now or in the
future, by any Borrower and the Lender Group in connection with this Agreement.

      "Louisiana  Regulatory  Authorities"  means,  collectively,  the Louisiana
Gaming Control Board and the Louisiana State Racing Commission, or any successor
Gaming Authority.

      "Management  Agreement" means that certain Amended and Restated Management
Services  Agreement dated as of February 25, 2003 among PGC, OED Acquisition and
Parent as in effect as of such date.



                                      -10-
<PAGE>

      "Management Fees  Subordination  Agreement" means that certain  Management
Fees  Subordination  Agreement,  dated as of the Closing Date,  among Borrowers,
Agent,  OED Acquisition and PGC, the form and substance of which is satisfactory
to Agent.

      "Manager"  means,  with  respect  to any  Person  (a) if such  Person is a
limited liability company,  the members of the board of managers,  or members of
such  other  body  performing  similar  functions  for such  Person,  manager or
managers,  as appointed  pursuant to the  operating  agreement of such Person as
then in effect,  or in the event that there are no managers or board of managers
or similar governing body, the sole member or (b) otherwise,  the members of the
board of directors (if such Person is a corporation)  or other governing body of
such Person.

      "Material  Adverse  Change"  means (a) a  material  adverse  change in the
business, prospects,  operations,  results of operations, assets, liabilities or
condition (financial or otherwise) of Borrowers taken as a whole, (b) a material
impairment  of a Borrower's  ability to perform its  obligations  under the Loan
Documents to which it is a party or of the Lender Group's ability to enforce the
Obligations  or realize upon the  Collateral  or the Letter of Credit,  or (c) a
material  impairment of the enforceability or priority of the Agent's Liens with
respect to the Collateral as a result of an action or failure to act on the part
of a Borrower.

      "Maturity Date" has the meaning set forth in Section 3.4.

      "Miscellaneous   Indebtedness"   means   Indebtedness   (other   than  the
Obligations,  the Obligations (as defined in the Revolving Loan Agreement) under
the Revolving  Loan  Agreement and Permitted  Gaming  Equipment  Purchase  Money
Indebtedness,  but including  Capitalized  Lease  Obligations),  in an aggregate
amount outstanding at any one time not in excess of $7,500,000.

      "Moody's" means Moody's Investors Service,  Inc., a Delaware  corporation,
and its successors.

      "Negotiable  Collateral"  means all of Borrowers'  now owned and hereafter
acquired right, title, and interest with respect to letters of credit, letter of
credit rights,  instruments,  promissory notes, drafts,  documents,  and chattel
paper (including  electronic  chattel paper and tangible chattel paper), and any
and all supporting obligations in respect thereof.

      "Net Proceeds" means all proceeds of any sale or disposition of assets net
of commissions and other reasonable and customary  transaction  costs,  fees and
expenses properly  attributable to such transaction and payable by a Borrower in
connection therewith (in each case, paid to non-Affiliates).

      "Note"  and  "Notes"  shall  have the  meanings  ascribed  thereto  in the
Indenture.

      "Obligations"  means  all  loans,  Advances,  debts,  principal,  interest
(including any interest  that,  but for the  provisions of the Bankruptcy  Code,
would have accrued),  liabilities  (including all amounts  charged to Borrowers'
Loan Account pursuant hereto),  obligations,  fees, charges, costs, Lender Group
Expenses  (including  any fees or expenses  that,  but for the provisions of the
Bankruptcy Code, would have accrued), lease payments, guaranties, covenants, and
duties  of any kind and  description  owing by  Borrowers  to the  Lender  Group
pursuant to or evidenced by the



                                      -11-
<PAGE>

Loan  Documents and  irrespective  of whether for the payment of money,  whether
direct or indirect,  absolute or contingent,  due or to become due, now existing
or  hereafter  arising,  and  including  all  interest not paid when due and all
Lender Group  Expenses  that  Borrowers  are required to pay or reimburse by the
Loan  Documents  or by law.  Any  reference  in this  Agreement  or in the  Loan
Documents to the Obligations shall include all amendments,  changes, extensions,
modifications,  renewals replacements,  substitutions,  and supplements, thereto
and  thereof,  as  applicable,  both  prior  and  subsequent  to any  Insolvency
Proceeding.

      "OED Acquisition" means OED Acquisition, LLC, a Delaware limited liability
company.

      "OED Capital" has the meaning set forth in the preamble to this Agreement.

      "Officers'  Certificate"  means  the  representations  and  warranties  of
officers  form  submitted by Agent to  Administrative  Borrower,  together  with
Borrowers'  completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Agent.

      "Originating Lender" has the meaning set forth in Section 14.1(e).

      "Parent" has the meaning set forth in the preamble to this Agreement.

      "Participant" has the meaning set forth in Section 14.1(e).

      "Participant Register" has the meaning set forth in Section 14.1(i).

      "Permitted Discretion" means a determination made in good faith and in the
exercise of reasonable  (from the perspective of a secured  asset-based  lender)
business judgment.

      "Permitted  Dispositions"  means  (a) sales or other  dispositions  by any
Borrower of Collateral that is substantially  worn,  damaged, or obsolete in the
ordinary  course of business;  provided,  however,  Agent shall have received 10
days prior written notice of such sale or disposition, and upon the consummation
of such sale of  disposition,  such  Borrower  shall  repay  Advances  under the
Tranche A Commitment or Tranche B Commitment,  as applicable, in an amount equal
to the Net Proceeds for such Collateral,  (b) sales by any Borrower of Inventory
to buyers in the ordinary  course of business,  (c) the use or transfer of money
or Cash Equivalents by  Administrative  Borrower or its Subsidiaries in a manner
that  is not  prohibited  by the  terms  of this  Agreement  or the  other  Loan
Documents, and (d) the licensing by Administrative Borrower or its Subsidiaries,
on  a  non-exclusive  basis,  of  patents,  trademarks,  copyrights,  and  other
intellectual property rights in the ordinary course of business.

      "Permitted Gaming Equipment  Purchase Money  Indebtedness"  means Purchase
Money Indebtedness incurred from time to time to acquire Gaming Equipment (other
than the Collateral) in the ordinary  course of business in an aggregate  amount
outstanding at any time not in excess of the sum of (a) $9,000,000, plus (b) the
aggregate  principal  amount of the Advances  hereunder  which have been repaid;
provided, however, (i) no such Indebtedness shall be used to finance any portion
of the Equipment  being  financed by an Advance  hereunder,  and (ii) the Gaming
Equipment  acquired with the proceeds of such Indebtedness shall not be attached
or affixed to or installed on any of the Collateral.



                                      -12-
<PAGE>

      "Permitted  Investments"  means (a) investments in Cash  Equivalents,  (b)
investments  in  negotiable  instruments  for  collection,  (c) advances made in
connection  with  purchases  of goods or  services  in the  ordinary  course  of
business, (d) investments by any Borrower in any other Borrower provided that if
any such investment is in the form of Indebtedness, such Indebtedness investment
shall be subject to the terms and conditions of the  Intercompany  Subordination
Agreement,  and (e)  Permitted  Investments  as  that  term  is  defined  in the
Indenture or Restricted Payments permitted by Section 1.1 of the Indenture.

      "Permitted Lien" means:

      (a) Liens set forth on Schedule P-1;

      (b) Liens imposed by governmental  authorities  for taxes,  assessments or
other charges not yet  delinquent  or that are being  contested in good faith by
appropriate  proceedings promptly instituted and diligently pursued, if adequate
reserves  with  respect  thereto are  maintained  on the books of  Borrowers  in
accordance with GAAP;

      (c) statutory Liens of carriers,  warehousemen,  mechanics,  material men,
suppliers,  landlords, repairmen or other like Liens arising by operation of law
in  the  ordinary  course  of  business;   provided,  that  (1)  the  underlying
obligations  are not yet  delinquent,  or (2) such Liens are being  contested in
good faith by appropriate proceedings promptly instituted and diligently pursued
and  adequate  reserves  with  respect  thereto are  maintained  on the books of
Borrowers in accordance with GAAP;

      (d) Liens securing the  performance of statutory  obligations,  surety and
appeal bonds,  performance bonds and other obligations of a like nature incurred
in the ordinary course of business;

      (e)  easements,  rights-of-way,  zoning,  similar  restrictions  and other
similar  encumbrances  or title  defects  incurred  in the  ordinary  course  of
business  consistent with industry practices which,  singly or in the aggregate,
do not in any case  materially  detract from the value of the  property  subject
thereto (as such property is used by Borrowers) or materially interfere with the
ordinary conduct of the businesses of Borrowers;

      (f) Liens incurred or deposits made in the ordinary  course of business to
secure the  obligations of Borrowers under workers'  compensation,  unemployment
insurance and other types of social security  legislation or otherwise to secure
statutory or  regulatory  obligations  of  Borrowers  in the ordinary  course of
business  consistent with past practice,  including to secure the performance of
tenders,  surety  and  appeal  bonds,  bids,  leases,   governmental  contracts,
performance and return-of-money  bonds and other similar obligations  (exclusive
in each case of obligations for the payment of borrowed money);  provided,  that
the  obligations  in connection  with which such Liens were incurred or deposits
made shall have been  incurred  in the  ordinary  course of  business  and shall
otherwise be permitted by this Agreement;

      (g) Liens securing the Obligations;



                                      -13-
<PAGE>

      (h)  Liens  securing   Miscellaneous   Indebtedness  or  Permitted  Gaming
Equipment  Purchase  Money  Indebtedness  provided  that in each  case such Lien
attaches  only to the asset  purchased  or  acquired  with the  proceeds of such
Indebtedness; and

      (i) leases or subleases granted to other Persons in the ordinary course of
business  not  materially  interfering  with the  conduct of the  businesses  of
Borrowers or  materially  detracting  from the value of the  relative  assets of
Borrowers;

      (j) Liens arising from  precautionary  Uniform  Commercial  Code financing
statement  filings  regarding  operating leases entered into by Borrowers in the
ordinary course of business;

      (k)  Liens  securing  permitted   refinancing   Indebtedness  incurred  in
compliance with this Agreement to refinance any Indebtedness that was secured by
Liens prior to such refinancing;

      (l) Liens in favor of the  Indenture  Trustee  relative to the Senior Note
Documents;

      (m) Liens securing the obligations under the Revolving Loan Agreement; and

      (n) Liens upon specific  items of Inventory or other goods and proceeds of
any Person securing such Person's obligations in respect of bankers' acceptances
issued or created  for the account of such Person to  facilitate  the  purchase,
shipment or storage of such Inventory or other goods.

      "Permitted  Protest" means the right of Administrative  Borrower or any of
its Subsidiaries,  as applicable,  to protest any Lien (other than any such Lien
that secures the Obligations), taxes (other than payroll taxes or taxes that are
the subject of a United States federal tax lien),  or rental  payment,  provided
that (a) a reserve with respect to such  obligation is  established on the Books
in such amount as is required  under GAAP,  (b) any such  protest is  instituted
promptly and  prosecuted  diligently  by  Administrative  Borrower or any of its
Subsidiaries,  as applicable,  in good faith,  and (c) Agent is satisfied  that,
while  any  such  protest  is  pending,  there  will  be no  impairment  of  the
enforceability, validity, or priority of any of the Agent's Liens.

      "Person" means natural persons, corporations, limited liability companies,
limited  partnerships,  general  partnerships,  limited liability  partnerships,
joint ventures,  trusts, land trusts,  business trusts, or other  organizations,
irrespective  of whether they are legal  entities,  and governments and agencies
and political subdivisions thereof.

      "PGC" means Peninsula Gaming Company,  LLC, a Delaware  limited  liability
company and the direct and sole manager of OED Acquisition.

      "PGP Investors"  means PGP Investors,  LLC, a Delaware  limited  liability
company.

      "PGP" means Peninsula Gaming Partners,  LLC, a Delaware limited  liability
company, the direct parent and sole manager of PGC.



                                      -14-
<PAGE>

      "Projections" means Parent's forecasted (a) balance sheets, (b) profit and
loss  statements,  and (c) cash flow  statements,  all  prepared on a consistent
basis with Parent's historical financial  statements,  together with appropriate
supporting details and a statement of underlying assumptions.

      "Pro Rata  Share"  means the  percentage  obtained  by  dividing  (i) such
Lender's Total Commitment,  by (ii) the aggregate amount of Total Commitments of
all Lenders; provided, however, that, in each case, in the event all Commitments
have been  terminated or reduced to zero,  Pro Rata Share shall be determined by
dividing (a) the aggregate  principal amount of such Lender's  Advances,  by (b)
the aggregate principal amount of all Advances outstanding at such time.

      "Purchase Money Indebtedness" means Indebtedness  incurred at the time of,
or within 20 days after,  the acquisition of any fixed assets for the purpose of
financing all or any part of the acquisition cost thereof.

      "Racino Project" means the project to design,  develop,  construct,  equip
and operate that certain  casino and race track to be located in Opelousas,  St.
Landry Parish, Louisiana.

      "Real  Property" means any estates or interests in real property now owned
or hereafter acquired by any Borrower and the improvements thereto.

      "Record" means information that is inscribed on a tangible medium or which
is stored in an electronic  or other medium and is  retrievable  in  perceivable
form.

      "Register" has the meaning set forth in Section 14.1(h).

      "Registered Note" has the meaning set forth in Section 2.13.

      "Registered Loan" has the meaning set forth in Section 2.13.

      "Remedial  Action"  means  all  actions  taken to (a)  clean  up,  remove,
remediate,  contain,  treat,  monitor,  assess,  evaluate, or in any way address
Hazardous  Materials  in the  indoor or  outdoor  environment,  (b)  prevent  or
minimize a release or threatened  release of Hazardous  Materials so they do not
migrate or endanger or  threaten  to  endanger  public  health or welfare or the
indoor  or  outdoor   environment,   (c)  perform  any   pre-remedial   studies,
investigations,  or post-remedial operation and maintenance  activities,  or (d)
conduct any other actions authorized by 42 USC ss. 9601.

      "Report" has the meaning set forth in Section 16.17.

      "Required  Lenders" means,  at any time, (a) Agent,  and (b) Lenders whose
Pro  Rata  Shares  aggregate  51%  of the  Total  Commitments,  or if the  Total
Commitments have been terminated, 51% of the Obligations outstanding.

      "Revolving Loan Agreement" means that certain Loan and Security Agreement,
dated as of June 24, 2003, by and among Borrowers and Wells Fargo Foothill,  and
the other  parties  party  thereto from time to time, as amended by that certain
First Amendment to Loan and Security



                                      -15-
<PAGE>

Agreement,  dated as of the Closing Date, as the same may be amended,  restated,
supplemented or otherwise modified from time to time.

      "S&P"  means  Standard  &  Poor's  Rating  Service,   a  division  of  The
McGraw-Hill Companies, Inc., a New York corporation, and its successors.

      "SEC" means the United States  Securities and Exchange  Commission and any
successor thereto.

      "Securities  Account" means a "securities account" as that term is defined
in the Code.

      "Senior Note Documents" means, collectively, the Indenture, the Notes, and
the  Collateral  Agreements  (as such term is defined in the  Indenture) in each
case, as such document may be amended,  restated,  supplemented or modified from
time to time with the consent of Lender.

      "Solvent"  means,  with respect to any Person on a particular  date,  that
such Person is not insolvent (as such term is defined in the Uniform  Fraudulent
Transfer Act).

      "Stock" means all shares, options, warrants, interests, participations, or
other  equivalents  (regardless of how  designated)  of or in a Person,  whether
voting or nonvoting,  including  common  stock,  preferred  stock,  or any other
"equity  security"  (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the SEC under the Exchange Act).

      "Subsidiary"  of  a  Person  means  a  corporation,  partnership,  limited
liability  company,  or other entity in which that Person directly or indirectly
owns or controls  the shares of Stock  having  ordinary  voting power to elect a
majority of the board of directors  (or appoint  other  comparable  managers) of
such corporation, partnership, limited liability company, or other entity.

      "Taxes" has the meaning set forth in Section 16.5.

      "Total   Commitment"  means,  with  respect  to  each  Lender,  its  Total
Commitment,  and, with respect to all Lenders, their Total Commitments,  in each
case as such Dollar  amounts are set forth beside such  Lender's  name under the
applicable  heading on Schedule C-1 attached  hereto or on the signature page of
the  Assignment  and  Acceptance  pursuant to which such Lender  became a Lender
hereunder in accordance with the provisions of Section 14.1.

      "Tranche A Advance" has the meaning set forth in Section 2.1(a).

      "Tranche A Collateral" means all of each Borrower's now owned or hereafter
acquired right,  title and interest in and to (a) any and all Gaming  Equipment,
the purchase of which was financed,  in full or in part, with proceeds of one or
more Tranche A Advances, and (b) the proceeds and products,  whether tangible or
intangible of any of the foregoing,  including proceeds of insurance coverage of
any and all of the foregoing.

      "Tranche A  Commitment"  means with respect to each Lender,  its Tranche A
Commitment,  and, with respect to all Lenders,  their Tranche A Commitments,  in
each case as




                                      -16-
<PAGE>
such Dollar amounts are set forth beside such Lender's name under the applicable
heading  on  Schedule  C-1 or on  the  signature  page  of  the  Assignment  and
Acceptance pursuant to which such Lender became a Lender hereunder in accordance
with the provisions of Section 14.1.

      "Tranche B Advance" has the meaning set forth in Section 2.1(b).

      "Tranche B Collateral" means all of each Borrower's now owned or hereafter
acquired right, title and interest in and to (a) any and all Gaming Equipment or
other  Equipment,  the purchase of which was financed,  in full or in part, with
proceeds of one or more Tranche B Advances,  and (b) the proceeds and  products,
whether  tangible or intangible of any of the foregoing,  including  proceeds of
insurance coverage of any and all of the foregoing.

      "Tranche B  Commitment"  means with respect to each Lender,  its Tranche B
Commitment,  and, with respect to all Lenders,  their Tranche B Commitments,  in
each case as such Dollar  amounts are set forth beside such  Lender's name under
the  applicable  heading  on  Schedule  C-1  or on  the  signature  page  of the
Assignment  and  Acceptance  pursuant  to  which  such  Lender  became  a Lender
hereunder in accordance with the provisions of Section 14.1.

      "Voidable Transfer" has the meaning set forth in Section 16.8.

      "Voting Stock" means Stock of any Person which at the time are entitled to
vote in the election of, as applicable, directors, Managers, members or partners
generally of such Person.

      "Wells  Fargo" means Wells Fargo Bank,  National  Association,  a national
banking association.

      "Wells  Fargo  Foothill"  means Wells Fargo  Foothill,  Inc., a California
corporation, and its successors and assigns.

      1.2 Accounting Terms. All accounting terms not specifically defined herein
shall  be  construed  in  accordance  with  GAAP.  When  used  herein,  the term
"financial  statements" shall include the notes and schedules thereto.  Whenever
the term  "Borrowers"  or the term  "Parent"  is used in respect of a  financial
covenant or a related definition,  it shall be understood to mean Parent and its
Subsidiaries  on a  consolidated  basis  unless  the  context  clearly  requires
otherwise.

      1.3 Code.  Any terms used in this  Agreement  that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.

      1.4  Construction.  Unless the context of this Agreement or any other Loan
Document  clearly  requires  otherwise,  references  to the plural  include  the
singular, references to the singular include the plural, the term "including" is
not  limiting,  and the term "or" has,  except where  otherwise  indicated,  the
inclusive  meaning  represented  by the  phrase  "and/or."  The words  "hereof,"
"herein,"  "hereby,"  "hereunder,"  and similar  terms in this  Agreement or any
other Loan Document refer to this Agreement or such other Loan Document,  as the
case may be, as a whole and not to any particular provision of this Agreement or
such other  Loan  Document,  as the case may be.  Section,  subsection,  clause,
schedule,  and exhibit  references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to any
agreement,  instrument,  or document shall include all alterations,  amendments,



                                      -17-
<PAGE>

changes,  extensions,  modifications,  renewals,  replacements,   substitutions,
joinders,  and supplements,  thereto and thereof,  as applicable (subject to any
restrictions   on   such   alterations,    amendments,    changes,   extensions,
modifications, renewals, replacements,  substitutions, joinders, and supplements
set forth  herein).  Any  reference  herein to any Person  shall be construed to
include such  Person's  successors  and assigns.  Any  requirement  of a writing
contained  herein or in the  other  Loan  Documents  shall be  satisfied  by the
transmission  of  a  Record  and  any  Record  transmitted  shall  constitute  a
representation  and  warranty  as  to  the  accuracy  and  completeness  of  the
information contained therein.

      1.5 Schedules and Exhibits.  All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference.

2.    LOAN AND TERMS OF PAYMENT.

      2.1   Advances.

      (a)  Tranche A  Commitment.  Subject to the terms and  conditions  of this
Agreement, each Lender agrees (severally,  not jointly or jointly and severally)
to make, from time to time prior to the Availability  Termination Date, a series
of term loans to Borrowers  (each,  a "Tranche A Advance" and  collectively  the
"Tranche A Advances") in an aggregate  amount at any one time outstanding not to
exceed such Lender's Pro Rata Share of the Tranche A Commitment.  Each Tranche A
Advance  shall be made in  accordance  with such Lender's Pro Rata Share at such
times and in such  amounts as any  Borrower  may  request in  writing,  shall be
advanced  directly to the applicable vendor or Borrower and once borrowed may be
prepaid in whole or in part  without  penalty or premium at any time  during the
term of this  Agreement  upon 30 days prior  written  notice by such Borrower to
Agent,  all such prepaid amounts to be applied to the installments due on all of
the Tranche A Advances in the inverse order of their maturity.  Amounts borrowed
and repaid may not be reborrowed. The foregoing to the contrary notwithstanding,
(a) each requested  Tranche A Advance shall be in a principal amount of not less
than (i) $500,000, or (ii) such lesser amount as is the then unfunded balance of
the Tranche A Commitment,  (b) each Tranche A Advance shall be in an amount,  as
determined  by Agent,  not to exceed such  Borrower's  invoice  cost  (including
shipping,  freight,  and installation) with respect to new Gaming Equipment that
is to be  purchased in the  ordinary  course of business by a Borrower  with the
proceeds of such Tranche A Advance,  (c) the new Gaming  Equipment that is to be
acquired or that has been  purchased by Borrowers  must be for Gaming  Equipment
listed on  Schedule  7.17  hereto and be  otherwise  acceptable  to Agent in all
respects,  not be a fixture,  and not be intended to be affixed to real property
or to become  installed  in or affixed to other  goods,  and (d) no Lender shall
have any  obligation to fund any Tranche A Advance  hereunder to the extent that
the making thereof would cause the then outstanding amount of Tranche A Advances
to exceed the Tranche A Commitment.  All amounts outstanding under the Tranche A
Commitment shall constitute Obligations.

      (b)  Tranche B  Commitment.  Subject to the terms and  conditions  of this
Agreement, each Lender agrees (severally,  not jointly or jointly and severally)
to make, from time to time prior to the Availability  Termination Date, a series
of term loans to Borrowers  (each,  a "Tranche B Advance" and  collectively  the
"Tranche B Advances") in an aggregate  amount at any one time outstanding not to
exceed such Lender's Pro Rata Share of the Tranche B Commitment.  Each



                                      -18-
<PAGE>

Tranche B Advance shall be made in accordance  with such Lender's Pro Rata Share
at such times and in such amounts as any Borrower may request in writing,  shall
be advanced  directly to the applicable vendor or Borrower and once borrowed may
be prepaid in whole or in part without penalty or premium at any time during the
term of this  Agreement  upon 30 days prior  written  notice by such Borrower to
Agent,  all such prepaid amounts to be applied to the installments due on all of
the Tranche B Advances in the inverse order of their maturity.  Amounts borrowed
and repaid may not be reborrowed. The foregoing to the contrary notwithstanding,
(a) each requested  Tranche B Advance shall be in a principal amount of not less
than (i) $500,000, or (ii) such lesser amount as is the then unfunded balance of
the Tranche B Commitment,  (b) each Tranche B Advance shall be in an amount,  as
determined by Agent, not to exceed  fifty-five  percent (55%) of such Borrower's
invoice cost (including shipping, freight, and installation) hereto with respect
to new Equipment that is to be purchased in the ordinary course of business by a
Borrower with the proceeds of such Tranche B Advance, (c) the new Equipment that
is to be acquired or that has been  purchased  by  Borrowers  must either be for
Equipment listed on Schedule 7.17 hereto and be otherwise acceptable to Agent in
all  respects,  not be a  fixture,  and not be  intended  to be  affixed to real
property or to become  installed in or affixed to other goods, and (d) no Lender
shall have any obligation to fund any Tranche B Advance  hereunder to the extent
that the making  thereof  would cause the then  outstanding  amount of Tranche B
Advances to exceed the Tranche B Commitment.  All amounts  outstanding under the
Tranche B Commitment shall constitute Obligations.

      2.2 Repayment of Advances.  All outstanding Tranche A Advances and Tranche
B Advances  shall be repayable in 48 equal  monthly  installments  of principal,
commencing  on March 1,  2004,  and  continuing  on the first day of each  month
thereafter  until  the  unpaid  balance  of all  Advances  is paid in full.  The
outstanding  principal  balance and all accrued  and unpaid  interest  under all
Advances  shall also be due and  payable in full upon the  Maturity  Date or any
earlier termination of this Agreement,  whether by its terms, by prepayment,  by
acceleration, or otherwise.

