<PAGE>   1
                                                                     4(ii)(a)(2)
                                                                  EXECUTION COPY
                                                                      [BORROWER]

                               SECURITY AGREEMENT


            SECURITY AGREEMENT ("Agreement"), dated as of February 25, 1999, is
made and entered into by and between The Delta Queen Steamboat Co., a Delaware
corporation (the "Grantor") and THE CHASE MANHATTAN BANK, a New York banking
corporation, as agent (hereinafter in such capacity, the "Agent") for its
benefit and for the benefit of the other Holders of Secured Obligations (as
referred to and defined in the "Credit Agreement" described below).

            WHEREAS, the Grantor, certain financial institutions and each other
financial institution which from time to time becomes a party thereto in
accordance with Section 11.02(a) (together with their respective successors and
permitted assigns, individually, a "Lender" and, collectively, the "Lenders")
and the Agent are parties to that certain Credit Agreement, dated as of February
25, 1999, (such agreement as it may be amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement");

            WHEREAS, it is a condition precedent to the Lenders' making any
loans or otherwise extending credit to the Grantor under the Credit Agreement
that the Grantor execute and deliver to the Agent, for its benefit and the
benefit of the other Holders of Secured Obligations, a security agreement in
substantially the form hereof; and

            WHEREAS, the Grantor wishes to grant security interests in favor of
the Agent, for its benefit and the benefit of the Holders of Secured
Obligations, as herein provided;

            NOW, THEREFORE, in connection of the promises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

            Section 1. Definitions. All capitalized terms used herein without
definitions shall have the respective meanings provided therefor in the Credit
Agreement. The term "Uniform Commercial Code" shall mean the Uniform Commercial
Code as the same may, from time to time, be in effect in the State of Louisiana;
and terms defined therein shall be used herein as defined therein; provided,
however, in the event that by reason of mandatory provisions of law, any and all
of the attachment, perfection, or priority of the security interest created
hereunder is governed by the Uniform Commercial Code as in effect in any
jurisdiction other than the State of Louisiana, the term "Uniform Commercial
Code" shall mean the Uniform Commercial Code as in effect in such other
jurisdiction for the purposes of the provisions hereof related to such
attachment, perfection or priority and for purposes of definitions related as
such provisions.
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            Section 2.  Grant of Security Interest.

            (a) The Grantor hereby grants to the Agent, for its benefit and the
benefit of the other Holders of Secured Obligations, to secure the prompt
payment and performance in full when due of the Obligations (whether at stated
maturity, by acceleration or otherwise), a security interest in and so pledges
and assigns to the Agent, for its benefit and the benefit of the other Holders
of Secured Obligations, the following properties, assets and rights of the
Grantor, wherever located, whether now owned or hereafter acquired or arising,
and all proceeds and products thereof (all of the same being hereinafter called
the "Collateral"):

            All personal and fixture property of every kind and nature including
      without limitation all furniture, fixtures, machinery, equipment, raw
      materials, inventory, goods, accounts, contract rights, rights to the
      payment of money, charter hire, earnings and freight, insurance refund
      claims and all other insurance claims and proceeds, tort claims, chattel
      paper, documents, instruments, deposit accounts, investment property and
      all general intangibles including, without limitation, all membership
      interests in limited liability companies, partnership interests, tax
      refund claims, license fees, patents, patent applications, trademarks,
      trademark applications, trade names, copyrights, copyright applications,
      rights to sue and recover for past infringement of patents, trademarks and
      copyrights, technology, know-how and processes, computer programs,
      computer software, engineering drawings, service marks, customer lists,
      goodwill, and all licenses, permits agreements of any kind or nature
      pursuant to which the Grantor possesses, uses or has authority to posses
      or use property (whether tangible or intangible) of others or which others
      possess, use or have authority to possess or use property (whether
      tangible or intangible) of the Grantor, and all recorded data of any kind
      or nature, regardless of the medium of recording including, without
      limitation, all software, writings, plans, specifications and schematics,
      but excluding all trademarks, servicemarks, designs, logos, indicia, trade
      names, corporate names, company names, business names, fictitious business
      names, source and product or service identifiers comprised in whole or in
      part by the words "American Queen" and any designs, logos or other
      depictions of the vessel known as the American Queen.

