EXHIBIT 10.32

                            REVOLVING LINE OF CREDIT
                                 LOAN AGREEMENT


         THIS REVOLVING LINE OF CREDIT LOAN AGREEMENT (the  "Agreement") is made
effective as of the ___ day of ___________________, 1997, by and between RIVIERA
HOLDINGS CORPORATION, a Nevada corporation, and RIVIERA OPERATING CORPORATION, a
Nevada  corporation,  doing  business as RIVIERA  HOTEL & CASINO  (collectively,
"Borrower"),  and U.S. BANK OF NEVADA, a Nevada state-chartered commercial bank,
("Lender").

                              W I T N E S S E T H :

         WHEREAS,  Lender has agreed to lend to Borrower on a reducing revolving
line of credit  basis  certain  funds (the "Loan") in an amount not to exceed at
any time FIFTEEN MILLION AND NO/100THS  DOLLARS  ($15,000,000.00)  (the "Maximum
Loan  Amount")  for the  purpose  of  providing  Borrower  with funds to acquire
certain new furniture, fixtures and equipment or to refinance or refund the cost
of certain existing furniture, fixtures and equipment of Borrower.

         NOW,  THEREFORE,  IN CONSIDERATION of the mutual covenants and promises
of the parties  and  subject to the  following  terms and  conditions,  Borrower
agrees to borrow from Lender, and Lender agrees to loan to Borrower the Loan for
the purposes provided herein. The Loan shall be evidenced by a Revolving Line of
Credit  Promissory Note (the "Note") bearing even date herewith,  and be secured
by a Security  Agreement  (the  "Security  Agreement")  under the terms of which
Borrower  shall  grant to  Lender a  security  interest  in  certain  collateral
described in Section 3 thereof (the "Collateral"). This Agreement, the Note, the
Security Agreement, and any and all other documents now or hereafter executed by
Borrower  or any other  person or party in  connection  with or to  evidence  or
secure payment of the Loan are sometimes hereafter  collectively  referred to as
the "Loan Documents".

         A.       DISBURSEMENTS.

                  A.1    General.  Provided  that no Event of Default (as
hereafter  defined)  then  exists  and is  continuing  hereunder,  Lender  shall
disburse  the Loan from time to time at the request of Borrower for the purposes
provided  herein once the  original of this  Agreement,  the Note,  the Security
Agreement, and all other Loan Documents, all fully executed, have been delivered
to Lender,  and once Borrower has paid Lender's  reasonable  attorney's fees and
costs  incurred in connection  herewith.  Lender shall be under no obligation to
make any disbursements under the Loan after January 1, 2002.

                  A.2    Reduction in Maximum Loan Amount.  On the first day of
January,  April,  July and October of each year,  commencing on the first day of
April, 1998, the

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Maximum Loan Amount shall be reduced by an amount equal to $937,500.00. Borrower
shall make a principal reduction payment under the Note on the first day of each
January, April, July and October, commencing on the first day of April, 1998, in
an amount,  if any,  required to reduce the principal balance due under the Note
to the then effective Maximum Loan Amount.

                  A.3    Maximum  Availability.  The maximum  amount  available
to Borrower under the Loan at any time (the "Maximum  Availability") shall be an
amount equal to the lesser of (a) the Maximum Loan Amount,  as reduced from time
to time pursuant to Section A.2 above;  or (b) the  Specified  Value (as defined
below) of the Collateral.

                  For  the  purposes  of  this  Agreement  and  the  other  Loan
Documents,  the term "Gaming  Devices"  shall mean any equipment or  mechanical,
electromechanical or electronic contrivance,  component or machine used remotely
or directly in connection with gaming or any game which affects the results of a
wager by  determining  win or loss.  The term  includes a system for  processing
information  which can alter the  normal  criteria  of random  selection,  which
affects the operation of any game or which  determines  the outcome of any game.
The term does not  include a system or  device  which  affects a game  solely by
stopping its operation so that the outcome remains undetermined.