      2.3   Borrowing Procedures and Settlements.

      (a) Procedure for  Borrowing.  Each  Borrowing  shall be made by a written
request  by an  Authorized  Person  delivered  to Agent  (which  notice  must be
received by Agent no later than 10:00 a.m.  (California time) five Business Days
prior to the date that is the requested  Funding Date  specifying (i) the amount
of such Borrowing,  (ii) the requested  Funding Date,  which shall be a Business
Day,  (iii)  whether  the Advance is a Tranche A Advance or a Tranche B Advance,
and (iv) the details of the  Equipment to be financed  with the proceeds of such
Advance,  including,  without  limitation,  whether  such  Equipment  is  Gaming
Equipment,  the cost,  manufacturer and vendor of such Equipment,  and the make,
model and serial number of such Equipment,  if applicable.  At Agent's election,
in lieu of delivering  the  above-described  request in writing,  any Authorized
Person may give Lender  telephonic  notice of such request by the required time,
with such  telephonic  notice to be confirmed in writing  within 24 hours of the
giving of such notice.

      (b) [Intentionally Omitted].

      (c) Making of Advances.



                                      -19-
<PAGE>

            (i) Promptly after receipt of a request for a Borrowing  pursuant to
      Section 2.3(a),  Agent shall notify the Lenders,  not later than 1:00 p.m.
      (California  time) on the Business Day  immediately  preceding the Funding
      Date applicable thereto, by telecopy,  telephone, or other similar form of
      transmission,  of the  requested  Borrowing.  Each  Lender  shall make the
      amount  of  such  Lender's  Pro  Rata  Share  of the  requested  Borrowing
      available to Agent in immediately available funds, to Agent's Account, not
      later than 10:00 a.m.  (California  time) on the Funding  Date  applicable
      thereto.  After  Agent's  receipt of the proceeds of such Advances (or the
      Term Loan, as applicable),  upon satisfaction of the applicable conditions
      precedent  set forth in Section 3 hereof,  Agent  shall make the  proceeds
      thereof  available to  Administrative  Borrower on the applicable  Funding
      Date by  transferring  immediately  available funds equal to such proceeds
      received  by  Agent  to  Administrative   Borrower's  Designated  Account;
      provided,  however,  that,  subject to the  provisions of Section  2.3(i),
      Agent shall not request any Lender to make,  and no Lender  shall have the
      obligation to make, any Advance if Agent shall have actual  knowledge that
      one or more of the applicable  conditions precedent set forth in Section 3
      will not be satisfied  on the  requested  Funding Date for the  applicable
      Borrowing unless such condition has been waived.

            (ii) Unless Agent  receives  notice from a Lender on or prior to the
      Closing Date or, with respect to any Borrowing  after the Closing Date, at
      least 1 Business Day prior to the date of such Borrowing, that such Lender
      will not make  available as and when  required  hereunder to Agent for the
      account of  Borrowers  the amount of that  Lender's  Pro Rata Share of the
      Borrowing,  Agent may assume  that each  Lender has made or will make such
      amount  available to Agent in immediately  available  funds on the Funding
      Date and Agent may (but shall not be so  required),  in reliance upon such
      assumption,  make  available  to  Borrowers  on such date a  corresponding
      amount.  If and to the  extent  any  Lender  shall  not have made its full
      amount available to Agent in immediately available funds and Agent in such
      circumstances  has made  available to Borrowers  such amount,  that Lender
      shall on the  Business  Day  following  such Funding Date make such amount
      available to Agent,  together with interest at the Defaulting  Lender Rate
      for each day during such period. A notice submitted by Agent to any Lender
      with respect to amounts owing under this  subsection  shall be conclusive,
      absent manifest  error. If such amount is so made available,  such payment
      to Agent shall  constitute such Lender's  Advance on the date of Borrowing
      for all purposes of this  Agreement.  If such amount is not made available
      to Agent on the Business Day following the Funding Date, Agent will notify
      Administrative Borrower of such failure to fund and, upon demand by Agent,
      Borrowers  shall pay such  amount to Agent for Agent's  account,  together
      with  interest  thereon  for  each  day  elapsed  since  the  date of such
      Borrowing,  at a rate per annum equal to the interest  rate  applicable at
      the time to the  Advances  composing  such  Borrowing.  The failure of any
      Lender to make any Advance on any Funding Date shall not relieve any other
      Lender of any  obligation  hereunder  to make an Advance  on such  Funding
      Date,  but no Lender  shall be  responsible  for the  failure of any other
      Lender to make the Advance to be made by such other  Lender on any Funding
      Date.

            (iii) Agent  shall not be  obligated  to  transfer  to a  Defaulting
      Lender any payments made by Borrowers to Agent for the Defaulting Lender's
      benefit,  and, in the absence of such transfer to the  Defaulting  Lender,
      Agent shall transfer any such payments



                                      -20-
<PAGE>

      to each other non-Defaulting  Lender member of the Lender Group ratably in
      accordance  with  their  Commitments  (but  only to the  extent  that such
      Defaulting  Lender's Advance was funded by the other members of the Lender
      Group) or, if so directed by Administrative  Borrower and if no Default or
      Event of Default had  occurred and is  continuing  (and to the extent such
      Defaulting  Lender's  Advance was not funded by the Lender Group),  retain
      same to be re-advanced to Borrowers as if such Defaulting  Lender had made
      Advances to Borrowers.  Subject to the  foregoing,  Agent may hold and, in
      its  Permitted  Discretion,  re-lend to Borrowers  for the account of such
      Defaulting Lender the amount of all such payments received and retained by
      it for the account of such Defaulting  Lender.  Solely for the purposes of
      voting or consenting to matters with respect to the Loan  Documents,  such
      Defaulting  Lender shall be deemed not to be a "Lender" and such  Lender's
      Commitment shall be deemed to be zero. This Section shall remain effective
      with respect to such Lender until (x) the Obligations under this Agreement
      shall have been declared or shall have become immediately due and payable,
      (y) the non-Defaulting  Lenders,  Agent, and Administrative Borrower shall
      have  waived  such  Defaulting  Lender's  default in  writing,  or (z) the
      Defaulting  Lender makes its Pro Rata Share of the applicable  Advance and
      pays to Agent all amounts owing by Defaulting  Lender in respect  thereof.
      The  operation  of this  Section  shall not be  construed  to  increase or
      otherwise  affect the  Commitment of any Lender,  to relieve or excuse the
      performance  by such  Defaulting  Lender or any other Lender of its duties
      and  obligations  hereunder,  or to relieve or excuse the  performance  by
      Borrowers  of their  duties and  obligations  hereunder to Agent or to the
      Lenders other than such Defaulting Lender. Any such failure to fund by any
      Defaulting  Lender shall  constitute a material  breach by such Defaulting
      Lender of this Agreement and shall entitle Administrative  Borrower at its
      option,  upon written notice to Agent, to arrange for a substitute  Lender
      to assume the Commitment of such Defaulting Lender, such substitute Lender
      to be acceptable to Agent.  In connection  with the  arrangement of such a
      substitute  Lender, the Defaulting Lender shall have no right to refuse to
      be replaced hereunder,  and agrees to execute and deliver a completed form
      of Assignment and Acceptance  Agreement in favor of the substitute  Lender
      (and agrees that it shall be deemed to have  executed and  delivered  such
      document if it fails to do so) subject  only to being  repaid its share of
      the  outstanding  Obligations  without  any premium or penalty of any kind
      whatsoever;  provided  further,  however,  that any such assumption of the
      Commitment of such  Defaulting  Lender shall not be deemed to constitute a
      waiver of any of the  Lender  Group's  or  Borrowers'  rights or  remedies
      against any such  Defaulting  Lender arising out of or in relation to such
      failure to fund.

      (d)   [Intentionally Omitted]

      (e) Agent Advances.

            (i) Agent hereby is authorized  by Borrowers  and the Lenders,  from
      time to time in Agent's  sole  discretion,  (1) after the  occurrence  and
      during the continuance of a Default or an Event of Default,  or (2) at any
      time that any of the other  applicable  conditions  precedent set forth in
      Section 3 have not been satisfied, to make Advances to Borrowers on behalf
      of the Lenders that Agent, in its Permitted  Discretion deems necessary or
      desirable  (A) to  preserve  or protect  the  Collateral,  or any  portion
      thereof, (B)



                                      -21-
<PAGE>

      to enhance the likelihood of repayment of the  Obligations,  or (C) to pay
      any other amount  chargeable  to  Borrowers  pursuant to the terms of this
      Agreement,  including  Lender  Group  Expenses  and the costs,  fees,  and
      expenses  described in Section 10 (any of the  Advances  described in this
      Section 2.3(e) shall be referred to as "Agent Advances");  provided,  that
      notwithstanding anything to the contrary contained in this Section 2.3(e),
      the aggregate  principal  amount of Agent Advances  outstanding at any one
      time  shall not  exceed  $1,000,000.  Each  Agent  Advance  is an  Advance
      hereunder and shall be subject to all the terms and conditions  applicable
      to other  Advances,  except that all payments  thereon shall be payable to
      Agent solely for its own account (and for the account of the holder of any
      participation interest with respect to such Agent Advance).

            (ii) The Agent  Advances shall be repayable on demand and secured by
      the  Agent's  Liens  granted  to Agent  under  the Loan  Documents,  shall
      constitute Advances and Obligations hereunder,  and shall bear interest at
      the rate applicable from time to time to Advances.

      (f)  Settlement.  It is agreed that each  Lender's  funded  portion of the
Advances is intended by the Lenders to equal,  at all times,  such  Lender's Pro
Rata Share of the outstanding Advances.  Such agreement  notwithstanding,  Agent
and the other Lenders agree (which  agreement shall not be for the benefit of or
enforceable by Borrowers) that in order to facilitate the administration of this
Agreement and the other Loan Documents, settlement among them as to the Advances
and the Agent Advances  shall take place on a periodic basis in accordance  with
the following provisions:

            (i) Agent shall request settlement  ("Settlement")  with the Lenders
      on a weekly basis,  or on a more frequent basis if so determined by Agent,
      (1) for itself,  with respect to each Agent Advance,  and (2) with respect
      to Collections  received, as to each by notifying the Lenders by telecopy,
      telephone,  or  other  similar  form of  transmission,  of such  requested
      Settlement,  no later than 1:00 p.m. (California time) on the Business Day
      immediately  prior to the date of such requested  Settlement  (the date of
      such requested  Settlement being the "Settlement  Date"). Such notice of a
      Settlement  Date  shall  include  a  summary  statement  of the  amount of
      outstanding  Advances  and Agent  Advances  for the period since the prior
      Settlement  Date.  Subject to the terms and  conditions  contained  herein
      (including Section 2.3(c)(iii)): (y) if a Lender's balance of the Advances
      and Agent  Advances  exceeds such  Lender's Pro Rata Share of the Advances
      and Agent Advances as of a Settlement  Date, then Agent shall, by no later
      than 12:00 p.m.  (California  time) on the  Settlement  Date,  transfer in
      immediately  available  funds to the account of such Lender as such Lender
      may designate, an amount such that each such Lender shall, upon receipt of
      such amount,  have as of the  Settlement  Date,  its Pro Rata Share of the
      Advances and Agent Advances, and (z) if a Lender's balance of the Advances
      and  Agent  Advances  is less  than such  Lender's  Pro Rata  Share of the
      Advances and Agent Advances as of a Settlement  Date, such Lender shall no
      later than 12:00 p.m. (California time) on the Settlement Date transfer in
      immediately  available funds to the Agent's  Account,  an amount such that
      each such  Lender  shall,  upon  transfer of such  amount,  have as of the
      Settlement  Date,  its Pro Rata Share of the Advances and Agent  Advances.
      Such amounts made  available to Agent under clause (z) of the  immediately
      preceding  sentence shall be applied against the amounts of the applicable



                                      -22-
<PAGE>

      Agent  Advance.  If any such amount is not made  available to Agent by any
      Lender on the Settlement Date applicable thereto to the extent required by
      the terms hereof,  Agent shall be entitled to recover for its account such
      amount on demand from such Lender  together with  interest  thereon at the
      Defaulting Lender Rate.

            (ii) In determining  whether a Lender's  balance of the Advances and
      Agent  Advances is less than,  equal to, or greater than such Lender's Pro
      Rata Share of the  Advances and Agent  Advances as of a  Settlement  Date,
      Agent shall, as part of the relevant Settlement, apply to such balance the
      portion of payments  actually received in good funds by Agent with respect
      to  principal,  interest,  fees payable by Borrowers  and allocable to the
      Lenders  hereunder,  and proceeds of Collateral.  To the extent that a net
      amount is owed to any such Lender after such application,  such net amount
      shall  be  distributed  by  Agent  to that  Lender  as  part of such  next
      Settlement.

      (g) Notation.  Agent shall record on its books the principal amount of the
Advances  owing to each  Lender  and  Agent  Advances  owing to  Agent,  and the
interests therein of each Lender, from time to time. In addition, each Lender is
authorized, at such Lender's option, to note the date and amount of each payment
or prepayment  of principal of such Lender's  Advances in its books and records,
including  computer  records,  such books and  records  constituting  conclusive
evidence,  absent manifest  error, of the accuracy of the information  contained
therein.

      (h) Lenders' Failure to Perform.  All Advances (other than Agent Advances)
shall be made by the Lenders  contemporaneously and in accordance with their Pro
Rata Shares.  It is understood  that (i) no Lender shall be responsible  for any
failure by any other  Lender to perform its  obligation  to make any Advance (or
other extension of credit) hereunder,  nor shall any Commitment of any Lender be
increased or decreased as a result of any failure by any other Lender to perform
its  obligations  hereunder,  and (ii) no failure  by any Lender to perform  its
obligations  hereunder  shall  excuse  any  other  Lender  from its  obligations
hereunder.

      2.4   Payments.

      (a) Payments by Borrowers.

            (i) Except as otherwise  expressly  provided herein, all payments by
      Borrowers  shall be made to Agent's  Account for the account of the Lender
      Group and shall be made in  immediately  available  funds,  no later  than
      11:00 a.m.  (California  time) on the date specified  herein.  Any payment
      received by Agent later than 11:00 a.m. (California time), shall be deemed
      to have been  received on the  following  Business Day and any  applicable
      interest or fee shall  continue to accrue  until such  following  Business
      Day.

            (ii) Unless Agent receives notice from Administrative Borrower prior
      to the date on which any payment is due to the Lenders that Borrowers will
      not make such payment in full as and when required,  Agent may assume that
      Borrowers  have made (or will make) such  payment in full to Agent on such
      date in  immediately  available  funds and Agent may (but  shall not be so
      required), in reliance upon such assumption,  distribute to each Lender on
      such due date an amount equal to the amount then due such  Lender.  If



                                      -23-
<PAGE>

      and to the extent  Borrowers  do not make such payment in full to Agent on
      the date when due,  each Lender  severally  shall repay to Agent on demand
      such amount distributed to such Lender,  together with interest thereon at
      the  Defaulting  Lender  Rate for each day from the date  such  amount  is
      distributed to such Lender until the date repaid.

      (b) Apportionment, Application and Reversal of Payments.

            (i) Except as otherwise  provided with respect to Defaulting Lenders
      and except as otherwise  provided in the Loan Documents  (including letter
      agreements between Agent and individual Lenders),  aggregate principal and
      interest   payments  shall  be  apportioned   ratably  among  the  Lenders
      (according to the unpaid  principal  balance of the  Obligations  to which
      such  payments  relate  held by each  Lender)  and  payments  of fees  and
      expenses  (other  than  fees or  expenses  that are for  Agent's  separate
      account,  after giving effect to any letter  agreements  between Agent and
      individual  Lenders) shall be apportioned ratably among the Lenders having
      a Pro Rata  Share  of the  type of  Commitment  or  Obligation  to which a
      particular  fee relates.  All payments  shall be remitted to Agent and all
      such payments  (other than payments  received while no Default or Event of
      Default has occurred and is continuing  and which relate to the payment of
      principal  or  interest  of specific  Obligations  or which  relate to the
      payment of specific fees), and all proceeds of Collateral or the Letter of
      Credit received by Agent, shall be applied as follows:

                  (A) first,  to pay any Lender Group Expenses then due to Agent
            under the Loan Documents, until paid in full,

                  (B) second,  to pay any Lender Group  Expenses then due to the
            Lenders under the Loan Documents,  on a ratable basis, until paid in
            full,

                  (C) third, to pay any fees then due to Agent (for its separate
            accounts, after giving effect to any letter agreements between Agent
            and the individual  Lenders) under the Loan Documents  until paid in
            full,

                  (D)  fourth,  to pay any  fees  then  due to any or all of the
            Lenders (after giving effect to any letter agreements  between Agent
            and  individual  Lenders)  under  the Loan  Documents,  on a ratable
            basis, until paid in full,

                  (E)  fifth,  to pay  interest  due  in  respect  of all  Agent
            Advances, until paid in full,

                  (F) sixth,  ratably to pay interest due in respect of Advances
            (other than Agent Advances) until paid in full;  provided,  however,
            proceeds of Tranche A Collateral and Tranche B Collateral shall only
            be  used to pay  interest  of  Tranche  A  Advances  and  Tranche  B
            Advances, respectively,

                  (G) seventh,  to pay  principal of all Advances  until paid in
            full;  provided,  however,  proceeds  of  Tranche A  Collateral  and
            Tranche B Collateral  shall only be used to pay principal of Tranche
            A Advances and Tranche B Advances, respectively,



                                      -24-
<PAGE>

                  (H) eighth,  to pay any other  Obligations until paid in full,
            and

                  (I)  ninth,  to  Borrowers  (to be  wired  to  the  Designated
            Account) or such other Person entitled thereto under applicable law.

            (ii) Agent promptly shall distribute to each Lender, pursuant to the
      applicable wire  instructions  received from each Lender in writing,  such
      funds as it may be entitled to receive,  subject to a Settlement  delay as
      provided in Section 2.3(h).

            (iii) In each  instance,  so long as no  Default or Event of Default
      has  occurred  and is  continuing,  Section  2.4(b) shall not be deemed to
      apply to any payment by  Borrowers  specified  by  Borrowers to be for the
      payment of specific Obligations then due and payable (or prepayable) under
      any provision of this Agreement.

            (iv) For purposes of the foregoing,  "paid in full" means payment of
      all amounts owing under the Loan Documents according to the terms thereof,
      including  loan fees,  service  fees,  professional  fees,  interest  (and
      specifically  including  interest  accrued after the  commencement  of any
      Insolvency  Proceeding),  default  interest,  interest  on  interest,  and
      expense reimbursements,  whether or not the same would be or is allowed or
      disallowed in whole or in part in any Insolvency Proceeding.

            (v)  In  the  event  of  a  direct  conflict  between  the  priority
      provisions of this Section 2.4 and other provisions contained in any other
      Loan  Document,  it is the  intention  of the  parties  hereto  that  such
      priority   provisions  in  such  documents  shall  be  read  together  and
      construed,  to the fullest  extent  possible,  to be in concert  with each
      other. In the event of any actual,  irreconcilable conflict that cannot be
      resolved as aforesaid,  the terms and provisions of this Section 2.4 shall
      control and govern.

      2.5   [Intentionally Omitted].

      2.6   Interest:  Rates, Payments, and Calculations.

      (a)  Interest  Rates.   Except  as  provided  in  clause  (c)  below,  all
Obligations  that have been  charged to the Loan  Account  pursuant to the terms
hereof  shall bear  interest  on the Daily  Balance  thereof at a per annum rate
equal to the Base Rate plus the Base Rate Margin. The foregoing notwithstanding,
at no time  shall any  portion of the  Obligations  bear  interest  on the Daily
Balance  thereof at a per annum rate less than 6%. To the extent  that  interest
accrued  hereunder at the rate set forth herein would be less than the foregoing
minimum  daily  rate,  the  interest  rate  chargeable  hereunder  for  such day
automatically shall be deemed increased to the minimum rate.

      (b) [Intentionally Omitted.]

      (c) Default Rate.  Upon the occurrence and during the  continuation  of an
Event of Default  (and at the election of Agent or the  Required  Lenders),  all
Obligations  that have been  charged to the Loan  Account  pursuant to the terms
hereof  shall bear  interest  on the Daily  Balance  thereof at a per annum rate
equal to 2  percentage  points  above the per annum  rate  otherwise  applicable
hereunder.



                                      -25-
<PAGE>

      (d) Payment.  Interest and all other fees payable  hereunder  shall be due
and  payable,  in  arrears,  on the  first  day of each  month at any time  that
Obligations or obligation to extend credit hereunder are outstanding.  Borrowers
hereby authorize Agent, from time to time, without prior notice to Borrowers, to
charge such interest and fees, all Lender Group Expenses (as and when incurred),
the charges,  commissions,  fees and costs  provided for in Section 2.11 (as and
when accrued or  incurred),  and all other  payments as and when due and payable
under any Loan Document to Borrowers'  Loan  Account,  which amounts  thereafter
shall constitute  Advances  hereunder and shall accrue interest at the rate then
applicable  to  Advances  hereunder.  Any  interest  not paid  when due shall be
compounded  by being  charged to  Borrowers'  Loan Account and shall  thereafter
constitute  Advances  hereunder  and  shall  accrue  interest  at the rate  then
applicable to Advances.

      (e) Computation. All interest and fees chargeable under the Loan Documents
shall be computed  on the basis of a 360 day year for the actual  number of days
elapsed. In the event the Base Rate is changed from time to time hereafter,  the
rates  of  interest  hereunder  based  upon  the  Base  Rate  automatically  and
immediately shall be increased or decreased by an amount equal to such change in
the Base Rate.

      (f) Intent to Limit Charges to Maximum  Lawful Rate. In no event shall the
interest rate or rates payable under this Agreement, plus any other amounts paid
in connection herewith, exceed the highest rate permissible under any law that a
court  of  competent   jurisdiction  shall,  in  a  final  determination,   deem
applicable.  Borrowers and the Lender Group,  in executing and  delivering  this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided,  however, that, anything contained herein
to the contrary notwithstanding,  if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto, as
of the date of this  Agreement,  Borrowers  are and shall be liable only for the
payment of such maximum as allowed by law, and payment  received from  Borrowers
in excess of such legal maximum,  whenever received,  shall be applied to reduce
the principal balance of the Obligations to the extent of such excess.

      2.7   [Intentionally Omitted].

      2.8 Crediting Payments. The receipt of any payment item by Agent shall not
be  considered a payment on account  unless such payment item is a wire transfer
of immediately available federal funds made to the Agent's Account or unless and
until such  payment  item is honored  when  presented  for  payment.  Should any
payment item not be honored when presented for payment,  then Borrowers shall be
deemed  not  to  have  made  such  payment  and  interest  shall  be  calculated
accordingly.  Anything to the contrary  contained  herein  notwithstanding,  any
payment item shall be deemed  received by Agent only if it is received  into the
Agent's Account on a Business Day on or before 11:00 a.m.  (California time). If
any payment item is received into the Agent's  Account on a non-Business  Day or
after 11:00 a.m. (California time) on a Business Day, it shall be deemed to have
been  received  by  Agent  as of the  opening  of  business  on the  immediately
following Business Day.

      2.9  Designated  Account.  Agent is authorized to make the Advances  under
this Agreement based upon telephonic or other instructions  received from anyone
purporting to be an Authorized  Person,  or without  instructions if pursuant to
Section  2.6(d).  Administrative



                                      -26-
<PAGE>

Borrower  agrees to  establish  and  maintain  the  Designated  Account with the
Designated  Account  Bank for the  purpose  of  receiving  the  proceeds  of the
Advances  requested  by  Borrowers  and made by Agent or the  Lender  hereunder.
Administrative  Borrower may add or replace,  the Designated Account Bank or the
Designated Account on 30 days prior written notice to Lender; provided, however,
that (i) such prospective Designated Account Bank shall be satisfactory to Agent
and Agent  shall have  consented  in  writing in advance to the  opening of such
Designated Account with the prospective  Designated Account Bank, and (ii) prior
to the  time of the  opening  of such  Designated  Account,  Borrowers  and such
prospective Designated Account Bank shall have executed and delivered to Agent a
Control  Agreement.  Unless otherwise  agreed by Agent and Borrowers,  any Agent
Advance  requested by Borrowers and made by Agent or the Lender  hereunder shall
be made to the Designated Account.

      2.10 Maintenance of Loan Account; Statements of Obligations.  Lender shall
maintain an account on its books in the name of Borrowers  (the "Loan  Account")
on which Borrowers will be charged with all Advances  (including Agent Advances)
made by Agent or the Lenders to Borrowers or for Borrowers' account and with all
other  payment  Obligations   hereunder  or  under  the  other  Loan  Documents,
including,  accrued  interest,  fees  and  expenses,  and  Lender  Expenses.  In
accordance with Section 2.8, the Loan Account will be credited with all payments
received by Agent from Borrowers or for Borrowers'  account.  Agent shall render
statements  regarding  the Loan Account to  Administrative  Borrower,  including
principal,  interest,  fees,  and  including an  itemization  of all charges and
expenses  constituting Lender Group Expenses owing, and such statements shall be
conclusively  presumed  to be correct and  accurate  and  constitute  an account
stated  between  Borrowers  and the Lender  Group  unless,  within 30 days after
receipt  thereof  by  Administrative  Borrower,  Administrative  Borrower  shall
deliver  to Agent  written  objection  thereto  describing  the  error or errors
contained in any such statements.

