MANAGEMENT AGREEMENT


         THIS MANAGEMENT  AGREEMENT (this "Agreement") is dated as of _________,
1996 by and between Elsinore  Corporation,  a Nevada  corporation  ("Elsinore"),
Four Queens,  Inc., a Nevada  corporation  ("Four  Queens"  and,  together  with
Elsinore,  the  "Companies"),  and Riviera Gaming Management  Corp.-Elsinore,  a
Nevada corporation ("Manager").

                                              PRELIMINARY STATEMENTS

                  A. Elsinore  owns and operates  through its  subsidiary,  Four
Queens,  a hotel and casino  commonly known as the Four Queens Hotel and Casino,
located at 202 Fremont Street, Las Vegas, Nevada.

                  B.       The Companies are party to those certain Chapter 11
bankruptcy  proceedings  pending in the United States  Bankruptcy  Court for the
District of Nevada (the  "Bankruptcy  Court") as Case No.  95-24685 RCJ and Case
No. 95-24687 RCJ respectively (the "Proceedings").

                  C.  Pursuant  to the  terms  and  conditions  of that  certain
Interim Management Agreement dated as of __________,  1996 between the Companies
and Manager (the "Interim  Management  Agreement")  the  Companies  have engaged
Manager to manage the  Project.  The term of the  Interim  Management  Agreement
expires on the Effective Date (as defined below).

                  D.  Pursuant to the terms and  conditions of the Joint Plan of
Reorganization  for the Debtors with respect to the  Proceedings  (the  "Plan"),
Manager  shall be engaged to manage the Project upon the  expiration of the term
of the Interim Management  Agreement in accordance with the terms and conditions
of this Agreement.

         In   consideration  of  the  foregoing  and  other  good  and  valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally  bound,  the parties to this  Agreement  hereby agree as
follows:

                             ARTICLE I. DEFINITIONS

         The following defined terms are used in this Agreement:

         "Affiliate" shall mean a person that directly or indirectly, or through
one or more  intermediaries,  controls,  is  controlled  by, or is under  common
control with the person in question and any stockholder or partner of any person
referred to in the preceding clause owning 10% or more of such entity.


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         "Audit Day" is defined in Section 3.6(a).

         "Audited Statements" is defined in Section 3.6(a).

         "Business Days" shall mean all weekdays except those that are official
holidays  of the  State of Nevada or the U.S.  Government.  Unless  specifically
stated as "Business Days," a reference to "days" means calendar days.

         "Capital Budget" is defined in Section 3.9.

         "Casino"  shall mean those areas  reserved  for the  operation  of slot
machines,  table  games and any other  legal  forms of  gaming  permitted  under
applicable   law,  and  such  additional   ancillary   service  areas  including
reservations and admissions,  cage, vault, count room, surveillance room and any
other room or area or activities therein regulated or taxed by the Nevada Gaming
Authorities by reason of gaming operations.

         "Casino Bankroll" shall mean an amount reasonably determined by Manager
as funding required to bankroll the Casino Gaming Activities but in no case less
than the amount required by Nevada gaming law or Nevada Gaming  Authorities.  In
no event  shall such  Casino  Bankroll  include  any amount  necessary  to cover
Operating Expenses or Operating Capital. Casino Bankroll shall include the funds
located on the casino tables,  in the gaming  devices,  cages,  vault,  counting
rooms, or in any other location in the Casino where funds may be found and funds
in a bank account identified by the Companies for any additional amount required
by Nevada  gaming law or Nevada  Gaming  Authorities  or such other amount as is
reasonably determined by Manager and the Companies.

         "Casino  Gaming  Activities"  shall mean the Casino cage,  table games,
slot machines,  video machines,  and other forms of gaming managed by Manager in
the Casino.

         "Casino  Operating  Expenses"  shall  mean  expenses  incurred  in  the
management  of the  Casino,  including,  but not limited  to,  gaming  supplies,
maintenance  of  the  Casino  area,   gaming  marketing   materials,   uniforms,
complimentaries,  Casino employee  training,  Casino employee  compensation  and
entitlements, and Gaming Taxes.

         "Companies' Advances" is defined in Section 3.11.

         "Confirmation Date" is defined in Recital C.

         "Default" or "Event of Default" is defined in Section 6.1.

         "EBITDA" shall mean revenues  derived from the operation of Four Queens
less all costs of operating Four Queens (including,  without limitation, any and
all costs  associated  with the Fremont  Street  Experience and the Minimum Fee)
except for (i)  bankruptcy  restructuring  costs,  (ii) Elsinore D&O  insurance,
(iii)  Elsinore  director and officer  compensation,  (iv)  expenses  related to
Elsinore debt (including Trustee Fees), (v) any other



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Elsinore expense over which Manager has no control and (vi) the Performance Fee,
all before (a)  interest  on  indebtedness,  (b) all taxes on income  other than
Gaming  Taxes,  (c)  depreciation  of tangible  assets and (d)  amortization  of
goodwill and other  intangible  assets,  all as  determined  by the  independent
certified  public  accountant  of the  Companies in  accordance  with  generally
accepted  accounting  principles  applied on a consistent  basis  (after  giving
effect to "fresh start" accounting), subject, however, to the dispute provisions
of Section 3.6(b).

         "Effective  Date"  shall mean the date the Plan  becomes  effective  as
defined in the Plan.

         "Extended Term" is defined in Section 2.3.

         "Extension Option" is defined in Section 2.3.

         "Fiscal  Year" shall mean the 12-month  period  starting with the first
full  quarter  beginning  immediately  following  the  Effective  Date  and each
12-month period thereafter.

         "Gaming  Taxes"  shall  mean  any  tax  imposed  by the  Nevada  Gaming
Authorities on Gross Gaming Revenues.

         "Governmental  Authorities"  shall mean the United States, the State of
Nevada  and any court or  political  subdivision  agency,  commission,  board or
instrumentality or officer thereof,  whether federal,  state or local, having or
exercising  jurisdiction over the Companies,  Manager or the Project,  including
the Casino.

         "Gross  Gaming  Revenues"  shall  mean  all of  the  revenue  from  the
operation of the Casino (which is taxed by the Nevada Gaming  Authorities)  from
all business  conducted  upon,  related to or from the Casino in accordance with
generally accepted accounting  principles and shall include,  but not be limited
to, the net win from gaming  activities,  which is the difference between gaming
wins  and  losses  before   deducting  Gaming  Taxes,  and  plus  or  minus,  as
appropriate,  deposits  made in respect of  progressive  slot machines and other
similar games.

         "Gross  Revenues"  shall mean  Gross  Gaming  Revenues,  plus all other
revenues resulting from the operation of the Project, minus all Gaming Taxes.

         "Management Fee" shall mean the Minimum Fee and the Performance Fee,
if any.

         "Minimum Fee" is defined in Section 4.1.

         "Monthly Financial Statements" is defined in Section 3.7.

         "Nevada Gaming  Authorities"  shall mean the Nevada Gaming  Commission,
State Gaming Control Board and all other gaming  regulatory  bodies,  including,
but not limited to,


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any municipality,  political  subdivision,  board,  commission,  agency or other
public body now in  existence  or  hereafter  created to regulate  gaming in the
State of Nevada.

         "Olympia" means the Seven Cedars Casino located in Sequim, Washington.

         "Operating Bank Accounts" is defined in Section 3.10.

         "Operating Budget" is defined in Section 3.9.

         "Operating  Capital"  shall  mean  such  amount in the  Operating  Bank
Accounts as will be reasonably  sufficient  to assure the timely  payment of all
current  liabilities  of the Project,  including  the  operations of the Casino,
during  the  term of this  Agreement,  and to  permit  Manager  to  perform  its
management  responsibilities and obligations hereunder, with reasonable reserves
for  unanticipated  contingencies  and  for  short  term  business  fluctuations
resulting from monthly variations from the Operating Budget.

         "Operating  Expenses" shall mean actual expenses incurred following the
Effective  Date  in  operating  the  Project,  including  the  Casino  Operating
Expenses,   employee   compensation  and   entitlements,   Operating   Supplies,
maintenance costs, fuel costs, utilities, taxes and the Minimum Fee.

         "Operating  Supplies"  shall  mean  gaming  supplies,  paper  supplies,
cleaning materials, marketing materials,  maintenance supplies, uniforms and all
other materials used in the operation of the Project.

         "Palm Springs" means the Spotlight 29 Casino located in Palm Springs,
California.

         "Performance Fee" shall mean the annual amount payable to Manager which
equals 25% of any  increase in EBITDA in any Fiscal Year of the Term or Extended
Term over $8 million.

         "Performance Fee Statement" is defined in Section 3.6(a).

         "Project"  shall  mean the Four  Queens  Hotel and Casino in Las Vegas,
Nevada and all necessary ancillary facilities to the Project, including, but not
limited  to,  vehicular   parking  area,   entertainment   facilities,   hotels,
restaurants,  waiting  areas,  restrooms,  administrative  offices  for, but not
limited  to,  accounting,   purchasing,   and  management  information  services
(including offices for Manager management personnel) and other areas utilized in
support of the operations of the Project.

         "Projected EBITDA" shall mean the EBITDA for the first two Fiscal Years
of the Term and is deemed to be $8 million for each such year.

         "Selected Arbitrator" is defined in Section 9.1.



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         "Term" is defined in Section 2.2.

             ARTICLE II: ENGAGEMENT OF MANAGER AND TERM OF AGREEMENT

         Section 2.1  Engagement  of Manager.  The  Companies  hereby engage and
employ Manager to act as their  exclusive  agent for the supervision and control
of the  management  of the  business  and  affairs of the Project and to provide
certain  services to the Companies as detailed in Section 3.3 of this  Agreement
in connection  with the Project,  and Manager hereby accepts such engagement and
employment,  on the terms and  conditions  hereinafter  set forth.  In addition,
Manager may  provide  consulting  services  to  Elsinore  from time to time with
respect to non-Project  related issues and Manager agrees to provide  consulting
services upon terms mutually acceptable to Manager and the Companies.

         Section 2.2 Term. Manager shall manage the Project from the period (the
"Term")  commencing  on the  Effective  Date and  ending 60 days after the third
Fiscal Year's audited results are available, subject to termination prior to the
end of  such  period  as  hereinafter  specified  or  extension  as  hereinafter
provided.  Either Manager or Elsinore may terminate this Agreement upon 120 days
notice after the second Fiscal Year's audited  results are  available,  provided
that  cumulative  EBITDA for the first two Fiscal  Years is less than 80% of the
cumulative Projected EBITDA. In the event that Elsinore elects to terminate this
Agreement  at the end of the  second  Fiscal  Year  because  the 80%  cumulative
Projected  EBITDA target was not met, Manager will have 60 days after receipt of
notice of Elsinore's election to so terminate in which to exercise its Warrants.
If Manager does not exercise its  Warrants,  or exercises  only a portion of its
Warrants,  then  any  Warrants  remaining  unexercised  at the end of the 60 day
period will be automatically cancelled.

         Section  2.3 Option to Extend  Term.  The Term may be  extended  at the
option  (the  "Extension  Option")  of  Manager  (the  "Extended  Term")  for an
additional term of two years,  provided that  cumulative  EBITDA for the Term is
80% or more of the  cumulative  Projected  EBITDA.  Manager  shall give  written
notice of its  exercise of an  Extension  Option no later than 120 days prior to
the expiration of the Term, on the  assumption  that  cumulative  EBITDA for the
Term will be 80% or more of the cumulative Projected EBITDA.

                  ARTICLE III: RESPONSIBILITIES OF THE PARTIES.

         Section 3.1  Standards.  With  respect to the  operation of the Project
pursuant to this  Agreement,  Manager shall manage and maintain the Project in a
manner  reasonably  consistent  with the  average of  standards  and  procedures
exercised  by  other   casino/hotel   operators  in  the   management  of  other
casino/hotels  of the same or similar type, class and quality as the Project and
located in Las Vegas, Nevada.

         Section 3.2  No Interference; Board Representation.  In order for
Manager to meet its  responsibilities  under Section 3.1 of this  Agreement in a
professional  manner, and to comply with any legal requirements and the terms of
this Agreement, the Companies hereby

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agree that (i) Manager shall have  uninterrupted  control of and  responsibility
for the operation of the Project  during the Term of this Agreement and (ii) the
Companies  will not  interfere or be involved  with the operation of the Project
and that  Manager  may  operate the  Project  free of  molestation,  eviction or
disturbance  by the Companies or any third party  claiming by,  through or under
the Companies,  provided that Manager shall not engage in any  transaction  with
any of its affiliates  relating to the Project in excess of $10,000  without the
prior written approval of the Elsinore Board of Directors.  Notwithstanding  the
foregoing,  during normal business hours and upon reasonable  notice to Manager,
the Companies'  directors and Elsinore's major  stockholder and their agents may
visit the  Project and may ask the Manager  and the  companies'  officers  about
various aspects of the Companies'  business,  operations and financial  results.
Examples  of the  matters  which  Manager  shall  determine  from  time  to time
hereunder  include,  but are not limited to, room rates,  food and beverage menu
prices,  charges  to guests  for other  services  performed  by  Manager  at the
Project, for rooms, gaming, commercial purposes and entertainment, entertainment
policies  and  specific  entertainment  obligations,  the labor  policies of the
Project and the type and character of publicity and promotion.  Manager  agrees,
however,  that it will  in good  faith  use its  best  efforts  to  perform  its
obligations and discharge its  responsibilities  in the control and operation of
the Project in and for the purpose of  maximizing  profits from the operation of
the Project. Nothing contained in this Section 3.2 shall prohibit the Companies'
Boards of Directors  from  exercising  their  fiduciary  duties if Manager shall
default in its obligations under this Agreement pursuant to Section 6.2 and such
default shall continue after any required notice and/or cure period.