                  For purposes of this  Agreement and the other Loan  Documents,
the term "Specified  Value" shall mean the amount  reasonably  determined by the
Borrower  to be the lesser of eighty  percent  (80%) of the (a) actual  original
cost of the  Collateral  (excluding  Gaming  Devices)  and (b) fair market value
(which is defined for purposes  hereof as  depreciated  cost) of the  Collateral
(excluding Gaming Devices),  as specified to the Lender in a schedule  delivered
to the  Lender  by the  date  of  the  making  of a Loan  for  the  purchase  or
refinancing  of such  Collateral,  as such schedule shall be updated by Borrower
and delivered to Lender on the twentieth day of the month immediately succeeding
the last day of each fiscal  quarter.  With respect to Collateral  consisting of
Gaming Devices, the percentage used in determining  Specified Value shall be one
hundred percent (100%).

                  A.4  Conditions.  Lender shall be under no  obligation to make
the initial disbursement under the Loan until Borrower has caused to be provided
to Lender an opinion of Borrower's counsel in all respects acceptable to Lender,
as to the  following:  (a) that  Borrower is duly  organized and existing and in
good standing to transact business in Nevada;  (b) that all conditions  required
by Borrower's  organizational  documents to authorize Borrower to enter into the
Loan  transaction and execute the Loan Documents have been  satisfied;  (c) that
all  licenses,  permits  and other  governmental  permits  necessary  to conduct
Borrower's  business  (where  the  failure  to  maintain  the same  would have a
material  adverse  effect upon its  operations  ("Material  Adverse  Effect") as
presently conducted are in effect; (d) that the Loan Documents constitute valid,
legal and  enforceable  obligations of Borrower in accordance  with their terms;
and (e) that  Borrower's  execution of the Loan Documents and performance of its
obligations  thereunder  shall not  constitute  a default by Borrower  under the
terms of any license,  permit or approval held by Borrower,  or any agreement to
which Borrower is a party, including, without limitation, that

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certain $100,000,000.00  Indenture dated June 30, 1993, between Riviera Holdings
Corporation, a Nevada corporation ("RHC"), Riviera Operating Corporation,  doing
business  as  Riviera  Hotel & Casino  ("ROC"),  and IBJ  Schroder  Bank & Trust
Company, as Trustee, as supplemented by the First Supplemental Indenture,  dated
June 30, 1993, as amended by Amendment to First Supplemental Indenture, dated as
of September 8, 1995 (the "Indenture Agreement").

                  A.5      Loan Fees.

                           (a)      Facility Fee.  As a condition of Lender's
obligation to make the initial  disbursement under the Loan,  Borrower shall pay
to Lender a facility  fee in the sum of  $75,000.00  upon the  execution of this
Agreement.

                           (b)     Non-Usage Fee. On the tenth day of January,
April, July and October of each year, commencing on the tenth day of July, 1997,
Borrower  shall pay to Lender in arrears a non-usage  fee in an amount  equal to
two-tenths  of one percent  (0.20%) of the  difference  between the Maximum Loan
Amount,  as reduced from time to time pursuant to Section A.2 above, and average
outstanding  amount of the Loan, during the previous  three-month period in each
case as reasonably determined by Lender.

         B.  INTEREST.

                  B.1 Interest Rate Options.  Borrower shall pay interest on the
principal amounts disbursed under the Loan at Borrower's option, as evidenced by
an executed Rate Request ("Rate Request") in the form attached hereto as Exhibit
"A", as follows:

                           (a)      At the floating commercial loan rate of
Lender  publicly  announced from time to time as Lender's prime rate (the "Prime
Rate"),  plus  one-half  of one percent  (0.50%)  per annum.  Any change in such
interest rate, as a result of a change in the Prime Rate, shall become effective
upon the date of change  in the Prime  Rate.  Any  disbursements  under the Loan
which Borrower  elects to bear interest at the foregoing  interest rate shall be
referred to herein as a "Prime Rate Disbursement"; or

                           (b)      At LIBOR (as defined below), plus two and
ninety  one-hundredths  percent  (2.90%)  per  annum  (the  "LIBOR  Rate").  Any
disbursements under the Loan which Borrower elects to bear interest at the LIBOR
Rate shall be referred to herein as a "LIBOR Rate Disbursement".