      2.11 Fees.  Borrowers  shall pay to Agent the following  fees and charges,
which  fees and  charges  shall be  non-refundable  when paid  (irrespective  of
whether this Agreement is terminated  thereafter) and shall be apportioned among
the Lenders in accordance with the terms of letter agreements  between Agent and
individual Lenders:

      (a) Fee Letter  Fees.  As and when due and payable  under the terms of the
Fee Letter,  Borrowers  shall pay to Agent the fees set forth in the Fee Letter,
and

      (b) Audit,  Appraisal,  and Valuation Charges. For the separate account of
Agent (but without  duplication of any amounts paid to Agent under the Revolving
Loan Agreement for any single audit, appraisal or valuation),  audit, appraisal,
and  valuation  fees and  charges  as  follows,  (i) a fee of $850 per day,  per
auditor,  plus  out-of-pocket  expenses for each  financial  audit of a Borrower
performed  by  personnel  employed  by Agent,  (ii) a fee of $1,500  per day per
appraiser,  plus  out-of-pocket  expenses,  for each appraisal of the Collateral
performed by personnel  employed by Agent,  and (iii) the actual charges paid or
incurred  by Agent if it elects  to employ  the  services  of one or more  third
Persons to perform financial audits of Borrowers, to appraise the Collateral, or
any portion thereof, or to assess a Borrower's business valuation.



                                      -27-
<PAGE>

      2.12  [Intentionally Omitted].

      2.13 Registered Notes. Agent agrees to record each Advance on the Register
referenced in Section  14.1(h).  Each Advance  recorded on the Register  (each a
"Registered  Loan")  may  not  be  evidenced  by  promissory  notes  other  than
Registered  Notes (as defined  below).  Upon the  registration  of any  Advance,
Borrowers  agree at the  request of any  Lender,  to execute and deliver to such
Lender a promissory  note, in conformity  with the terms of this  Agreement,  in
registered  form  to  evidence  such  Registered  Loan,  in form  and  substance
reasonably  satisfactory  to such Lender,  and registered as provided in Section
14.1(h) (a "Registered Note"), payable to the order of such Lender and otherwise
duly completed,  provided that any Registered  Note issued to evidence  Advances
shall be issued in the principal amount of the applicable  Lender's  Commitment.
Once recorded on the Register, each Advance may not be removed from the Register
so long as it remains  outstanding,  and a Registered  Note may not be exchanged
for a promissory note that it is not a Registered Note.

      2.14  Capital  Requirements.   If,  after  the  date  hereof,  any  Lender
determines  that (i) the adoption of or change in any law,  rule,  regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the  interpretation  or  application  thereof by any  Governmental
Authority charged with the  administration  thereof,  or (ii) compliance by such
Lender or its parent  bank  holding  company  with any  guideline,  request,  or
directive of any such entity regarding  capital adequacy  (whether or not having
the force of law),  will have the effect of reducing the return on such Lender's
or such holding company's capital as a consequence of such Lender's  obligations
hereunder to a level below that which such Lender or such holding  company could
have  achieved  but for  such  adoption,  change,  or  compliance  (taking  into
consideration  such Lender's or such holding  company's  then existing  policies
with  respect to capital  adequacy and  assuming  the full  utilization  of such
entity's capital) by any amount deemed by such Lender to be material,  then such
Lender may notify Administrative  Borrower and Agent thereof.  Following receipt
of such notice,  Borrowers agree to pay such Lender on demand the amount of such
reduction of return of capital as and when such reduction is determined, payable
within 90 days after  presentation  by such Lender of a statement  in the amount
and setting forth in reasonable detail such Lender's calculation thereof and the
assumptions  upon which such  calculation  was based (which  statement  shall be
deemed true and correct absent manifest error). In determining such amount, such
Lender may use any reasonable averaging and attribution methods.

      2.15  Joint and Several Liability of Borrowers.

      (a) Each Borrower is accepting joint and several  liability  hereunder and
under the other Loan Documents in consideration of the financial  accommodations
to be  provided by Agent and the Lenders  under this  Agreement,  for the mutual
benefit,  directly and indirectly,  of each Borrower and in consideration of the
undertakings  of the other  Borrowers to accept joint and several  liability for
the Obligations.

      (b)  Each  Borrower,   jointly  and  severally,   hereby  irrevocably  and
unconditionally  accepts, not merely as a surety but also as a co-debtor,  joint
and several liability with the other Borrowers,  with respect to the payment and
performance  of all of  the  Obligations  (including,  without  limitation,  any
Obligations  arising  under this Section  2.15),  it being the  intention of the



                                      -28-
<PAGE>

parties  hereto  that  all  the  Obligations  shall  be the  joint  and  several
obligations  of  each  Person  composing   Borrowers   without   preferences  or
distinction among them.

      (c) If and to the  extent  that any of  Borrowers  shall  fail to make any
payment with respect to any of the Obligations as and when due or to perform any
of the Obligations in accordance with the terms thereof, then in each such event
the other Persons composing Borrowers will make such payment with respect to, or
perform, such Obligation.

      (d)  The  Obligations  of  each  Person  composing   Borrowers  under  the
provisions of this Section 2.15 constitute the absolute and unconditional,  full
recourse Obligations of each Person composing Borrowers enforceable against each
such Borrower to the full extent of its properties and assets,  irrespective  of
the  validity,  regularity  or  enforceability  of this  Agreement  or any other
circumstances whatsoever.

      (e) Except as otherwise expressly provided in this Agreement,  each Person
composing  Borrowers hereby waives notice of acceptance of its joint and several
liability,  notice of any  Advances,  notice of the  occurrence  of any Default,
Event of Default, or of any demand for any payment under this Agreement,  notice
of any  action  at any time  taken or  omitted  by Agent or  Lender  under or in
respect of any of the  Obligations,  any requirement of diligence or to mitigate
damages and, generally,  to the extent permitted by applicable law, all demands,
notices and other  formalities  of every kind in connection  with this Agreement
(except  as  otherwise  provided  in  this  Agreement).  Each  Person  composing
Borrowers hereby assents to, and waives notice of, any extension or postponement
of the time for the payment of any of the  Obligations,  the  acceptance  of any
payment  of  any of the  Obligations,  the  acceptance  of any  partial  payment
thereon, any waiver,  consent or other action or acquiescence by Agent or Lender
at any time or times in respect of any default by any Person composing Borrowers
in the performance or satisfaction of any term, covenant, condition or provision
of this Agreement,  any and all other indulgences  whatsoever by Agent or Lender
in respect of any of the Obligations, and the taking, addition,  substitution or
release,  in whole or in part, at any time or times,  of any security for any of
the Obligations or the addition,  substitution or release,  in whole or in part,
of any Person  composing  Borrowers.  Without  limiting  the  generality  of the
foregoing,  each  Borrower  assents  to any  other  action or delay in acting or
failure to act on the part of any Agent or Lender with respect to the failure by
any Person composing Borrowers to comply with any of its respective Obligations,
including,  without limitation, any failure strictly or diligently to assert any
right or to pursue  any  remedy  or to  comply  fully  with  applicable  laws or
regulations thereunder, which might, but for the provisions of this Section 2.15
afford grounds for  terminating,  discharging or relieving any Person  composing
Borrowers,  in whole or in part, from any of its Obligations  under this Section
2.15, it being the intention of each Person composing Borrowers that, so long as
any of the Obligations  hereunder  remain  unsatisfied,  the Obligations of such
Person  composing  Borrowers  under this  Section  2.15 shall not be  discharged
except by  performance  and then only to the  extent  of such  performance.  The
Obligations of each Person composing Borrowers under this Section 2.15 shall not
be  diminished  or rendered  unenforceable  by any  winding up,  reorganization,
arrangement,  liquidation,  reconstruction or similar proceeding with respect to
any Person  composing  Borrowers  or any Agent or Lender.  The joint and several
liability of the Persons  composing  Borrowers  hereunder shall continue in full
force and effect  notwithstanding  any absorption,  merger,  amalgamation or any
other change  whatsoever in the name,  constitution or place of formation of any
of the Persons composing Borrowers or any Agent or Lender.



                                      -29-
<PAGE>

      (f) Each Person composing  Borrowers  represents and warrants to Agent and
Lender that such Borrower is currently  informed of the  financial  condition of
Borrowers and of all other  circumstances  which a diligent inquiry would reveal
and which  bear upon the risk of  nonpayment  of the  Obligations.  Each  Person
composing  Borrowers  further  represents  and warrants to Agent and Lender that
such  Borrower has read and  understands  the terms and  conditions  of the Loan
Documents.  Each Person composing  Borrowers hereby covenants that such Borrower
will continue to keep informed of Borrowers' financial condition,  the financial
condition of other guarantors, if any, and of all other circumstances which bear
upon the risk of nonpayment or nonperformance of the Obligations.

      (g) The  provisions  of this  Section 2.15 are made for the benefit of the
Agent,  the Lender  and their  respective  successors  and  assigns,  and may be
enforced  by it or them  from  time to time  against  any or all of the  Persons
composing  Borrowers  as  often as  occasion  therefor  may  arise  and  without
requirement on the part of any such Agent, Lender, successor, or assign first to
marshal  any of its or their  claims or to exercise  any of its or their  rights
against any of the other Persons composing  Borrowers or to exhaust any remedies
available to it or them against any of the other Persons composing  Borrowers or
to resort  to any  other  source  or means of  obtaining  payment  of any of the
Obligations  hereunder  or to elect any other  remedy.  The  provisions  of this
Section 2.15 shall remain in effect until all of the Obligations shall have been
paid in full or otherwise fully satisfied.  If at any time, any payment,  or any
part thereof,  made in respect of any of the  Obligations,  is rescinded or must
otherwise  be restored  or returned by any Agent or Lender upon the  insolvency,
bankruptcy  or  reorganization  of any of the Persons  composing  Borrowers,  or
otherwise,  the  provisions of this Section 2.15 will forthwith be reinstated in
effect, as though such payment had not been made.

      (h) Each of the Persons composing Borrowers hereby agrees that it will not
enforce  any of its rights of  contribution  or  subrogation  against  the other
Persons  composing  Borrowers  with  respect  to any  liability  incurred  by it
hereunder or under any of the other Loan  Documents,  any payments made by it to
the  Agent  or the  Lenders  with  respect  to any  of  the  Obligations  or any
collateral security therefor until such time as all of the Obligations have been
paid in full in cash.  Any claim which any  Borrower  may have against any other
Borrower with respect to any payments to any Agent or Lender  hereunder or under
any other Loan  Documents are hereby  expressly made  subordinate  and junior in
right of payment,  without  limitation  as to any  increases in the  Obligations
arising  hereunder or  thereunder,  to the prior  payment in full in cash of the
Obligations  and,  in the  event of any  insolvency,  bankruptcy,  receivership,
liquidation,  reorganization  or other similar  proceeding under the laws of any
jurisdiction  relating  to  any  Borrower,  its  debts  or its  assets,  whether
voluntary or  involuntary,  all such  Obligations  shall be paid in full in cash
before any payment or distribution of any character, whether in cash, securities
or other property, shall be made to any other Borrower therefor.

      (i) Each of the Persons composing  Borrowers hereby agrees that, after the
occurrence and during the  continuance  of any Default or Event of Default,  the
payment  of any  amounts  due  with  respect  to the  indebtedness  owing by any
Borrower to any other  Borrower is hereby  subordinated  to the prior payment in
full in cash of the  Obligations.  Each  Borrower  hereby  agrees that after the
occurrence and during the  continuance of any Default or Event of Default,  such
Borrower  will  not  demand,  sue  for  or  otherwise  attempt  to  collect  any
indebtedness  of any other Borrower owing to such Borrower until the Obligations
shall  have  been  paid in full  in  cash.



                                      -30-
<PAGE>

If, notwithstanding the foregoing sentence, such Borrower shall collect, enforce
or receive any amounts in respect of such  indebtedness,  such amounts  shall be
collected,  enforced and received by such Borrower as trustee for the Agent, and
such  Borrower  shall deliver any such amounts to Agent for  application  to the
Obligations in accordance with Section 2.4(b).

3.    CONDITIONS; TERM OF AGREEMENT.

      3.1 Conditions  Precedent to Initial  Extension of Credit.  In addition to
satisfying  each of the  conditions  precedent  set forth in  Section  3.3,  the
obligation  of the Lender  Group (or any  member  thereof)  to make the  initial
Advances  (or  otherwise  extend any credit  hereunder)  is subject to the prior
fulfillment,  to the satisfaction of Lender Group, of each of the conditions set
forth below:

      (a) the Closing Date shall occur on or before September 22, 2003;

      (b) Agent shall have received all financing  statements required by Agent,
and  Agent  shall  have  received  searches  reflecting  the  filing of all such
financing statements;

      (c) Agent shall have received each of the following documents, in form and
substance  satisfactory to Agent, duly executed, and each such document shall be
in full force and effect:

            (i)   the Disbursement Letter,

            (ii)  the Fee Letter,

            (iii) the Officers' Certificate,

            (iv)  the Intercompany Subordination Agreement, and

            (v)   the Management Fees Subordination Agreement.

      (d) Agent shall have received the Letter of Credit,  in form and substance
satisfactory to Lender Group;

      (e) Agent shall have  received a  certificate  from the  Secretary of each
Borrower  attesting to the resolutions of such Borrower's board of directors (or
comparable manager) authorizing its execution, delivery, and performance of this
Agreement  and the other Loan  Documents  to which such  Borrower is a party and
authorizing specific officers of such Borrower to execute the same;

      (f)  Agent  shall  have  received  copies  of  each  Borrower's  Governing
Documents, as amended,  modified, or supplemented to the Closing Date, certified
by the Secretary of such Borrower;

      (g) Agent shall have received a certificate of status with respect to each
Borrower,  dated  within 10 days of the Closing  Date,  such  certificate  to be
issued by the  appropriate  officer



                                      -31-
<PAGE>

of the jurisdiction of organization of such Borrower,  which  certificate  shall
indicate that such Borrower is in good standing in such jurisdiction;

      (h) Agent shall have received  certificates of status with respect to each
Borrower, each dated within 30 days of the Closing Date, such certificates to be
issued  by  the  appropriate  officer  of  the  jurisdictions  (other  than  the
jurisdiction  of  organization of such Borrower) in which its failure to be duly
qualified  or  licensed  would  constitute  a  Material  Adverse  Change,  which
certificates  shall  indicate  that such  Borrower  is in good  standing in such
jurisdictions;

      (i) Agent shall have received  opinions of Borrowers'  counsel in form and
substance  satisfactory to Agent, such opinions to include (a) that the Advances
are "Permitted  Indebtedness",  as defined in and under the Indenture,  (b) that
the Agent's Liens are "Permitted  Liens", as defined in and under the Indenture,
and (c)  regulatory  opinions  as to the due  issuance  and valid  existence  of
Borrowers' Gaming License;

      (j)  Agent  shall  have  received   satisfactory   evidence  (including  a
certificate  of the chief  financial  officer  of Parent)  that all tax  returns
required  to be filed by  Borrowers  have been  timely  filed and all taxes upon
Borrowers or their properties,  assets,  income, and franchises  (including Real
Property  taxes and payroll taxes) have been paid prior to  delinquency,  except
such taxes that are the subject of Permitted Protests;

      (k) Agent shall have  completed its business,  legal,  and  collateral due
diligence,  including  a  collateral  audit and review of  Borrowers'  Books and
verification of Borrowers'  representations  and warranties to the Lender Group,
the results of which shall be satisfactory to Agent;

      (l) Agent shall have received the Closing Date Business Plan;

      (m) Borrowers  shall pay all Lender Group Expenses  incurred in connection
with the transactions evidenced by this Agreement;

      (n)  Borrowers  shall have  received  all licenses  (including  the Gaming
Licenses),  approvals or evidence of other actions  required by any Governmental
Authority,  including the Louisiana Regulatory  Authorities,  in connection with
the  execution  and delivery by  Borrowers  of this  Agreement or any other Loan
Document or with the  consummation of the transactions  contemplated  hereby and
thereby;

      (o) Agent shall have received a copy of the Revolving  Loan  Agreement (as
amended through the Closing Date), in form and substance  satisfactory to Agent,
duly executed and delivered by all parties party thereto; and

      (p)  all  other  documents  and  legal  matters  in  connection  with  the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Lender Group.

      Notwithstanding the foregoing, Lenders are under no obligation to make the
initial  Advance (or  otherwise  to extend any credit  provided  for  hereunder)
unless  and  until all of the  conditions  set  forth in  Section  3.3 below are
satisfied to the satisfaction of Agent.



                                      -32-
<PAGE>

      3.2 Conditions  Subsequent to Initial Extension of Credit.  The obligation
of the Lender  Group (or any member  thereof) to continue to make  Advances  (or
otherwise extend credit  hereunder) is subject to the fulfillment,  on or before
the date  applicable  thereto,  of each of the  conditions  subsequent set forth
below  (the  failure  by  Borrowers  to so  perform  or  cause  to be  performed
constituting an Event of Default):

      (a) within 180 days of the Closing Date, deliver to Agent certified copies
of the policies of insurance,  together with the  endorsements  thereto,  as are
required by Section 6.8, the form and  substance of which shall be  satisfactory
to Agent and its counsel.

      3.3 Conditions  Precedent to all  Extensions of Credit.  The obligation of
the Lender Group (or any member  thereof) to make any Advances (or to extend any
other credit hereunder) shall be subject to the following conditions precedent:

      (a) the representations and warranties contained in this Agreement and the
other Loan Documents  shall be true and correct in all material  respects on and
as of the date of such  extension  of credit,  as though  made on and as of such
date  (except to the extent  that such  representations  and  warranties  relate
solely to an earlier date);

      (b) no Default or Event of Default  shall have  occurred and be continuing
on the date of such extension of credit, nor shall either result from the making
thereof;

      (c) no injunction,  writ,  restraining order, or other order of any nature
prohibiting,  directly or  indirectly,  the  extending of such credit shall have
been  issued  and  remain in force by any  Governmental  Authority  against  any
Borrower, Agent, any Lender, or any of their Affiliates;

      (d) Agent shall have  received a copy of the invoice,  purchase  order and
any other agreements  relating to the Equipment to be financed with the proceeds
of such  Advance,  and each of the  foregoing  shall  be in form  and  substance
satisfactory to Agent ;

      (e) Agent  shall  have  received  the  results  of lien  searches  against
Borrowers  from  all  applicable  jurisdictions  dated  within  30  days  of the
requested  Funding Date,  and such searches will reveal no other liens of record
against  Equipment  of any  Borrower  (other than  financing  statements  of the
Indenture  Trustee and with respect to the Revolving Loan Agreement on record as
of the Closing Date, and financing  statements listing specific equipment (other
than the Collateral) as collateral);

      (f) Agent shall have received all financing  statements and notice letters
to creditors of  Borrowers as may be required by Agent in  connection  with such
Advance;

      (g) Agent shall have  received a certificate  of insurance,  together with
the endorsements thereto, as are required by Section 6.8, the form and substance
of which shall be  satisfactory  to Agent,  and such insurance  shall be in full
force and effect; and

      (h) no Material Adverse Change shall have occurred.

      3.4 Term.  This  Agreement  shall become  effective upon the execution and
delivery hereof by Borrowers,  Agent,  and the Lender and shall continue in full
force and effect for a term



                                      -33-
<PAGE>

ending on March 1, 2008 (the "Maturity  Date").  The foregoing  notwithstanding,
the Lender  Group,  upon the  election of the Required  Lenders,  shall have the
right to terminate its obligations under this Agreement  immediately and without
notice upon the occurrence and during the continuation of an Event of Default.

      3.5 Effect of  Termination.  On the date of termination of this Agreement,
all  Obligations  immediately  shall  become due and payable  without  notice or
demand.  No termination of this Agreement,  however,  shall relieve or discharge
Borrowers of their duties,  Obligations,  or covenants hereunder and the Agent's
Liens in the Collateral  shall remain in effect until all Obligations  have been
fully and finally  paid in full and the Lender  Group's  obligations  to provide
additional  credit hereunder have been terminated.  When this Agreement has been
terminated and all of the  Obligations  have been fully and finally paid in full
and the Lender Group's  obligations to provide  additional credit under the Loan
Documents  have been  terminated  irrevocably,  Agent will, at  Borrowers'  sole
expense,  execute and deliver any UCC  termination  statements,  lien  releases,
mortgage  releases,   re-assignments  of  trademarks,   discharges  of  security
interests, and other similar discharge or release documents (and, if applicable,
in recordable form) as are reasonably  necessary to release,  as of record,  the
Agent's Liens and all notices of security  interests and liens  previously filed
by Agent with respect to the Obligations.

      3.6 Early Termination by Borrowers. Borrowers have the option, at any time
upon 90 days  prior  written  notice by  Administrative  Borrower  to Agent,  to
terminate  this  Agreement  by paying to Agent,  for the  benefit  of the Lender
Group, in cash, the Obligations,  in full. If Administrative Borrower has sent a
notice of termination pursuant to the provisions of this Section,  then Lenders'
obligations to extend credit  hereunder  shall  terminate and Borrowers shall be
obligated to repay the  Obligations,  in full, on the date set forth as the date
of termination of this Agreement in such notice.

4.    CREATION OF SECURITY INTEREST.

      4.1 Grant of Security Interest.  Each Borrower hereby grants to Agent, for
the benefit of the Lender  Group a  continuing  security  interest in all of its
right,  title, and interest in all currently  existing and hereafter acquired or
arising  Collateral  in order to secure  prompt  repayment of any and all of the
Obligations  in accordance  with the terms and  conditions of the Loan Documents
and in  order  to  secure  prompt  performance  by  Borrowers  of each of  their
covenants  and  duties  under the Loan  Documents;  provided,  however,  (a) the
Tranche A  Collateral  shall not secure,  and  proceeds of Tranche A  Collateral
shall not be used to repay,  Tranche B Advances and (b) the Tranche B Collateral
shall not  secure,  and  proceeds of Tranche B  Collateral  shall not be used to
repay,  Tranche A Advances.  The Agent's  Liens in and to the  Collateral  shall
attach to all Collateral  without further act on the part of Agent or Borrowers.
Anything  contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for Permitted Dispositions, Borrowers have no authority,
express or implied, to dispose of any item or portion of the Collateral.

      4.2 Negotiable  Collateral.  In the event that any  Collateral,  including
proceeds,  is evidenced by or consists of Negotiable  Collateral,  and if and to
the extent that perfection of priority of Agent's security interest is dependent
on or enhanced by possession,  the  applicable



                                      -34-
<PAGE>

Borrower,  immediately  upon the  request of Agent,  shall  endorse  and deliver
physical possession of such Negotiable Collateral to Agent.

      4.3   [Intentionally Omitted].

      4.4 Delivery of Additional  Documentation  Required.  At any time upon the
request of Agent,  Borrowers  shall  execute and  deliver to Agent,  any and all
financing  statements,  original  financing  statements in lieu of  continuation
statements,   fixture  filings,  security  agreements,   pledges,   assignments,
endorsements of certificates of title,  and all other documents (the "Additional
Documents")  that Agent may  request in its  Permitted  Discretion,  in form and
substance  satisfactory  to Agent,  to perfect and continue  perfected or better
perfect the Agent's  Liens in the  Collateral  (whether  now owned or  hereafter
arising or acquired) and in order to fully  consummate  all of the  transactions
contemplated  hereby and under the other Loan  Documents.  To the maximum extent
permitted by applicable law, each Borrower  authorizes Agent to execute any such
Additional  Documents in the applicable  Borrower's  name and authorize Agent to
file such executed Additional Documents in any appropriate filing office.

      4.5  Power  of  Attorney.   Each  Borrower   hereby   irrevocably   makes,
constitutes,  and appoints  Agent (and any of Agent's  officers,  employees,  or
agents  designated by Agent) as such Borrower's true and lawful  attorney,  with
power to (a) if such Borrower refuses to, or fails timely to execute and deliver
any of the documents described in Section 4.4, sign the name of such Borrower on
any of the documents  described in Section 4.4, (b) at any time that an Event of
Default has occurred and is continuing, sign such Borrower's name on any invoice
or bill of lading relating to the  Collateral,  (c) at any time that an Event of
Default has  occurred and is  continuing  endorse  such  Borrower's  name on any
Collection item that may come into Lender's possession,  (d) at any time that an
Event of Default has occurred and is continuing,  make,  settle,  and adjust all
claims under such Borrower's  policies of insurance and make all  determinations
and decisions  with respect to such  policies of insurance,  and (e) at any time
that an Event of  Default  has  occurred  and is  continuing,  settle and adjust
disputes and claims respecting the Collateral  directly with third parties,  for
amounts and upon terms that Agent  determines  to be  reasonable,  and Agent may
cause to be  executed  and  delivered  any  documents  and  releases  that Agent
determines  to be  necessary.  The  appointment  of  Agent  as  each  Borrower's
attorney, and each and every one of its rights and powers, being coupled with an
interest,  is  irrevocable  until all of the  Obligations  have  been  fully and
finally repaid and performed and the Lender Group's obligations to extend credit
hereunder are terminated.

      4.6  Right  to  Inspect.  Agent  and  each  Lender  (through  any of their
respective  officers,  employees,  or agents) shall have the right, from time to
time and during  normal  business  hours  hereafter  to inspect the Books and to
check, test, and appraise the Collateral,  operations and assets of Borrowers in
order to verify Borrowers'  financial condition or the amount,  quality,  value,
condition of, or any other matter relating to, the Collateral.