         Section 3.3  Services.  Manager covenants and agrees to perform, or
cause to be performed, the following services in connection with the Project:

                  (a) Permits. Manager, on behalf of and with the cooperation of
         the Companies,  shall oversee  obtaining and  maintaining all necessary
         licenses,  findings of suitability,  approvals and permits  required by
         any law, rule or regulation of the Nevada Gaming Authorities, as may be
         required for the operation of the Project as a casino/hotel  including,
         without limitation,  gaming, liquor, bar, restaurant, signage and hotel
         licenses and any permits  required in connection with any  refurbishing
         or  expansion  of the  Project.  Manager  shall  comply with the rules,
         regulations  and orders of the Nevada Gaming  Authorities  and with any
         conditions  set out in any such licenses and permits issued by any such
         authorities  and, with the cooperation of the Companies,  shall provide
         any information, report or access to records reasonably required by the
         Nevada Gaming Authorities.

                  (b)  Personnel.  Manager shall maintain such level of staffing
         as shall be required to carry out its duties hereunder. If the Board of
         Directors  of  Elsinore  determines  that  Manger  is not  meeting  its
         staffing  requirements,  then  Manager and  Elsinore  will meet in good
         faith to resolve any staffing  issues.  If such dispute is not resolved
         within two weeks,  and either Manager or Elsinore  determines that such
         dispute cannot be resolved within a reasonable  time, then such dispute
         shall be resolved by arbitration pursuant to Article IX.


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                  (i)  Except  as  otherwise   expressly  provided  herein,  all
         personnel  employed at the Project  shall be  employees of Four Queens.
         Manager shall hire, terminate,  advance, demote, supervise,  direct the
         work of and determine the  compensation  and other benefits (except for
         the establishment of any new employee pension and profit-sharing plans,
         which  shall be  determined  by  Manager  and shall be  subject  to the
         approval of the Board of Directors of Elsinore in its sole and absolute
         discretion,   it  being   understood  that  any  employee  pension  and
         profit-sharing  plans in  existence  as of the date  hereof  have  been
         approved  by the  Board of  Directors  of  Elsinore)  of all  personnel
         working at the Project,  and Elsinore  shall not interfere with or give
         orders or instructions to personnel employed at the Project;  provided,
         however, that Manager will not enter into any employment contracts with
         any employees that exceed the duration of the Term or the Extended Term
         of this  Agreement,  as the  case  may  be,  or any  material  employee
         contracts  or  benefit   arrangements   (i.e.,  any  such  contract  or
         arrangement  involving  an annual  compensation  (including  salary and
         bonuses) of more than $125,000),  unless first approved by the Board of
         Directors  of  Elsinore  which  approval  shall  not  be   unreasonably
         withheld.   Manager  agrees  that  employees'  wages  or  benefits  and
         conditions  of  employment  (inclusive  of any  discretionary  employee
         bonuses  granted  from time to time by  Manager)  shall be  granted  by
         Manager in a manner  consistent  with the existing  standards  therefor
         currently  employed at the Project.  The parties  hereto agree that all
         wages,   bonuses,   compensation  and  benefits   (including,   without
         limitation,  severance and termination pay) of personnel at the Project
         are the exclusive obligation of Four Queens.

                  (ii)  All  wages,   salaries,   benefits,   compensation   and
         entitlements of the Project  employees,  including the General Manager,
         the consultants and independent  contractors  approved by the Companies
         and Manager, shall be paid from the Operating Bank Accounts by Manager.
         Notwithstanding  the  foregoing,  Manager shall not be liable to any of
         the  Companies'  personnel for wages,  compensation  or other  employee
         benefit  including  without   limitation  to  health  care,   insurance
         benefits, worker's compensation, severance or termination pay.

                  (iii)  Manager  shall be  responsible  for the training of all
         personnel and shall cooperate with all personnel in an effort to obtain
         and  maintain  all  required  licenses  issued  by  the  Nevada  Gaming
         Authorities,  and will hire only persons with valid employee  licenses,
         if under the rules and  regulations  of the Nevada Gaming  Authorities,
         such employee licenses are a condition of employment.

                  (iv)  The   employees   necessary   to   discharge   Manager's
         obligations  and  responsibilities  hereunder  shall  be  employees  of
         Manager (or its Affiliates) and shall be hired,  paid and discharged by
         Manager  in its sole and  absolute  discretion.  Manager  shall in good
         faith  determine  the  number  of  employees   necessary  to  discharge
         Manager's obligations and responsibilities  hereunder, the salaries and
         other  compensation   arrangements  of  such  employees  shall  be  the
         responsibility  of  Manager  and  Manager  shall  not have any right of
         reimbursement from the Companies in respect thereof.



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                  (v) The Companies may employ such corporate  executives,  each
         of whom shall be licensable  if required by Nevada Gaming  Authorities,
         as they may choose,  provided  that none of the  salaries,  bonuses and
         benefits  for such  executives  or costs or expenses of the  Companies'
         Boards of Directors shall be a cost of operation of the Project for the
         purposes of determining EBITDA.

         Section 3.4 Sales and Promotions.  Manager shall formulate,  coordinate
and  implement  promotion,  marketing  and sales  programs,  and shall cause the
Project to participate  in  promotional,  marketing and sales  campaigns and, as
appropriate,  activities involving complimentary rooms and food and beverages to
bona fide travel agents, tourist officials and airlines representatives,  and to
all other  individuals  and entities  whatsoever  which, in the exercise of good
management practice, is deemed to be beneficial to the Project.

         The Companies  agree that no  unreasonable  influence  shall be brought
upon Manager relating to the granting or extension of credit or complimentaries.
Credit  facilities shall be granted by Manager in its reasonable  discretion and
in accordance  with good  management  practices and Manager's and its Affiliates
standard procedures;  provided that except for extending credit for the purchase
of goods,  services,  gaming  or  entertainment  at the  Project  and  except as
otherwise permitted herein, Manager shall not be authorized to make any loans or
extensions  of  credit  for or on  behalf  of the  Companies  without  the prior
approval of the Board of Directors of Elsinore.

         Section 3.5 Books and Records.  Manager shall maintain,  or cause to be
maintained,  a complete  accounting system for and on behalf of the Companies in
connection with Manager's management of the Project. The books and records shall
be kept in accordance with generally accepted accounting principles consistently
applied and in accordance  with the uniform system of accounts for hotels.  Such
books  and  records  shall  be kept on the  basis of a Fiscal  Year.  Books  and
accounts  shall be  maintained  at the  Project  or at the  principal  office of
Manager with a duplicate copy thereof at the Project.  The Companies  shall have
the right and  privilege  of  examining  and  copying  said  books and  records,
including all daily reports prepared by Manager for internal use at the Project,
during regular business hours.  Manager shall comply with all requirements  with
respect to internal  controls and  accounting  and shall prepare and provide all
required   reports  under  the  rules  and  regulations  of  the  Nevada  Gaming
Authorities.

         Section 3.6  Audits.

                  (a)  Manager  shall  engage  Arthur  Andersen  LLP,  unless  a
         different  mutually  agreed  upon  auditor  is  substituted   ("Regular
         Auditor"),  to  audit  the  operations  of the  Companies,  (i) for the
         purpose  of  calculating   the  Performance   Fee   ("Performance   Fee
         Statements") and (ii) as of and at the end of each year occurring after
         the date hereof (the  "Audited  Statements").  A  sufficient  number of
         copies of the  Performance  Fee Statements  and the Audited  Statements
         shall be furnished to the Companies and Manager as soon as available to
         permit the Companies and



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         Manager to meet any public reporting  requirements as may be applicable
         to them,  but in no event later than ninety (90) days following the end
         of such fiscal period (such 90th day to be the "Audit  Day").  Any cost
         of such statements shall be deemed an Operating Expense.

                  (b)  Nothing  herein  contained  shall  prevent  either  party
         ("Initiator")  from  designating an additional  independent  nationally
         recognized  accounting  firm  ("Special  Auditor") to review one of the
         Performance  Fee  Statements or Audited  Statements at the  Initiator's
         expense (which shall not be an Operating Expense).  In the event of any
         dispute  between the Regular  Auditor and the Special Auditor as to any
         item  subject to audit,  the Regular  Auditor  and the Special  Auditor
         shall  select a third  nationally  recognized  accounting  firm ("Third
         Auditor") whose resolution on the non-prevailing  party of such dispute
         to pay the fees and  expenses of the Special  Auditor or Third  Auditor
         shall bind the parties.  The fees of the Third Auditor shall be paid by
         either the  Companies  or  Manager,  based upon which of them the Third
         Auditor designates as the  non-prevailing  party, and the Third Auditor
         may also, in its sole discretion, impose the costs of the Special Audit
         on the non-prevailing party.

                  (c) If no Special Auditor shall have been designated within 60
         days after the delivery of a  Performance  Fee  Statement or an Audited
         Statement, the same shall be final and binding upon the parties to this
         Agreement for all purposes.

         Section 3.7 Monthly and Quarterly  Financial  Statements.  On or before
the 20th  day of each  month,  Manager  shall  prepare  an  unaudited  operating
statement  for the preceding  calendar  month  detailing the Gross  Revenues and
expenses   incurred  in  the  Project's   operation   (the  "Monthly   Financial
Statements").  The  Monthly  Financial  Statements  shall  include  a  statement
detailing drop figure  accounts on all Gross Gaming  Revenues.  On or before the
45th day after the end of each  quarter,  Manager  shall  prepare  an  unaudited
report for the preceding  quarter  detailing the  capitalized  expenditures  and
marketing expenses incurred in the Project's operation.

         Section  3.8  Expenses.  All  costs,  expenses,  funding  or  operating
deficits and  Operating  Capital,  real  property and personal  property  taxes,
insurance  premiums  and  other  liabilities  incurred  due  to the  gaming  and
nongaming  operations of the Project  shall be the sole and exclusive  financial
responsibility  of  the  Companies.  It is  understood  that  statements  herein
indicating  that the  Companies  shall  furnish,  provide or  otherwise  supply,
present or contribute  items or services  hereunder  shall not be interpreted or
construed to mean that Manager is liable or  responsible to fund or pay for such
items if the Companies do not.

         Section 3.9 Annual  Budgets.  Manager  shall  prepare and submit to the
Companies'  Boards of  Directors  at least 60 days  before  the start of the new
Fiscal Year for their approval a capital  budget for the  expenditure of capital
improvements  ("Capital  Budget").  To the extent practical,  a reserve shall be
established for this purpose. The parties agree that any "material"  expenditure
not contemplated by the Capital Budget shall require the consent of both Manager
and the Companies. For the foregoing purposes, "material" shall

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mean  $20,000  in the  case of any such  individual  item  and an  aggregate  of
$250,000 in the case of all such items. Manager shall also prepare and submit to
the Companies'  Boards of Directors at least 60 days before the start of the new
Fiscal Year for their approval an operating budget projecting revenues, expenses
and EBITDA for the next Fiscal Year ("Operating Budget"). Manager shall have the
responsibility  to manage the Project in accordance  with the  Operating  Budget
except for expenses  necessitated by circumstances  beyond Manager's  reasonable
control.  Any dispute as to the Capital Budget or the Operating  Budget shall be
resolved by arbitration pursuant to Article IX.

         Section 3.10  Operating Bank Accounts.