                  B.2 LIBOR  Election.  Provided  that no Event of Default  then
exists hereunder, if Borrower desires that the Loan, or a portion thereof, is to
bear  interest  at the LIBOR Rate,  or Borrower  desires to convert a Prime Rate
Disbursement  to a LIBOR  Rate  Disbursement  or desires to convert a LIBOR Rate
Disbursement  with a certain  LIBOR  Borrowing  Period  into a  different  LIBOR
Borrowing  Period,  Borrower  shall so elect (a "LIBOR  Election")  by providing
Lender with at least two (2) Business Days (as defined below) prior

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notice thereof,  which notice shall specify (a) the LIBOR borrowing  period (the
"LIBOR Borrowing Period") of either 30, 60 or 90 days, and (b) the amount, which
in no event  shall be less  than  $500,000.00,  and  shall be in  increments  of
$100,000.00  (a  "LIBOR  Increment"),  to be  subject  to such  LIBOR  Election.
Lender's  LIBOR Rates are  established as of  approximately  8:00 a.m. and 10:00
a.m. on each  Business Day for LIBOR Rates to take effect two (2) Business  Days
later,  and LIBOR Rate quotes may be obtained from Lender  between 8:00 a.m. and
12:00 noon on any Business Day.  Quotes based on LIBOR Rates set as of 8:00 a.m.
must be accepted by Borrower  before 10:00 a.m., and quotes based on LIBOR Rates
set as of 10:00 a.m. must be accepted by Borrower  before 12:00 noon.  Notice of
acceptance  of a quoted  LIBOR  Rate  shall be given by  Borrower  to  Lender in
writing  or by  telephone  (and  if by  telephone  then  thereafter  immediately
confirmed by Borrower in  writing).  In the event that notice is given to Lender
after the times set forth  above,  the notice  shall be deemed to be given as of
the next Business  Day. All times  referred to herein shall be local time in Las
Vegas,  Nevada.  The written notice of LIBOR Election,  or written  confirmation
thereof,  shall be in the form of a Rate Request.  Any amounts outstanding under
the Loan in excess of a LIBOR  Increment  shall  bear  interest  as a Prime Rate
Disbursement.  At the expiration of a LIBOR Borrowing  Period, in the event that
the loan amount subject to a LIBOR Election has not been repaid by Borrower,  it
shall  then  bear  interest  as a Prime  Rate  Disbursement  unless a new  LIBOR
Borrowing  Period has been  chosen by  Borrower  pursuant  to the terms  hereof.
Notwithstanding  anything to the contrary  contained  herein,  Borrower shall be
permitted  to have no more than five (5) LIBOR  Elections  in effect at any time
without the prior written consent of Lender.

                  B.3 LIBOR Regulatory Requirements. In the event that Lender is
required  under  Regulation  D,  promulgated  by the Board of  Governors  of the
Federal Reserve System,  or any other  regulation,  to maintain reserves against
LIBOR  obligations,  Borrower  shall pay to Lender on the last day of each LIBOR
Borrowing Period, as additional  interest  ("Additional  Interest") on any LIBOR
Rate  Disbursement,  such  additional  amount  (determined  as though Lender has
funded 100% of the LIBOR Rate  Disbursement in the Interbank  Eurodollar  Market
whether or not that is actually the case) as would,  together  with  payments of
interest on the LIBOR Rate Disbursement for that LIBOR Borrowing Period,  result
in receipt by Lender of total interest on the LIBOR Rate  Disbursement  for that
LIBOR Borrowing  Period at the rate reasonably  determined by Lender to be equal
to the following:  the stated LIBOR Rate on the LIBOR Rate Disbursement  divided
by one (1), minus the Reserve  Percentage (as defined below). In determining the
Additional  Interest,  there  shall  be taken  into  account  any  transitional,
adjustment or phase-in provisions of the reserve requirements which would reduce
the reserve  requirement of Lender during any LIBOR Borrowing  Period.  Lender's
determination  of such matters  shall be  conclusive  in the absence of manifest
error.