      4.7   [Intentionally Omitted].

      4.8 Letter of Credit. As additional  credit  enhancement for the repayment
of the  Obligations to Lender,  Borrowers have caused the Letter of Credit to be
issued  and  delivered  to Agent.  Agent  shall  have the right to draw upon the
Letter of Credit in accordance  with its terms,



                                      -35-
<PAGE>

in full or in part (and to apply the proceeds thereof to the Obligations or hold
as cash  collateral,  at the option of Lender);  provided,  however,  that, upon
written request of Borrowers after the Availability Termination Date and so long
as (i) no Default or Event of Default  shall then exist,  and (ii) the aggregate
amount of scheduled principal payments (without giving effect to any prepayments
required  hereunder) made to Agent with respect to the Tranche A Advances or the
Tranche B  Advances,  or any  combination  of the  foregoing,  equals or exceeds
$3,200,000,  Agent  agrees to promptly  deliver  and  release to  Administrative
Borrower the Letter of Credit.

5.    REPRESENTATIONS AND WARRANTIES.

      In order to induce the Lender  Group to enter  into this  Agreement,  each
Borrower makes the following  representations and warranties to the Lender Group
which shall be true, correct, and complete,  in all material respects, as of the
date hereof, and shall be true, correct, and complete, in all material respects,
as of the Closing Date,  and at and as of the date of the making of each Advance
(or other extension of credit) made thereafter,  as though made on and as of the
date of such Advance (or other  extension of credit)  (except to the extent that
such  representations  and warranties relate solely to an earlier date) and such
representations  and warranties shall survive the execution and delivery of this
Agreement:

      5.1 No Encumbrances.  Each Borrower has good and indefeasible title to its
assets, free and clear of Liens except for Permitted Liens.

      5.2 [Intentionally Omitted].

      5.3 [Intentionally Omitted].

      5.4 Equipment.  All of the Equipment is used or held for use in Borrowers'
business and is fit for such purposes.

      5.5  Location of  Equipment.  The  Equipment  is not stored with a bailee,
warehouseman,  or similar party and is located only at the locations  identified
on Schedule 5.5.

      5.6   [Intentionally Omitted].

      5.7 Location of Chief Executive  Office;  FEIN. The chief executive office
of each  Borrower is located at the address  indicated  in Schedule 5.7 and each
Borrower's FEIN is identified in Schedule 5.7.

      5.8 Due Organization and Qualification; Subsidiaries.

      (a) Each  Borrower is duly  organized  and existing  and in good  standing
under the laws of the  jurisdiction  of its  organization  and  qualified  to do
business in any state where the failure to be so qualified  reasonably  could be
expected to have a Material Adverse Change.

      (b) Set forth on Schedule 5.8(b),  is a complete and accurate  description
of the  authorized  capital  Stock of each  Borrower,  by class,  and, as of the
Closing Date, a description  of the number of shares of each such class that are
issued and outstanding. Other than as described on Schedule 5.8(b), there are no
subscriptions,  options,  warrants,  or calls  relating  to any  shares  of



                                      -36-
<PAGE>

each  Borrower's  capital  Stock,  including any right of conversion or exchange
under any outstanding  security or other  instrument.  No Borrower is subject to
any obligation  (contingent or otherwise) to repurchase or otherwise  acquire or
retire any  shares of its  capital  Stock or any  security  convertible  into or
exchangeable for any of its capital Stock.

      (c) Set forth on Schedule 5.8(c),  is a complete and accurate list of each
Borrower's direct and indirect  Subsidiaries,  showing:  (i) the jurisdiction of
their  organization;  (ii) the  number  of shares  of each  class of common  and
preferred Stock authorized for each of such  Subsidiaries;  and (iii) the number
and the percentage of the  outstanding  shares of each such class owned directly
or indirectly by the applicable  Borrower.  All of the outstanding capital Stock
of each  such  Subsidiary  has been  validly  issued  and is fully  paid and (if
applicable) non-assessable.

      (d) Except as set forth on Schedule  5.8(c),  there are no  subscriptions,
options,   warrants,   or  calls  relating  to  any  shares  of  any  Borrower's
Subsidiaries' capital Stock, including any right of conversion or exchange under
any  outstanding  security  or  other  instrument.  No  Borrower  or  any of its
respective  Subsidiaries is subject to any obligation  (contingent or otherwise)
to  repurchase  or  otherwise  acquire or retire  any  shares of any  Borrower's
Subsidiaries' capital Stock or any security convertible into or exchangeable for
any such capital Stock.

      5.9   Due Authorization; No Conflict.

      (a) As to each Borrower, the execution,  delivery, and performance by such
Borrower of this  Agreement  and the Loan  Documents to which it is a party have
been duly authorized by all necessary action on the part of such Borrower.

      (b) As to each Borrower, the execution,  delivery, and performance by such
Borrower of this  Agreement and the Loan Documents to which it is a party do not
and will not (i)  violate  any  provision  of  federal,  state,  or local law or
regulation applicable to any Borrower,  the Governing Documents of any Borrower,
or any order,  judgment, or decree of any court or other Governmental  Authority
binding  on any  Borrower,  (ii)  conflict  with,  result  in a  breach  of,  or
constitute  (with  due  notice  or lapse of time or both) a  default  under  any
material  contractual  obligation of any Borrower  (including  any of the Senior
Note  Documents),  (iii) result in or require the creation or  imposition of any
Lien of any nature  whatsoever  upon any  properties  or assets of any Borrower,
other than  Permitted  Liens,  or (iv)  require any  approval of any  Borrower's
members or  shareholders  or any  approval  or  consent of any Person  under any
material contractual obligation of any Borrower.

      (c)  Other  than  the  filing  of  financing  statements,  the  execution,
delivery,  and  performance  by each  Borrower  of this  Agreement  and the Loan
Documents  to which such  Borrower  is a party do not and will not  require  any
registration with,  consent,  or approval of, or notice to, or other action with
or by, any Governmental Authority or other Person.

      (d) As to each  Borrower,  this  Agreement and the other Loan Documents to
which such Borrower is a party, and all other documents  contemplated hereby and
thereby,  when executed and delivered by such Borrower will be the legally valid
and binding  obligations of such Borrower,  enforceable against such Borrower in
accordance with their respective terms,



                                      -37-
<PAGE>

except as enforcement  may be limited by equitable  principles or by bankruptcy,
insolvency, reorganization,  moratorium, or similar laws relating to or limiting
creditors' rights generally.

      (e) The Agent's Liens are validly created,  perfected,  and first priority
Liens, subject only to Permitted Liens.

      5.10  Litigation.  Other than those  matters  disclosed on Schedule  5.10,
there are no actions, suits, or proceedings pending or, to the best knowledge of
Borrowers,  threatened  against  Borrowers,  or any of  their  Subsidiaries,  as
applicable,  except for (a) matters that are fully covered by insurance (subject
to customary deductibles),  and (b) matters arising after the Closing Date that,
if decided adversely to Borrowers, or any of their Subsidiaries,  as applicable,
reasonably could not be expected to result in a Material Adverse Change.

      5.11 No Material  Adverse  Change.  All financial  statements  relating to
Borrowers  that have been  delivered  by Borrowers to the Lender Group have been
prepared in  accordance  with GAAP (except,  in the case of unaudited  financial
statements,  for the lack of  footnotes  and being  subject  to  year-end  audit
adjustments) and present fairly in all material respects,  Borrowers'  financial
condition as of the date thereof and results of  operations  for the period then
ended.  There has not been a Material  Adverse  Change with respect to Borrowers
since the date of the latest financial  statements submitted to the Lender Group
on or before the Closing Date.

      5.12  Fraudulent Transfer.

      (a) The Borrowers on a consolidated basis are Solvent.

      (b)  No  transfer  of  property  is  being  made  by any  Borrower  and no
obligation is being incurred by any Borrower in connection with the transactions
contemplated  by this  Agreement or the other Loan  Documents with the intent to
hinder, delay, or defraud either present or future creditors of Borrowers.

      5.13 Employee Benefits. None of Borrowers,  any of their Subsidiaries,  or
any of its ERISA Affiliates maintains or contributes to any Benefit Plan.

      5.14 Environmental Condition. Except as set forth on Schedule 5.14, (a) to
Borrowers' knowledge, none of Borrowers' properties or assets has ever been used
by  Borrowers  or by previous  owners or  operators  in the  disposal  of, or to
produce,  store, handle, treat, release, or transport,  any Hazardous Materials,
where such production, storage, handling, treatment, release or transport was in
violation,  in any material  respect,  of applicable  Environmental  Law, (b) to
Borrowers'  knowledge,  none of  Borrowers'  properties  or assets has ever been
designated or identified in any manner pursuant to any environmental  protection
statute as a Hazardous  Materials  disposal  site,  (c) none of  Borrowers  have
received notice that a Lien arising under any  Environmental Law has attached to
any revenues or to any Real  Property  owned or operated by  Borrowers,  and (d)
none of Borrowers have received a summons,  citation,  notice, or directive from
the Environmental  Protection Agency or any other federal or state  governmental
agency  concerning  any action or  omission  by any  Borrower  resulting  in the
releasing or disposing of Hazardous Materials into the environment.



                                      -38-
<PAGE>

      5.15  Brokerage  Fees.  Borrowers  have not  utilized  the services of any
broker or finder in connection  with  Borrowers'  obtaining  financing  from the
Lender Group under this Agreement and no brokerage  commission or finders fee is
payable by Borrowers in connection herewith.

      5.16 Intellectual Property.  Each Borrower owns, or holds licenses in, all
trademarks,  trade names, copyrights,  patents, patent rights, and licenses that
are  necessary to the conduct of its business as currently  conducted.  Attached
hereto as Schedule 5.16 is a true, correct, and complete listing of all material
patents, patent applications,  trademarks,  trademark applications,  copyrights,
and  copyright  registrations  as to which each  Borrower  is the owner or is an
exclusive licensee.

      5.17 Leases. Borrowers enjoy peaceful and undisturbed possession under all
leases  material to the business of Borrowers and to which Borrowers are a party
or under  which  Borrowers  are  operating.  All of such  leases  are  valid and
subsisting and no material default (after giving effect to any applicable notice
and cure periods) by Borrowers exists under any of them.

      5.18  DDAs.  Set  forth  on  Schedule  5.18  are  all of the  DDAs of each
Borrower, including, with respect to each depository (i) the name and address of
such  depository,  and (ii) the account numbers of the accounts  maintained with
such depository.

      5.19  Complete  Disclosure.  All  factual  information  (taken as a whole)
furnished  by or on  behalf  of  Borrowers  in  writing  to Agent or any  Lender
(including  all  information  contained in the Schedules  hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement,  the other
Loan Documents,  or any transaction  contemplated  herein or therein is, and all
other such factual  information (taken as a whole) hereafter  furnished by or on
behalf of  Borrowers  in writing to the Agent or any  Lender  will be,  true and
accurate,  in all material respects, on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary to
make such information  (taken as a whole) not misleading in any material respect
at such time in light of the  circumstances  under  which such  information  was
provided. On the Closing Date, the Closing Date Projections represent, and as of
the date on which any other  Projections are delivered to Agent, such additional
Projections  represent  Borrowers'  good  faith  best  estimate  of  its  future
performance for the periods covered thereby.

      5.20 Indebtedness.  Set forth on Schedule 5.20 is a true and complete list
of all  Indebtedness  of each  Borrower  outstanding  immediately  prior  to the
Closing  Date that is to remain  outstanding  after  the  Closing  Date and such
Schedule accurately reflects the aggregate principal amount of such Indebtedness
and the principal terms thereof.

      5.21  Licenses and Permits.

      (a) (i) All material  licenses  (including all necessary Gaming Licenses),
permits,  and consents and similar rights  required from any federal,  state, or
local governmental body (including the Gaming  Authorities),  for the ownership,
use, or operation of the  businesses or properties now owned or operated by each
Borrower,  have been validly issued and are in full force and effect;  (ii) each
Borrower is in compliance,  in all material respects, with all of the provisions
thereof applicable to it; and (iii) none of such licenses,  permits, or consents
is the



                                      -39-
<PAGE>

subject of any pending or, to any Borrower's  knowledge,  threatened  proceeding
for the revocation, cancellation,  suspension, or non-renewal thereof. As of the
Closing Date (and as of each subsequent date on which Borrower delivers to Agent
an updated schedule pursuant to Section 6.18 below),  set forth on Schedule 5.21
is a complete and accurate list of all such licenses, permits, and consents that
are necessary and  appropriate  for the operation of Borrower's  businesses  and
such schedule  identifies  the date by which an  application  for the renewal of
such license,  permit, or consent must be filed and describes the status of each
such pending application.

      (b) Each  Borrower has obtained (i) all material  licenses,  permits,  and
consents  necessary or  appropriate  to conduct its business and  operations and
(ii) as of the Closing Date, all required  approvals from the Gaming Authorities
of the transactions contemplated hereby and by the other Loan Documents.

      (c) Each Borrower owns or possesses all patents,  trademarks, trade names,
copyrights,  and other similar  rights  necessary for the conduct of business as
now carried on or proposed to be  conducted,  without any known  conflict of the
rights of others.

6.    AFFIRMATIVE COVENANTS.

      Each Borrower  covenants and agrees that, so long as any credit  hereunder
shall  be  available  and  until  full and  final  payment  of the  Obligations,
Borrowers shall and shall cause each of their respective  Subsidiaries to do all
of the following:

      6.1  Accounting  System.  Maintain  a system of  accounting  that  enables
Borrowers to produce  financial  statements in accordance with GAAP and maintain
records  pertaining to the Collateral  that contain  information as from time to
time reasonably may be requested by Agent.

      6.2 Reporting.  Provide Agent and each Lender with the following documents
at the following times in form satisfactory to the Required Lenders (but without
duplication of any identical reports delivered to Wells Fargo Foothill, as agent
under the Revolving Loan Agreement):

--------------------------------------------------------------------------------
Monthly (not later than    (a) a detailed itemized report reflecting the prior
the 15th day of each       months and year-to-date revenues from the racetrack,
month)                     off-track betting parlors (including video poker
                           revenues) and out-of-state satellite operations,

                           (b) a detailed itemized report reflecting tax
                           payments made during the prior month,
--------------------------------------------------------------------------------
Monthly (not later than    (c) a detailed itemized report showing the following
the 15th day of each       items: (i) the average daily dollar amount of
month), commencing with    winnings for all Gaming Equipment for such month,
the month following the    (ii) the average daily number of customers admitted
month in which the Racino  into the Racino Project casino for such month, and
Project casino opens to    (iii) the average daily dollar amount of winnings
the general public         per customer admitted for such month, and
--------------------------------------------------------------------------------


                                      -40-
<PAGE>

--------------------------------------------------------------------------------
Upon request by Agent      (d) such other reports as to the Collateral, or the
                           financial condition of Borrowers, as Agent may
                           request.
--------------------------------------------------------------------------------

      In  addition,  each  Borrower  agrees to  cooperate  fully  with  Agent to
facilitate and implement a system of electronic collateral reporting in order to
provide electronic reporting of each of the items set forth above.

      6.3 Financial Statements, Reports, Certificates. Deliver to Agent and each
Lender (but without  duplication  of any  identical  reports  delivered to Wells
Fargo Foothill, as lender under the Revolving Loan Agreement):

      (a) as soon as available,  but in any event within 30 days (45 days in the
case of a  month  that is the end of one of the  first 3  fiscal  quarters  in a
fiscal  year  or 90 days in the  case of a month  that is the end of the  fiscal
year) after the end of each month during each of Parent's fiscal years,

            (i) a company prepared consolidated balance sheet, income statement,
      and  statement  of cash  flow  covering  Parent's  and  its  Subsidiaries'
      operations during such period,

            (ii) a certificate  signed by the chief financial  officer of Parent
      to the effect that:

                  (A) the financial  statements  delivered  hereunder  have been
            prepared in  accordance  with GAAP (except for the lack of footnotes
            and being subject to year-end audit  adjustments) and fairly present
            in all material  respects the financial  condition of Parent and its
            Subsidiaries,

                  (B) the  representations and warranties of Borrowers contained
            in this  Agreement and the other Loan Documents are true and correct
            in all material  respects on and as of the date of such certificate,
            as though  made on and as of such date  (except to the  extent  that
            such  representations  and  warranties  relate  solely to an earlier
            date), and

                  (C)  there  does  not  exist  any   condition  or  event  that
            constitutes  a Default or Event of Default (or, to the extent of any
            non-compliance, describing such non-compliance as to which he or she
            may have knowledge and what action Borrowers have taken, are taking,
            or propose to take with respect thereto), and

            (iii) for each month that is the date on which a financial  covenant
      in Section 7.20 is to be tested, a Compliance  Certificate  demonstrating,
      in  reasonable  detail,  compliance  at the end of such  period  with  the
      applicable financial covenants contained in Section 7.20,

      (b) as soon as available, but in any event within 90 days after the end of
each of Parent's fiscal years,



                                      -41-
<PAGE>

            (i)  financial  statements of Parent and its  Subsidiaries  for each
      such fiscal year,  audited by  independent  certified  public  accountants
      reasonably acceptable to Agent and certified,  without any qualifications,
      by such  accountants  to have been prepared in accordance  with GAAP (such
      audited financial statements to include a balance sheet, income statement,
      and statement of cash flow and, if prepared,  such accountants'  letter to
      management),

            (ii) a certificate  of such  accountants  addressed to Agent and the
      Lender  stating  that  such  accountants  do  not  have  knowledge  of the
      existence of any Default or Event of Default under Section 7.20,

      (c) as soon as available,  but in any event no later than thirty (30) days
after the end of each of Parent's fiscal years,

            (i)  copies  of  Borrowers'  Projections,   in  form  and  substance
      (including as to scope and underlying assumptions)  satisfactory to Agent,
      in its sole discretion,  for the forthcoming  fiscal year, month by month,
      certified by the chief financial officer of Parent as being such officer's
      good faith best  estimate of the financial  performance  of Parent and its
      Subsidiaries during the period covered thereby,

      (d) if and when filed by any Borrower,

            (i) any filings or monthly reports  submitted by any Borrower to the
      Louisiana Regulatory  Authorities or any other Gaming Authority other than
      such  filings or  monthly  reports  submitted  in the  ordinary  course of
      business,

            (ii) any filings made by any Borrower with the SEC,

            (iii)  copies of  Borrowers'  federal  income tax  returns,  and any
      amendments thereto, filed with the Internal Revenue Service, and

            (iv)  any  other  information  that is  provided  by  Parent  to its
      shareholders in their capacities as shareholders generally,

      (e) if and  when  filed  by  any  Borrower  and  as  requested  by  Agent,
satisfactory   evidence  of  payment  of   applicable   excise   taxes  in  each
jurisdictions in which (i) any Borrower  conducts business or is required to pay
any  such  excise  tax,  (ii)  where  any  Borrower's  failure  to pay any  such
applicable  excise tax would result in a Lien on the properties or assets of any
Borrower,  or (iii)  where any  Borrower's  failure  to pay any such  applicable
excise tax reasonably could be expected to result in a Material Adverse Change,

      (f) as soon as a Borrower has  knowledge  of any event or  condition  that
constitutes a Default or an Event of Default,  notice thereof and a statement of
the curative action that Borrowers propose to take with respect thereto,

      (g) as soon as any Borrower has  knowledge  that the  construction  of the
Racino  Project  cannot be completed by  Contractor,  or has knowledge that such
Borrower  cannot  meet  its  obligations   under  any   construction   documents
(including,  without limitation, the Fixed Price



                                      -42-
<PAGE>

Contract),  notice thereof and a statement of the curative action that Borrowers
propose to take with respect thereto,

      (h) as soon as any Borrower has knowledge thereof,  notice of any proposed
legislation  or  administrative  action  specifically  affecting any  Borrower's
gaming  activities  or the Racino  Project  submitted  to the floor for business
before any Governmental Authority in the state of Louisiana (including the state
legislature or any committee thereof), and

      (i) upon the  request  of Agent,  any other  report  reasonably  requested
relating to the financial condition of Borrowers.

      In addition to the financial statements referred to above, Borrowers agree
to  deliver   financial   statements   prepared  on  both  a  consolidated   and
consolidating basis and agree that no Borrower, or any Subsidiary of a Borrower,
will have a fiscal  year  different  from that of Parent.  Borrowers  agree that
their  independent  certified  public  accountants are authorized to communicate
with Agent and to release to Agent  whatever  financial  information  concerning
Borrowers that Agent  reasonably may request.  Each Borrower waives the right to
assert a confidential relationship, if any, it may have with any accounting firm
or service bureau in connection with any information requested by Agent pursuant
to or in  accordance  with this  Agreement,  and agree  that  Agent may  contact
directly  any such  accounting  firm or service  bureau in order to obtain  such
information.

      6.4   [Intentionally Omitted].

      6.5   [Intentionally Omitted].

      6.6  Maintenance  of  Properties.   Borrowers  shall  cause  all  material
properties  which are owned or leased by Borrowers  used in the conduct of their
business and the business of each of the  Subsidiaries to be maintained and kept
in good condition,  repair and working order (reasonable wear and tear excepted)
and  supplied  with  all  necessary  equipment  and  shall  cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in their  reasonable  judgment  may be  necessary,  so that the  business
carried on in  connection  therewith  may be  properly  conducted  at all times;
provided, however, that nothing in this Section 6.6 shall prevent Borrowers from
discontinuing any operation or maintenance of any of such properties (other than
the  Collateral),  or disposing of any of them (other than the  Collateral),  if
such  discontinuance  or disposal is (a) (i) in the  judgment of the Managers of
Borrowers,  desirable  in the  conduct of the  business  of such entity and (ii)
would not have a material  adverse effect on the ability of Borrowers to satisfy
their obligations under the this Agreement and other Loan Documents, and, to the
extent applicable, (b) as otherwise permitted under Section 7.4 hereof.

      6.7 Taxes.  Cause all assessments and taxes,  whether real,  personal,  or
otherwise,  due or payable by, or imposed, levied, or assessed against Borrowers
or any of their  assets to be paid in full,  before  delinquency  or before  the
expiration  of any extension  period,  except to the extent that the validity of
such  assessment or tax shall be the subject of a Permitted  Protest.  Borrowers
will make timely  payment or deposit of all tax payments and  withholding  taxes
required of it by applicable  laws,  including those laws  concerning  F.I.C.A.,
F.U.T.A.,  state  disability,  and local,



                                      -43-
<PAGE>

state,  and federal  income taxes,  and will,  upon request,  furnish Agent with
proof  satisfactory to Agent  indicating  that the applicable  Borrower has made
such  payments or deposits.  Borrowers  shall deliver  satisfactory  evidence of
payment of applicable  excise taxes in each  jurisdictions in which any Borrower
is required to pay any such excise tax.

      6.8   Insurance.

      (a) At  Borrowers'  expense,  maintain  insurance  respecting  its  assets
wherever  located,  covering loss or damage by fire, theft,  explosion,  and all
other  hazards  and risks as  ordinarily  are insured  against by other  Persons
engaged  in the  same or  similar  businesses.  Borrowers  also  shall  maintain
business interruption and comprehensive general liability insurance,  as well as
insurance against larceny, embezzlement, and criminal misappropriation. All such
policies of insurance shall be in such amounts and with such insurance companies
as are reasonably satisfactory to Agent. All such policies of insurance relating
to the Collateral shall cover the full  replacement cost of such Equipment.  The
deductible under all such insurance  policies  covering  personal property shall
not exceed $100,000 per occurrence in case of fire loss, and shall be the lowest
commercially  available and  reasonably  priced  deductible in case of all other
losses.  Borrowers  shall  deliver  copies of all such  policies to Agent with a
satisfactory lender's loss payable endorsement naming Agent as loss payee as its
interests may appear with respect to property  insurance or  additional  insured
with respect to  liability  policies.  Each policy of  insurance or  endorsement
shall contain a clause requiring the insurer to give not less than 10 days prior
written  notice  to Agent in the event of  cancellation  of the  policy  for any
reason  whatsoever.  In the event of any casualty loss of assets of any Borrower
constituting Collateral and assets not constituting Collateral,  Borrowers shall
allocate any deductible for such loss to the assets not constituting Collateral,
to the extent practicable under the circumstances.

      (b) Borrowers shall give Agent prompt notice of the occurrence of any loss
covered by such insurance.

            (i) In the  absence of a Default or Event of  Default,  Agent  shall
      have the exclusive  right to adjust any losses payable with respect to the
      Collateral  under any such  insurance  policies in excess of $2,000,000 in
      the aggregate, without any liability to Borrowers whatsoever in respect of
      such  adjustments,  and any monies  received as payment for any loss under
      any insurance policy mentioned above with respect to the Collateral (other
      than  liability  insurance  policies)  or  as  payment  of  any  award  or
      compensation  for condemnation or taking by eminent domain with respect to
      the Collateral, may be retained by the applicable Borrower for application
      to the cost of repairs,  replacements, or restorations.  Any such repairs,
      replacements, or restorations shall be effected with reasonable promptness
      and  shall  be of a value  at least  equal  to the  value of the  items of
      property  destroyed prior to such damage or  destruction.  Borrowers shall
      consult with Agent in connection  with  adjusting any losses  payable with
      respect to the Collateral not in excess of $2,000,000.