                  (a) Manager shall  establish  bank accounts that are necessary
         for the  operation of the Project,  including an account for the Casino
         Bankroll,  at various  banking  institutions  chosen by  Manager  (such
         accounts are  hereinafter  collectively  referred to as the  "Operating
         Bank  Accounts").  The Operating Bank Accounts shall be named in such a
         manner as to identify the Project and  particular  uses for the account
         as the Companies and Manager may  determine.  All  instructions  to and
         checks drawn on the  Operating  Bank  Accounts  shall be signed only by
         representatives of the Companies or Manager who are covered by fidelity
         insurance and designated the Companies or Manager  personnel may be the
         only authorizing  signing persons on checks drawn on the Operating Bank
         Accounts. All checks shall be drawn only in accordance with established
         normal and customary accounting policies and procedures.  The Operating
         Bank Accounts shall be interest  bearing  accounts if such accounts are
         reasonably  available and all interest thereon shall be credited to the
         Operating Bank Accounts.  All Gross Revenues  (excluding noncash items)
         shall be deposited in the Operating  Bank  Accounts,  and Manager shall
         pay out of the  Operating  Bank  Accounts,  to the  extent of the funds
         therein,  from time to time,  all Operating  Expenses and other amounts
         required by Manager to perform its  obligations  under this  Agreement.
         All funds in the  Operating  Bank  Accounts  shall be separate from any
         other  funds  of  any  of  Manager's   Affiliates  and  the  Companies'
         Affiliates  and neither the Companies  nor Manager may  commingle  such
         funds in the  Operating  Bank Accounts with the funds of any other bank
         accounts.

                  (b)  Manager  agrees that it will not use any  Operating  Bank
         Accounts as compensating balances related to the extension of credit to
         Manager  or grant any right of  set-off  or  bankers'  lien on any such
         accounts   in  respect  of  any   amounts   owed  by  Manager  to  such
         depositories. Manager shall seek to obtain reasonable rates of interest
         for the  Operating  Bank  Accounts,  with due  regard to the  financial
         stability of and services offered by the  depositories  with which such
         accounts are kept. The parties to this  Agreement  agree that all funds
         held from time to time in the  Operating  Bank  Accounts are solely the
         property of Four Queens,  and upon the  expiration or  Termination  (as
         defined below) of this Agreement for any reason, Manager shall cease to
         withdraw  funds from all  Operating  Bank  Accounts and shall take such
         steps  as shall be  necessary  to (1)  remove  Manager's  designees  as
         signatories to the Operating Bank Accounts and (2) authorize Elsinore's
         designees


                                     - 10 -

<PAGE>



         to become the sole  signatories to the Operating  Bank  Accounts.  This
         provision shall survive  Termination.  It is understood and agreed that
         Manager may maintain  petty cash funds at the Project and make payments
         therefrom  as  the  same  are  customarily  made  in  the  casino/hotel
         business.

                  (c)  The  Companies   shall  have  the  right  to  fund  their
         obligations under the Plan by withdrawals from Operating Bank Accounts.
         The Companies'  ability to make other  withdrawals  from Operating Bank
         Accounts shall be consistent with their funding  obligations under this
         Agreement and in accordance with  established  accounting  policies and
         procedures.

                  Section 3.11      Payment of Expenses.

                  (a) Manager  shall pay from the Gross  Revenues the  following
         items  in the  order of  priority  listed  below,  on or  before  their
         applicable  due  date:  (i)  required   payments  to  the  Governmental
         Authorities,  including federal, state or local payroll taxes ("Payroll
         Taxes"),  (ii) Operating Expenses,  including taxes (other than Payroll
         Taxes) and the  Management  Fee, and (iii)  emergency  expenditures  to
         correct  a  condition  of an  emergency  nature,  including  structural
         repairs,  which require  immediate  repairs to preserve and protect the
         Project.  In the event that funds are not  available for payment of the
         Operating Expenses in their entirety,  all Payroll Taxes or withholding
         taxes shall be paid first from the available funds.

                  (b)  During  the  Term  of this  Agreement,  within  five  (5)
         Business  Days after  receipt  of  written  notice  from  Manager,  the
         Companies shall fund the Operating Bank Accounts  designated by Manager
         (the  "Companies'  Advances")  in such a  fashion  so as to  adequately
         insure that the Operating  Capital set forth in the Operating Budget as
         revised  is  sufficient  to support  the  uninterrupted  and  efficient
         ongoing  operation  of  the  Project.   The  written  request  for  any
         additional  Operating  Capital  shall be  submitted  by  Manager to the
         Companies on a monthly  basis based on the interim  statements  and the
         Operating Budget, as revised.

         Section 3.12  Cooperation  of the Companies and Manager.  The Companies
and  Manager  shall  cooperate  fully  with each  other  during the Term and the
Extended  Term,  if any, of this  Agreement to  facilitate  the  performance  by
Manager  of  Manager's  obligations  and  responsibilities  set  forth  in  this
Agreement.

         Section 3.13  Financing Matters.

                  (a) In no event  may  either  party  represent  that the other
         party or any Affiliate of such party is or in any way may be liable for
         the  obligations  of such party in  connection  with (i) any  financing
         agreement,   or  (ii)  any  public  or  private  offering  or  sale  of
         securities.  If the Companies, or any Affiliate of the Companies shall,
         at any  time,  sell or  offer  to sell  any  securities  issued  by the
         Companies or any Affiliate of the  Companies  through the medium of any
         prospectus or otherwise and which

                                     - 11 -

<PAGE>



         relates  to the  Project  or its  operation,  it  shall  do so  only in
         compliance with all applicable  laws, and shall clearly disclose to all
         purchasers  and  offerees  that  (i)  neither  Manager  nor  any of its
         Affiliates,  officers,  directors, agents or employees shall in any way
         be deemed to be an issuer or underwriter of such  securities,  and (ii)
         Manager and its Affiliates,  officers,  directors, agents and employees
         have not  assumed  and shall not have any  liability  arising out of or
         related  to the  sale or offer of such  securities,  including  without
         limitation,   any  liability  or   responsibility   for  any  financial
         statements,   projections  or  other   information   contained  in  any
         prospectus or similar written or oral communication. Manager shall have
         the right to approve any description of Manager or its  Affiliates,  or
         any  description of this  Agreement or of the  Companies'  relationship
         with Manager  hereunder,  which may be contained in any  prospectus  or
         other  communications  (unless  such  information  is  furnished to the
         Companies by Manager in writing),  and the  Companies  agree to furnish
         copies of all such  materials  to Manager  for such  purposes  within a
         reasonable  time  prior  to the  delivery  thereof  to any  prospective
         purchaser or offeree. The Companies agree to indemnify,  defend or hold
         Manager and its Affiliates,  officers, directors, agents and employees,
         free and harmless from any and all liabilities,  costs, damages, claims
         or expenses  arising out of or related to the breach of the  Companies'
         obligations  under this  Section  3.13.  Manager  agrees to  reasonably
         cooperate with the Companies in the  preparation of such agreements and
         offerings.

                  (b)  Notwithstanding   the  above  restrictions,   subject  to
         Manager's right of review set forth in this Section 3.13, the Companies
         may  represent  that the  Project is managed by Manager and Manager may
         represent  that it manages the Project and both may  describe the terms
         of this  Agreement and the physical  characteristics  of the Project in
         regulatory filings and public or private offerings.  Moreover,  nothing
         in this Section shall  preclude the  disclosure  of (i) already  public
         information, or (ii) audited or unaudited financial statements from the
         Project   required  by  the  terms  of  this  Agreement  or  (iii)  any
         information or documents  required to be disclosed to or filed with the
         Governmental Authorities.  Both parties shall use their best efforts to
         consult with the other  concerning  disclosures as to the Project.  The
         Companies  and Manager  shall  cooperate  with each other in  providing
         financial  information  concerning  the Project and Manager that may be
         required by any lender or required by any Governmental Authority.

         Section 3.14 Taxes and  Insurance.  Throughout the Term or the Extended
Term, the Companies  shall furnish Manager with copies of all tax statements and
insurance policies and all financing  documents  (including notes and mortgages)
relating to the Companies.  Manager shall cause all federal and state income and
sales tax returns of the  Companies  to be  prepared  and shall  cooperate  with
taxing authorities in connection with any inquiries or audits that relate to the
Companies.  Manager will also assist the Companies in procuring and  maintaining
liability,  property  and such  other  insurance  in at least such  amounts  and
covering such risks as is currently maintained with respect to the Companies and
in such  additional  amounts and  covering  such  additional  risks,  if any, as
Manager and Elsinore  determine is necessary in connection with the operation of
the Companies, with responsible

                                     - 12 -

<PAGE>



and reputable insurance  companies or associations.  All such insurance policies
shall name Manager as an  additional  insured and all insurers  thereon shall be
required to issue to Manager a  certificate  of  insurance  providing  that such
insurer shall deliver to Manager  reasonable  prior notice of termination of any
such policy or the coverage  provided thereby and, if and to the extent the same
shall be available without adversely affecting Four Queens' coverage and without
additional  premiums or charges,  waiving the rights of such insurer, if any, of
subrogation  against  Manager.  Without  in any  way  diminishing  Four  Queens'
responsibility hereunder,  Manager is hereby authorized and directed to pay from
the  Operating  Bank Accounts all taxes and insurance  fees  including,  without
limitation,  withholding  taxes and insurance  premiums,  and all other items of
expense relating to the ownership or operation of the Companies.

         Section 3.15  Concessions.  Manager shall  consummate,  if in Manager's
reasonable  discretion  it  deems  the same to be in the  best  interest  of the
Project,  in the  name  of and  for  the  benefit  of  Four  Queens,  reasonable
arms-length arrangements and leases with concessionaires, licensees, tenants and
other  intended users of any  facilities  related to the Project.  Copies of all
such arrangements shall be furnished to Elsinore.

         Section 3.16 Material Assessments. Manager, as exclusive agent for Four
Queens, is authorized to make and enter into any agreements (including,  without
limitation,  agreement  with  Manager's  Affiliates,  provided  such  agreements
represent the equivalent of reasonable  arms,  length  negotiations)  as are, in
Manager's  opinion,  necessary  or  desirable  for  the  operation,  supply  and
maintenance  of the Project,  as required by this  Agreement.  Manager  shall be
required  to obtain the prior  written  approval  of the Board of  Directors  of
Elsinore  which  approval  shall be in the absolute  discretion of such Board of
Directors  before  entering into any agreement not  contemplated by the approved
Annual  Budget.  Manager  shall  not  enter  into any  agreement  involving  the
incurrence of debt obligations on behalf of either or both of the Companies,  or
for Manager's own account,  with respect to the operations of the Project,  over
any amounts therefor set forth in the approved Annual Budget.

         Section  3.17  Trademarks.  Manager  (i)  acknowledges  the  Companies'
exclusive rights in and to the trademarks,  service marks, trade names and other
such  intellectually  property utilized by the Companies in the operation of the
Project  (the "Four  Queens  Marks") and (ii) agrees not to do any act that will
impair or affect the strength of the Four Queens  Marks,  the  continuity of the
registration  of the Four Queens  Marks,  the  Companies'  ownership of the Four
Queens  Marks or the goodwill  associated  with the Four Queens  Marks.  Manager
agrees to render  whatever  assistance  Elsinore may  reasonably  require in the
procurement  and  maintenance of  registrations  of the Four Queens Marks in the
United States Patent and Trademark Office and in other jurisdictions.


                                     - 13 -

<PAGE>





                      ARTICLE IV: MANAGEMENT FEE; WARRANTS

         Section 4.1  Payments to Manager.

                  (a)  Manager  shall  be  paid a  minimum  fee at the  rate  of
         $1,000,000  per annum (the  "Minimum  Fee") payable in advance in equal
         monthly  installments  of  $83,333.33  on the first  day of each  month
         during the Term and the Extended Term, if any.

                  (b)  Promptly,  and in no event  later than 90 days  following
         receipt of audited financial statements after the end of a Fiscal Year,
         Manager  shall  be paid  the  Performance  Fee,  if any.  Although  the
         Effective  Date  will  occur   approximately   two  months  later,  the
         Performance  Fee for 1997 will be calculated for the period  commencing
         January 1, 1997.

         Section 4.2 Interest on Overdue Amounts;  Collection  Costs. If for any
reason the Management Fee (both the Minimum Fee or Performance Fee) or any other
amount due to Manager under this  Agreement is not paid on a timely basis,  such
amount  shall  bear  interest  at the rate of 12% per annum  until paid in full.
Manager  shall also be entitled to  reimbursement  for the costs of  collection,
including  counsel  fees and  disbursements,  with  respect to amounts due to it
under this Agreement but which are unpaid.

         Section  4.3 Bonus.  Four  Queens or  Elsinore  will have the option to
terminate this  Agreement on 90 days prior written  notice if (i)  substantially
all of the  assets of the Four  Queens are sold,  (ii) Four  Queens is merged or
consolidated  with another company,  or (iii) the current  shareholders  sell at
least the  majority of the shares of Four Queens or Elsinore  during the term of
this Agreement.  If this Agreement is so terminated before the expiration of the
Term or the  Extended  Term,  if  applicable,  then  Manager will be entitled to
receive  $2  million  in cash,  minus any amount  realized  or  realizable  upon
exercise of the Warrants.

         Section 4.4  Warrants.  Elsinore  hereby  grants  Manager  warrants (in
customary form in the reasonable opinion of counsel to Manager) (the "Warrants")
on the terms  summarized  below,  which summary is qualified by reference to the
Warrant Agreement, a copy of which is attached hereto as Exhibit A:

                  (a)      Number of Shares Purchased:  20% of the issued and
         outstanding equity capital (on a fully diluted basis) of Elsinore on
         the Effective Date.