                  If, after the date hereof,  the application or adoption of any
applicable law, rule or regulation,  or any change therein, or any change in the
interpretation or administration thereof by any governmental authority,  central
bank or comparable  agency  charged with the  interpretation  or  administration
thereof, or compliance by Lender with any request or directive

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(whether or not having the force of law) of any such authority,  central bank or
comparable agency:

                           (a)      shall subject Lender to any tax, duty or
other  charge with  respect to the amount as to which  Borrower has made a LIBOR
Election  (except any income  taxes of Lender  assessed on the basis of Lender's
net income or gross  receipts and any franchise  taxes,  branch taxes,  taxes on
doing  business  or taxes on overall  capital or net worth of Lender  imposed in
lieu of income taxes); or

                           (b)      shall impose, modify or deem applicable any
reserve  (including  without  limitation  any  reserve  imposed  by the Board of
Governors  of  the  Federal   Reserve   System),   special  deposit  or  similar
requirements  against assets of,  deposits with or for the account of, or credit
extended by,  Lender with respect to or as a result of the making by Borrower of
a LIBOR Election; or

                           (c)      shall impose upon Lender, directly or
indirectly, any condition affecting any amount advanced by Lender to Borrower as
to which Borrower has made a LIBOR Election,  or shall  otherwise  affect any of
the same;

and the result of any of the foregoing has in the reasonable  opinion of Lender,
increased  the  cost  to  Lender  of  making  or  maintaining   any  outstanding
disbursement or other  outstanding  portion of the Loan as to which the Borrower
has  made a LIBOR  Election,  or  reduced  the  amount  of any sum  received  or
receivable by Lender by an amount deemed by Lender to be material,  then, within
fifteen  (15) days after demand by Lender  (which  demand shall not be made more
than  thirty  (30) days  after  such  cost is  incurred  by Lender  and shall be
accompanied by reasonable detail supporting such demand),  Borrower shall pay to
Bank such  additional  amount or  amounts.  If,  following  payment  of any such
additional amounts by Borrower to Lender,  Lender receives a refund of or credit
for any portion thereof, then Lender shall promptly repay Borrower the amount so
refunded or credited. Notwithstanding anything to the contrary contained herein,
in the event that Lender may  minimize or  eliminate  any costs or  restrictions
associated with  maintaining  LIBOR Rate  Disbursements by using another lending
office  within  the  U.S.  Bancorp  system,  then  Lender  shall  to the  extent
permissible  under then existing laws and regulations  governing Lender use such
other lending office.

                  If, after the date hereof,  the application or adoption of any
applicable law, rule or regulation,  or any change therein, or any change in the
interpretation or administration thereof by any governmental authority,  central
bank or comparable  agency  charged with the  interpretation  or  administration
thereof,  or compliance by Lender with any request or directive  (whether or not
having  the  force of law) of any such  authority,  central  bank or  comparable
agency,  or the occurrence of circumstances  affecting the Interbank  Eurodollar
Markets generally,  shall, in the reasonable opinion of Lender, make it unlawful
or  impossible  for  Lender to make or  maintain  LIBOR  Rate  Disbursements  or
materially restrict the authority of Lender to purchase,  sell, or take deposits
in Eurodollars, then Lender's obligation to give effect to a

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LIBOR  Election  shall be  suspended  for the  duration  of such  illegality  or
impossibility.  Upon receipt of notice of such illegality or  impossibility,  at
Borrower's  election either (a) all then  outstanding  LIBOR Rate  Disbursements
shall be immediately  converted into Prime Rate  Disbursements and thereafter be
so treated for all purposes  hereunder,  or (b) Borrower shall repay in full the
then outstanding  principal  amount of the applicable  LIBOR Rate  Disbursements
together with accrued interest thereon, on either: (i) the last day of the LIBOR
Borrowing  Period  applicable  to such  LIBOR  Rate  Disbursement  if lender may
lawfully continue to maintain the LIBOR Rate  Disbursements to such day; or (ii)
immediately, and without prepayment penalty, if Lender may not lawfully continue
to maintain the LIBOR Rate  Disbursements to such day. If Lender is unable,  for
the reasons set forth above,  to make or maintain any LIBOR Rate  Disbursements,
Lender  shall fund such  amount as a Prime Rate  Disbursement.  Borrower  hereby
agrees to reimburse Lender on demand for all costs and expenses  attributable to
its  making or  maintaining  LIBOR Rate  Disbursements  hereunder  which  result
directly  from any such  change  in law,  rule,  regulation,  interpretation  or
administration, or in connection with the conversion of the interest rate on any
portion of the Loan as to which  Borrower has made a LIBOR Election prior to the
end of the applicable LIBOR Borrowing Period.