            (b) Pursuant to the terms hereof, the Grantor has endorsed, assigned
and delivered to the Agent all negotiable or nonnegotiable instruments,
certificated securities and chattel paper pledged by it hereunder, together with
instruments of transfer or assignment duly executed in blank as the Agent may
have specified. In the event that the Grantor shall, after the date of this
Agreement, acquire any other negotiable or nonnegotiable instruments,
certificated securities or chattel paper to be pledged by it hereunder, the
Grantor shall promptly endorse, assign and deliver the same to the Agent,
accompanied by such instruments of transfer or assignment duly executed in blank
as the Agent may from time to time specify. To the extent that any securities
are uncertificated, the issuer thereof has agreed or, in the case of
uncertificated securities hereafter acquired by the Grantor, will agree at the
time of such acquisition to comply


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with instructions originated by the Agent without further consent by the
Grantor, with the Agent having at all times the right to obtain definitive
certificates (in the Agent's name or in the name of one or more nominees of the
Agent) where the issuer customarily issues certificates, all to be held as
Collateral hereunder. To the extent that the Grantor has, or acquires after the
date of this Agreement, any security entitlement with respect to a financial
asset held in a securities account, the securities intermediary maintaining the
account has agreed, or will at the time of such acquisition agree, to comply
with entitlement orders originated by the Agent without further consent by the
Grantor. The Grantor hereby acknowledges that the Agent may, in its discretion,
appoint one or more financial institutions to act as the Agent's agent in
holding in a custodial account instruments or other financial assets in which
the Agent on behalf of the Agent and the other Holders of Secured Obligations is
granted a security interest hereunder, including, without limitation,
certificates of deposit and other instruments evidencing short-term obligations.

            (c) Notwithstanding the foregoing provisions of this Section 2, such
grant of security interest shall not extend to, and the term "Collateral" shall
not include, any chattel paper and general intangibles which are now or
hereafter held by the Grantor as licensee, lessee or otherwise, to the extent
that (i) such chattel paper and general intangibles are not assignable or
capable of being encumbered as a matter of law or under the terms of the
license, lease or other agreement applications thereto (but solely to the extent
that any such restriction shall be enforceable under applicable law), without
the consent of the licensor or lessor thereof or other applicable party thereto
and (ii) such consent has not been obtained; provided, however, that the
foregoing grant of security interest shall extend to, and the term "Collateral"
shall include, (A) any and all proceeds of such chattel paper and general
intangibles to the extent that the assignment or encumbering of such proceeds is
not so restricted and (B) upon any such licensor, lessor or other applicable
party consent with respect to any otherwise excluded chattel paper or general
intangibles being obtained, thereafter such chattel paper or general intangibles
as well as any and all proceeds thereof that might have theretofore have been
excluded from such grant of a security interest and the term "Collateral".

            Section 3. Title to Collateral, etc. The Grantor is the owner of the
Collateral free from any adverse lien, security interest or other encumbrance,
except for the security interest created by this Agreement and other liens
permitted by the Credit Agreement. None of the Collateral constitutes, or is the
proceeds of, "farm products" as defined in Section 9-109(3) of the Uniform
Commercial Code of the State of Louisiana. None of the account debtors in
respect of any accounts, chattel paper or general intangibles and none of the
obligors in respect of any instruments included in the Collateral is a
Governmental Authority subject to the Federal Assignment of Claims Act.

            Section 4. Continuous Perfection. The Grantor's place or places of
business and, if it has more than one place of business, its chief executive
office are indicated on Schedule 1 attached hereto. The Grantor will not change
the same, or the name, identity or corporate structure of the Grantor in any
manner, without providing at least 30 days' prior written notice to the Agent.
The Collateral other than the Delta Queen and the Mississippi Queen and any
Collateral located thereon, to the extent not delivered to the Agent pursuant to
Section 2(b), will


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be kept at those locations listed on Schedule 1 and the Grantor will not remove
the Collateral from such locations, except with respect to inventory as required
in the ordinary course of business, without providing at least 30 days' prior
written notice to the Agent.