                  (b)      Duration:  Co-extensive with the Term and Extended
         Term of this Agreement (i.e. five years but only if Extension Option
         is exercised).

                  (c)      Exercise Price:  The greater of (i) book value per
         share on the Effective Date after the additional cash from the rights
         offering (as defined in the


                                     - 14 -

<PAGE>



         Plan) or (ii) the "Rights  Offering Net Per Share"  resulting from such
         rights  offering.  Rights  Offering Net Per Share shall mean $5 million
         divided by the number of shares of Elsinore  outstanding  after  giving
         effect to the rights offering and exercise of the Warrants.

                  (d)   Anti-Dilution   Adjustment:   In  addition  to  standard
         adjustment for stock splits,  stock  dividends,  recapitalizations  and
         similar  events,  the Exercise Price would be reduced and the number of
         Warrants  would increase by a formula if (i) shares of common stock are
         sold at less than current market value,  unless the Company  obtains an
         opinion from an  investment  banker that such sale at less than current
         market value was  necessary as a result of the quantity of common stock
         being sold,  or (ii)  warrant  options or  convertible  securities  are
         issued with an exercise or  conversion  price less than current  market
         value (other than issuances to full-time employees of Elsinore involved
         in the  operation  of the Project of shares of common stock and options
         or  warrants  to purchase  up to an  aggregate  of 10% of the  Elsinore
         issued and outstanding common stock as of the Effective Date).

                  (e)      Registration Rights:  Manager will have the right to
          become a party (with the identical rights as the Elsinore bondholders)
          to the Registration Rights Agreement among the Elsinore bondholders
          and Elsinore.

                    ARTICLE V: REPRESENTATIONS AND WARRANTIES

         Section  5.1  Manager  represents  and  warrants  to the  Companies  as
follows:

                  (a)  Companies'  Organization.  Manager is a corporation  duly
         organized,  validly existing and in good standing under the laws of the
         State of Nevada and has the full corporate power and authority to enter
         into and perform its obligations under this Agreement.

                  (b)  Authorization of Agreement.  The execution,  delivery and
         performance of this Agreement has been duly  authorized and approved by
         all  necessary  corporate  action  on the  part of  Manager,  and  this
         Agreement   has  been  duly  executed  and  delivered  by  Manager  and
         constitutes  the  legal,  valid  and  binding  obligation  of  Manager,
         enforceable  against Manager in accordance  with its terms,  subject to
         applicable    bankruptcy,     insolvency,     fraudulent    conveyance,
         reorganization, moratorium and similar laws affecting creditors' rights
         and remedies generally and subject,  as to  enforceability,  to general
         principles of equity.  The execution,  delivery and performance of this
         Agreement by Manager does not and will not conflict  with any law, rule
         or regulation of the Nevada Gaming Authorities.

                  (c)  Litigation.  There  are  no  judicial  or  administrative
         actions,  proceedings  or  investigations  pending  or,  to the best of
         Manager's  knowledge,  threatened  against  Manager  that  question the
         validity  of this  Agreement  or any  action  taken  or to be  taken by
         Manager in connection with this Agreement and that, if adversely


                                     - 15 -

<PAGE>



         determined, would have a material adverse effect upon Manager's ability
         to perform its obligations under this Agreement.

                  (d)  Consents  and  Approvals.   With  the  exception  of  the
         requisite approvals of the Nevada Gaming Authorities, no authorization,
         consent, approval,  license, finding of suitability,  exemption from or
         filing  or  registration  with any  court or  governmental  department,
         commission,  board,  bureau,  agency or  instrumentality,  domestic  or
         foreign, is or will be necessary as a condition to the valid execution,
         delivery or performance by Manager of this  Agreement,  other than such
         authorizations, consents, approvals, licenses, findings of suitability,
         exemptions,  filings or  registrations as have been obtained and are in
         full force and effect.

         Section 5.2 The Companies represent and warrant to Manager as follows:

                  (a) Companies'  Organization.  The Companies are  corporations
         duly organized, validly existing and in good standing under the laws of
         the State of Nevada and have the full corporate  power and authority to
         enter into and perform its obligations under this Agreement.

                  (b)  Authorization of Agreement.  The execution,  delivery and
         performance of this Agreement and the Plan has been duly authorized and
         approved  by  all  necessary  corporate  action  on  the  part  of  the
         Companies,  and this  Agreement has been duly executed and delivered by
         the Companies and constitutes the legal,  valid and binding  obligation
         of them, enforceable against them in accordance with its terms, subject
         to   applicable   bankruptcy,    insolvency,   fraudulent   conveyance,
         reorganization, moratorium and similar laws affecting creditors' rights
         and remedies generally and subject,  as to  enforceability,  to general
         principles of equity.  The execution,  delivery and performance of this
         Agreement by the Companies does not and will not conflict with any law,
         rule or regulation of the Nevada Gaming Authorities.

                  (c)  Consents  and  Approvals.   With  the  exception  of  the
         requisite approvals of the Nevada Gaming Authorities, no authorization,
         consent, approval,  license, finding of suitability,  exemption from or
         filing  or  registration  with any  court or  governmental  department,
         commission,  board,  bureau,  agency or  instrumentality,  domestic  or
         foreign, is or will be necessary as a condition to the valid execution,
         delivery or performance by the Companies of this Agreement,  other than
         such  authorizations,   consents,  approvals,   licenses,  findings  of
         suitability, exemptions, filings or registrations as have been obtained
         and are in full force and effect.

                  (d)      No Joint Venture.  It is expressly understood and
         agreed that Manager is being employed by the Companies as an
         independent contractor to provide, or cause to be provided, supervisory
         management and consulting services in respect of the Project and not
         as a partner or joint venturer of the Companies or either or them.  All
         purchases and acquisitions of every kind and character by Manager on


                                     - 16 -

<PAGE>



         behalf of the  Companies  shall be  property of the  Companies  and all
         debts and  liabilities  incurred  by  Manager  within  the scope of the
         authority  granted  and  permitted  hereunder  in  the  course  of  its
         management and operation of the Project shall be debts and  liabilities
         of the Companies only, and Manager shall not be liable therefor for its
         own account, except as specifically stated to the contrary herein.

                               ARTICLE VI. DEFAULT

         Section 6.1 Definition. The occurrence of any one or more of the events
described  in the  Sections  6.2,  6.3, 6.4 or 6.5 which is not cured within the
time  permitted,  shall  constitute a default under this Agreement  (hereinafter
referred to as a "Default" or an "Event of Default") as to the party  failing in
the performance or effecting the breaching act.

         Section 6.2 Manager's Defaults. If Manager shall (a) fail to perform or
materially  comply with any of the  covenants,  agreements,  terms or conditions
contained  in this  Agreement  applicable  to  Manager  and such  failure  shall
continue for a period of thirty (30) days after written  notice thereof from the
Companies to Manager specifying in detail the nature of such failure, or, in the
case such  failure is of a nature that it cannot,  with due  diligence  and good
faith,  be cured within thirty (30) days,  if Manager fails to proceed  promptly
and with all due diligence and in good faith to cure the same and  thereafter to
prosecute the curing of such failure to completion with all due diligence within
ninety  (90)  days  thereafter,  or (b) take or fail to take any  action  to the
extent required of Manager by the Nevada Gaming Authorities unless Manager cures
such default or breach prior to the expiration of applicable  notice,  grace and
cure periods, if any, provided,  however, that Manager shall only be required to
cure any defaults with respect to which Manager has a duty hereunder.

         Section 6.3 The Companies'  Default. If the Companies shall (a) fail to
make any monetary  payment  required under this  Agreement,  including,  but not
limited to, the  Companies'  Advances,  on or before the due date recited herein
and said failure  continues for five (5) Business Days after written notice from
Manager  specifying  such failure,  or (b) fail to perform or materially  comply
with any of the other covenants,  agreements,  terms or conditions  contained in
this Agreement  applicable to the Companies  (other than monetary  payments) and
which  failure  shall  continue  for a period of thirty (30) days after  written
notice thereof from Manager to the Companies  specifying in detail the nature of
such failure,  or, in the case such failure is of a nature that it cannot,  with
due  diligence  and good faith,  cure within  thirty (30) days, if the Companies
fail to proceed  promptly and with all due  diligence  and in good faith to cure
the same and  thereafter  to prosecute  the curing of such failure to completion
with all due diligence within ninety (90) days thereafter.

         Section  6.4  Bankruptcy.  With  the  exception  of any  actions  taken
pursuant  to the  Proceedings,  if any party (a)  applies for or consents to the
appointment  of a  receiver,  trustee  or  liquidator  of  itself  or any of its
property,  (b) makes a general  assignment for the benefit of creditors,  (c) is
adjudicated  a bankrupt  or  insolvent,  or (d) files a  voluntary  petition  in
bankruptcy or a petition or an answer seeking  reorganization  or an arrangement
with

                                     - 17 -

<PAGE>



creditors,  takes  advantage  of  any  bankruptcy,  reorganization,  insolvency,
readjustment  of debt,  dissolution or  liquidation  law, or admits the material
allegations  of a petition  filed against it in any  proceedings  under any such
law.

         Section 6.5 Reorganization/Receiver.  With the exception of any actions
taken pursuant to the Proceedings, if an order, judgment or decree is entered by
any court of competent  jurisdiction approving a petition seeking reorganization
of Manager  or the  Companies,  as the case may be, or  appointing  a  receiver,
trustee or liquidator of Manager or the Companies, as the case may be, or of all
or a substantial  part of any of the assets of Manager or the Companies,  as the
case may be, and such order, judgment or decree continues unstayed and in effect
for a period of sixty (60) days from the date of entry thereof.

         Section  6.6  Delays  and  Omissions.  No delay or  omission  as to the
exercise of any right or power  accruing  upon any Event of Default shall impair
the non-defaulting  party's exercise of any right or power or shall be construed
to be a waiver of any Event of Default or acquiescence therein.

         Section 6.7 Disputes in Arbitration.  Notwithstanding the provisions of
this Article VI, any  occurrence  which would  otherwise  constitute an Event of
Default  hereunder  shall not constitute an Event of Default for so long as such
dispute is in arbitration pursuant to the arbitration provisions of Article IX.

                            ARTICLE VII. TERMINATION

         Section 7.1 Termination Events. This Agreement may be terminated by the
non-defaulting  party upon the occurrence of an Event of Default and the lapsing
of the time to cure.

         Section 7.2 Notice of  Termination.  In the event of the occurrence and
continuation for the relevant cure period of an Event of Default, either Manager
or the Companies, as appropriate,  may terminate  ("Termination") this Agreement
by giving ten (10) days written  notice,  and the Term or the  Extended  Term of
this  Agreement  shall expire by limitation  at the  expiration of said last day
specified in the notice as if said date was the date herein originally fixed for
the expiration of the Term or the Extended Term hereof.

         Section 7.3  Payments  Upon  Termination.  The  Companies  shall pay to
Manager all accrued but unpaid  Management  Fees and expenses of Manager and any
other sum owed Manager pursuant to this Agreement.

         Section 7.4       Post Termination.  Upon a Termination:

                  (a) Manager  shall  promptly  deliver to  Elsinore  any books,
         records, instruments or other documentation relating to the Project and
         the Companies in Manager's possession or under Manager's control;


                                     - 18 -

<PAGE>




                  (b) Manager  and its  Affiliates  shall  release and waive all
         rights,  claims,  interests and relationships they may have to control,
         retain,  or  discharge  any matter of  management  with  respect to the
         Project,  or any other benefit  thereunder or in connection  therewith,
         except as  specified in Section 7.3 and for the  provisions  of Article
         VIII which shall survive Termination; and

                  (c) Manager shall peacefully  vacate and surrender  possession
         to Four Queens,  and shall fully  cooperate in the prompt and efficient
         transfer of the  management  of the Project from Manager to Four Queens
         or a person or entity designated by Four Queens. In connection with the
         foregoing,  Manager  shall  act in good  faith to avoid  any  breach or
         disruption  of any contract  involving  the Project or the lapse of any
         insurance policy covering or pertaining to the Project.

         Section 7.5 Transfer of Permits and Gaming  Licenses Upon  Termination.
To the fullest extent  permissible  under  applicable  law, upon  termination or
expiration of this Agreement, Manager shall cooperate in the transfer of any and
all permits,  licenses or similar authorizations issued by any governmental body
(including,  without limitation,  the Nevada Gaming Authorities) relating to the
operation or management of any or all of the Project to the new manager.

         Section  7.6  Option  to  Terminate.  Elsinore  will  have the right to
terminate  this  Agreement on 90 days prior  written  notice if (i) three months
after  William  L.  Westerman  has  given  notice  that he will  retire as Chief
Executive  Officer  ("CEO") of Riviera  Holdings  Corporation  or its subsidiary
Riviera  Gaming  Management,  a successor  acceptable  to Elsinore  has not been
appointed  or (ii)  three  months  after the death of William  L.  Westerman,  a
successor acceptable to Elsinore has not been appointed.