            (ii) During the  existence  of a Default or Event of Default,  Agent
      shall have the exclusive  right to adjust any losses  payable with respect
      to the Collateral under any such insurance  policies in excess of $150,000
      without  any   liability  to  Borrower   whatsoever  in  respect  of  such
      adjustments,  and any monies in excess of $150,000 received as payment



                                      -44-
<PAGE>

      for any loss under any insurance  policy  mentioned  above with respect to
      the Collateral (other than liability  insurance policies) or as payment of
      any award or  compensation  for  condemnation  or taking by eminent domain
      with respect to the Collateral,  shall be paid over to Agent to be applied
      at the election of the Required  Lenders  either to the  prepayment of the
      Obligations or shall be disbursed to Borrowers  under staged payment terms
      reasonably  satisfactory  to Agent for application to the cost of repairs,
      replacements, or restorations.

      (c) No Borrower  will take out separate  insurance  concurrent  in form or
contributing in the event of loss with that required to be maintained under this
Section  6.8,  unless Agent is included  thereon as named  insured with the loss
payable to Agent under a lender's loss payable  endorsement  or its  equivalent.
Borrowers  immediately  shall notify Agent  whenever such separate  insurance is
taken out,  specifying  the insurer  thereunder  and full  particulars as to the
policies  evidencing  the same,  and copies of such policies  promptly  shall be
provided to Agent.

      6.9  Location  of  Equipment.  Keep the  Equipment  only at the  locations
identified on Schedule 5.5; provided,  however, that Administrative Borrower may
amend Schedule 5.5 so long as such  amendment  occurs by written notice to Agent
not less than 30 days prior to the date on which the  Equipment is moved to such
new  location,  so long as such new  location is within the  continental  United
States, and so long as, at the time of such written notification, the applicable
Borrower  provides any  financing  statements  or fixture  filings  necessary to
perfect  and  continue  perfected  the  Agent's  Liens on such  assets  and,  if
requested  by  Required  Lenders,  also  provides to Agent a  Collateral  Access
Agreement.  None of the Equipment  comprising  the  Collateral is affixed to any
real property or other goods.

      6.10 Compliance with Laws.  Comply with the requirements of all applicable
laws, rules,  regulations,  and orders of any Governmental Authority,  including
the Fair Labor Standards Act and the Americans With Disabilities Act, other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the aggregate, would not result in and reasonably could not be expected to
result in a Material Adverse Change.

      6.11 Leases.  Pay when due all rents and other  amounts  payable under any
leases to which any  Borrower is a party or by which any  Borrower's  properties
and  assets are bound,  unless  such  payments  are the  subject of a  Permitted
Protest.

      6.12  Brokerage  Commissions.  Pay  any and all  brokerage  commission  or
finders fees incurred in connection with or as a result of Borrowers'  obtaining
financing  from the Lender  Group  under  this  Agreement.  Borrowers  agree and
acknowledge that payment of all such brokerage commissions or finders fees shall
be the sole responsibility of Borrowers,  and each Borrower agrees to indemnify,
defend,  and hold Agent and the Lender Group harmless from and against any claim
of any broker or finder arising out of Borrowers'  obtaining  financing from the
Lender Group under this Agreement.

      6.13  Existence.  At all times  preserve and keep in full force and effect
each Borrower's  valid existence and good standing and any rights and franchises
material to Borrowers' businesses.



                                      -45-
<PAGE>

      6.14  Environmental.

      (a) Keep any property either owned or operated by any Borrower free of any
Environmental  Liens or post bonds or other financial  assurances  sufficient to
satisfy the obligations or liability evidenced by such Environmental  Liens, (b)
comply, in all material  respects,  with Environmental Laws and provide to Agent
documentation of such compliance which Agent reasonably  requests,  (c) promptly
notify Agent of any release of a Hazardous  Material in any reportable  quantity
from or onto  property  owned or operated by any  Borrower and take any Remedial
Actions required to abate said release or otherwise to come into compliance with
applicable Environmental Law, and (d) promptly provide Agent with written notice
within  10 days of the  receipt  of any of the  following:  (i)  notice  that an
Environmental  Lien has been filed against any of the real or personal  property
of any Borrower, (ii) commencement of any Environmental Action or notice that an
Environmental  Action will be filed against any Borrower,  and (iii) notice of a
violation,  citation,  or other  administrative  order which reasonably could be
expected to result in a Material Adverse Change.

      6.15  Disclosure  Updates.  Promptly and in no event later than 5 Business
Days  after  obtaining  knowledge  thereof,  (a)  notify  Agent  if any  written
information,  exhibit,  or report  furnished to the Lender Group  contained  any
untrue  statement  of a  material  fact or omitted  to state any  material  fact
necessary to make the  statements  contained  therein not misleading in light of
the circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof.

      6.16 Government  Authorization.  Deliver to Agent, as soon as practicable,
and in any event  within ten (10) days after the receipt by such  Borrower  from
any Gaming Authority or other  Governmental  Authority having  jurisdiction over
the  operations of such  Borrower or filing or receipt  thereof by such Borrower
(a)  copies  of any  order or  notice of such  Gaming  Authority  or such  other
Governmental  Authority or court of competent  jurisdiction which designates any
Gaming  License  or other  material  franchise,  permit,  or other  governmental
operating  authorization  of such Borrower or any  application  therefor,  for a
hearing or which  refuses  renewal or  extension  of, or revokes or suspends the
authority of such Borrower to construct, own, manage, or operate its businesses,
and (b) a copy of any  competing  application  filed  with  respect  to any such
Gaming  License  or  other  authorization,  or  application  therefor,  of  such
Borrower, or any citation, notice of violation, or order to show cause issued by
any Gaming Authority or other  governmental  authority or any complaint filed by
any Gaming Authority or other governmental  authority which is available to such
Borrower.

      6.17 License  Renewals.  Commencing  on the date six months  following the
Closing Date and  continuing  every six months  thereafter,  deliver to Agent an
updated Schedule 5.21 reflecting thereon,  as of the date of such delivery,  the
information described in Section 5.21.

      6.18  Licenses  and  Permits.   (a)  Ensure  that  all  material  licenses
(including all necessary  Gaming  Licenses),  permits,  and consents and similar
rights required from any federal,  state, or local  governmental body (including
the Gaming  Authorities) for the ownership,  use, or operation of the businesses
or properties  now owned or operated by each  Borrower have been



                                      -46-
<PAGE>

validly issued and are in full force and effect, and (b) comply, in all material
respects, with all of the provisions thereof applicable to it.

7.    NEGATIVE COVENANTS

      Each Borrower  covenants and agrees that, so long as any credit  hereunder
shall  be  available  and  until  full and  final  payment  of the  Obligations,
Borrowers will not and will not permit any of their  respective  Subsidiaries to
do any of the following:

      7.1 Indebtedness.  Create, incur, assume, permit,  guarantee, or otherwise
become  or  remain,   directly  or  indirectly,   liable  with  respect  to  any
Indebtedness, except:

      (a) Indebtedness evidenced by this Agreement and the other Loan Documents;

      (b) Indebtedness set forth on Schedule 5.20;

      (c) Indebtedness  evidenced by, or under, the Revolving Loan Agreement and
the Loan Documents (as defined in the Revolving Loan Agreement);

      (d) (i)  Miscellaneous  Indebtedness,  and (ii) Permitted Gaming Equipment
Purchase Money Indebtedness;

      (e) Indebtedness under the Senior Note Documents in an aggregate principal
amount not to exceed $123,200,000 at any one time outstanding;

      (f) refinancings,  renewals, or extensions of Indebtedness permitted under
clauses (b), (c), (d) and (e) of this Section 7.1 (and continuance or renewal of
any  Permitted  Liens  associated  therewith)  so long  as:  (i) the  terms  and
conditions  of such  refinancings,  renewals,  or  extensions do not, in Agent's
reasonable  judgment,  materially  impair  the  prospects  of  repayment  of the
Obligations by Borrowers or materially impair Borrowers' creditworthiness,  (ii)
such refinancings,  renewals,  or extensions do not result in an increase in the
principal amount of the Indebtedness so refinanced,  renewed, or extended or add
one or more of the Borrowers as liable with respect  thereto if such  additional
Borrowers were not liable with respect to the original Indebtedness,  (iii) such
refinancings,  renewals,  or  extensions  do not result in a  shortening  of the
average  weighted  maturity  of the  Indebtedness  so  refinanced,  renewed,  or
extended,  nor are they on  terms or  conditions,  that,  taken as a whole,  are
materially more burdensome or restrictive to the applicable  Borrower,  and (iv)
if the Indebtedness that is refinanced, renewed, or extended was subordinated in
right of  payment  to the  Obligations,  then the  terms and  conditions  of the
refinancing, renewal, or extension Indebtedness must include subordination terms
and  conditions  that are at least as  favorable  to Lender  as those  that were
applicable to the refinanced, renewed, or extended Indebtedness;

      (g) Indebtedness in an aggregate amount not to exceed  $6,000,000 in favor
of OED  Acquisition  provided that such  Indebtedness is at all times subject to
the Intercompany Subordination Agreement;



                                      -47-
<PAGE>

      (h) Indebtedness with respect to the obligations of Borrowers  pursuant to
the  Management  Agreement  so long  as  such  obligations  are  subject  to the
Management Fees Subordination Agreement; and

      (i) Indebtedness composing Permitted Investments.

      7.2  Liens.  Create,  incur,  assume,  or  permit to  exist,  directly  or
indirectly,  any Lien on or with  respect  to any of its  assets,  of any  kind,
whether now owned or  hereafter  acquired,  or any income or profits  therefrom,
except for Permitted Liens  (including  Liens that are replacements of Permitted
Liens to the extent that the original  Indebtedness is refinanced,  renewed,  or
extended under Section 7.1(f) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).

      7.3   Restrictions on Fundamental Changes.

      (a)   Enter   into   any   merger,   consolidation,   reorganization,   or
recapitalization, or reclassify its Stock; or

      (b) Liquidate,  wind up, or dissolve  itself (or suffer any liquidation or
dissolution).

      7.4 Disposal of Assets. Other than Permitted  Dispositions,  convey, sell,
lease, license,  assign,  transfer, or otherwise dispose of any of the assets of
any Borrower.

      7.5 Change Name. Change any Borrower's name, FEIN, corporate structure, or
identity, or add any new fictitious name; provided, however, that a Borrower may
change its name upon at least 30 days  prior  written  notice by  Administrative
Borrower  to Lender of such  change and so long as, at the time of such  written
notification, such Borrower provides any financing statements or fixture filings
necessary to perfect and continue perfected Lender's Liens.

      7.6  Guarantee.  Guarantee  or  otherwise  become in any way  liable  with
respect to the  obligations  of any third Person  except (a) by  endorsement  of
instruments or items of payment for deposit to the account of Borrowers or which
are  transmitted  or turned over to Agent,  (b)  guarantees by  Subsidiaries  of
Borrowers of the  obligations of Borrowers  under the Indenture or the Revolving
Loan Agreement,  (c) guarantees constituting Investments permitted under Section
7.13, and (d) guarantees constituting Indebtedness permitted under Section 7.1.

      7.7  Nature  of  Business.  Make any  change  in the  principal  nature of
Borrowers' business.

      7.8   Prepayments and Amendments.

      (a) Except in connection  with a refinancing  permitted by Section 7.1(f),
prepay, redeem, defease,  purchase, or otherwise acquire any Indebtedness of any
Borrower,  other  than the  Obligations,  the  Obligations  (as  defined  in the
Revolving Loan Agreement) or Miscellaneous  Indebtedness in accordance with this
Agreement, and



                                      -48-
<PAGE>

      (b) Except in connection  with a refinancing  permitted by Section 7.1(f),
(i) directly or indirectly, amend, modify, alter, increase, or change any of the
terms or conditions of any agreement,  instrument, document, indenture, or other
writing evidencing or concerning Indebtedness permitted under Sections 7.1(b) or
(e), or (ii) directly or indirectly,  amend, modify,  alter,  increase or change
any of the  terms or  conditions  of the  Management  Agreement  and  except  as
permitted in clause (i) hereof,  any of the Senior Note Documents,  in each case
unless approved by Agent in its Permitted Discretion.

      7.9 Change of Control.  Cause, permit, or suffer,  directly or indirectly,
any Change of Control.

      7.10  [Intentionally Omitted].

      7.11   Distributions;   Management  Fees.  Other  than   distributions  or
declaration  and payment of dividends by a Borrower to another  Borrower or to a
Subsidiary of a Borrower,  make any distribution or declare or pay any dividends
(in cash or other property,  other than common Stock) on, or purchase,  acquire,
redeem,  or retire any of any  Borrower's  Stock,  of any class,  whether now or
hereafter  outstanding,  or make any payment of  management  fees to any Person.
Notwithstanding  anything in this  Section 7.11 to the  contrary,  so long as no
Event of Default exists  hereunder,  (a) Parent may make cash  distributions  in
respect of, and in an amount  equal to, the amount of state and  federal  income
tax paid or to be paid by the holders of Parent's Stock on taxable income earned
by Parent and attributable to such holders as a result of Parent's  earnings for
federal  and state  (for the state or states in which any  holder is liable  for
income taxes with respect to such income) income tax purposes, after taking into
account any deduction for state income taxes in  calculating  the federal income
tax liability and all other deductions,  credits, deferrals and other reductions
available  to the  holders  from or  through  Parent,  (b)  Borrowers  may  make
distributions  to their  respective  shareholders in an aggregate  amount not to
exceed  $1,250,000  during the term of this Agreement,  so long as no Default or
Event of Default shall exist on the date of such distribution, and (c) except as
prohibited under the Management Fees Subordination Agreement, Borrowers may make
payments required pursuant to the Management Agreement.

      7.12 Accounting Methods.  Modify or change its method of accounting (other
than as may be required to conform to GAAP) or enter into,  modify, or terminate
any agreement currently existing, or at any time hereafter entered into with any
third party  accounting firm or service bureau for the preparation or storage of
Borrowers'  accounting  records  without said  accounting firm or service bureau
agreeing to provide Agent  information  regarding  the  Collateral or Borrowers'
financial condition.

      7.13  Investments.  Except for  Permitted  Investments  or for  Securities
Accounts or DDAs constituting Indenture Accounts,  directly or indirectly,  make
or  acquire  any  Investment,  or incur any  liabilities  (including  contingent
obligations) for or in connection with any Investment.

      7.14  Transactions  with Affiliates.  Directly or indirectly enter into or
permit to exist any  transaction  with any Affiliate of any Borrower  except (a)
for transactions  that are in the ordinary course of Borrowers'  business,  upon
fair and reasonable  terms,  that are fully disclosed



                                      -49-
<PAGE>

to Agent,  and that are no less favorable to Borrowers than would be obtained in
an arm's length  transaction with a non-Affiliate,  (b) that Borrowers may incur
indebtedness to Affiliates pursuant to, and within, the limitations set forth in
Section 7.1(g), (c) for payments pursuant to the Management Agreement, except as
prohibited  under  the  Management  Fees   Subordination   Agreement,   and  (d)
transactions between or among Borrowers and any Borrower's Subsidiary.

      7.15  Suspension.  Suspend  or go  out  of a  substantial  portion  of its
business.

      7.16 Compensation. Increase the annual fee or per-meeting fees paid to the
members  of its  Board of  Directors  during  any year by more than 15% over the
prior year.

      7.17 Use of  Proceeds.  Use the proceeds of the (a) Tranche A Advances for
any purpose  other than to acquire  Gaming  Equipment in the ordinary  course of
business  for use in the  business  operations  of  Borrower,  and (b) Tranche B
Advances  for any  purpose  other than to  acquire  Gaming  Equipment  and other
Equipment in the ordinary course of business for use in the business  operations
of Borrower, in each case consistent with the terms and conditions hereof.

      7.18 Change in Location of Chief Executive Office; Equipment with Bailees.
Relocate its chief  executive  office to a new location  without  Administrative
Borrower  providing 30 days prior written  notification  thereof to Agent and so
long as,  at the time of such  written  notification,  the  applicable  Borrower
provides any financing  statements or fixture  filings  necessary to perfect and
continue perfected the Agent's Liens and, upon request of Required Lenders, also
provides  to  Agent a  Collateral  Access  Agreement  with  respect  to such new
location.  The Equipment shall not at any time now or hereafter be stored with a
bailee, warehouseman, or similar party without Agent's prior written consent.

      7.19 Securities  Accounts.  Except with respect to any Securities  Account
constituting  Indenture  Accounts,  establish or maintain any Securities Account
unless  Agent  shall  have  received  a Control  Agreement  in  respect  of such
Securities Account. Borrowers agree to not transfer assets out of any Securities
Account  (other  than  Securities  Accounts  constituting  Indenture  Accounts);
provided,  however,  that,  so long as no Event of Default has  occurred  and is
continuing  or would result  therefrom,  Borrowers  may use such assets (and the
proceeds thereof) to the extent not prohibited by this Agreement.

      7.20  Financial Covenants.

            (i) Minimum EBITDA.  Fail to maintain  EBITDA,  measured on a fiscal
      quarter-end  basis,  of at least  the  required  amount  set  forth in the
      following table for the period set forth opposite thereto;

      --------------------------------------------------------------------------
              Applicable Amount                         Period
      --------------------------------------------------------------------------
                 $4,168,000             For the Four (4) Fiscal Month Period
                                        Ending June 30, 2004
      --------------------------------------------------------------------------
                 $7,294,000             For the Seven (7) Fiscal Month Period
                                        Ending September 30, 2004
      --------------------------------------------------------------------------


                                      -50-
<PAGE>

      --------------------------------------------------------------------------
                 $12,504,000            For the Ten (10) Fiscal Month Period
                                        Ending December 31, 2004
      --------------------------------------------------------------------------
                 $20,006,400            For the Twelve (12) Fiscal Month
                                        Period Ending March 31, 2005
      --------------------------------------------------------------------------
                 $20,044,800            For the Twelve (12) Fiscal Month
                                        Period ending June 30, 2005
      --------------------------------------------------------------------------
                 $20,083,200            For the Twelve (12) Fiscal Month
                                        Period Ending September 30, 2005
      --------------------------------------------------------------------------
                 $20,121,600            For the Twelve (12) Month Period
                                        Ending December 31, 2005
      --------------------------------------------------------------------------
                 $20,160,000            For the Twelve (12) Fiscal Month
                                        Period Ending March 31, 2006]
      --------------------------------------------------------------------------

            (ii) Capital  Expenditures.  Make capital  expenditures  (except (1)
      those required under the Construction  Disbursement  Budget (as defined in
      the Cash  Collateral  and  Disbursement  Agreement  and as the same may be
      amended, modified or supplemented from time to time in accordance with the
      Cash  Collateral  and  Disbursement  Agreement),  (2) those  required with
      respect  to the  acquisition  of Real  Property  from  Bart C.  Warner  as
      described in item 2 of Schedule 5.20 and (3) those  required to be made to
      O.M.  Operating in connection with the video gaming purchase  described in
      item 10 of  Schedule  5.20) in any fiscal year in excess of the amount set
      forth in the following table for the applicable period:

      ---------------------------------------------------------------
      July 1, 2003 through the    Fiscal Year 2004     Fiscal Year
       end of the Fiscal Year                             2005
                2003
      ---------------------------------------------------------------
              $250,000               $1,500,000        $2,000,000
      ---------------------------------------------------------------

8.    EVENTS OF DEFAULT.

      Any one or more of the  following  events  shall  constitute  an  event of
default (each, an "Event of Default") under this Agreement:

      8.1 If Borrowers fail to pay (a) Obligations  constituting  principal when
due and payable,  or when declared due and payable,  or (b) any other portion of
the Obligations  (including  interest (including any interest which, but for the
provisions of the Bankruptcy Code, would have accrued on such amounts), fees and
charges due the Lender Group,  reimbursement of Lender Group Expenses,  or other
amounts  constituting  Obligations)  within  three  (3)  days of the  date  such
Obligation described in this clause (b) is due and payable, or when declared due
and payable;

      8.2 If  Borrowers  fail or neglect to  perform,  keep,  or observe (a) any
term, provision,  condition,  covenant, or agreement:  (i) contained in Sections
6.2 (Reporting),  6.3 (Financial Statements,  Reports,  Certificates),  6.7 (Tax
Returns),   6.10  (Compliance  with  Laws),   6.11



                                      -51-
<PAGE>

(Leases),  6.12 (Brokerage  Commissions),  or 6.13 (Existence) of this Agreement
and such failure  continues  for a period of 5 Business Days from the earlier of
(A) notice by Lender to Borrowers or (B) the date  Borrowers knew or should have
known of its occurrence;  or (ii) contained in Sections 6.1 (Accounting System),
6.6  (Maintenance  of  Properties),  or 6.9  (Location  of  Equipment),  or 6.14
(exclusive  of clause (d) thereof)  (Environmental)  of this  Agreement and such
failure  continues  for a period of 15  Business  Days from the  earlier  of (A)
notice by Lender to  Borrowers  or (B) the date  Borrowers  knew or should  have
known of its occurrence; or (b) any other term, provision,  condition, covenant,
or agreement  contained  in this  Agreement  or any  material  term,  provision,
condition,  covenant or agreement  contained in any of the other Loan  Documents
(giving effect to any grace periods,  cure periods, or required notices, if any,
expressly  provided for in such other Loan Documents);  in each case, other than
any term,  provision,  condition,  covenant, or agreement that is the subject of
another provision of this Section 8, in which event such other provision of this
Section 8 shall govern;

      8.3 If any material portion of any Borrower's or any of its  Subsidiaries'
assets is  attached,  seized,  subjected to a writ or distress  warrant,  levied
upon, or comes into the possession of any third Person;

      8.4   If an  Insolvency  Proceeding  is commenced by any Borrower or any
of its Subsidiaries;

      8.5 If an Insolvency  Proceeding is commenced against any Borrower, or any
of its  Subsidiaries,  and any of the following events occur: (a) the applicable
Borrower  or the  Subsidiary  consents  to  the  institution  of the  Insolvency
Proceeding against it, (b) the petition commencing the Insolvency  Proceeding is
not timely controverted,  (c) the petition commencing the Insolvency  Proceeding
is not  dismissed  within 60  calendar  days of the date of the filing  thereof;
provided,  however,  that, during the pendency of such period,  Agent (including
any successor agent) and each other member of the Lender Group shall be relieved
of their  obligation  to extend  credit  hereunder,  (d) an  interim  trustee is
appointed to take possession of all or any substantial portion of the properties
or assets of, or to operate all or any  substantial  portion of the business of,
any Borrower or any of its  Subsidiaries,  or (e) an order for relief shall have
been entered therein;

      8.6 If any Borrower or any of its Subsidiaries is enjoined, restrained, or
in any way  prevented  by court  order from  continuing  to  conduct  all or any
material  part of its business  affairs for a period of 5  consecutive  Business
Days;

      8.7 If notices of Lien,  levy,  or  assessment  in an aggregate  amount in
excess of $50,000 are filed of record with respect to any of the  Collateral  by
the United States, or any department,  agency, or instrumentality thereof, or by
any state, county,  municipal,  or governmental agency, or if any taxes or debts
owing at any time  hereafter to any one or more of such entities  becomes a Lien
exceeding the foregoing aggregate limitation,  whether choate or otherwise, upon
any of the  Collateral  and the same is not paid  before the  earlier of 30 days
after the date it first  arises or 15 days prior to the date on which such asset
is subject to being forfeited;



                                      -52-
<PAGE>

      8.8 If a  judgment  or  judgments  for the  payment of money  (other  than
judgments as to which a reputable insurance company has accepted full liability)
is or are entered by a court of competent  jurisdiction  against any Borrower or
any of its  Subsidiaries  and such  judgment or judgments  remain  undischarged,
unbonded,  or unstayed for a period of 60 days after entry;  provided,  that the
aggregate amount of all such judgments exceeds $1,000,000;

      8.9 If there is a default under any Indebtedness of any Borrower or any of
its  Subsidiaries  in excess of  $1,000,000  and such  default (a) occurs at the
final maturity of the obligations  thereunder,  or (b) results in a right by the
other party  thereto,  irrespective  of whether  exercised,  to  accelerate  the
maturity  of  the  applicable   Borrower's  or  its  Subsidiaries'   obligations
thereunder,  to terminate such  agreement,  or to refuse to renew such agreement
pursuant to an automatic renewal right therein;

      8.10 If any  Borrower  or any of its  Subsidiaries  makes any  payment  on
account of  Indebtedness  that has been  contractually  subordinated in right of
payment to the payment of the Obligations,  except to the extent such payment is
permitted  by the  terms  of the  subordination  provisions  applicable  to such
Indebtedness;

      8.11 If any misstatement or  misrepresentation  exists now or hereafter in
any warranty,  representation,  statement, or Record made to the Lender Group by
any Borrower, its Subsidiaries,  or any officer, employee, agent, or director of
any Borrower or any of its Subsidiaries;

      8.12 If the Letter of Credit  expires  or is not  renewed at least 30 days
prior to its  expiry  date prior to release  by Agent  pursuant  to Section  4.8
hereof;

      8.13 If this  Agreement or any other Loan Document that purports to create
a Lien,  shall,  for any reason,  fail or cease to create a valid and  perfected
and,  except to the  extent  permitted  by the terms  hereof or  thereof,  first
priority  Lien on or  security  interest  in the  Collateral  covered  hereby or
thereby;

      8.14 Any provision of any Loan  Document  shall at any time for any reason
be declared to be null and void, or the validity or enforceability thereof shall
be  contested  by any  Borrower,  or a  proceeding  shall  be  commenced  by any
Borrower,  or  by  any  Governmental  Authority  having  jurisdiction  over  any
Borrower,  seeking to establish the invalidity or  unenforceability  thereof, or
any  Borrower  shall deny that any  Borrower  has any  liability  or  obligation
purported to be created under any Loan Document;

      8.15 If there is an "Event  of  Default"  under  (and as  defined  in) the
Indenture; or if there is an event of default under any of the other Senior Note
Documents,  the Fixed Price Contract,  the Management Agreement or the Revolving
Loan Agreement; or

      8.16  If  any  Governmental   Authority  (including  the  Louisiana  state
legislature)  restricts  the ability of any Borrower to operate,  or  restricts,
limits or  prohibits  any  Borrower  from  operating,  its  gaming  business  as
conducted  on the Closing  Date or  operating  the Racino  Project in the manner
contemplated  on the  Closing  Date and such  restriction  results in a Material
Adverse Change.