            Section 5. No Liens. Except for the security interest herein granted
and liens permitted by the Credit Agreement, the Grantor shall be the owner of
the Collateral free from any lien, security interest or other encumbrance, and
the Grantor shall defend the same against all claims and demands of all Persons
at any time claiming the same or any interests therein adverse to the Agent or
any of the other Holders of Secured Obligations. The Grantor shall not pledge,
mortgage or create, or suffer to exist a security interest in the Collateral in
favor of any Person other than Agent, for its benefit and the benefit of the
other Holders of Secured Obligations, except for liens permitted by the Credit
Agreement.

            Section 6. No Transfers. Subject to the provisions of the Credit
Agreement, the Grantor will not sell or offer to sell or otherwise transfer the
Collateral or any interest therein except for sales or other dispositions of
obsolescent items of equipment in the ordinary course of business consistent
with past practices.

            Section 7. Insurance. Grantor shall maintain casualty insurance with
respect to the Collateral in accordance with Section 6.05 of the Credit
Agreement.

            Section 8. Maintenance of Collateral; Compliance with Law. The
Grantor will keep the Collateral in good order and repair and will not use the
same in violation of law or any policy of insurance thereon. The Agent, or its
designee, upon reasonable advance notice to Grantor may inspect the Collateral
at any reasonable time, wherever located.

            Section 9. Collateral Protection Expenses; Preservation of
Collateral.

            (a) In its discretion, the Agent may, upon ten (10) days' prior
written notice to the Grantor so long as no Event of Default has occurred and is
continuing (and otherwise without prior notice), discharge taxes and other
encumbrances at any time levied or placed on any of the Collateral (except for
taxes and encumbrances being contested by the Grantor in accordance with Section
6.04 of the Credit Agreement), make repairs thereto and pay any necessary filing
fees. The Grantor agrees to reimburse the Agent on demand for any and all
expenditures so made. The Agent shall have no obligation to the Grantor to make
any such expenditures, nor shall the making thereof relieve the Grantor of any
default.

            (b) Anything herein to the contrary notwithstanding, the Grantor
shall remain liable under each contract or agreement comprised in the Collateral
to be observed or performed by the Grantor thereunder. Neither the Agent nor any
other Holder of Secured Obligations shall have any obligation or liability under
any such contract or agreement by reason of or arising out of this Agreement or
the receipt by the Agent or any other Holder of Secured Obligations of any
payment relating to any of the Collateral, nor shall the Agent or any other
Holder of Secured Obligations be obligated in any manner to perform any of the
obligations of the Grantor under or


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pursuant to any such contract or agreement, to make inquiry as to the nature or
sufficiency of any payment received by the Agent or any other Holder of Secured
Obligations in respect of the Collateral or as to the sufficiency of any
performance by any party under any such contract or agreement, to present or
file any claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to the Agent or to which the
Agent or any other Holder of Secured Obligations may be entitled at any time or
times. The Agent's sole duty with respect to the custody, safe keeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the Uniform Commercial Code or otherwise, shall be to deal with such
Collateral in the same manner as the Agent deals with similar property for its
own account.

            Section 10. Securities and Deposits. If an Event of Default shall
have occurred and be continuing, (i) the Agent may at any time, at its option,
transfer to itself or any nominee any investment property constituting
Collateral, receive any income thereon and hold such income as additional
Collateral or apply it to the Obligations, and (ii) whether or not any
Obligations are due, the Agent may demand, sue for, collect, or make any
settlement or compromise which it deems desirable with respect to the
Collateral. Regardless of the adequacy of Collateral or any other security for
the Obligations, any deposits or other sums at any time credited by or due from
the Agent or any other Holder of Secured Obligations to the Grantor may at any
time be applied to or set off against any of the Obligations.