         If either Four Queens or Elsinore terminates this Agreement pursuant to
this Section 7.6 or Section 4.3, then any increase in the  Management Fee due to
the Performance Fee payable under Section 4.1 will be calculated as follows: the
Performance  Fee through the date of termination  will be 25% of the increase of
(i) EBITDA  through  the date of  termination  over (ii)  $666,666.67  times the
number of months elapsed in the Fiscal Year through the date of termination. The
Performance Fee will be paid to Manager promptly,  but in no event later than 90
days after the termination date.

                 ARTICLE VIII: EXCULPATION AND INDEMNIFICATION.

         Section 8.1  Exculpation.  Manager,  its  Affiliates  and each of their
respective  officers,  partners,  directors,  employees  and agents shall not be
liable to the  Companies or any person who has acquired an interest in either or
both of the  Companies,  for  any  losses  sustained  or  liabilities  incurred,
including monetary damages,  as a result of any act or omission of Manager,  its
Affiliates or any of their respective officers, partners,  directors,  employees
or agents,  if the  conduct of Manager or such other  person did not  constitute
actual fraud, gross negligence or willful or wanton misconduct ("Manager Conduct
Standard").  The  negative  disposition  of any action,  suit or  proceeding  by
judgment, order,


                                     - 19 -

<PAGE>



settlement,  conviction or upon a plea of nolo  contendere,  or its  equivalent,
shall not, of itself,  create a presumption that Manager,  its Affiliates or any
of their respective officers, partners, directors,  employees or agents acted in
a manner contrary to the Manager  Conduct  Standard.  Nothing  contained in this
Agreement   shall   exculpate  or  limit   Manager's   liability   for  unlawful
misappropriation of the Companies' assets.

         Section 8.2       Indemnification.

                  (a) Subject to the provisions of Section  8.2(b)  hereof,  the
         Companies shall indemnify and hold harmless Manager, its Affiliates and
         any of their respective officers,  partners,  directors,  employees and
         agents (each individually,  an "Indemnitee"),  from and against any and
         all  losses,   claims,   damages,   liabilities,   expenses  (including
         reasonable legal fees and expenses),  judgments, fines, settlements and
         other amounts arising from any and all claims, demands,  actions, suits
         or proceedings,  civil, criminal,  administrative or investigative,  in
         which an Indemnitee may be involved, or threatened to be involved, as a
         party or otherwise, which relates to, or arises out of, the performance
         of any duties and services for or on behalf of the  Companies  pursuant
         to the terms and  within  the scope of this  Agreement,  regardless  of
         whether the liability or expense  accrued at or relates to, in whole or
         in part,  any time before,  on or after the date  hereof.  The negative
         disposition  of any action,  suit or  proceeding  by  judgment,  order,
         settlement,  conviction  or  upon a plea  of  nolo  contendere,  or its
         equivalent,  shall  not,  of  itself,  create  a  presumption  that  an
         Indemnitee acted in a manner contrary to the Manager Conduct Standard.

                  (b) An  Indemnitee  shall not be entitled  to  indemnification
         under this  Section 8.2 with  respect to any claim,  issue or matter in
         which it has been finally  adjudged in a nonappealable  order that such
         Indemnitee has breached the Manager Conduct Standard unless and only to
         the extent that the court in which such action was brought,  or another
         court of competent  jurisdiction,  determines  upon  application  that,
         despite  the  adjudication  of  liability,   in  view  of  all  of  the
         circumstances  of the case,  the  Indemnitee  is fairly and  reasonably
         entitled to  indemnification  for such  liabilities and expenses as the
         court may deem  proper.  In addition,  notwithstanding  anything to the
         contrary  contained in this Article VIII,  an  Indemnitee  shall not be
         entitled to  indemnification  under this  Section  8.2  against  losses
         sustained or  liabilities  incurred if such losses or  liabilities  are
         finally  determined by a court of competent  jurisdiction  to have been
         the direct result of the Manager Conduct Standard.

                  (c)  In  the  event  that  any  legal   proceedings  shall  be
         instituted  or any claim or demand  shall be  asserted by any person in
         respect  of which  payment  may be  sought by an  Indemnitee  under the
         provisions of this Section 8.2, the  Indemnitee  shall  promptly  cause
         written  notice of the  assertion  of any such  proceeding  or claim of
         which it has actual  knowledge to be forwarded to the  Companies.  Upon
         receipt of such notice,  the Companies  shall have the right,  at their
         option and expense,  to be represented by counsel of their choice,  and
         to  defend  against,  negotiate,  settle  or  otherwise  deal  with any
         proceeding, claim or demand which relates to any loss,

                                     - 20 -

<PAGE>



         liability,   damage  or  deficiency   indemnified   against  hereunder;
         provided,  however,  that no  settlement  shall be made  without  prior
         written  consent  of the  Indemnitee  which  shall not be  unreasonably
         withheld;  and provided further, that the Indemnitee may participate in
         any such proceeding with counsel of its choice and at its expense.  The
         Indemnitee and the Companies  agree to cooperate  fully with each other
         in connection  with the defense,  negotiation or settlement of any such
         legal proceeding, claim or demand.

                  After any final  judgment or award shall have been rendered by
         a  court,  arbitration  board or  administrative  agency  of  competent
         jurisdiction  and  the  expiration  of the  time  in  which  to  appeal
         therefrom,  or  a  settlement  shall  have  been  consummated,  or  the
         Indemnitee and the Companies  shall have arrived at a mutually  binding
         agreement  with  respect to each  separate  matter  indemnified  by the
         Companies  hereunder,  the  Indemnitee  shall  forward to the Companies
         notice of any sums due and owing by it pursuant to this  Agreement with
         respect to such matter and the  Companies  shall be required to pay all
         of the sums so owing to the Indemnitee in immediately  available funds,
         thirty (30) days after the date of such notice.

                  (d) The indemnification  provided by this Section 8.2 shall be
         in addition to any other rights to which an Indemnitee  may be entitled
         under  any  agreement,  bylaw  or vote of the  Board  of  Directors  of
         Elsinore  or  Four  Queens,  respectively,  or as a  matter  of  law or
         otherwise,  both as to action in the Indemnitee's  capacity as Manager,
         an  Affiliate  thereof or an officer,  partner,  director,  employee or
         agent of  Manager  or its  Affiliates  and as to  action  in any  other
         capacity, shall continue as to an Indemnitee who has ceased to serve in
         such capacity and shall inure to the benefit of the heirs,  successors,
         assigns and administrators of an Indemnitee.

                             ARTICLE IX: ARBITRATION

         Section 9.1 Appointment of Arbitrators.  All disputes arising out of or
connected  with the subject matter of this Agreement are to be referred first to
a committee  of four (4)  persons  who shall meet in an attempt to resolve  said
dispute or open issue. The committee shall consist of two (2) persons  appointed
by the  Companies  and two (2) persons  appointed  by Manager.  If an  agreement
cannot be reached to resolve the dispute by the  committee,  the dispute or open
issue will be resolved by binding arbitration.  Any award of the arbitrators may
be filed in a court of law as a final judgment.  Any such  arbitration  shall be
conducted  in Las Vegas,  Nevada in  accordance  with the rules and  regulations
adopted by the American Arbitration Association. Either party may serve upon the
other party a written  notice of the demand  dispute or appraisal to be resolved
pursuant to this  Article IX.  Within  thirty (30) days after the giving of such
notice,  each of the parties hereto shall nominate and appoint an arbitrator (or
appraiser,  as the case may be) and shall  notify the other  party in writing of
the name and address of the  arbitrator so chosen.  Upon the  appointment of the
two (2)  arbitrators as hereinabove  provided,  said two (2)  arbitrators  shall
forthwith,  within  fifteen  (15)  days  after  the  appointment  of the  second
arbitrator,  and before exchanging views as to the question at issue, appoint in
writing a third arbitrator who shall


                                     - 21 -

<PAGE>



be experienced  in the operation of a gaming casino (the "Selected  Arbitrator")
and give written notice of such  appointment to each of the parties  hereto.  In
the event that the two (2)  arbitrators  shall fail to appoint or agree upon the
Selected Arbitrator within said fifteen (15) day period, the Selected Arbitrator
shall be selected by the parties  themselves if they so agree upon such Selected
Arbitrator  within a further  period of ten (10) days. If a Selected  Arbitrator
shall not be  appointed  or agreed upon within the time  herein  provided,  then
either  party on behalf of both may request  such  appointment  by the  American
Arbitration  Association  (or  its  successor  or  similar  organization  if the
American  Arbitration  Association is no longer in existence).  Said arbitrators
shall be sworn  faithfully  and fairly to determine  the question at issue.  The
arbitrators shall afford to the Companies and Manager a hearing and the right to
submit  evidence,  with the privilege of  cross-examination,  on the question at
issue, and shall with all possible speed make their determination in writing and
shall give notice to the parties  hereto of such  determination.  The concurring
determination of any two (2) of said three (3) arbitrators shall be binding upon
the parties, or, in case no two (2) of the arbitrators shall render a concurring
determination,  then  the  determination  of the  Selected  Arbitrator  shall be
binding upon the parties hereto. Each party shall pay the fees of the arbitrator
appointed  by it,  and the fees of the  Selected  Arbitrator  shall  be  divided
equally between the Companies and Manager.

         Section 9.2 Inability to Act. In the event that an arbitrator appointed
as  aforesaid  shall  thereafter  die or become  unable or unwilling to act, his
successor  shall be appointed in the same manner provided in this Article IX for
the  appointment of the  arbitrator so dying or becoming  unable or unwilling to
act.

                               ARTICLE X: NOTICES

         Notice  given by a party under this  Agreement  shall be in writing and
shall be deemed duly given (i) when delivered by hand,  (ii) when three (3) days
have elapsed after its  transmittal  by registered  or certified  mail,  postage
prepaid,  return  receipt  requested,  or two (2) days  have  elapsed  after its
transmittal  by  nationally  recognized  air  courier  service;  or  (iii)  when
delivered by telephonic facsimile transmission (with a copy thereof so delivered
by hand,  mail or air courier if recipient does not  acknowledge  receipt of the
transmission).  Notices  shall be sent to the  addresses  set  forth  below,  or
another  as to which  that  party  has  given  notice,  in each case with a copy
provided in the same manner and at the same time to the persons shown below

                  if to Elsinore or Four Queens to:

                  202 Fremont Street
                  P.O. Box 370
                  Las Vegas, Nevada 89101
                  Attention:  President
                  Facsimile No:  (702) 387-5142

                  with a copy to:


                                     - 22 -

<PAGE>




                  Gordon & Silver, Ltd.
                  3800 Howard Hughes Parkway
                  14th Floor
                  Las Vegas, Nevada 89109
                  Attn:    Gerald M. Gordon, Esq.
                  Facsimile No:  (702) 369-2666

                  if to Manager to:

                  c/o William L. Westerman
                  2901 Las Vegas Boulevard South
                  Las Vegas, Nevada 89109-1935
                  Facsimile No:  (702) 794-9277

                  with a copy to:

                  Dechert, Price & Rhoads
                  477 Madison Avenue
                  New York, New York 10022
                  Attn:  Fredric J. Klink, Esq.
                  Facsimile No:  (212) 308-2041

         Any party may change the name and/or address by written notice given in
each instance to the other parties.

                            ARTICLE XI: MISCELLANEOUS

         Section 11.1 Nevada Gaming  Control Act and Nevada Gaming  Authorities.
Notwithstanding  anything to the  contrary  contained  in this  Agreement,  this
Agreement  shall be deemed to  include  all  provisions  required  by the Nevada
Gaming Control Act, as amended, and the regulations  promulgated thereunder (the
"Act"),  and  shall  be  conditioned  upon the  approval  of the  Nevada  Gaming
Authorities  as required  by the Act.  To the extent that any term or  provision
contained in this Agreement shall be  inconsistent  with the Act, the provisions
of the Act shall govern.  All  provisions of the Act, to the extent  required by
law to be included in this Agreement, are incorporated herein by reference as if
fully restated in this Agreement.

         Section  11.2 Entire  Agreement.  This  Agreement  contains  the entire
understanding  of the parties to this Agreement in respect of its subject matter
and supersedes all prior agreements and understandings  between the parties with
respect to such subject matter.

         Section 11.3      Amendment; Waiver.  This Agreement may not be
modified,  amended,  supplemented,  canceled  or  discharged,  except by written
instrument  executed  by all of the  parties  to this  Agreement.  No failure to
exercise, and no delay in exercising, any right,

                                     - 23 -

<PAGE>



power or privilege under this Agreement shall operate as a waiver, nor shall any
single or partial exercise of any right,  power or privilege  hereunder preclude
the exercise of any other right, power or privilege.  No waiver of any breach of
any  provision  shall be deemed to be a waiver of any  preceding  or  succeeding
breach of the same or any other provision,  nor shall any waiver be implied from
any course of dealing  between or among the  parties.  No  extension of time for
performance  of any  obligations  or other  acts  hereunder  or under  any other
agreement  shall be deemed to be an extension of the time for performance of any
other obligations or any other acts.