         B.4 LIBOR  Prepayments.  Except as  otherwise  provided  in Section B.3
above, upon payment or prepayment of any LIBOR Rate Disbursement,  or conversion
of a LIBOR Rate Disbursement to a Prime Rate  Disbursement,  on a day other than
the last day in the applicable  LIBOR  Borrowing  Period  (whether  voluntarily,
involuntarily,  by reason or acceleration, or otherwise),  Borrower shall pay to
Lender within fifteen (15) Business Days following demand by Lender a prepayment
fee equal to the excess of (a) the present value of the principal amount prepaid
as discounted  (on the basis of a year of twelve 30-day months) to present value
by reference to the yield for U.S.  Treasury  Securities  with  maturities  most
nearly  approximating  the  remaining  weighted  average  life to the end of the
relevant LIBOR  Borrowing  Period for the principal  payments being prepaid over
(b) the sum of all such principal payments plus accrued interest thereon.

         B.5  Definitions.  For purposes of this  Agreement the following  terms
shall have the following meanings unless otherwise indicated:

                  (a)  "Business  Day"  means  any day  other  than a  Saturday,
Sunday,  or other day on which  banks in Las  Vegas,  Nevada are  authorized  to
close.

                  (b) "LIBOR" means the rate per annum (computed on the basis of
a 360-day year and the actual  number of days  elapsed)  determined by Lender as
the  average  rate  offered to Lender  for U.S.  dollar  deposits  in the London
Eurodollar  Market  based upon  quotations  at five (5) major banks for a period
equal to the  relevant  LIBOR  Borrowing  Period  and in an amount  equal to the
applicable LIBOR Rate Disbursement.

                  (c)      "Reserve Percentage" means a percentage that is
reasonably  determined  by Lender as the average  (rounded  to the next  highest
1/100th of 1%) of the maximum

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percentage  reserve in effect as  prescribed  by the Board of  Governors  of the
Federal Reserve System for  determining  the maximum  reserve  requirement for a
member bank of the Federal  Reserve  System in the  district in which  Lender is
located.

         C.       REPRESENTATIONS, COVENANTS AND WARRANTIES.

                  Borrower  hereby  unconditionally  represents,  covenants  and
warrants as follows:

                  C.l Power. If Borrower or any signator who signs on its behalf
is a corporation, partnership, limited liability company, or trust, that it is a
corporation duly incorporated,  or a partnership,  limited liability company, or
trust duly  organized,  and in any event validly  existing under the laws of the
state of its  incorporation  or origination and duly qualified to do business in
the  State of  Nevada,  with  requisite  power  and  authority  to (i) incur the
indebtedness  evidenced by the Note; (ii) enter into this  Agreement;  and (iii)
enter  into  any  other  Loan   Documents   executed  and  delivered  to  Lender
concurrently herewith.

                  C.2  Authority.  That this  Agreement,  the Note, the Security
Agreement,  and all  other  Loan  Documents  executed  and  delivered  to Lender
concurrently  herewith were executed in accordance with the requirements of law,
and,  if  Borrower  or any  signator  who signs on its behalf is a  corporation,
partnership,  limited  liability  company,  or  trust,  in  accordance  with any
requirements of its articles of incorporation, articles of partnership, articles
of organization  and/or  operating  agreement,  or declaration of trust, and any
amendments  thereto,  and  that  the  execution  of the  same,  and the full and
complete  performance  of the provisions  thereof,  is authorized by its bylaws,
articles of partnership, articles of organization and/or operating agreement, or
declaration  of trust,  or a  resolution  of its board of directors or partners,
members  or  managers,  or  trustees,  and will not  result in any breach of, or
constitute a default  under,  or result in the  creation of any lien,  charge or
encumbrance (other than those contained herein or in any instrument delivered to
Lender concurrently  herewith) upon any property or assets of Borrower under any
material  indenture,  mortgage,  deed of trust, bank loan or credit agreement or
other  instrument or agreement to which Borrower is a party or by which Borrower
is bound or, if applicable, under Borrower's corporate charter, bylaws, articles
of  partnership,   articles  of  organization  and/or  operating  agreement,  or
declaration of trust.