            Section 11. Notification to Account Debtors and Other Obligors. If
an Event of Default shall have occurred and be continuing, the Grantor shall, at
the request of the Agent, notify account debtors on accounts, chattel paper and
general intangibles of the Grantor and obligors on instruments for which the
Grantor is an obligee of the security interest of the Agent in any account,
chattel paper, general intangible or instrument and that payment thereof is to
be made directly to the Agent or to any financial institution designated by the
Agent as the Agent's agent therefor, and the Agent may itself, if an Event of
Default shall have occurred and be continuing, without notice to or demand upon
the Grantor, so notify account debtors and obligors. After the making of such a
request or the giving of any such notification, the Grantor shall hold any
proceeds of collection of accounts, chattel paper, general intangibles and
instruments received by the Grantor as trustee for the Agent, for its benefit
and the benefit of the other Holders of Secured Obligations, without commingling
the same with other funds of the Grantor and shall turn the same over to the
Agent in the identical form received, together with any necessary endorsements
or assignments. The Agent shall apply the proceeds of collection of accounts,
chattel paper, general intangibles and instruments received by the Agent to the
Obligations, such proceeds to be immediately entered after final payment in cash
or solvent credits of the items giving rise to them.

            Section 12. Further Assurances. The Grantor, at its own expense,
shall do, make, execute and deliver all such additional and further acts,
things, deeds assurances and instruments as the Agent may reasonably require
more completely to vest in and assure to the Agent and the other Holders of
Secured Obligations their respective rights hereunder or in any of the
Collateral, including, without limitation, (a) executing, delivering and, where
appropriate, filing financing


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statements and continuation statements under the Uniform Commercial Code, (b)
obtaining any consent of any licensor, lessor or other applicable party referred
to in Section 2(c), (c) obtaining waivers from mortgagees and landlords and (d)
taking all actions required by Sections 8-106, 8-301 and 9-115 of the Uniform
Commercial Code, as applicable in each relevant jurisdiction, with respect to
certificated and uncertificated securities. The Grantor agrees that a carbon,
photographic or other reproduction of this security agreement or a financing
statement is sufficient as a financing statement.

            Section 13.  Power of Attorney.

            (a) The Grantor hereby irrevocably constitutes and appoints the
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorneys-in-fact during the existence of any Event of Default
with full irrevocable power and authority in the place and stead of the Grantor
or in the Agent's own name, for the purpose of carrying out the terms of this
Agreement, without notice to or assent by the Grantor, to do the following:

            (i) generally to sell, transfer, pledge, make any agreement with
      respect to or otherwise deal with any of the Collateral in such manner as
      is consistent with the Uniform Commercial Code and as fully and completely
      as though the Agent were the absolute owner thereof for all purposes, and
      to do at the Grantor's expense, at any time, or from time to time, all
      acts and things which the Agent deems necessary to protect, preserve or
      realize upon the Collateral and the Agent's security interest therein, in
      order to effect the intent of this Agreement, all as fully and effectively
      as the Grantor might do, including, without limitation, (A) the filing and
      prosecuting of registration and transfer applications with the appropriate
      federal or local agencies or authorities with respect to trademarks,
      copyrights and patentable inventions and processes, (B) upon written
      notice to the Grantor, the exercise of voting rights with respect to
      voting securities, which rights may be exercised, if the Agent so elects,
      with a view to causing the liquidation in a commercially reasonable manner
      of assets of the issuer of any such securities and (C) the execution,
      delivery and recording, in connection with any sale or other disposition
      of any Collateral, of the endorsements, assignments or other instruments
      of conveyance or transfer with respect to such Collateral; and

            (ii) to file such financing statements with respect hereto, with or
      without the Grantor's signature, or a photocopy or carbon copy of this
      Agreement or of a signed financing statement in substitution for a
      financing statement, as the Agent may deem appropriate and to execute in
      the Grantor's name such financing statements and continuation statements
      which may require the Grantor's signature.

            (b) To the extent permitted by law, the Grantor hereby ratifies all
that said attorneys shall lawfully do or cause to be done by virtue hereof. This
power of attorney is a power coupled with an interest and shall be irrevocable.


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            (c) The powers conferred on the Agent hereunder are solely to
protect the interests of the Agent and the other Holders of Secured Obligations
in the Collateral and shall not impose any duty upon the Agent to exercise any
such powers. The Agent shall be accountable only for the amounts that it
actually receives as a result of the exercise of such powers and neither
it nor any of its officers, directors, employees or agents shall be responsible
to the Grantor for any act or failure to act, except for the Agent's own gross
negligence or willful misconduct.