         Section 11.4    Binding Effect; Assignment; Combinations Involving
                         the Companies.

                  (a) The rights and  obligations of this  Agreement  shall bind
         and inure to the benefit of the  parties  (including  their  respective
         officers,  directors,  employees,  agents  and  Affiliates)  and  their
         respective heirs,  executors,  successors and assigns. No party to this
         Agreement  shall  have  the  right to  assign  this  Agreement  and its
         respective rights and obligations hereunder without the consent of each
         other party to this Agreement.

                  (b) If the termination option of Section 4.3 is not exercised,
         the Companies agree that during the Term or the Extended Term they will
         not enter into an  agreement  with a third party to sell  substantially
         all of the Project assets (as opposed to sale of equity  securities) to
         a third party unless,  as a condition to such combination (i) Manager's
         rights under this Agreement shall continue in full force and effect and
         (ii) the third  party  shall  agree to  continue  to pay to Manager the
         Management  Fee. In the event of a  combination,  it shall use its best
         efforts to assert and protect, in good faith,  Manager's rights granted
         to Manager in this  Agreement  at all times during the  negotiation  of
         said combination.

         Section 11.5 Counterparts. This Agreement may be executed in any number
of  counterparts,  each of which shall be an original but all of which  together
shall constitute one and the same instrument.

         Section 11.6 Terminology.  The headings contained in this Agreement are
for  convenience  of reference only and are not to be given any legal effect and
shall not affect the meaning or interpretation of this Agreement.

         Section  11.7  Governing  Law.  This  Agreement  shall be  construed in
accordance  with and governed for all purposes by the laws and public  policy of
the State of Nevada applicable to contracts  executed and to be wholly performed
within such State.

         Section 11.8 Severability.  If any provision of this Agreement,  or the
application of any such provision to any person or  circumstance,  is held to be
inconsistent  with any present or future law, ruling,  rule or regulation of any
court or  governmental  or regulatory  authority  having  jurisdiction  over the
subject matter of this Agreement,  such provision shall be deemed to be modified
to the minimum extent necessary to comply with such law, ruling,


                                     - 24 -

<PAGE>



rule or regulation,  and the remainder of this Agreement,  or the application of
such  provision to persons or  circumstances  other than those as to which it is
held inconsistent,  shall not be affected.  If any provision is determined to be
illegal, unenforceable, or void, which provision does not relate to any payments
made  hereunder  and the payments made  hereunder  shall not be affected by such
determination  and this  Agreement is capable of substantial  performance,  then
such void provision shall be deemed rescinded and each provision not so affected
shall be enforced to the extent permitted by law.

         Section 11.9 No Third Party Benefits. This Agreement is for the benefit
of the parties hereto and their respective permitted successors and assigns. The
parties  neither intend to confer any benefit  hereunder on any person,  firm or
corporation  other than the parties hereto,  nor shall any such third party have
any rights hereunder.

         Section 11.10  Drafting  Ambiguities.  Each party to this Agreement and
its counsel have had an  opportunity  to review and revise this  Agreement.  The
normal  rule of  construction  to the  effect  that  any  ambiguities  are to be
resolved against the drafting party shall not be employed in the  interpretation
of this Agreement or of any amendments or exhibits to this Agreement.

         Section  11.11  Attorneys'  Fees.  Should  either  party  institute  an
arbitration,  action or proceeding to enforce any provisions hereof or for other
relief  due to an  alleged  breach  of any  provision  of  this  Agreement,  the
prevailing  party shall be entitled to receive from the other party all costs of
the action or proceeding and reasonable attorneys' fees.

         Section 11.12 Limitations on Responsibilities of Manager. Manager shall
use its best efforts to render the services  contemplated  by this  Agreement in
good faith to the Companies,  but notwithstanding anything to the contrary which
may be  expressed  or  implied  in this  Agreement,  Manager  hereby  explicitly
disclaims any and all warranties,  express or implied, including but not limited
to the  success or  profitability  of the  Project.  In the  performance  of the
services  contemplated  by this  Agreement,  Manager  shall not be liable to the
Companies  for any acts or  omissions  in  connection  therewith,  except  which
constitute a breach of the Manager Conduct  Standard and then only to the extent
of the Management  Fees actually  received by Manager,  provided that so long as
Elsinore is controlled by affiliates of John C. Waterfall,  Manager's  liability
for  breach  of  the  Manager  Conduct  Standard  shall  not be  limited  to the
Management Fees received by Manager.

         Section 11.13 No Violation.  Nothing  contained in this Agreement shall
entitle the Boards of Directors,  Manager or any other persons acting for any of
the Companies or Manager to exercise control over the operation of the Casino or
other  operations of the Project in a manner which would violate any  regulation
of the Nevada Gaming Authorities.



                                     - 25 -

<PAGE>


                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Agreement to be duly executed by an authorized representative thereof, all as of
the day and year first above written.


ELSINORE:                                       FOUR QUEENS:

Elsinore Corporation, a Nevada                  Four Queens, Inc., a Nevada
  corporation                                     corporation


By: _____________________________               By: ___________________________
    Name:________________________                   Name:______________________
    Title:_______________________                   Title:_____________________




MANAGER:




By: _____________________________             
    Name:________________________             
    Title:_______________________             




                                     - 26 -

<PAGE>

                                                                      Exhibit A
                                                                      ---------

                           WARRANTS TO PURCHASE SHARES
                     OF COMMON STOCK OF ELSINORE CORPORATION

                              [number of warrants]

         This  Warrant  Certificate  certifies  that Riviera  Gaming  Management
Corporation - Elsinore (or registered  assigned (the "Holder"),  is the owner of
[number]  Warrants  (subject to  adjustment as provided  herein),  each of which
represents the right to subscribe for and purchase from Elsinore Corporation,  a
Nevada corporation (the "Company"), one share of the Common Stock, no par value,
of the  Company  (the  common  stock,  including  any stock into which it may be
changed, reclassified or converted, is herein referred to as the "Common Stock")
at the purchase price (the  "Exercise  Price") of [amount] per share (subject to
adjustment as provided herein).  This Warrant  Certificate  represents  Warrants
issued pursuant to a Management Agreement dated [date],  between the Company and
Riviera Gaming Management Corporation - Elsinore (the "Management Agreement").

         THIS WARRANT AND THE SECURITIES  ISSUABLE UPON EXERCISE HEREOF
         HAVE NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS
         AMENDED, AND ARE SUBJECT TO CERTAIN RESTRICTIONS, CONTAINED IN
         PARAGRAPHS 5 AND 6 HEREOF, WITH RESPECT TO THEIR TRANSFER.

         The Warrants represented by this Warrant Certificate are subject to the
following provisions, terms and conditions:

         1.  Exercise of Warrants.  The Warrants may be exercised by the Holder,
in whole or in part  (but not as to a  fractional  share of  Common  Stock),  by
surrender of this Warrant  Certificate at the principal office of the Company at
[address] (or such other office or agency of the Company as may be designated by
notice in writing to the Holder at the address of such Holder  appearing  on the
books of the Company), with the appropriate form attached hereto duly exercised,
at any time within the period  beginning  on the date hereof and expiring at the
same time as the Term or Extended Term under the  Management  Agreement  expires
(the "Exercise Period") and by payment to the Company by certified check or bank
draft of the purchase price for such shares.  The Company agrees that the shares
of Common Stock so purchased  shall be and are deemed to be issued to the Holder
as the record  owner of such shares of Common  Stock as of the close of business
on the date on which the Warrant  Certificate  shall have been  surrendered  and
payment  made for such shares of Common  Stock.  Certificates  representing  the
shares of  Common  Stock so  purchased,  together  with any cash for  fractional
shares of Common  Stock paid  pursuant to Section 2E,  shall be delivered to the
Holder  promptly  and in no event  later than ten (10) days  after the  Warrants
shall have


<PAGE>



been so  exercised,  and,  unless  the  Warrants  have  expired,  a new  Warrant
Certificate  representing the number of Warrants  represented by the surrendered
Warrant  Certificate,  if any, that shall not have been exercised  shall also be
delivered to the Holder within such time.

         2.       Adjustments.  The Exercise Price and the number of shares of
Common  Stock  issuable  upon  exercise  of each  Warrant  shall be  subject  to
adjustment from time to time as follows:

                  (1) Stock  Dividends;  Stock  Splits;  Reverse  Stock  Splits;
                  Reclassifications.  In  case  the  Company  shall  (i)  pay  a
                  dividend with respect to its capital stock in shares of Common
                  Stock, (ii) subdivide its outstanding  shares of Common Stock,
                  (iii)  combine its  outstanding  shares of Common Stock into a
                  smaller  number of shares of any class of Common Stock or (iv)
                  issue any shares of its capital stock in a reclassification of
                  the  Common  Stock  (including  any such  reclassification  in
                  connection  with a  merger,  consolidation  or other  business
                  combination   in  which   the   Company   is  the   continuing
                  corporation)  (any one of which actions is herein  referred to
                  as an  "Adjustment  Event"),  the  number  of shares of Common
                  Stock  purchasable  upon exercise of each Warrant  immediately
                  prior to the record  date for such  Adjustment  Event shall be
                  adjusted so that the Holder  shall  thereafter  be entitled to
                  receive  the  number  of  shares  of  Common  Stock  or  other
                  securities  of the Company (such other  securities  thereafter
                  enjoying  the  rights of shares of  Common  Stock  under  this
                  Warrant Certificate) that such Holder would have owned or have
                  been   entitled  to  receive   after  the  happening  of  such
                  Adjustment Event, had such Warrant been exercised  immediately
                  prior to the happening of such Adjustment  Event or any record
                  date with respect thereto. An adjustment made pursuant to this
                  Section  2A(I) shall become  effective  immediately  after the
                  effective  date of such  Adjustment  Event  retroactive to the
                  record date, if any, for such Adjustment Event.

                  (2)  Distributions  of  Subscription   Rights  or  Convertible
                  Securities.  In case the  Company  shall fix a record date for
                  the  making  of a  distribution  to all  holders  of shares of
                  Common Stock of rights,  options,  warrants or  convertible or
                  exchangeable  securities containing the right to subscribe for
                  or purchase shares of Common Stock  (excluding  those referred
                  to in Section  2A(S)  below),  then in each case the number of
                  shares of Common Stock purchasable after such record date upon
                  the  exercise  of  each  Warrant   shall  be   determined   by
                  multiplying  the number of shares of Common Stock  purchasable
                  upon the  exercise of each Warrant  immediately  prior to such
                  record date by a fraction, the numerator of which shall be the
                  then Current  Market Value (as defined in Section 2A(3) below)
                  of one share of Common Stock on the record date for such

                                      - 2 -

<PAGE>



                  distribution  and the  denominator  of which shall be the then
                  Current  Market  Value  of one  share of  Common  Stock on the
                  record date for such distribution less the then fair value (as
                  determined by the independent  Financial Expert (as defined in
                  Section 2A(3) below), of such subscription rights,  options or
                  warrants,  or of such  convertible or exchangeable  securities
                  distributed  with  respect to one such share of Common  Stock.
                  Such adjustment  shall be made whenever any such  distribution
                  is made and shall become effective on the date of distribution
                  retroactive  to the  record  date  for  the  determination  of
                  stockholders entitled to receive such distribution.

                  (3) Current Market Value.  For the purpose of any  computation
                  under this Section 2, the Current Market Value of one share of
                  Common  Stock or of any other  security  (herein  collectively
                  referred  to as a  "security")  at the date  herein  specified
                  shall be (1) if the  Company  does not have a class of  equity
                  securities  registered  under the  Securities  Exchange Act of
                  1934  (the  "Exchange  Act"),  the value of the  security  (a)
                  determined  in  good  faith  in the  most  recently  completed
                  armslength  transaction  between the Company and a third party
                  who  is  not  an  affiliate  of  the  Company  in  which  such
                  determination  is necessary and the closing of which occurs on
                  such  date or  shall  have  occurred  within  the  six  months
                  preceding  such date,  provided that the Board of Directors of
                  the Company shall in good faith  determine that any such value
                  represents a reasonable  estimate of the fair value of a share
                  of Common  Stock as of such date,  (b) if no such  transaction
                  shall  have  occurred  on such date or within  such  six-month
                  period,  most recently  determined as of a date within the six
                  months preceding such date by an Independent  Financial Expert
                  (in the  event  of  more  than  one  such  determination,  the
                  determination  for the later  date shall be used) or (c) if no
                  such determination  shall have been made within such six month
                  period, determined as of such date by an Independent Financial
                  Expert,  or (2) if the  Company  does  have a class of  equity
                  securities registered under the Exchange Act, deemed to be the
                  average of the daily  market  prices of the  security for five
                  trading  days  before  such date or, if the  Company has had a
                  class of equity  securities  registered under the Exchange Act
                  for less than five  trading  days before  such date,  then the
                  average of the daily market prices for all of the trading days
                  before such date for which daily market prices are  available.
                  For  purposes of this Section 2 an affiliate of a person shall
                  mean any other person that directly, or indirectly through one
                  or more intermediaries,  controls,  or is controlled by, or is
                  under common control with,  such person.  For purposes of this
                  definition,  control means the power to direct the  management
                  and  policies  of a person,  directly or  indirectly,  whether
                  through the  ownership  of voting  securities,  by contract or
                  otherwise.