                                      -53-
<PAGE>

9.    THE LENDER'S RIGHTS AND REMEDIES.

      9.1 Rights and Remedies. Upon the occurrence, and during the continuation,
of an Event of Default,  the  Required  Lenders (at their  election  but without
notice of their election and without demand) may authorize and instruct Agent to
do any one or more of the  following  on behalf of the Lender  Group (and Agent,
acting  upon the  instructions  of the  Required  Lenders,  shall do the same on
behalf of the Lender Group), all of which are authorized by Borrowers:

      (a) Declare all Obligations,  whether evidenced by this Agreement,  by any
of the other Loan Documents, or otherwise, immediately due and payable;

      (b) Cease  advancing  money or  extending  credit to or for the benefit of
Borrowers  under this Agreement,  under any of the Loan Documents,  or under any
other agreement between Borrowers and the Lender Group;

      (c) Terminate this Agreement and any of the other Loan Documents as to any
future liability or obligation of the Lender Group, but without affecting any of
the Agent's Liens in the Collateral and without affecting the Obligations;

      (d) [Intentional Omitted];

      (e) [Intentional Omitted];

      (f) Without notice to or demand upon any Borrower,  make such payments and
do such acts as Agent considers  necessary or reasonable to protect its security
interests in the Collateral.  Each Borrower agrees to assemble the Collateral if
Agent so requires, and to make the Collateral available to Agent at a place that
Agent  may  designate  which is  reasonably  convenient  to both  parties.  Each
Borrower authorizes Agent to enter the premises where the Collateral is located,
to take and maintain  possession  of the  Collateral,  or any part of it, and to
pay,  purchase,  contest,  or compromise any Lien that in Agent's  determination
appears to conflict with the Agent's  Liens and to pay all expenses  incurred in
connection  therewith  and to charge  Borrowers'  Loan  Account  therefor.  With
respect to any of Borrowers'  owned or leased  premises,  each  Borrower  hereby
grants Agent a license to enter into  possession  of such premises and to occupy
the same,  without charge, in order to exercise any of the Lender Group's rights
or remedies provided herein, at law, in equity, or otherwise;

      (g) Without notice to any Borrower (such notice being  expressly  waived),
and without  constituting  a retention of any collateral in  satisfaction  of an
obligation  (within  the  meaning  of  the  Code),  set  off  and  apply  to the
Obligations  any and all (i) balances  and deposits of any Borrower  held by the
Lender Group, or (ii) Indebtedness at any time owing to or for the credit or the
account of any Borrower held by the Lender Group;

      (h) Hold,  as cash  collateral,  any and all  balances and deposits of any
Borrower held by the Lender Group to secure the full and final  repayment of all
of the Obligations;

      (i) Ship, reclaim,  recover, store, finish, maintain,  repair, prepare for
sale,  advertise  for sale,  and sell (in the manner  provided  for  herein) the
Collateral.  Each  Borrower  hereby  grants to Agent a license or other right to
use, without charge, such Borrower's labels, patents,



                                      -54-
<PAGE>

copyrights,   trade  secrets,  trade  names,  trademarks,   service  marks,  and
advertising  matter,  or any property of a similar nature, as it pertains to the
Collateral,  in completing  production of, advertising for sale, and selling any
Collateral  and such  Borrower's  rights under all  licenses  and all  franchise
agreements shall inure to the Lender Group's benefit;

      (j) Sell the  Collateral  at either a public or private  sale, or both, by
way of one or more  contracts  or  transactions,  for cash or on terms,  in such
manner and at such places (including Borrowers' premises) as Agent determines is
commercially  reasonable.  It is not necessary that the Collateral be present at
any such sale;

      (k) Agent  shall  give  notice of the  disposition  of the  Collateral  as
follows:
            (i) Agent shall give Administrative Borrower (for the benefit of the
      applicable  Borrower)  a notice in writing of the time and place of public
      sale,  or, if the sale is a private sale or some other  disposition  other
      than a public  sale is to be made of the  Collateral,  then the time on or
      after which the private sale or other disposition is to be made; and

            (ii) The notice shall be  personally  delivered  or mailed,  postage
      prepaid, to Administrative Borrower as provided in Section 12, at least 10
      days before the earliest time of disposition  set forth in the notice;  no
      notice  needs to be given prior to the  disposition  of any portion of the
      Collateral that is perishable or threatens to decline speedily in value or
      that is of a type customarily sold on a recognized market;

      (l) Agent,  on behalf of the Lender  Group may credit bid and  purchase at
any public sale;

      (m)  Agent  may seek the  appointment  of a  receiver  or  keeper  to take
possession  of all or any portion of the  Collateral  or to operate same and, to
the maximum extent permitted by law, may seek the appointment of such a receiver
without the requirement of prior notice or a hearing;

      (n) The Lender Group shall have all other rights and remedies available to
it at law or in equity or pursuant to any other Loan  Documents  (including  the
right to draw, in full or in part, under the Letter of Credit);

      (o) Any excess that exists after  disposition  of the  Collateral  will be
returned,  without interest and subject to the rights of third Persons, by Agent
to Administrative Borrower (for the benefit of the applicable Borrower); and

      (p) In the event Agent  elects to commence  foreclosure  proceeding  under
Louisiana law, Agent may cause such Collateral, or any part or parts thereof, to
be immediately seized and sold,  whether in term of court or in vacation,  under
ordinary or executory process,  in accordance with applicable  Louisiana law, to
the  highest  bidder for cash,  with or without  appraisement,  and  without the
necessity of making  additional  demand upon or notifying  the  Borrowers or any
Person or  placing  the  Borrowers  or any Person in  default,  all of which are
expressly waived. For purposes of foreclosure under Louisiana  executory process
procedures,  each Borrower  confesses  judgment and  acknowledges to be indebted
unto  and in  favor  of Agent  up to the  full  amount  of the  Obligations,  in
principal,  interest,  costs,  expenses,  attorneys'  fees  and  other  fees and
charges.



                                      -55-
<PAGE>

To  the  extent  permitted  under   applicable   Louisiana  law,  each  Borrower
additionally  waives: (a) the benefit of appraisal as provided in Articles 2332,
2336, 2723 and 2724 of the Louisiana Code of Civil Procedure, and all other laws
with regard to appraisal  upon judicial sale; (b) the demand and three (3) days'
delay as provided  under  Articles 2639 and 2721 of the Louisiana  Code of Civil
Procedure; (c) the notice of seizure as provided under Articles 2293 and 2721 of
the Louisiana  Code of Civil  Procedure;  (d) the three (3) days' delay provided
under Articles 2331 and 2722 of the Louisiana Code of Civil  Procedure;  and (e)
all other benefits  provided under Articles 2331, 2722 and 2723 of the Louisiana
Code of Civil Procedure and all other articles not specifically mentioned above.
Should it become  necessary  for Agent to foreclose  under this  Agreement,  all
declarations  of fact,  which are made  under an  authentic  act before a Notary
Public in the presence of two witnesses, by a Person declaring such facts to lie
within his or her knowledge, shall constitute authentic evidence for purposes of
executory  process  and  also  for  purposes  of La.  R.S.  9:3509.1,  La.  R.S.
9:3504(D)(6) and La. R.S. 10:9-629, as applicable.  In addition to the foregoing
rights and remedies,  Agent may elect to effect the seizure and  disposition  of
the Collateral  pursuant to any procedures as may be authorized by Louisiana law
from time to time.

      9.2 Remedies Cumulative. The rights and remedies of the Lender Group under
this Agreement,  the other Loan  Documents,  and all other  agreements  shall be
cumulative.  The Lender  Group  shall have all other  rights  and  remedies  not
inconsistent  herewith as  provided  under the Code,  by law,  or in equity.  No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the  Lender  Group of any  Event of  Default  shall be deemed a
continuing  waiver.  No delay by the Lender  Group  shall  constitute  a waiver,
election, or acquiescence by it.

10.   TAXES AND EXPENSES.

      If any  Borrower  fails to pay any  monies  (whether  taxes,  assessments,
insurance  premiums,  or, in the case of leased  properties or assets,  rents or
other amounts payable under such leases) due to third Persons,  or fails to make
any  deposits  or furnish  any  required  proof of payment  or  deposit,  all as
required under the terms of this Agreement,  then, Agent, in its sole discretion
and without  prior notice to any Borrower,  may do any or all of the  following:
(a) make payment of the same or any part  thereof,  (b) set up such  reserves in
Borrowers'  Loan  Account as Agent deems  necessary  to protect the Lender Group
from the exposure created by such failure,  or (c) in the case of the failure to
comply with Section 6.8 hereof,  obtain and maintain  insurance  policies of the
type  described in Section 6.8 and take any action with respect to such policies
as Agent deems prudent.  Any such amounts paid by Lender shall constitute Lender
Group  Expenses and any such payments  shall not  constitute an agreement by the
Lender  Group to make  similar  payments in the future or a waiver by the Lender
Group of any Event of Default  under this  Agreement.  Agent need not inquire as
to, or contest the validity of, any such  expense,  tax, or Lien and the receipt
of the  usual  official  notice  for the  payment  thereof  shall be  conclusive
evidence that the same was validly due and owing.

11.   WAIVERS; INDEMNIFICATION.

      11.1 Demand;  Protest.  Each Borrower  waives demand,  protest,  notice of
protest,  notice of  default or  dishonor,  notice of  payment  and  nonpayment,
nonpayment at maturity,



                                      -56-
<PAGE>

release,   compromise,   settlement,   extension,   or  renewal  of   documents,
instruments,  chattel paper, and guarantees at any time held by the Lender Group
on which any such Borrower may in any way be liable.

      11.2 The Lender Group's  Liability for  Collateral.  Each Borrower  hereby
agrees that: (a) so long as the Lender Group complies with its  obligations,  if
any,  under  the  Code,  Agent  shall  not in any way or  manner  be  liable  or
responsible for: (i) the safekeeping of the Collateral,  (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause,  (iii) any
diminution  in the value  thereof,  or (iv) any act or default  of any  carrier,
warehouseman,  bailee,  forwarding  agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Borrowers.

      11.3 Indemnification. Each Borrower shall pay, indemnify, defend, and hold
the  Agent-Related  Persons,  the  Lender-Related  Persons  with respect to each
Lender,  each  Participant,  and each of their respective  officers,  directors,
employees,   agents,  and  attorneys-in-fact  (each,  an  "Indemnified  Person")
harmless (to the fullest  extent  permitted by law) from and against any and all
claims, demands, suits, actions,  investigations,  proceedings, and damages, and
all  reasonable  attorneys fees and  disbursements  and other costs and expenses
actually  incurred in  connection  therewith  (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against,  imposed
upon,  or  incurred by any of them (a) in  connection  with or as a result of or
related to the execution, delivery, enforcement,  performance, or administration
of  this  Agreement,  any of  the  other  Loan  Documents,  or the  transactions
contemplated  hereby or  thereby,  and (b) with  respect  to any  investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the  proceeds  of the  credit  provided  hereunder  (irrespective  of
whether any Indemnified Person is a party thereto), or any act, omission, event,
or circumstance in any manner related thereto (all the foregoing,  collectively,
the "Indemnified  Liabilities").  The foregoing to the contrary notwithstanding,
Borrowers shall have no obligation to any Indemnified  Person under this Section
11.3  with  respect  to any  Indemnified  Liability  that a court  of  competent
jurisdiction  finally  determines to have resulted from the gross  negligence or
willful misconduct of such Indemnified  Person. This provision shall survive the
termination  of this  Agreement  and the  repayment of the  Obligations.  If any
Indemnified  Person  makes any  payment  to any other  Indemnified  Person  with
respect to an  Indemnified  Liability  as to which  Borrowers  were  required to
indemnify the Indemnified Person receiving such payment,  the Indemnified Person
making such payment is entitled to be  indemnified  and  reimbursed by Borrowers
with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO
EACH INDEMNIFIED  PERSON WITH RESPECT TO INDEMNIFIED  LIABILITIES WHICH IN WHOLE
OR IN PART  CAUSED  BY OR ARISE OUT OF ANY  NEGLIGENT  ACT OR  OMISSION  OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

12.   NOTICES.

      Unless  otherwise  provided in this  Agreement,  all notices or demands by
Borrowers  or Agent to the other  relating to this  Agreement  or any other Loan
Document  shall be in writing  and (except for  financial  statements  and other
informational  documents which may be sent by first-class mail, postage prepaid)
shall be personally  delivered or sent by registered or certified  mail (postage
prepaid, return receipt requested),  overnight courier, electronic mail (at such
email



                                      -57-
<PAGE>

addresses as Administrative  Borrower or Agent, as applicable,  may designate to
each other in accordance  herewith),  or  telefacsimile  to Borrowers in care of
Administrative  Borrower  or to Agent,  as the case may be, at its  address  set
forth below:

            If to Administrative
            Borrower:                  THE OLD EVANGELINE DOWNS, L.L.C.
                                       c/o Peninsula Gaming Partners, LLC
                                       400 E. Third Street, P.O. Box 1750
                                       Dubuque, Iowa 52004
                                       Attn:  Natalie Schramm
                                       Fax No.  (563) 690-2190

            and

                                       THE OLD EVANGELINE DOWNS, L.L.C.
                                       c/o Peninsula Gaming Partners, LLC
                                       11100 Santa Monica Boulevard, 10th
                                       Floor
                                       Los Angeles, California 90025
                                       Attn:  M. Brent Stevens
                                       Fax No.  (310) 914-6476

            with copies to:            MAYER, BROWN, ROWE & MAW
                                       1675 Broadway
                                       New York, New York 10019
                                       Attn:  Ron Brody, Esq.
                                       Fax No.  (212) 262-1910

            If to Agent:               WELLS FARGO FOOTHILL, INC.
                                       2450 Colorado Avenue, Suite 3000W
                                       Santa Monica, California 90404
                                       Attn:  Structured Finance Group Manager
                                       Fax No.  (310) 454-7442

            with copies to:            PAUL HASTINGS JANOFSKY & WALKER, LLP
                                       600 Peachtree Street, NE, Suite 2400
                                       Atlanta, Georgia 30308-2222
                                       Attn:  Cindy J. K. Davis, Esq.
                                       Fax No.  (404) 815-2424

      Agent and  Borrowers  may change the  address at which they are to receive
notices  hereunder,  by notice in writing in the  foregoing  manner given to the
other  party.  All notices or demands sent in  accordance  with this Section 12,
other than notices by Agent in connection  with  enforcement  rights against the
Collateral  under the  provisions of the Code,  shall be deemed  received on the
earlier  of the date of actual  receipt or 3  Business  Days  after the  deposit
thereof in the mail. Each Borrower  acknowledges and agrees that notices sent by
the Lender Group in connection  with the exercise of enforcement  rights against
Collateral  under the provisions of the



                                      -58-
<PAGE>

Code shall be deemed sent when  deposited in the mail or  personally  delivered,
or, where permitted by law, transmitted by telefacsimile or any other method set
forth above.

13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

      (a) THE VALIDITY OF THIS  AGREEMENT AND THE OTHER LOAN  DOCUMENTS  (UNLESS
EXPRESSLY  PROVIDED TO THE CONTRARY IN ANOTHER LOAN  DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION,  INTERPRETATION,  AND ENFORCEMENT HEREOF
AND  THEREOF,  AND THE RIGHTS OF THE PARTIES  HERETO AND THERETO WITH RESPECT TO
ALL MATTERS  ARISING  HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL
BE DETERMINED  UNDER,  GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES  THEREOF
OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

      (b)  THE  PARTIES  AGREE  THAT  ALL  ACTIONS  OR  PROCEEDINGS  ARISING  IN
CONNECTION  WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS  SHALL BE TRIED AND
LITIGATED  ONLY IN THE STATE AND  FEDERAL  COURTS  LOCATED  IN THE COUNTY OF NEW
YORK, STATE OF NEW YORK,  PROVIDED,  HOWEVER,  THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT,  AT AGENT'S OPTION,  IN
THE COURTS OF ANY JURISDICTION  WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE
SUCH  COLLATERAL OR OTHER PROPERTY MAY BE FOUND.  BORROWERS AND THE LENDER GROUP
WAIVE, TO THE EXTENT  PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO
ASSERT THE DOCTRINE OF FORUM NON  CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT
ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).

      (c) BORROWERS AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF
THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS  CONTEMPLATED  THEREIN,  INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY  CLAIMS.  BORROWERS  AND THE  LENDER  GROUP  REPRESENT  THAT  EACH HAS
REVIEWED THIS WAIVER AND EACH  KNOWINGLY AND  VOLUNTARILY  WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION,  A
COPY OF THIS  AGREEMENT  MAY BE FILED  AS A  WRITTEN  CONSENT  TO A TRIAL BY THE
COURT.



                                      -59-
<PAGE>

14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

      14.1  Assignments and Participations.

      (a) Any Lender may, with the written  consent of Agent  (provided  that no
written consent of Agent shall be required in connection with any assignment and
delegation by a Lender to an Eligible  Transferee),  and, so long as no Event of
Default then  exists,  Borrowers,  assign and delegate to one or more  assignees
(each an "Assignee")  all, or any ratable part of all, of the  Obligations,  the
Commitments  (pro rata between the Tranche A Commitment and Tranche B Commitment
of such Lender) and the other rights and  obligations  of such Lender  hereunder
and under the other Loan  Documents,  in a minimum amount of $5,000,000  (except
that such minimum amount shall not apply to an Affiliate of a Lender); provided,
however, that Borrower's consent shall not be unreasonably withheld, conditioned
or delayed; provided further that no Lender may make any assignment hereunder at
any time to Cerberus or Ableco  Finance LLC without  consent of  Borrowers;  and
provided  further that that  Borrowers and Agent may continue to deal solely and
directly  with such  Lender in  connection  with the  interest so assigned to an
Assignee  until (i) written  notice of such  assignment,  together  with payment
instructions,  addresses,  and related information with respect to the Assignee,
have been  given to  Administrative  Borrower  and Agent by such  Lender and the
Assignee,  (ii) such Lender and its Assignee  have  delivered to  Administrative
Borrower  and  Agent  an  Assignment   and  Acceptance  in  form  and  substance
satisfactory  to Agent,  and (iii) the  assignor  Lender or Assignee has paid to
Agent for Agent's  separate  account a  processing  fee in the amount of $5,000.
Anything contained herein to the contrary notwithstanding,  the consent of Agent
shall not be required and payments of any fees shall not be required if (x) such
assignment is in connection with any merger,  consolidation,  sale, transfer, or
other  disposition  of all or any  substantial  portion of the  business or loan
portfolio  of such  Lender  or (y) the  assignee  is an  Affiliate  (other  than
individual(s))  of  a  Lender.   Anything   contained  herein  to  the  contrary
notwithstanding,  Wells Fargo Foothill agrees for the benefit of Borrowers that,
so long as no Event of Default  has  occurred  and is  continuing,  Wells  Fargo
Foothill  shall  retain more than fifty  percent  (50%) of the  Obligations  and
commitment  to make  Advances  under  Section 2.1 of this  Agreement,  provided,
however,  that,  the minimum  retention of  Obligations  and  commitment to make
Advances  shall not be applicable if such  assignment is in connection  with any
merger,  consolidation,  sale,  transfer,  or  other  disposition  of all or any
substantial portion of the business or loan portfolio of Wells Fargo Foothill.

      (b) From and after the date that Agent notifies the assignor  Lender (with
a copy to Administrative  Borrower) that it has received an executed  Assignment
and  Acceptance  and payment of the  above-referenced  processing  fee,  (i) the
Assignee  thereunder  shall be a party hereto and, to the extent that rights and
obligations  hereunder have been assigned to it pursuant to such  Assignment and
Acceptance,  shall have the rights and  obligations  of a Lender  under the Loan
Documents,  and (ii) the assignor  Lender  shall,  to the extent that rights and
obligations  hereunder and under the other Loan  Documents have been assigned by
it pursuant to such  Assignment  and  Acceptance,  relinquish its rights (except
with respect to Section 11.3 hereof) and be released from its obligations  under
this Agreement (and in the case of an Assignment and Acceptance  covering all or
the remaining portion of an assigning Lender's rights and obligations under this
Agreement  and the other Loan  Documents,  such Lender shall cease to be a party



                                      -60-
<PAGE>

hereto  and  thereto),  and such  assignment  shall  affect a  novation  between
Borrowers and the Assignee.

      (c)  By  executing  and  delivering  an  Assignment  and  Acceptance,  the
assigning  Lender  thereunder and the Assignee  thereunder  confirm to and agree
with each  other and the other  parties  hereto as  follows:  (1) other  than as
provided in such  Assignment  and  Acceptance,  such  assigning  Lender makes no
representation  or warranty  and assumes no  responsibility  with respect to any
statements,  warranties or  representations  made in or in connection  with this
Agreement or the execution,  legality,  validity,  enforceability,  genuineness,
sufficiency  or value of this  Agreement  or any other Loan  Document  furnished
pursuant hereto,  (2) such assigning Lender makes no  representation or warranty
and  assumes no  responsibility  with  respect  to the  financial  condition  of
Borrowers  or the  performance  or  observance  by  Borrowers  of  any of  their
obligations under this Agreement or any other Loan Document  furnished  pursuant
hereto,  (3)  such  Assignee  confirms  that  it has  received  a copy  of  this
Agreement,  together with such other  documents and information as it has deemed
appropriate  to make its own credit  analysis  and  decision  to enter into such
Assignment and  Acceptance,  (4) such Assignee will,  independently  and without
reliance upon Agent,  such  assigning  Lender or any other Lender,  and based on
such  documents  and  information  as it shall  deem  appropriate  at the  time,
continue to make its own credit  decisions in taking or not taking  action under
this  Agreement,  (5) such Assignee  appoints and authorizes  Agent to take such
actions and to exercise  such powers under this  Agreement  as are  delegated to
Agent,  by the  terms  hereof,  together  with  such  powers  as are  reasonably
incidental thereto, and (6) such Assignee agrees that it will perform all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.

      (d)  Immediately  upon each  Assignee's  making its processing fee payment
under the Assignment and Acceptance and receipt and  acknowledgment  by Agent of
such fully executed Assignment and Acceptance, this Agreement shall be deemed to
be amended to the  extent,  but only to the  extent,  necessary  to reflect  the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom.   The  Commitment  allocated  to  each  Assignee  shall  reduce  such
Commitments of the assigning Lender pro tanto.

      (e) Any Lender may at any time, with the written consent of Agent, sell to
one or more  commercial  banks,  financial  institutions,  or other  Persons not
Affiliates  of such  Lender (a  "Participant")  participating  interests  in its
Obligations,  the Commitment,  and the other rights and interests of that Lender
(the  "Originating  Lender")  hereunder  and  under  the  other  Loan  Documents
(provided that no written  consent of Agent shall be required in connection with
any  sale  of any  such  participating  interests  by a  Lender  to an  Eligible
Transferee);  provided,  however, that (i) the Originating Lender shall remain a
"Lender" for all purposes of this Agreement and the other Loan Documents and the
Participant  receiving  the  participating  interest  in  the  Obligations,  the
Commitments,  and the other  rights  and  interests  of the  Originating  Lender
hereunder  shall not  constitute  a "Lender"  hereunder  or under the other Loan
Documents and the Originating  Lender's  obligations  under this Agreement shall
remain unchanged,  (ii) the Originating  Lender shall remain solely  responsible
for the performance of such obligations, (iii) Borrowers, Agent, and the Lenders
shall  continue  to deal  solely and  directly  with the  Originating  Lender in
connection  with the  Originating  Lender's  rights and  obligations  under this
Agreement and the other Loan  Documents,  (iv) no Lender shall transfer or grant
any participating  interest under which the Participant has the right to approve
any  amendment  to, or any consent or waiver



                                      -61-
<PAGE>

with respect to, this Agreement or any other Loan Document, except to the extent
such amendment to, or consent or waiver with respect to this Agreement or of any
other Loan Document would (A) extend the final maturity date of the  Obligations
hereunder in which such  Participant is  participating,  (B) reduce the interest
rate  applicable  to the  Obligations  hereunder  in which such  Participant  is
participating,  (C) release  all or a material  portion of the  Collateral,  the
Letter of Credit or guaranties  (except to the extent expressly  provided herein
or in any of the Loan Documents)  supporting the Obligations  hereunder in which
such  Participant is  participating,  (D) postpone the payment of, or reduce the
amount of, the interest or fees payable to such Participant through such Lender,
or (E) change  the  amount or due dates of  scheduled  principal  repayments  or
prepayments  or premiums,  and (v) all amounts  payable by  Borrowers  hereunder
shall be  determined as if such Lender had not sold such  participation,  except
that, if amounts  outstanding  under this Agreement are due and unpaid, or shall
have been  declared or shall have become due and payable upon the  occurrence of
an Event of  Default,  each  Participant  shall be  deemed  to have the right of
set-off in respect of its  participating  interest  in amounts  owing under this
Agreement to the same extent as if the amount of its participating interest were
owing  directly  to it as a Lender  under  this  Agreement.  The  rights  of any
Participant  only shall be derivative  through the Originating  Lender with whom
such  Participant  participates  and no Participant  shall have any rights under
this  Agreement or the other Loan Documents or any direct rights as to the other
Lenders, Agent, Borrowers, the Collateral,  the Letter of Credit or otherwise in
respect of the Obligations.  No Participant  shall have the right to participate
directly in the making of decisions by the Lenders among themselves.