            Section 14. Remedies. If an Event of Default shall have occurred and
be continuing, the Agent may, without notice to or demand upon the Grantor,
declare this Agreement to be in default, and the Agent shall thereafter have in
any jurisdiction in which enforcement hereof is sought, in addition to all other
rights and remedies, the rights and remedies of a secured party under the
Uniform Commercial Code, including, without limitation, the right to take
possession of the Collateral, and for that purpose the Agent may, so far as the
Grantor can give authority therefor, enter upon any premises on which the
Collateral may be situated and remove the same therefrom. The Agent may require
the Grantor to assemble all or any part of the Collateral at such location or
locations within the state(s) of the Grantor's principal office(s) or at such
other locations as the Agent may designate. Unless the Collateral is perishable
or threatens to decline speedily in value or is of a type customarily sold on a
recognized market, the Agent shall give to the Grantor at least ten (10)
Business Days' prior written notice of the time and place of any public sale of
Collateral or of the time after which any private sale or any other intended
disposition is to be made. The Grantor hereby acknowledges that ten (10)
Business Days' prior written notice of such sale or sales shall be reasonable
notice. In addition, the Grantor waives any and all rights that it may have to a
judicial hearing in advance of the enforcement of any of the Agent's rights
hereunder, including, without limitation, its right following an Event of
Default to take immediate possession of the Collateral and to exercise its
rights with respect thereto. To the extent that any of the Obligations are to be
paid or performed by a Person other than the Grantor, the Grantor waives and
agrees not to assert any rights or privileges which it may have under Section
9-112 of the Uniform Commercial Code.

            Section 15. Special Louisiana Provisions. The Grantor hereby agrees
as follows:

            (a) For purposes of Louisiana executory process, the Grantor
acknowledges the Obligations secured hereby, whether now existing or to arise
hereafter, and confesses judgment thereon. Upon the occurrence of an Event of
Default and at any time thereafter so long as the same shall be continuing, and
in addition to all other rights and remedies granted the Agent hereunder, it
shall be lawful for and the Grantor hereby authorizes the Agent without making a
demand or putting the Grantor in default, a putting in default being expressly
waived, to cause all and singular the Collateral to be seized and sold after due
process of law, the Grantor waiving the benefit of any and all laws or parts of
laws relative to the appraisement of property seized and sold under executory
process or other legal process, and consenting that the Collateral be sold
without appraisement, either in its entirety or in lots or parcels, as the Agent
may determine, to the highest bidder for cash or on such other terms as the
plaintiff in such proceedings may direct. In addition, the Agent shall have all
of the rights and remedies available to it under this


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Agreement or under the Louisiana Commercial Laws (Louisiana Revised Statutes,
Title 10), then in effect, and under Chapter 9 of the Louisiana Commercial Laws,
then in effect (La. R.S. 10:9-101 et seq.).

            (b) the Grantor hereby waives:

               (i) the benefit of appraisement provided for in Articles 2332,
            2336, 2723 and 2724 of the Louisiana Code of Civil Procedure and all
            other laws conferring the same;

              (ii) the demand and three (3) days' notice of demand as provided
            in Articles 2639 and 2721 of the Louisiana Code of Civil Procedure;

             (iii) the notice of seizure provided by Articles 2293 and 2721 of
            the Louisiana Code of Civil Procedure; and

              (iv) the three (3) days' delay provided for in Articles 2331 and
            2722 of the Louisiana Code of Civil Procedure.

            (c) the Grantor expressly authorizes and agrees that the Agent shall
have the right to appoint a keeper of the Collateral, or any part thereof,
pursuant to the terms and provisions of La. R.S. 9:5136.