                                      - 3 -

<PAGE>



                           The market price for each such business day shall be:
                  (A) in the case of a security listed or admitted to trading on
                  any securities  exchange,  the closing price,  regular way, on
                  such day, or if no sale takes  place on such day,  the average
                  of the  closing bid and asked  prices on such day,  (B) in the
                  case of a security  not then  listed or admitted to trading on
                  any securities exchange,  the last reported sale price on such
                  day, or if no sale takes place on such day, the average of the
                  closing  bid and asked  prices on such day,  as  reported by a
                  reputable  quotation source designated by the Company,  (C) in
                  the case of a security  not then listed or admitted to trading
                  on any security exchange and as to which no such reported sale
                  price or bid and asked  prices are  available,  the average of
                  the  reported  high bid and low asked  prices on such day,  as
                  reported by a reputable quotation services,  or a newspaper of
                  general  circulation  in the  Borough of  Manhattan,  City and
                  State of New York, customarily published on each business day,
                  designated  by the  Company,  or if there  shall be no bid and
                  asked  prices on such day, the average of the high bid and low
                  asked prices, as so reported, on the most recent day (not more
                  than five days prior to the date in question) for which prices
                  have been so  reported,  and (D) if there are no bid and asked
                  prices  reported  during  the five  days  prior to the date in
                  question,  the Current  Market Value of the security  shall be
                  determined  as if the  Company  did not have a class of equity
                  securities registered under the Exchange Act.

                           For purposes of this Section  2A(3),  an  Independent
                  Financial Expert shall mean a nationally recognized investment
                  banking  firm  (i)  which  does  not  (and  whose   directors,
                  officers,  employees and affiliates do not),  have a direct or
                  indirect  financial  interest in the  Company  (other than the
                  beneficial  ownership,  directly or  indirectly,  of less than
                  three  percent of the  outstanding  shares of capital stock of
                  the Company),  (ii) which has not been, and, at the time it is
                  called  upon  to  give  independent  financial  advise  to the
                  Company,  is not  (and  none  of  whose  directors,  officers,
                  employees or affiliates is) a promoter, director or officer of
                  the Company or any of its  affiliates or an  underwriter  with
                  respect to any of the Company's  securities,  (iii) which does
                  not provide any advise or opinions to the Company except as an
                  Independent  Financial  Expert  and  (iv)  which  is  mutually
                  agreeable  to the Company and the holders of a majority of the
                  Warrants.  If the Company and the holders of a majority of the
                  Warrants do not promptly agree as to the Independent Financial
                  Expert, each shall appoint one investment banking firm and the
                  two firms so appointed shall select the Independent  Financial
                  Expert to be employed by the Company. An Independent Financial
                  Expert may be  compensated  by the  Company  for  opinions  or
                  services it provides as an Independent  Financial  Expert.  In
                  making its determination of the value of the Common Stock, the
                  Independent  Financial  Expert shall use one or more valuation
                  methods that

                                      - 4 -

<PAGE>



                  the Independent  Financial  Expert,  in its best  professional
                  judgment,  determines  to  be  most  appropriate.   After  the
                  Independent  Financial Expert has made its determination,  the
                  Company  shall  cause  the  Independent  Financial  Expert  to
                  prepare a report (a "Value  Report")  stating  the  methods of
                  valuation considered or used and the value of the Common Stock
                  or other  security it values and  containing a statement as to
                  the  nature  and scope of the  examination  made.  Such  Value
                  Report shall  accompany any  Adjustment  Notice (as defined in
                  Section  2B) sent by the  Company  to the Holder  pursuant  to
                  Section 2B;  provided,  that the  adjustment  to the  Exercise
                  Price that is the subject of such  Adjustment  Notice requires
                  the services of an Independent Financial Expert.

                  (4)  Adjustment  of  Exercise  Price.  Whenever  the number of
                  shares of Common Stock  purchasable  upon the exercise of each
                  Warrant is adjusted  pursuant to Sections 2A(1) and 2A(2), the
                  Exercise  Price for each share of Common  Stock  payable  upon
                  exercise of each Warrant shall be adjusted by multiplying such
                  Exercise  Price  immediately  prior  to such  adjustment  by a
                  fraction, the numerator of which shall be the number of shares
                  of Common Stock  purchasable upon the exercise of each Warrant
                  immediately  prior to such adjustment,  and the denominator of
                  which  shall  be the  number  of  shares  of  Common  Stock so
                  purchasable immediately thereafter.

                  (5)  Issuance  of Common  Stock to  Stockholders  of Less Than
                  Current Market Value.  In the event that the Company sells and
                  issues [to a stockholder of the Company or to any  "affiliate"
                  of such  stockholder]  shares of any Common Stock,  or rights,
                  options,  warrants or convertible or  exchangeable  securities
                  containing  the right to subscribe  for or purchase  shares of
                  Common Stock [excluding (i) shares, rights, options,  warrants
                  or convertible or exchangeable securities issued in any of the
                  transactions described in Sections 2A(1) and 2A(2) above, (ii)
                  the  Warrants  and any shares of Common  Stock  issuable  upon
                  exercise  thereof,  (iii)  shares  of  Common  Stock  or other
                  securities, or options or rights in respect thereof, issued to
                  full-time  employees of the Company or its subsidiaries in the
                  ordinary  course of  business  as  compensation  for  services
                  rendered or to be rendered or as part of an employee incentive
                  program  and (iv) shares of common  stock or other  securities
                  issued  upon  exercise,  conversion  or  exchange  of  rights,
                  options,  warrants or convertible or  exchangeable  securities
                  issued in any of the transactions  described in Sections 2A(1)
                  and 2A(2) above or in a  transaction  with respect to which no
                  adjustment  was  required  pursuant  to this  Section  2A (but
                  including shares, rights, options,  warrants or convertible or
                  exchangeable securities issued as consideration in any merger,
                  consolidation  or other business  combination)] at a price per
                  share of Common Stock (determined, in the case of such rights,
                  options,  warrants or convertible or exchangeable  securities,
                  by dividing (X) the total

                                      - 5 -

<PAGE>



                  amount  receivable by the Company in consideration of the sale
                  and issuance of such rights, options,  warrants or convertible
                  or exchangeable  securities  (which amount may be zero if such
                  rights,  options,  warrants  or  convertible  or  exchangeable
                  securities are issued without  consideration),  plus the total
                  consideration payable to the Company upon exercise, conversion
                  or  exchange  thereof,  by (Y) the  total  number of shares of
                  Common  Stock  covered by such rights,  opinions,  warrants or
                  convertible or exchangeable securities) that is lower than the
                  then  Current  Market Value per share of such Common Stock (as
                  determined by the Independent  Financial  Expert in accordance
                  with Section 2A(3) above) in effect  immediately prior to such
                  sale and issuance,  then the Exercise  Price shall be adjusted
                  (calculated  to the nearest  $0.01) so that it shall equal the
                  price  determined by multiplying  the Exercise Price in effect
                  immediately  prior  thereto by a fraction,  the  numerator  of
                  which  shall  be (i) an  amount  equal  to the  sum of (A) the
                  number of shares of Common Stock outstanding immediately prior
                  to such  sale and  issuance  plus (B) the  number of shares of
                  Common  Stock  which  the  aggregate   consideration  received
                  (determined as provided below) for such sale or issuance would
                  purchase  at such  Current  Market  Value per  share,  and the
                  denominator  of which shall be (ii) the total number of shares
                  of Common Stock  outstanding  (determined  as provided  below)
                  immediately  after  such sale and  issuance.  Such  adjustment
                  shall be made successively whenever such an issuance is made.

                           Upon the occurrence of a sale and issuance  described
                  in the  preceding  paragraph,  the  number of shares of Common
                  Stock  purchasable under the exercise of this Warrant shall be
                  that number  determined by multiplying the number of shares of
                  Common Stock issuable upon exercise  immediately prior to such
                  adjustment  by a  fraction,  the  numerator  of  which  is the
                  Exercise Price in effect  immediately prior to such adjustment
                  and the  denominator  of  which  is the  Exercise  Price as so
                  adjusted.

                           For the purposes of such  adjustments,  the shares of
                  Common  Stock  which the holder of any such  rights,  options,
                  warrants or convertible or  exchangeable  securities  shall be
                  entitled to  subscribe  for or purchase  shall be deemed to be
                  issued  and  outstanding  as of the  date  of  such  sale  and
                  issuance  and  the  consideration   received  by  the  Company
                  therefor shall be deemed to be the  consideration  received by
                  the Company for such rights, options,  warrants or convertible
                  or exchangeable securities (which consideration may be zero if
                  such rights, options,  warrants or convertible or exchangeable
                  securities  are  issued  without   consideration),   plus  the
                  consideration  or  premiums  stated in such  rights,  options,
                  warrants or convertible or exchangeable  securities to be paid
                  for the shares of any Common Stock  covered  thereby.  In case
                  the Company shall sell and issue,  in a  transaction  to which
                  this paragraph 2A(5) applies, shares of Common

                                      - 6 -

<PAGE>



                  Stock  or  rights,   options,   warrants  or   convertible  or
                  exchangeable  securities containing the right to subscribe for
                  or  purchase  shares  of  Common  Stock,   for   consideration
                  consisting,  in whole or in part, of property  other than cash
                  or its  equivalent,  then  determining the "price per share of
                  Common Stock" and the "consideration  received by the Company"
                  for purposes of the first sentence of this Section 2A(5),  the
                  Board of Directors  of the Company  shall  determine,  in good
                  faith,  the fair value of the  rights,  options,  warrants  or
                  convertible or exchangeable securities then being sold as part
                  of such unit.  There shall be no  adjustment  of the  Exercise
                  Price  pursuant  to this  Section  2A(5) if the amount of such
                  adjustment shall be less than $0.01 per share of Common Stock;
                  provided,  however,  that any  adjustments  which by reason of
                  this  provision  are not  required to be made shall be carried
                  forward and taken into account in any subsequent adjustment.

                  (6) Expiration of Rights  Options and  Conversion  Privileges.
                  Upon the  expiration  without  being  exercised of any rights,
                  options,  warrants or  conversion or exchange  privileges  for
                  which an  adjustment  has been made  pursuant to this Warrant,
                  the  Exercise  Price and the number of shares of Common  Stock
                  purchasable upon the exercise of each Warrant shall, upon such
                  expiration,  be  readjusted  and  shall  thereafter,  upon any
                  future exercise, be such as they would have been had they been
                  originally  adjusted  (or had the original  adjustment  not be
                  required,  as the case may be) as if (A) the  only  shares  of
                  Common  Stock so issued were the shares of such Common  Stock,
                  if any,  actually  issued  or sold upon the  exercise  of such
                  rights, options, warrants or conversion or exchange rights and
                  (B) such shares of Common  Stock,  if any, were issued or sold
                  for the  consideration  actually  received by the Company upon
                  such  exercise  plus  the  consideration,   if  any,  actually
                  received  by the Company  for  issuance,  sale or grant of all
                  such  rights,  options,  warrants  or  conversion  or exchange
                  rights  whether  or not  exercised;  provided,  that  no  such
                  readjustment  shall have the effect of increasing the Exercise
                  Price  by an  amount,  or  decreasing  the  number  of  shares
                  purchasable  upon  exercise  of each  Warrant by a number,  in
                  excess of the  amount or  number of the  adjustment  initially
                  made in respect to the issuance, sale or grant of such rights,
                  options, warrants or conversion or exchange rights.

                  (7) De  Minimis  Adjustments.  Except as  provided  in Section
                  2A(5) with reference to  adjustments  required by such Section
                  2A(5),  no  adjustment in the number of shares of Common Stock
                  purchasable hereunder shall be required unless such adjustment
                  would  require an increase or decease of at least 1.0% percent
                  in the number of shares of Common  Stock  purchasable  upon an
                  exercise  of  each  Warrant;   provided,   however,  that  any
                  adjustments  which by  reason  of this  Section  2A(7) are not
                  required to be made shall be

                                      - 7 -

<PAGE>



                  carried  forward  and taken  into  account  in any  subsequent
                  adjustment. All calculations shall be made to the nearest full
                  share.