      (f) In connection  with any such assignment or  participation  or proposed
assignment or participation, a Lender may disclose all documents and information
which it now or hereafter may have relating to Borrowers or Borrowers' business.

      (g) Any other provision in this Agreement notwithstanding,  any Lender may
at any time create a security interest in, or pledge,  all or any portion of its
rights under and interest in this Agreement in favor of any Federal Reserve Bank
in accordance  with  Regulation A of the Federal  Reserve Bank or U.S.  Treasury
Regulation  31 CFR  ss.203.14,  and such  Federal  Reserve Bank may enforce such
pledge or security interest in any manner permitted under applicable law.

      (h) Subject to the last  sentence  of this  Section  14.1(h),  Agent shall
maintain,  or cause to be  maintained,  a register (the  "Register") on which it
enters the name of a Lender as the registered owner of each Advance, as the case
may be, held by such Lender. A Registered Loan (and the Registered Note, if any,
evidencing  the  same)  may be  assigned  or sold in  whole  or in part  only by
registration  of such  assignment or sale on the Register  (and each  Registered
Note shall  expressly so provide).  Subject to the last sentence of this Section
14.1(h),  any assignment or sale of all or part of such Registered Loan (and the
Registered  Note,  if  any,  evidencing  the  same)  may  be  effected  only  by
registration  of such  assignment  or sale on the  Register,  together  with the
surrender of the Registered  Note, if any,  evidencing the same duly endorsed by
(or accompanied by a written  instrument of assignment or sale duly executed by)
the holder of such Registered Note, whereupon,  at the request of the designated
assignee(s)  or  transferee(s),  one or more  new  Registered  Notes in the same
aggregate  principal  amount shall be issued to the  designated  assignee(s)  or
transferee(s).  Prior  to the  registration  of an  assignment  or  sale  of any
Registered  Loan  (and  the  Registered  Note,  if any,  evidencing  the  same),
Borrowers,  Agent and the  Lenders  shall  treat the  Person in whose  name such
Registered  Loan  (and the  Registered  Note,



                                      -62-
<PAGE>

if any,  evidencing the same) is registered as the owner thereof for the purpose
of receiving all payments  thereon and for all other  purposes,  notwithstanding
notice to the contrary.  In the case of an  assignment or delegation  covered by
Section 14.1(a)(y), the assigning Lender shall maintain a register comparable to
the Register on behalf of Agent.

      (i) In the event that a Lender sells  participations in a Registered Loan,
such  Lender  shall  maintain  a  register  on which it  enters  the name of all
participants in the Registered Loans held by it (the "Participant  Register"). A
Registered  Loan (and the Registered  Note, if any,  evidencing the same) may be
participated in whole or in part only by registration of such  participation  on
the Participant  Register (and each Registered Note shall expressly so provide).
Any  participation  of such  Registered  Loan (and the Registered  Note, if any,
evidencing  the  same)  may  be  effected  only  by  the  registration  of  such
participation on the Participant Register.

      (j) Successors.  This Agreement shall bind and inure to the benefit of the
respective  successors  and assigns of each of the parties;  provided,  however,
that Borrowers may not assign this  Agreement or any rights or duties  hereunder
without the Lenders' prior written consent and any prohibited  assignment  shall
be  absolutely  void ab initio.  No consent to  assignment  by the Lenders shall
release any Borrower from its Obligations.  Lender may assign this Agreement and
the other Loan  Documents  and its rights and duties  hereunder  and  thereunder
pursuant to Section 14.1 hereof and,  except as expressly  required  pursuant to
Section  14.1  hereof,  no consent or  approval  by any  Borrower is required in
connection with any such assignment.

15.   AMENDMENTS; WAIVERS.

      15.1  Amendments  and Waivers.  No amendment or waiver of any provision of
this  Agreement or any other Loan  Document,  and no consent with respect to any
departure by Borrowers therefrom, shall be effective unless the same shall be in
writing and signed by the Required  Lenders (or by Agent at the written  request
of  the  Required  Lenders)  and  Administrative  Borrower  (on  behalf  of  all
Borrowers)  and then any such waiver or consent  shall be effective  only in the
specific  instance  and for the  specific  purpose  for which  given;  provided,
however, that no such waiver, amendment, or consent shall, unless in writing and
signed by all the Lenders  affected  thereby  and  Administrative  Borrower  (on
behalf of all Borrowers) and acknowledged by Agent, do any of the following:

      (a) increase or extend any Commitment of any Lender,

      (b)  postpone or delay any date fixed by this  Agreement or any other Loan
Document for any payment of  principal,  interest,  fees,  or other  amounts due
hereunder or under any other Loan Document,

      (c) reduce the principal of, or the rate of interest on, any loan or other
extension  of credit  hereunder,  or reduce  any fees or other  amounts  payable
hereunder or under any other Loan Document,

      (d) change the percentage of the Commitments  that is required to take any
action hereunder,



                                      -63-
<PAGE>

      (e) amend this Section or any  provision of the  Agreement  providing  for
consent or other action by all Lenders,

      (f) release Collateral other than as permitted by Section 16.12,

      (g) change the definition of "Required Lenders",

      (h) contractually subordinate any of the Agent's Liens,

      (i) release any Borrower from any obligation for the payment of money, or

      (j) amend any of the provisions of Section 16.

and,  provided  further,  however,  that no amendment,  waiver or consent shall,
unless in writing and signed by Agent,  affect the rights or duties of Agent, as
applicable,  under this  Agreement  or any other Loan  Document.  The  foregoing
notwithstanding,  any amendment,  modification, waiver, consent, termination, or
release of, or with  respect to, any  provision  of this  Agreement or any other
Loan  Document that relates only to the  relationship  of the Lender Group among
themselves,  and that does not affect the rights or  obligations  of  Borrowers,
shall not require consent by or the agreement of Borrowers.

      15.2  Replacement of Holdout Lender.

      If any action to be taken by the Lender Group or Agent hereunder  requires
the unanimous consent,  authorization, or agreement of all Lenders, and a Lender
("Holdout Lender") fails to give its consent,  authorization, or agreement, then
Agent,  upon at least 5 Business  Days prior  irrevocable  notice to the Holdout
Lender,  may permanently  replace the Holdout Lender with one or more substitute
Lenders (each, a  "Replacement  Lender"),  and the Holdout Lender shall have not
right to refuse to be  replaced  hereunder.  Such  notice to replace the Holdout
Lender shall specify an effective  date for such  replacement,  which date shall
not be later than 15 Business Days after the date such notice is given.

      Prior to the effective  date of such  replacement,  the Holdout Lender and
each  Replacement  Lender shall execute and deliver an Assignment and Acceptance
Agreement,  subject  only to the Holdout  Lender  being  repaid its share of the
outstanding  Obligations  without any premium or penalty of any kind whatsoever.
If the  Holdout  Lender  shall  refuse or fail to execute  and  deliver any such
Assignment  and  Acceptance  Agreement  prior  to the  effective  date  of  such
replacement,  the Holdout  Lender shall be deemed to have executed and delivered
such Assignment and Acceptance Agreement.  The replacement of any Holdout Lender
shall be made in accordance  with the terms of Section 14.1.  Until such time as
the  Replacement  Lenders  shall  have  acquired  all  of the  Obligations,  the
Commitments,  and  the  other  rights  and  obligations  of the  Holdout  Lender
hereunder and under the other Loan  Documents,  the Holdout  Lender shall remain
obligated to make the Holdout Lender's Pro Rata Share of Advances.

      15.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender to
exercise any right,  remedy,  or option  under this  Agreement or any other Loan
Document,  or delay by Agent or any Lender in exercising the same,  will operate
as a waiver thereof.  No waiver by Agent or any Lender will be effective  unless
it is in writing,  and then only to the



                                      -64-
<PAGE>

extent  specifically  stated.  No waiver by Agent or any Lender on any  occasion
shall affect or diminish Agent's and each Lender's rights  thereafter to require
strict performance by Borrowers of any provision of this Agreement.  Agent's and
each Lender's  rights under this  Agreement and the other Loan Documents will be
cumulative  and not  exclusive  of any other  right or remedy  that Agent or any
Lender may have.

16.   AGENT; THE LENDER GROUP.

      16.1 Appointment and Authorization of Agent. Each Lender hereby designates
and appoints Wells Fargo Foothill as its representative under this Agreement and
the other Loan Documents and each Lender hereby irrevocably  authorizes Agent to
take such action on its behalf under the  provisions of this  Agreement and each
other Loan  Document and to exercise  such powers and perform such duties as are
expressly  delegated  to Agent by the terms of this  Agreement or any other Loan
Document,  together with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express  conditions  contained  in this Section 16.
The  provisions of this Section 16 are solely for the benefit of Agent,  and the
Lenders,  and Borrowers shall have no rights as a third party beneficiary of any
of the  provisions  contained  herein.  Any provision to the contrary  contained
elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent
shall not have any duties or responsibilities,  except those expressly set forth
herein,  nor shall  Agent have or be deemed to have any  fiduciary  relationship
with any Lender, and no implied covenants, functions, responsibilities,  duties,
obligations or  liabilities  shall be read into this Agreement or any other Loan
Document or otherwise  exist against Agent;  it being  expressly  understood and
agreed  that the use of the word  "Agent" is for  convenience  only,  that Wells
Fargo  Foothill is merely the  representative  of the Lenders,  and only has the
contractual duties set forth herein.  Except as expressly  otherwise provided in
this Agreement, Agent shall have and may use its sole discretion with respect to
exercising or refraining from exercising any  discretionary  rights or taking or
refraining  from taking any actions that Agent  expressly is entitled to take or
assert under or pursuant to this Agreement and the other Loan Documents. Without
limiting the generality of the foregoing,  or of any other provision of the Loan
Documents  that  provides  rights or powers to Agent,  Lenders  agree that Agent
shall have the right to exercise the following  powers as long as this Agreement
remains in effect:  (a)  maintain,  in accordance  with its  customary  business
practices,  ledgers and records  reflecting the status of the  Obligations,  the
Collateral,  the Collections,  and related matters,  (b) execute or file any and
all  financing  or  similar   statements  or  notices,   amendments,   renewals,
supplements,  documents, instruments, proofs of claim, notices and other written
agreements with respect to the Loan Documents,  (c) make Advances, for itself or
on behalf of Lenders as provided in the Loan Documents, (d) exclusively receive,
apply,  and distribute the  Collections as provided in the Loan  Documents,  (e)
open and maintain such bank accounts and cash management accounts as Agent deems
necessary  and  appropriate  in  accordance  with  the  Loan  Documents  for the
foregoing  purposes  with respect to the  Collateral  and the  Collections,  (f)
perform,  exercise,  and  enforce any and all other  rights and  remedies of the
Lender Group with respect to Borrowers,  the  Obligations,  the  Collateral,  or
otherwise  related to any of same as  provided  in the Loan  Documents,  and (g)
incur  and pay such  Lender  Group  Expenses  as Agent  may  deem  necessary  or
appropriate  for the  performance  and  fulfillment  of its functions and powers
pursuant to the Loan Documents.



                                      -65-
<PAGE>

      16.2 Delegation of Duties.  Agent may execute any of its duties under this
Agreement  or any  other  Loan  Document  by or  through  agents,  employees  or
attorneys-in-fact  and shall be  entitled  to advice of counsel  concerning  all
matters  pertaining  to such  duties.  Agent  shall not be  responsible  for the
negligence  or misconduct  of any agent or  attorney-in-fact  that it selects as
long as such selection was made without gross negligence or willful misconduct.

      16.3 Liability of Agent.  None of the  Agent-Related  Persons shall (i) be
liable  for any  action  taken or omitted to be taken by any of them under or in
connection  with this  Agreement or any other Loan Document or the  transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be  responsible  in any manner to any of the  Lenders  for any  recital,
statement,  representation or warranty made by any Borrower or any Subsidiary or
Affiliate of any Borrower, or any officer or director thereof, contained in this
Agreement  or in  any  other  Loan  Document,  or in  any  certificate,  report,
statement or other document referred to or provided for in, or received by Agent
under or in connection  with, this Agreement or any other Loan Document,  or the
validity,  effectiveness,  genuineness,  enforceability  or  sufficiency of this
Agreement or any other Loan Document,  or for any failure of any Borrower or any
other  party to any Loan  Document  to  perform  its  obligations  hereunder  or
thereunder.  No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the  observance  or  performance  of any of the
agreements  contained  in, or  conditions  of, this  Agreement or any other Loan
Document,  or to inspect the Books or  properties  of  Borrowers or the books or
records or properties of any of Borrowers' Subsidiaries or Affiliates.

      16.4  Reliance by Agent.  Agent  shall be  entitled to rely,  and shall be
fully  protected in relying,  upon any  writing,  resolution,  notice,  consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement  or other  document or  conversation  believed by it to be genuine and
correct and to have been signed,  sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel  (including counsel to Borrowers
or counsel to any Lender), independent accountants and other experts selected by
Agent.  Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless Agent shall first receive
such advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received,  Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction  by Lenders  against any and all  liability and expense that may be
incurred by it by reason of taking or continuing to take any such action.  Agent
shall in all cases be fully  protected in acting,  or in refraining from acting,
under this Agreement or any other Loan Document in accordance  with a request or
consent of the Lenders and such  request and any action  taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.

      16.5 Notice of Default or Event of  Default.  Agent shall not be deemed to
have  knowledge or notice of the  occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses  required  to be paid to Agent for the account of the  Lenders,  except
with  respect to Events of Default of which Agent has actual  knowledge,  unless
Agent  shall  have  received  written  notice  from a Lender  or  Administrative
Borrower  referring  to this  Agreement,  describing  such  Default  or Event of
Default,  and stating that such notice is a "notice of default."  Agent promptly
will  notify the  Lenders of its  receipt of any such  notice or of any Event of
Default  of which  Agent has actual  knowledge.  If any  Lender  obtains  actual
knowledge of any Event of Default,  such Lender  promptly shall notify the other




                                      -66-
<PAGE>

Lenders  and  Agent of such  Event  of  Default.  Each  Lender  shall be  solely
responsible  for giving  any  notices to its  Participants,  if any.  Subject to
Section 16.4, Agent shall take such action with respect to such Default or Event
of Default as may be  requested  by the  Required  Lenders  in  accordance  with
Section 9.

      16.6  Credit  Decision.   Each  Lender   acknowledges  that  none  of  the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrowers
and  their  Subsidiaries  or  Affiliates,  shall be  deemed  to  constitute  any
representation  or warranty  by any  Agent-Related  Person to any  Lender.  Each
Lender represents to Agent that it has,  independently and without reliance upon
any  Agent-Related  Person and based on such documents and information as it has
deemed  appropriate,  made  its own  appraisal  of and  investigation  into  the
business,  prospects,  operations,  property,  financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document,  and all applicable  bank  regulatory laws relating to
the transactions  contemplated  hereby,  and made its own decision to enter into
this  Agreement and to extend credit to Borrowers.  Each Lender also  represents
that it will,  independently and without reliance upon any Agent-Related  Person
and based on such documents and information as it shall deem  appropriate at the
time,  continue to make its own credit  analysis,  appraisals  and  decisions in
taking or not taking action under this  Agreement and the other Loan  Documents,
and to make such investigations as it deems necessary to inform itself as to the
business,  prospects,  operations,  property,  financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan  Document.  Except for  notices,  reports,  and other  documents
expressly  herein required to be furnished to the Lenders by Agent,  Agent shall
not have any duty or  responsibility  to provide  any Lender  with any credit or
other  information  concerning the business,  prospects,  operations,  property,
financial  and other  condition or  creditworthiness  of Borrowers and any other
Person party to a Loan Document that may come into the  possession of any of the
Agent-Related Persons.

      16.7 Costs and Expenses;  Indemnification.  Agent may incur and pay Lender
Group Expenses to the extent Agent reasonably deems necessary or appropriate for
the  performance  and  fulfillment of its  functions,  powers,  and  obligations
pursuant to the Loan Documents, including court costs, reasonable attorneys fees
and expenses,  costs of collection by outside collection agencies and auctioneer
fees and costs of security  guards or  insurance  premiums  paid to maintain the
Collateral, whether or not Borrowers are obligated to reimburse Agent or Lenders
for  such  expenses  pursuant  to the  Loan  Agreement  or  otherwise.  Agent is
authorized and directed to deduct and retain sufficient amounts from Collections
received by Agent to reimburse Agent for such  out-of-pocket  costs and expenses
prior to the  distribution of any amounts to Lenders.  In the event Agent is not
reimbursed for such costs and expenses from Collections  received by Agent, each
Lender  hereby  agrees that it is and shall be  obligated to pay to or reimburse
Agent for the amount of such Lender's Pro Rata Share thereof. Whether or not the
transactions  contemplated  hereby are consummated,  the Lenders shall indemnify
upon demand the  Agent-Related  Persons (to the extent not  reimbursed  by or on
behalf of Borrowers and without  limiting the obligation of Borrowers to do so),
according  to their Pro Rata  Shares,  from and against any and all  Indemnified
Liabilities;  provided,  however, that no Lender shall be liable for the payment
to any  Agent-Related  Person of any  portion  of such  Indemnified  Liabilities
resulting solely from such Person's gross  negligence or willful  misconduct nor
shall any  Lender be liable  for the  obligations  of any  Defaulting  Lender in
failing to make an  Advance  or other  extension  of credit  hereunder.



                                      -67-
<PAGE>

Without  limitation of the  foregoing,  each Lender shall  reimburse  Agent upon
demand for such Lender's  ratable share of any costs or  out-of-pocket  expenses
(including attorneys fees and expenses) incurred by Agent in connection with the
preparation,  execution, delivery, administration,  modification,  amendment, or
enforcement (whether through  negotiations,  legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities  under, this Agreement,
any other Loan Document,  or any document contemplated by or referred to herein,
to the extent that Agent is not  reimbursed for such expenses by or on behalf of
Borrowers.  The  undertaking  in this Section  shall  survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.

      16.8 Agent in Individual Capacity. Wells Fargo Foothill and its Affiliates
may make loans to, issue letters of credit for the account of,  accept  deposits
from,  acquire equity interests in, and generally engage in any kind of banking,
trust,  financial advisory,  underwriting,  or other business with Borrowers and
their  Subsidiaries  and  Affiliates and any other Person (other than the Lender
Group) party to any Loan Documents as though Wells Fargo Foothill were not Agent
hereunder,  and, in each case, without notice to or consent of the other members
of the Lender  Group.  The other members of the Lender Group  acknowledge  that,
pursuant to such activities,  Wells Fargo Foothill or its Affiliates may receive
information  regarding Borrowers or their Affiliates and any other Person (other
than  the  Lender  Group)  party  to any  Loan  Documents  that  is  subject  to
confidentiality  obligations in favor of Borrowers or such other Person and that
prohibit the  disclosure  of such  information  to the Lenders,  and the Lenders
acknowledge that, in such  circumstances (and in the absence of a waiver of such
confidentiality  obligations,  which waiver Agent will use its  reasonable  best
efforts to obtain),  Agent  shall not be under any  obligation  to provide  such
information  to them.  The terms  "Lender"  and  "Lenders"  include  Wells Fargo
Foothill in its individual capacity.

      16.9 Successor Agent. Agent may resign as Agent upon 45 days notice to the
Lenders.  If Agent  resigns  under this  Agreement,  the Required  Lenders shall
appoint a successor  Agent for the Lenders.  If no successor  Agent is appointed
prior to the  effective  date of the  resignation  of Agent,  Agent may appoint,
after  consulting with the Lenders,  a successor  Agent. If Agent has materially
breached or failed to perform any  material  provision  of this  Agreement or of
applicable law, the Required  Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights,  powers,  and duties of the retiring  Agent and
the term  "Agent"  shall  mean such  successor  Agent and the  retiring  Agent's
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent's resignation  hereunder as Agent, the provisions of this Section 16 shall
inure to its benefit as to any actions  taken or omitted to be taken by it while
it  was  Agent  under  this  Agreement.  If  no  successor  Agent  has  accepted
appointment as Agent by the date which is 45 days  following a retiring  Agent's
notice of  resignation,  the retiring  Agent's  resignation  shall  nevertheless
thereupon  become  effective  and the Lenders shall perform all of the duties of
Agent  hereunder  until such time,  if any, as the  Lenders  appoint a successor
Agent as provided for above.

      16.10  Lender  in  Individual  Capacity.  Any  Lender  and its  respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from,  acquire equity  interests in and generally engage in any kind of
banking,  trust,  financial  advisory,   underwriting



                                      -68-
<PAGE>

or other business with Borrowers and their  Subsidiaries  and Affiliates and any
other Person (other than the Lender Group) party to any Loan Documents as though
such  Lender  were not a Lender  hereunder  without  notice to or consent of the
other  members  of the Lender  Group.  The other  members  of the  Lender  Group
acknowledge  that,  pursuant to such activities,  such Lender and its respective
Affiliates may receive  information  regarding Borrowers or their Affiliates and
any other Person (other than the Lender Group) party to any Loan  Documents that
is subject to  confidentiality  obligations  in favor of Borrowers or such other
Person and that prohibit the disclosure of such information to the Lenders,  and
the Lenders  acknowledge  that, in such  circumstances  (and in the absence of a
waiver of such  confidentiality  obligations,  which waiver such Lender will use
its  reasonable  best  efforts to  obtain),  such  Lender not shall be under any
obligation to provide such information to them.

      16.11 Withholding Taxes.

      (a) If any Lender is a "foreign corporation,  partnership or trust" within
the meaning of the IRC and such Lender claims exemption from, or a reduction of,
U.S.  withholding tax under Sections 1441 or 1442 of the IRC, such Lender agrees
with and in favor of Agent and Borrowers, to deliver to Agent and Administrative
Borrower:

            (i) if such Lender claims an exemption from withholding tax pursuant
      to its portfolio interest exception, (a) a statement of the Lender, signed
      under  penalty of perjury,  that it is not a (I) a "bank" as  described in
      Section  881(c)(3)(A)  of the  IRC,  (II) a 10%  shareholder  (within  the
      meaning of Section 881(c)(3)(B) of the IRC), or (III) a controlled foreign
      corporation  described  in  Section  881(c)(3)(C)  of the  IRC,  and (B) a
      properly  completed  IRS Form  W-8BEN,  before  the first  payment  of any
      interest under this Agreement and at any other time  reasonably  requested
      by Agent or Administrative Borrower;

            (ii) if such Lender  claims an exemption  from,  or a reduction  of,
      withholding tax under a United States tax treaty,  properly  completed IRS
      Form W-8BEN before the first payment of any interest  under this Agreement
      and at any other  time  reasonably  requested  by Agent or  Administrative
      Borrower;

            (iii) if such Lender claims that interest paid under this  Agreement
      is exempt from United  States  withholding  tax because it is  effectively
      connected  with a United  States  trade or  business of such  Lender,  two
      properly completed and executed copies of IRS Form W-8ECI before the first
      payment of any interest is due under this  Agreement and at any other time
      reasonably requested by Agent or Administrative Borrower;

            (iv) such  other form or forms as may be  required  under the IRC or
      other laws of the United  States as a  condition  to  exemption  from,  or
      reduction of, United States withholding tax.

Such Lender agrees promptly to notify Agent and  Administrative  Borrower of any
change  in  circumstances  which  would  modify or render  invalid  any  claimed
exemption or reduction.

      (b) If any Lender claims exemption from, or reduction of,  withholding tax
under a United  States tax treaty by  providing  IRS Form W-8BEN and such Lender
sells, assigns, grants a



                                      -69-
<PAGE>

participation  in, or  otherwise  transfers  all or part of the  Obligations  of
Borrowers to such Lender,  such Lender agrees to notify Agent of the  percentage
amount in which it is no longer the beneficial owner of Obligations of Borrowers
to such Lender. To the extent of such percentage  amount,  Agent will treat such
Lender's IRS Form W-8BEN as no longer valid.

      (c) If any Lender is entitled to a reduction in the applicable withholding
tax,  Agent may  withhold  from any  interest  payment to such  Lender an amount
equivalent  to the  applicable  withholding  tax after  taking into account such
reduction.  If the forms or other  documentation  required by subsection  (a) of
this  Section  are not  delivered  to Agent,  then Agent may  withhold  from any
interest payment to such Lender not providing such forms or other  documentation
an amount equivalent to the applicable withholding tax.