            Section 16. No Waiver, etc. The Grantor waives demand, notice,
protest, notice of acceptance of this Agreement, notice of loans made, credit
extended, Collateral received or delivered or other action taken in reliance
hereon and all other demands and notices of any description. With respect to
both the Obligations and the Collateral, the Grantor assents to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of Collateral, to the addition or release of
any party or Person primarily or secondarily liable, to the acceptance of
partial payment thereon and the settlement, compromising or adjusting of any
thereof, all in such manner and at such time or times as the Agent may deem
advisable. The Agent shall have no duty as to the collection or protection of
the Collateral or any income thereon, nor as to the preservation of rights
against prior parties, nor as to the preservation of any rights pertaining
thereto beyond the safe custody thereof as set forth in Section 9(b). The Agent
shall not be deemed to have waived any of its rights upon or under the
Obligations or the Collateral unless such waiver shall be in writing and signed
by the Agent. No delay or omission on the part of the Agent in exercising any
right shall operate as a waiver of such right or any other right. A waiver on
any one occasion shall not be construed as a bar to or waiver of any right on
any future occasion. All rights and remedies of the Agent with respect to the
Obligations or the Collateral, whether evidenced hereby or by any other
instrument or papers, shall be cumulative and may be exercised singularly,
alternatively, successively or concurrently at such time or at such times as the
Agent deems expedient.


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            Section 17. Marshalling. Neither the Agent nor any other Holder of
Secured Obligations shall be required to marshal any present or future
collateral security (including but not limited to this Agreement and the
Collateral) for, or other assurances of payment of, the Obligations or any of
them or to resort to such collateral security or other assurances of payment in
any particular order, and all of the rights of the Agent hereunder and of the
Agent or any other Holder of Secured Obligations in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to
all other rights, however existing or arising. To the extent that it lawfully
may, the Grantor hereby agrees that it will not invoke any law relating to the
marshalling of collateral which might cause delay in or impede the enforcement
of the Agent's rights under this Agreement or under any other instrument
creating or evidencing any of the Obligations or under which any of the
Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
the Grantor hereby irrevocably waives the benefits of all such laws.

            Section 18. Proceeds of Dispositions; Expenses. The Grantor shall
pay to the Agent on demand any and all expenses, including reasonable attorneys'
fees and disbursements, incurred or paid by the Agent in protecting, preserving
or enforcing the Agent's rights under or in respect of any of the Collateral.
After deducting all of said expenses, the residue of any proceeds of collection
or sale of the Collateral shall, to the extent actually received in cash, be
applied to the payment of the Obligations in accordance with Section 2.07(b) of
the Credit Agreement. Upon the indefeasible payment and satisfaction in full of
all of the Obligations and the termination of all financial arrangements among
the Grantor and the Holders of Secured Obligations (other than continuing
contingent indemnity obligations), and after making any payments required by
Section 9-504(1)(c) of the Uniform Commercial Code, any excess shall be returned
to the Grantor, and the Grantor shall remain liable for any deficiency in the
payment of the Obligations.

            Section 19. Agent. The Agent shall exercise its rights and remedies
hereunder in accordance with the provisions of the Credit Agreement, including
without limitation the provisions for acting upon the request or at the
direction of one or more of the Lenders.

            Section 20. Overdue Amounts. Until paid, all amounts due and payable
by the Grantor hereunder shall be a debt secured by the Collateral and shall
bear, whether before or after judgment, interest at the Default Rate as set
forth in the Credit Agreement.

            Section 21. GOVERNING LAW. THIS AGREEMENT AND ANY DISPUTE AMONG THE
GRANTOR, THE AGENT OR ANY OTHER HOLDER OF SECURED OBLIGATIONS ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG
THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, AND
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE INTERPRETED
AND RESOLVED IN ACCORDANCE WITH THE LAWS OF THE STATE OF LOUISIANA.

            Section 22. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.


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            (A) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION (B),
EACH OF THE PARTIES HERETO AGREES THAT ALL DISPUTES AMONG THEM ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG
THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED
EXCLUSIVELY BY STATE OR FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK, BUT THE
PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK, NEW YORK. EACH OF THE PARTIES
HERETO WAIVES IN ALL DISPUTES BROUGHT PURSUANT TO THIS SUBSECTION ANY OBJECTION
THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.