                  (8) Duty to Make Fair  Adjustments  in Certain  Cases.  If any
                  event  occurs  as to  which  in the  opinion  of the  Board of
                  Directors  the other  provisions  of this  Section  2A are not
                  strictly applicable or if strictly applicable would not fairly
                  protect the purchase rights of the Warrants in accordance with
                  the essential intent and principles of such  provisions,  then
                  the  Board  of  Directors  shall  make  an  adjustment  in the
                  application  of  such  provisions,  in  accordance  with  such
                  essential  intent  and  principles,  so  as  to  protect  such
                  purchase rights as aforesaid.

                  (9) Adjustment for Asset  Distributions.  If the Company shall
                  fix a record  date for the  making  of a  distribution  to all
                  holders of shares of Common Stock of evidence of  indebtedness
                  of the  Company or other  assets  (other  than  ordinary  cash
                  dividends  not in  excess  of  the  retained  earnings  of the
                  Company  determined by the  application of generally  accepted
                  accounting principles), then the Exercise Price for each share
                  of Common Stock payable upon exercise of each Warrant shall be
                  reduced  by  the  then  fair  value  (as   determined  by  the
                  Independent  Financial  Expert (as  defined  in Section  2A(3)
                  above)) of the  indebtedness  or other assets  distributed  in
                  respect  of one  such  share.  Such  adjustment  shall be made
                  whenever  any  such  distribution  is made  and  shall  become
                  effective  on the  date  of  distribution  retroactive  to the
                  record date for the determination of stockholders  entitled to
                  receive such distribution.

                  A.  Notice of  Adjustment.  Whenever  the  number of shares of
Common Stock purchasable upon the exercise of each Warrant or the Exercise Price
is adjusted, as herein provided, the Company shall promptly notify the Holder in
writing (such writing referred to as an "Adjustment  Notice") of such adjustment
or  adjustments  and shall  deliver to such  Holder a  certificate  of a firm of
independent public accountants selected by the Board of Directors of the Company
(who  may  be  the  regular  accountants  employed  by  the  Company)  or of the
Independent  Financial  Expert,  if any, which makes a determination  of Current
Market Value with  respect to any such  adjustment  setting  forth the number of
shares of Common  Stock  purchasable  upon the  exercise of each Warrant and the
Exercise  Price after such  adjustment,  setting forth a brief  statement of the
facts  requiring such adjustment and setting forth the computation by which such
adjustment was made.

                  B.       Statement on Warrant Certificates.  The form of this
Warrant  Certificate  need not be changed  because of any change in the Exercise
Price or in the  number or kind of shares  purchasable  upon the  exercise  of a
Warrant and any Warrant Exercise Price and the same number and kind of shares as
are stated in this Warrant Certificate.  However, the Company may at the time in
its sole discretion make any

                                      - 8 -

<PAGE>



change in the form of the Warrant  Certificate  that it may deem appropriate and
that  does  not  affect  the  substance  thereof  and  any  Warrant  Certificate
thereafter  issued,  whether in exchange  or  substitution  for any  outstanding
Warrant Certificate or otherwise, may be in the form so changed.

                  C. Notice to Holder of Record Date,  Dissolution,  Liquidation
or Winding  Up. The  Company  shall  cause to be mailed  (by first  class  mail,
postage  prepaid)  to the  Holder of such of the record  date for any  dividend,
distribution  or payment,  in cash or in kind  (including,  without  limitation,
evidence of indebtedness and assets),  with respect to shares of Common Stock at
least 20 calendar  days before any such date. In case at any time after the date
hereof,  there shall be a voluntary or involuntary  dissolution,  liquidation or
winding up of the Company,  then the Company  shall cause to be mailed (by first
class mail,  postage prepaid) to the Holder at such Holder's address as shown on
the books of the Company,  at the earliest  practicable time (and, in any event,
not less than 20  calendar  days  before  any date set for  definitive  action),
notice of the date on which such  dissolution,  liquidation  or winding up shall
take place, as the case may be. The notices referred to above shall also specify
the date as of which the  holders  of the  shares  of Common  Stock of record or
other  securities  underlying  the  Warrants  shall be entitled to receive  such
dividend,  ties,  money  or the  property  deliverable  upon  such  dissolution,
liquidation or winding up, as the case may be (the  "Entitlement  Date"). In the
case of a  distribution  of evidence of  indebtedness  or assets  (other than in
dissolution,  liquidation  or winding up) which has the effect of  reducing  the
Exercise Price to zero or less pursuant to Section  2A(9),  if the Holder elects
to exercise the Warrants in accordance with Section I and become a holder of the
Common Stock on the Entitlement  Date, the Holder shall  thereafter  receive the
evidence of  indebtedness  or assets  distributed in respect of shares of Common
Stock. In the case of any dissolution, liquidation or winding up of the Company,
the Holder shall  receive on the  Entitlement  Date the cash or other  property,
less the Exercise Price for the Warrants then in effect,  that such Holder would
have been  entitled to receive had the Warrants been  exercisable  and exercised
immediately  prior  to such  dissolution,  liquidation  or  winding  up (or,  if
appropriate,  record date  therefor)  and any right of a Holder to exercise  the
Warrants shall terminate.

                  E. Fractional Interests.  The Company shall not be required to
issue fractional shares of Common Stock on the exercise of the Warrants. If more
than one Warrant shall be presented for exercise in full at the same time by the
same  holder,  the number of full shares of Common Stock which shall be issuable
upon such  exercise  shall be computed on the basis of the  aggregate  number of
whole  shares of  Common  Stock  purchasable  on  exercise  of the  Warrants  so
presented.  If any  fraction of a share of Common  Stock  would,  except for the
provisions  of this  Section 2E be issuable on the  exercise of the Warrants (or
specified  proportion  thereof),  the  Company  shall  pay  an  amount  in  cash
calculated  by it to be equal  to the then  fair  value of one  share of  Common
Stock,  as  determined  by the Board of  Directors of the company in good faith,
multiplied by such fraction computed to the nearest whole cent.

                                      - 9 -

<PAGE>




         3. Reservation and Authorization of Common Stock. The Company covenants
and  agrees  (A) that all shares of Common  Stock  which may be issued  upon the
exercise of the Warrants  represented  by this Warrant  Certificate  will,  upon
issuance,  be  validly  issued,  fully  paid and  nonassessable  and free of all
insurance  or  transfer  taxes,  liens and  charges  with  respect  to the issue
thereof, (b) that during the Exercise Period, the Company will at all times have
authorized,  and reserved for the purpose of issue or transfer  upon exercise of
the Warrants evidenced by this Warrant Certificate,  sufficient shares of Common
Stock to provide for the  exercise of the Warrants  represented  by this Warrant
Certificate,  and (c) that the  Company  will  take  all such  action  as may be
necessary to ensure that the shares of Common Stock  issuable  upon the exercise
of the Warrants may be so issued  without  violation  of any  applicable  law or
regulation,  or any requirements of any domestic  securities exchange upon which
any capital stock of the Company may be listed, provided,  however, that nothing
contained  herein shall impose upon the Company any  obligation  to register the
warrants  evidenced  by this  Warrant  Certificate  or such  Common  Stock under
applicable  securities laws except as provided in the Investment  Agreement.  In
the event that any  securities  of the Company  other than the Common  Stock are
issuable upon  exercise of the  Warrants,  the Company will take or refrain from
taking any action  referred to in clauses  (A) through (c) of this  Section 3 as
though such clauses  applied,  mutatis  mutandis to such other  securities  then
issuable upon the exercise the Warrants.

         4. No Voting Rights.  This Warrant Certificate shall not entitle
the holder hereof to any voting  rights or other rights as a stockholder  of the
Company.

         5. Exercise or Transfer of Warrants or Common Stock. The Holder of this
Warrant  Certificate  agrees  to be bound  by the  provisions  contained  in the
Warrant  Purchase   Agreement  with  respect  to  the   limitations,   including
limitations  imposed  for  Securities  Act  compliance,  on the  transfer of the
Warrants  and the  shares  of Common  Stock or other  securities  issuable  upon
exercise of the Warrants.

         6. Warrants  Transferable.  Subject to the provision of Section 5, this
Warrant Certificate and the Warrants it evidences are transferrable, in whole or
in part,  without  charge to the Holder,  at the office or agency of the Company
referred  to in  Section  1, by the  Holder  in  person  or by  duly  authorized
attorney,  upon surrender of this Warrant  Certificate  properly endorsed.  Each
taker and Holder of this  Warrant  Certificate,  by taking or holding  the same,
consents and agrees that this Warrant Certificate, when endorsed in blank, shall
be deemed negotiable,  and that the Holder,  when this Warrant Certificate shall
have been so  endorsed,  may be treated  by the  Company  and all other  persons
dealing  with this  Warrant  Certificate  as the  absolute  owner hereof for any
purpose and as the person  entitled to exercise the rights  represented  by this
Warrant Certificate,  or to the transfer hereof on the books of the Company, any
notice to the contrary  notwithstanding;  but until such transfer on such books,
the  Company  may  treat  the  registered  holder  hereof  as the  owner for all
purposes.


                                     - 10 -

<PAGE>



         7.  Registration.  The Holder and certain successors of the Holder are
entitled to the benefits of a Registration Rights Agreement,  a copy of which is
on file at the offices of the Company.

         8.  Closing of Books.  The Company  will at no time close its  transfer
books  against the  transfer of any Warrant or of any shares of Common  Stock or
other  securities  issuable upon the exercise of any Warrant in any manner which
interferes with the timely exercise of the Warrants.

         9. Warrants  Exchangeable,  Loss,  Theft.  This Warrant  Certificate is
exchangeable, upon the surrender hereof of any Holder at the office or agency of
the Company referred to in Section 1, for new Warrant Certificates of like tenor
representing in the aggregate the right to subscribe for and purchase the number
of shares of Common Stock which may be subscribed  for and purchased  hereunder,
each such new Warrant to  represent  the right to subscribe  and  purchase  such
number of shares of Common Stock as shall be designated by said holder hereof at
the time of such surrender. Upon receipt of evidence satisfactory to the Company
of the loss, theft, destruction or mutilation, upon surrender or cancellation of
this  Warrant  Certificate,  the Company  will issue to the holder  hereof a new
Warrant  Certificate  of  like  tenor,  in lieu  of  this  Warrant  Certificate,
representing  the right to  subscribe  for and  purchase the number of shares of
Common Stock which may be subscribed for and purchased hereunder.

         10. Mergers, Consolidations, Etc.

                  A. Except as may  otherwise be provided in Section  2A(5),  if
the Company shall merge or consolidate with another  corporation,  the holder of
this Warrant shall  thereafter have the right,  upon exercise hereof and payment
of the Exercise  Price, to receive solely the kind and amount of shares of stock
(including, if applicable, Common Stock), other securities,  property or cash or
any combination thereof receivable by a holder of the number of shares of Common
Stock for which this Warrant might have been exercised immediately prior to such
merger or consolidation (assuming, if applicable, that the holder of such Common
Stock  failed to  exercise  its rights of  election,  if any,  as to the kind or
amount of shares of stock,  other  securities,  property or cash or  combination
thereof receivable upon such merger or consolidation).

                  B. In case of any  reclassification or change of the shares of
Common Stock issuable upon exercise of this Warrant  (other than  elimination or
par value, a change in par value,  or from par value to no par value,  or as the
result of a  subdivision  or  combination  of  shares  (which  is  provided  for
elsewhere herein),  but including any  reclassification  of the shares of Common
stock into two or more  classes or series of shares) or in case of any merger or
consolidation  of another  corporation  into the Company in which the Company is
the surviving  corporation and in which there is a reclassification or change of
the shares of Common Stock (other than a change in par

                                     - 11 -

<PAGE>


value,  or from par value to no par value,  or as a result of a  subdivision  or
combination  (which  is  provided  for  elsewhere  herein),  but  including  any
reclassification  of the shares of Common  Stock this Warrant  shall  thereafter
have the right,  upon  exercise  hereof and payment of the  Exercise  Price,  to
receive solely the kind and amount of shares of stock (including, if applicable,
Common Stock),  other  securities,  property or cash or any combination  thereof
receivable upon such  reclassification,  change,  merger or  consolidation  by a
holder of the number of shares of Common Stock for which this Warrant might have
been exercised  immediately prior to such  reclassification,  change,  merger or
consolidation  (assuming,  if  applicable,  that the holder of such Common Stock
failed to exercise its rights of  election,  if any, as to the kind or amount of
shares of stock,  other  securities,  property  or cash or  combination  thereof
receivable upon such reclassification, change, merger or consolidation).

         11. Rights and Obligations Survive Exercise of Warrants. The rights and
obligations  of the  Company,  of the  Holder,  and of the  holders of shares of
Common Stock or other securities issued upon exercise of the Warrants, contained
in Sections 5 and 7 of this Warrant  Certificate  shall  survive the exercise of
the Warrants.

         Dated:  [date].

                                        ELSINORE CORPORATION



                                        By:_______________________________


Attest:


_________________________________
[secretary]


                                     - 12 -

<PAGE>