      (d) If the IRS or any other Governmental Authority of the United States or
other jurisdiction asserts a claim that Agent did not properly withhold tax from
amounts paid to or for the account of any Lender (because the  appropriate  form
was not delivered,  was not properly executed,  or because such Lender failed to
notify Agent of a change in circumstances  which rendered the exemption from, or
reduction of, withholding tax ineffective,  or for any other reason) such Lender
shall  indemnify  and hold Agent  harmless  for all  amounts  paid,  directly or
indirectly, by Agent as tax or otherwise,  including penalties and interest, and
including any taxes imposed by any  jurisdiction on the amounts payable to Agent
under this Section,  together with all costs and expenses  (including  attorneys
fees and expenses).  The obligation of the Lenders under this  subsection  shall
survive the payment of all  Obligations  and the  resignation  or replacement of
Agent.

      (e) All payments  made by  Borrowers  hereunder or under any note or other
Loan  Document  will be made without  setoff,  counterclaim,  or other  defense,
except as required by  applicable  law other than for Taxes (as defined  below).
All such  payments  will be made free and clear of,  and  without  deduction  or
withholding for, any present or future taxes,  levies,  imposts,  duties,  fees,
assessments or other charges of whatever nature now or hereafter  imposed by any
jurisdiction  (other than the United States) or by any political  subdivision or
taxing  authority  thereof or therein  (other  than of the United  States)  with
respect to such payments (but excluding,  any tax imposed by any jurisdiction or
by any political subdivision or taxing authority thereof or therein (i) measured
by or based on the net income or net profits of a Lender,  or (ii) to the extent
that  such  tax  results  from a  change  in the  circumstances  of the  Lender,
including a change in the residence,  place of organization,  or principal place
of business of the Lender, or a change in the branch or lending office of Lender
participating in the transactions set forth herein) and all interest,  penalties
or similar  liabilities  with  respect  thereto  (all such  non-excluded  taxes,
levies,  imposts,  duties, fees,  assessments or other charges being referred to
collectively as "Taxes").  If any Taxes are so levied or imposed,  each Borrower
agrees to pay the full amount of such Taxes, and such additional  amounts as may
be  necessary so that every  payment of all amounts due under this  Agreement or
under any note,  including  any amount paid pursuant to this Section 16.11 after
withholding  or deduction for or on account of any Taxes,  will not be less than
the amount provided for herein;  provided,  however, that Borrowers shall not be
required to increase any such amounts payable to Agent or any Lender (i) that is
not organized under the laws of the United States if such Person fails to comply
with the other  requirements  of this Section 16.11,  or (ii) if the increase in
such amount payable results from Agent's or such Lender's own willful misconduct
or gross  negligence.  Borrowers  will  furnish to Agent as promptly as possible
after



                                      -70-
<PAGE>

the date the payment of any Taxes is due pursuant to  applicable  law  certified
copies of tax receipts evidencing such payment by Borrowers.

      16.12 Collateral Matters.

      (a) The Lenders hereby  irrevocably  authorize Agent, at its option and in
its  sole  discretion,  to  release  any  Lien on any  Collateral  (i)  upon the
termination of the Commitments and payment and satisfaction in full by Borrowers
of all Obligations,  (ii)  constituting  property being sold or disposed of if a
release is required or desirable in connection  therewith and if  Administrative
Borrower  certifies to Agent that the sale or  disposition  is  permitted  under
Section 7.4 of this  Agreement or the other Loan  Documents  (and Agent may rely
conclusively  on  any  such  certificate,   without  further   inquiry),   (iii)
constituting  property in which no Borrower  owned any  interest at the time the
security  interest was granted or at any time thereafter,  or (iv)  constituting
property leased to a Borrower under a lease that has expired or is terminated in
a transaction  permitted under this Agreement.  Except as provided above,  Agent
will not execute and deliver a release of any Lien on any Collateral without the
prior written authorization of (y) if the release is of all or substantially all
of the Collateral,  all of the Lenders, or (z) otherwise,  the Required Lenders.
Upon request by Agent or  Administrative  Borrower at any time, the Lenders will
confirm in writing  Agent's  authority  to release any such Liens on  particular
types or items of Collateral pursuant to this Section 16.12; provided,  however,
that (1) Agent  shall not be  required  to execute  any  document  necessary  to
evidence such release on terms that, in Agent's  opinion,  would expose Agent to
liability  or create any  obligation  or entail any  consequence  other than the
release of such Lien without recourse, representation, or warranty, and (2) such
release shall not in any manner discharge,  affect, or impair the Obligations or
any Liens (other than those  expressly  being  released) upon (or obligations of
Borrowers in respect of) all  interests  retained by Borrowers,  including,  the
proceeds of any sale,  all of which shall  continue  to  constitute  part of the
Collateral.

      (b) Agent  shall have no  obligation  whatsoever  to any of the Lenders to
assure  that the  Collateral  exists or is owned by  Borrowers  or is cared for,
protected,  or insured or has been  encumbered,  or that the Agent's  Liens have
been properly or  sufficiently or lawfully  created,  perfected,  protected,  or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care,  disclosure or fidelity,  or to
continue  exercising,  any of the  rights,  authorities  and  powers  granted or
available to Agent pursuant to any of the Loan  Documents,  it being  understood
and agreed that in respect of the  Collateral,  or any act,  omission,  or event
related thereto, subject to the terms and conditions contained herein, Agent may
act in any manner it may deem appropriate,  in its sole discretion given Agent's
own  interest in the  Collateral  in its capacity as one of the Lenders and that
Agent shall have no other duty or liability  whatsoever  to any Lender as to any
of the foregoing, except as otherwise provided herein.

      16.13 Restrictions on Actions by Lenders; Sharing of Payments.

      (a) Each of the  Lenders  agrees  that it shall not,  without  the express
consent of Agent, and that it shall, to the extent it is lawfully entitled to do
so, upon the request of Agent,  set off  against  the  Obligations,  any amounts
owing by such Lender to  Borrowers or any deposit  accounts of Borrowers  now or
hereafter  maintained with such Lender.  Each of the Lenders



                                      -71-
<PAGE>

further  agrees that it shall not,  unless  specifically  requested  to do so by
Agent, take or cause to be taken any action,  including, the commencement of any
legal or equitable  proceedings,  to foreclose any Lien on, or otherwise enforce
any  security  interest  in, any of the  Collateral  the purpose of which is, or
could be, to give such  Lender any  preference  or  priority  against  the other
Lenders with respect to the Collateral.

      (b) If, at any time or times any  Lender  shall  receive  (i) by  payment,
foreclosure,  setoff,  or otherwise,  any proceeds of Collateral or any payments
with respect to the Obligations arising under, or relating to, this Agreement or
the other Loan Documents,  except for any such proceeds or payments  received by
such Lender from Agent pursuant to the terms of this Agreement, or (ii) payments
from Agent in excess of such Lender's ratable portion of all such  distributions
by Agent,  such Lender  promptly shall (1) turn the same over to Agent, in kind,
and with such endorsements as may be required to negotiate the same to Agent, or
in immediately  available  funds,  as applicable,  for the account of all of the
Lenders and for application to the Obligations in accordance with the applicable
provisions of this Agreement, or (2) purchase,  without recourse or warranty, an
undivided  interest  and  participation  in the  Obligations  owed to the  other
Lenders so that such excess payment  received shall be applied  ratably as among
the Lenders in accordance with their Pro Rata Shares; provided, however, that if
all or  part  of  such  excess  payment  received  by the  purchasing  party  is
thereafter  recovered  from  it,  those  purchases  of  participations  shall be
rescinded in whole or in part, as applicable,  and the applicable portion of the
purchase price paid therefor  shall be returned to such  purchasing  party,  but
without  interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.

      16.14 Agency for  Perfection.  Agent hereby  appoints each other Lender as
its agent (and each Lender hereby accepts such  appointment)  for the purpose of
perfecting  the Agent's Liens in assets which,  in accordance  with Article 9 of
the UCC can be perfected only by possession. Should any Lender obtain possession
of any such Collateral,  such Lender shall notify Agent thereof,  and,  promptly
upon Agent's  request  therefor  shall  deliver such  Collateral  to Agent or in
accordance with Agent's instructions.

      16.15  Payments by Agent to the Lenders.  All payments to be made by Agent
to the  Lenders  shall be made by bank wire  transfer  or  internal  transfer of
immediately  available funds pursuant to such wire transfer instructions as each
party may designate  for itself by written  notice to Agent.  Concurrently  with
each such  payment,  Agent shall  identify  whether such payment (or any portion
thereof) represents principal, premium, or interest of the Obligations.

      16.16 Concerning the Collateral and Related Loan Documents. Each member of
the Lender Group  authorizes  and directs Agent to enter into this Agreement and
the other Loan  Documents  relating  to the  Collateral,  for the benefit of the
Lender  Group.  Each member of the Lender  Group agrees that any action taken by
Agent in accordance with the terms of this Agreement or the other Loan Documents
relating  to the  Collateral  and the  exercise by Agent of its powers set forth
therein  or  herein,  together  with  such  other  powers  that  are  reasonably
incidental thereto, shall be binding upon all of the Lenders.



                                      -72-
<PAGE>

      16.17 Field Audits and Examination Reports;  Confidentiality;  Disclaimers
by  Lenders;  Other  Reports  and  Information.  By  becoming  a  party  to this
Agreement, each Lender:

      (a) is deemed to have requested  that Agent furnish such Lender,  promptly
after it becomes  available,  a copy of each field audit or  examination  report
(each a "Report" and collectively, "Reports") prepared by Agent, and Agent shall
so furnish each Lender with such Reports,

      (b)  expressly  agrees and  acknowledges  that Agent does not (i) make any
representation or warranty as to the accuracy of any Report,  and (ii) shall not
be liable for any information contained in any Report,

      (c)  expressly   agrees  and   acknowledges   that  the  Reports  are  not
comprehensive  audits or examinations,  that Agent or other party performing any
audit or examination will inspect only specific information  regarding Borrowers
and will rely  significantly  upon the Books, as well as on  representations  of
Borrowers' personnel,

      (d) agrees to keep all Reports and other material,  non-public information
regarding  Borrowers and their  Subsidiaries and their operations,  assets,  and
existing and  contemplated  business  plans in a confidential  manner;  it being
understood  and  agreed by  Borrowers  that in any event  such  Lender  may make
disclosures (a) to counsel for and other advisors,  accountants, and auditors to
such  Lender,  (b)  reasonably  required  by any bona fide  potential  or actual
Assignee or Participant in connection with any contemplated or actual assignment
or transfer by such Lender of an interest herein or any  participation  interest
in such Lender's rights hereunder,  (c) of information that has become public by
disclosures made by Persons other than such Lender,  its Affiliates,  assignees,
transferees,  or  Participants,  or (d) as required or  requested  by any court,
governmental or administrative  agency,  pursuant to any subpoena or other legal
process, or by any law, statute,  regulation, or court order; provided, however,
that, unless prohibited by applicable law, statute,  regulation, or court order,
such Lender  shall notify  Administrative  Borrower of any request by any court,
governmental  or  administrative  agency,  or pursuant to any  subpoena or other
legal  process  for  disclosure  of any  such  non-public  material  information
concurrent with, or where practicable, prior to the disclosure thereof, and

      (e) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold Agent and any such other Lender
preparing a Report harmless from any action the indemnifying  Lender may take or
conclusion  the  indemnifying  Lender  may  reach  or draw  from any  Report  in
connection with any loans or other credit  accommodations  that the indemnifying
Lender  has  made  or  may  make  to  Borrowers,  or the  indemnifying  Lender's
participation  in, or the indemnifying  Lender's purchase of, a loan or loans of
Borrowers;  and (ii) to pay and protect,  and indemnify,  defend and hold Agent,
and any such other Lender  preparing a Report  harmless  from and  against,  the
claims,  actions,  proceedings,  damages,  costs,  expenses,  and other  amounts
(including,  attorneys  fees and  costs)  incurred  by Agent and any such  other
Lender  preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.



                                      -73-
<PAGE>

In addition to the  foregoing:  (x) any Lender may from time to time  request of
Agent in  writing  that  Agent  provide  to such  Lender a copy of any report or
document  provided  by  Borrowers  to Agent that has not been  contemporaneously
provided by Borrowers to such Lender,  and, upon receipt of such request,  Agent
shall  provide a copy of same to such  Lender,  (y) to the extent  that Agent is
entitled,  under any  provision  of the Loan  Documents,  to request  additional
reports  or  information  from  Borrowers,  any Lender  may,  from time to time,
reasonably  request  Agent to exercise  such right as specified in such Lender's
notice to Agent,  whereupon  Agent  promptly  shall  request  of  Administrative
Borrower the  additional  reports or  information  reasonably  specified by such
Lender, and, upon receipt thereof from Administrative  Borrower,  Agent promptly
shall provide a copy of same to such Lender, and (z) any time that Agent renders
to Administrative  Borrower a statement regarding the Loan Account,  Agent shall
send a copy of such statement to each Lender.

      16.18 Several Obligations;  No Liability.  Notwithstanding that certain of
the Loan Documents now or hereafter may have been or will be executed only by or
in  favor  of  Agent  in its  capacity  as  such,  and not by or in favor of the
Lenders,  any and all  obligations  on the  part of  Agent  (if any) to make any
credit  available  hereunder  shall  constitute  the  several  (and  not  joint)
obligations  of the respective  Lenders on a ratable  basis,  according to their
respective  Commitments,  to make an amount of such  credit  not to  exceed,  in
principal amount,  at any one time  outstanding,  the amount of their respective
Commitments.  Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability  for, or in respect of, the business,
assets,  profits,  losses, or liabilities of any other Lender. Each Lender shall
be solely  responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required,  and no Lender
shall have any  obligation,  duty, or liability to any  Participant of any other
Lender.  Except as provided in Section 16.7, no member of the Lender Group shall
have any  liability  for the acts or any other  member of the Lender  Group.  No
Lender shall be  responsible to any Borrower or any other Person for any failure
by any  other  Lender  to  fulfill  its  obligations  to make  credit  available
hereunder,  nor to  advance  for it or on its  behalf  in  connection  with  its
Commitment,  nor to  take  any  other  action  on  its  behalf  hereunder  or in
connection with the financing contemplated herein.

17.   GENERAL PROVISIONS.

      17.1  Effectiveness.  This Agreement shall be binding and deemed effective
when executed by Borrowers,  Agent,  and each Lender whose signature is provided
for on the signature pages hereof.

      17.2 Section Headings. Headings and numbers have been set forth herein for
convenience  only.  Unless the contrary is compelled by the context,  everything
contained in each Section applies equally to this entire Agreement.

      17.3  Interpretation.  Neither  this  Agreement  nor  any  uncertainty  or
ambiguity herein shall be construed  against Lender or Borrowers,  whether under
any rule of construction or otherwise.  On the contrary, this Agreement has been
reviewed by all parties and shall be construed and interpreted  according to the
ordinary  meaning of the words used so as to accomplish  fairly the purposes and
intentions of all parties hereto.



                                      -74-
<PAGE>

      17.4 Severability of Provisions. Each provision of this Agreement shall be
severable  from every  other  provision  of this  Agreement  for the  purpose of
determining the legal enforceability of any specific provision.

      17.5  Amendments  in  Writing.  This  Agreement  only can be  amended by a
writing in accordance with Section 15.1.

      17.6 Counterparts; Telefacsimile Execution. This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which,  when executed and delivered,  shall be deemed to be an original,
and all of which,  when taken  together,  shall  constitute but one and the same
Agreement.   Delivery  of  an  executed   counterpart   of  this   Agreement  by
telefacsimile  shall be equally as effective as delivery of an original executed
counterpart of this Agreement.  Any party delivering an executed  counterpart of
this  Agreement  by  telefacsimile  also  shall  deliver  an  original  executed
counterpart  of this  Agreement but the failure to deliver an original  executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement.  The foregoing  shall apply to each other Loan Document  mutatis
mutandis.

      17.7  Revival and  Reinstatement  of  Obligations.  If the  incurrence  or
payment of the  Obligations  by any  Borrower  or the  transfer to Lender of any
property  should for any reason  subsequently be declared to be void or voidable
under  any  state or  federal  law  relating  to  creditors'  rights,  including
provisions  of  the   Bankruptcy   Code  relating  to  fraudulent   conveyances,
preferences,  or other voidable or recoverable payments of money or transfers of
property  (collectively,  a  "Voidable  Transfer"),  and if the Lender  Group is
required to repay or restore,  in whole or in part, any such Voidable  Transfer,
or elects to do so upon the  reasonable  advice of its counsel,  then, as to any
such Voidable Transfer,  or the amount thereof that the Lender Group is required
or elects to repay or restore,  and as to all reasonable  costs,  expenses,  and
attorneys fees of the Lender Group related  thereto,  the liability of Borrowers
automatically  shall be revived,  reinstated,  and  restored  and shall exist as
though such Voidable Transfer had never been made.

      17.8 Integration.  This Agreement, together with the other Loan Documents,
reflects  the  entire   understanding   of  the  parties  with  respect  to  the
transactions  contemplated  hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.

      17.9  Parent as Agent for  Borrowers.  Each  Borrower  hereby  irrevocably
appoints  Parent as the borrowing agent and  attorney-in-fact  for all Borrowers
(the "Administrative Borrower") which appointment shall remain in full force and
effect unless and until Agent shall have received prior written notice signed by
each Borrower that such  appointment has been revoked and that another  Borrower
has been appointed  Administrative  Borrower.  Each Borrower hereby  irrevocably
appoints and  authorizes the  Administrative  Borrower (i) to provide Agent with
all notices  with  respect to Advances  and all other  notices and  instructions
under this Agreement and (ii) to take such action as the Administrative Borrower
deems  appropriate  on its behalf to obtain  Advances and to exercise such other
powers as are  reasonably  incidental  thereto to carry out the purposes of this
Agreement. It is understood that the handling of the Loan Account and Collateral
of  Borrowers in a combined  fashion,  as more fully set forth  herein,  is



                                      -75-
<PAGE>

done solely as an  accommodation to Borrowers in order to utilize the collective
borrowing powers of Borrowers in the most efficient and economical manner and at
their request,  and that Lender Group shall not incur  liability to any Borrower
as a result  hereof.  Each  Borrower  expects  to derive  benefit,  directly  or
indirectly,  from the  handling  of the Loan  Account  and the  Collateral  in a
combined fashion since the successful operation of each Borrower is dependent on
the continued  successful  performance  of the integrated  group.  To induce the
Lender  Group to do so,  and in  consideration  thereof,  each  Borrower  hereby
jointly and  severally  agrees to indemnify  each member of the Lender Group and
hold each member of the Lender  Group  harmless  against any and all  liability,
expense, loss or claim of damage or injury, made against the Lender Group by any
Borrower or by any third party whosoever,  arising from or incurred by reason of
(a) the  handling of the Loan  Account and  Collateral  of  Borrowers  as herein
provided,   (b)  the  Lender  Group's   relying  on  any   instructions  of  the
Administrative  Borrower,  or (c) any other  action  taken by the  Lender  Group
hereunder or under the other Loan Documents,  except that Borrowers will have no
liability to the relevant  Agent Related Person or  Lender-Related  Person under
this Section 17.8 with respect to any liability that has been finally determined
by a court of  competent  jurisdiction  to have  resulted  solely from the gross
negligence or willful misconduct of such Agent-Related  Person or Lender-Related
Person, as the case may be.

      17.10 Non-Recourse Liability.

      (a) Subject to the qualifications in paragraph (b) below, the Lender Group
shall not enforce the  liability  and  obligations  of  Borrowers to perform and
observe the obligations  contained in this Agreement or any other Loan Document,
by any action or proceeding  wherein a money  judgment  shall be sought  against
Borrowers,  and  Borrowers  shall have no personal  liability for the payment or
performance of any of their obligations under any Loan Documents except that the
Lender Group may bring a foreclosure  action, or any other appropriate action or
proceeding to enable the Lender Group to enforce and realize upon the Collateral
or the  Letter of  Credit,  or any other  collateral  granted  to or held by the
Lender Group,  and the interests of Borrowers in the  Collateral,  the Letter of
Credit  and  such  other  collateral;   provided,   however,   that,  except  as
specifically  provided  herein,  any  judgment in any such action or  proceeding
shall be enforceable  against  Borrowers  only to the extent of each  Borrower's
respective  interest  in the  Collateral,  the Letter of Credit and in any other
collateral  granted to or held by the Lender Group. The Lender Group agrees that
it shall  not sue for,  seek or  demand  any  deficiency  judgment  against  any
Borrower  in  any  such  action  or  proceeding,  under  or by  reason  of or in
connection with this Agreement or the other Loan Documents. Nothing herein shall
be  deemed to be a waiver of any right  which the  Lender  Group may have  under
Sections 506(a),  506(b), 1111(b) or any other provisions of the Bankruptcy Code
to file a claim for the full amount of the Obligations secured by this Agreement
or to  require  that  all  Collateral  shall  continue  to  secure  all  of  the
Obligations  owing to the Lender Group in accordance with this Agreement and the
other Loan Documents.

      (b) The  provisions  of Section  17.10(a)  above shall not,  however:  (i)
impair the right of the Lender Group to name any  Borrower as a party  defendant
in any action or suit for foreclosure  against the  Collateral;  (ii) affect the
validity  or  enforceability  of any  guaranty  made  in  connection  with  this
Agreement  or the other  Loan  Documents;  (iii)  impair the right of the Lender
Group to  obtain  the  appointment  of a  receiver  of the  Collateral;  or (iv)
constitute a release,  waiver or  impairment of the right of the Lender Group to
enforce the  liability  or



                                      -76-
<PAGE>

obligation of any Borrower , by money  judgment or  otherwise,  to the extent of
any loss, damage, cost, expense,  liability,  claim or other obligation incurred
by the Lender Group (including attorneys' fees and costs),  arising out of or in
connection  with any act or omission by such Borrower which would give rise to a
cause of action in favor of Agent, any Lender, or the Lender Group, at law or in
equity, independent of such Borrower's obligations and liabilities as a borrower
under the Loan Documents.  Anything  contained in Section  17.10(a) above to the
contrary  notwithstanding,  Borrowers  shall be liable to the Lender  Group for,
without  limitation,  the Lender  Group's harm,  loss (which may include  Lender
Group Expenses, and lost interest and principal of the Advances),  damage, costs
and  expenses  (including  the Lender  Group's  reasonable  attorneys'  fees and
collection  costs)  arising out of or in  connection  with any of the  following
circumstances:

            (i)  any use or  application  of the  proceeds  of any  Advances  in
      violation of Section 7.17 hereof,  or any failure to maintain at all times
      the insurance required by Section 6.8, or any failure to cause Agent to be
      named the sole loss-payee of any such insurance covering the Collateral ;

            (ii) any waste respecting all or any part of the Collateral;

            (iii) any fraud or intentional misconduct of any Borrower;

            (iv) any material breach of any  representation  or warranty made in
      connection  with this  Agreement  known by any Borrower to have been false
      when made or deemed  made,  including  any material  misrepresentation  or
      inaccuracy  contained in any  financial  statement,  borrowing  request or
      other  document  provided to Lender  pursuant to this  Agreement  known by
      Borrower to have been false or inaccurate when provided; or

            (v) the  occurrence  of a direct or indirect  transfer of any of the
      Collateral  in  violation  of this  Agreement  without  the prior  written
      consent of Lender,  or the existence of any Liens on (other than the Liens
      in favor of Agent),  or any  Governmental  Authority's or other creditor's
      threatened  seizure  or  forfeiture  of,  or  foreclosure  on , any of the
      Collateral.

                           [Signature page to follow]



                                      -77-
<PAGE>


      IN WITNESS  WHEREOF,  the parties  hereto have caused this Agreement to be
executed and delivered as of the date first above written.

                                    THE OLD EVANGELINE DOWNS, L.L.C.,
                                    a Louisiana limited liability company


                                    By:  /s/ Natalie Schramm
                                       -----------------------------------------
                                       Title:  Chief Financial Officer


                                    THE OLD EVANGELINE DOWNS CAPITAL CORP., a
                                    Delaware corporation


                                    By:  /s/ Natalie Schramm
                                       -----------------------------------------
                                       Title:  Chief Financial Officer


                                    WELLS FARGO FOOTHILL, INC.,
                                    a California corporation, as Agent and as
                                     Lender


                                    By:  /s/ Rhonda Noell
                                       -----------------------------------------
                                       Title:  Senior Vice President


                                      -78-
<PAGE>

                                  SCHEDULE A-1
                                  ------------
                                 AGENT'S ACCOUNT

      An account at a bank  designated by Agent from time to time as the account
into which  Borrowers  shall make all  payments  to Agent for the benefit of the
Lender  Group and into which the Lender  Group shall make all  payments to Agent
under this  Agreement  and the other  Loan  Documents;  unless  and until  Agent
notifies Administrative  Borrower and the Lender Group to the contrary,  Agent's
Account shall be that certain deposit account bearing account number  323-266193
and maintained by Agent with JPMorgan Chase Bank, 4 New York Plaza,  15th Floor,
New York, New York 10004, ABA #021000021.



<PAGE>


                                  SCHEDULE C-1
                                  ------------
                                   COMMITMENTS

================================================================================
    Lender               Tranche A            Tranche B       Total Commitment
                         Commitment           Commitment
================================================================================
Wells Fargo              $10,036,097          $5,963,903         $16,000,000
Foothill, Inc.
================================================================================

================================================================================

================================================================================

================================================================================

================================================================================
All Lenders              $10,036,097          $5,963,903         $16,000,000
================================================================================