            (B) OTHER JURISDICTIONS. THE GRANTOR AGREES THAT THE AGENT OR ANY
OTHER HOLDER OF SECURED OBLIGATIONS SHALL HAVE THE RIGHT TO PROCEED AGAINST THE
GRANTOR OR ITS PROPERTY IN A COURT IN ANY LOCATION TO ENABLE SUCH PERSON TO (1)
OBTAIN PERSONAL JURISDICTION OVER THE GRANTOR OR (2) REALIZE ON THE COLLATERAL
OR ANY OTHER SECURITY FOR THE OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER ENTERED IN FAVOR OF SUCH PERSON. THE GRANTOR AGREES THAT IT WILL NOT
ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY SUCH PERSON TO
REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH PERSON. THE GRANTOR
WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH SUCH
PERSON HAS COMMENCED A PROCEEDING DESCRIBED IN THIS SUBSECTION.

            (C) SERVICE OF PROCESS. THE GRANTOR WAIVES PERSONAL SERVICE OF ANY
PROCESS UPON IT AND, AS ADDITIONAL SECURITY FOR THE OBLIGATIONS, IRREVOCABLY
APPOINTS THE PRENTICE-HALL CORPORATION SYSTEM, INC., WHOSE ADDRESS IS 500
CENTRAL AVENUE, ALBANY, NEW YORK, 12206, AS THE GRANTOR'S AGENT FOR THE PURPOSE
OF ACCEPTING SERVICE OF PROCESS ISSUED BY ANY COURT. THE GRANTOR IRREVOCABLY
WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH IN ANY JURISDICTION SET FORTH ABOVE.

            (D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR


                                      -10-
<PAGE>   11
OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH. EACH OF THE PARTIES HERETO AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY
AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

            (E) WAIVER OF BOND. THE GRANTOR WAIVES THE POSTING OF ANY BOND
OTHERWISE REQUIRED OF ANY PARTY HERETO IN CONNECTION WITH ANY JUDICIAL PROCESS
OR PROCEEDING TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS OR TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
SUCH PARTY, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER,
PRELIMINARY OR PERMANENT INJUNCTION, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.

            Section 23. Miscellaneous. The headings of each section of this
Agreement are for convenience only and shall not define or limit the provisions
thereof. This Agreement and all rights and obligations hereunder shall be
binding upon the Grantor and its respective successors and assigns, and shall
inure to the benefit of the Agent, the other Holders of Secured Obligations and
their respective successors and permitted assigns. If any term of this Agreement
shall be held to be invalid, illegal or unenforceable, the validity of all other
terms hereof shall in no way be affected thereby, and this Agreement shall be
construed and be enforceable as if such invalid, illegal or unenforceable term
had not been included herein. The Grantor acknowledges receipt of a copy of this
Agreement.

            Section 24. Notice, Etc. All notices, requests, consents, approvals,
waivers and other communications under this Agreement to the Grantor shall be
given in the manner and to the addresses set forth in the Credit Agreement.


                                      -11-
<PAGE>   12
            IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first above written.


                                     THE DELTA QUEEN STEAMBOAT CO.


                                      By: /s/ JORDAN B. ALLEN 
                                          --------------------------------
                                      Name: Jordan B. Allen
                                      Title: Executive Vice President


                                      THE CHASE MANHATTAN BANK, as Agent


                                      By: /s/ STEVEN J. FALISKI
                                          --------------------------------
                                      Name:  Steven J. Faliski
                                            ------------------------------

                                      Title: Vice President
                                            ------------------------------


                                      -12-
<PAGE>   13
                         CERTIFICATE OF ACKNOWLEDGMENT


STATE OF ILLINOIS       )
                        )  ss
COUNTY OF COOK          )


      Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this ____ day of February, 1999, personally appeared Jordan B.
Allen to me known personally, and who, being by me duly sworn, deposes and says
that he is the Executive Vice President of The Delta Queen Steamboat Co., and
that said instrument was signed and sealed on behalf of said corporation by
authority of its Board of Directors, and said Executive Vice President
acknowledged said instrument to be the free act and deed of said corporation.



                                    --------------------------------
                                    Notary Public
                                    My Commission Expires:


                                      -13-
<PAGE>   14
                                   SCHEDULE 1
                                       to
                               SECURITY AGREEMENT
                           dated as of February   , 1999

                             Places of Business and
                      Chief Executive Office of the Grantor

The Delta Queen Steamboat Co
Robin Street Wharf
1380 Port of New Orleans Place
New Orleans, LA 70130


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