                  C.3 Financial Statements. Any and all unaudited balance sheets
heretofore  furnished  Lender by or on behalf of Borrower and or any  guarantors
are true and correct in all material respects,  and fully and accurately present
the financial condition of the subjects thereof as of the dates thereof (subject
to normal  year-end  audit  adjustments),  and no  material  adverse  change has
occurred in the  financial  condition  reflected  therein since the dates of the
most  recent  financial  statement  submitted  to Lender.  During the Loan term,
Borrower  shall  provide  Lender  with the  following:  (i) copies of annual CPA
audited  consolidated  financial  statements  (as  contained  in annual  reports
required to be filed under Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Sections") for Borrower within 120 days following the end
of each of such Borrower's  fiscal years; (ii) copies of quarterly CPA reviewed,
unaudited

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consolidated  financial  statements  for  Borrower  (as  contained  in quarterly
reports  required to be filed under the Sections)  within  forty-five  (45) days
following  the end of each fiscal  quarter;  (iii) copies of federal  income tax
returns  (including all schedules) and/or extension requests for Borrower within
fifteen  (15)  days  after  filing  the  same;  and  (iv)  quarterly  compliance
certificates  within  forty-five  (45)  days  following  the end of each  fiscal
quarter,  commencing with the fiscal quarter ending on March 31, 1997,  executed
by Borrower's  treasurer,  certifying  that  Borrower is in compliance  with the
financial  covenants set forth in Section C.5 below;  (v) copy of annual updated
list of slot  machines  in the form  attached  as  Exhibit  "A" to the  Security
Agreement within forty-five (45) days following the end of each fiscal year; and
(vi)  copies of such  other  financial  information  relating  to  Borrower  and
Borrower's business operations which Lender may reasonably request.

                  C.4 Litigation.  Except as heretofore  disclosed in writing to
Lender, there are no actions,  suits or proceedings pending, or to the knowledge
of Borrower  threatened,  against or  affecting  Borrower  which,  if  adversely
determined, would have a Material Adverse Effect.

                  C.5 Financial Covenants.  During the term of the Loan:

                           (a)      Borrower shall maintain a Maximum Leverage
Ratio (defined as [average  funded debt as of the last day of each month for the
quarter  then  ended] /  [earnings  before  interest,  taxes,  depreciation  and
amortization  ("EBITDA"),  calculated on a rolling four (4) quarter average]) of
not greater than 4.50 to 1.00 tested for compliance quarterly as of the last day
of each fiscal quarter of Borrower. The term "funded debt" means, as of any date
of determination, without duplication, the sum of (i) all principal indebtedness
of Borrower for borrowed money (including debt securities issued by Borrower) on
that date, plus (ii) the aggregate  amount of the net present value of principal
payable  by  Borrower  in  respect  of  capital  leases  on that  date,  each as
determined in accordance with generally accepted accounting principles.

                           (b)      Borrower shall maintain a Minimum Times
Fixed Charge  Coverage Ratio  (defined as [EBITDA,  calculated on a rolling four
(4) quarter  average]/ [the prior year's current portion of long term debt, plus
the prior year's  current  portion of capital lease  obligations,  plus interest
expense for the current quarterly  period,  including  capitalized  interest and
excluding  interest on intercompany debt, plus short-term loans (with maturities
of twelve  (12)  months or  less)])  of not less  than 1.50 to 1.00  tested  for
compliance quarterly as of the last day of each fiscal quarter of Borrower;

                           (c)      Borrower shall incur no additional
indebtedness or additional  liens or encumbrances on Borrower's real or personal
property in excess of $10,000,000.00,  except for the financing evidenced by the
Indenture Agreement,  without the prior written consent of Lender, which consent
shall not be unreasonably withheld; and


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                           (d)      except for mergers wherein either RHC or
ROC is the  surviving  entity and Borrower is in  compliance  with each covenant
contained herein following such merger,  Borrower shall not sell or transfer all
or  substantially  all of Borrower's  assets,  or merge or consolidate  with any
other person or entity,  without Lender's prior written  consent,  which consent
shall not be unreasonably withheld;

                  The foregoing representations, covenants, and warranties shall
survive until all sums payable pursuant to the Note or this Agreement,  or which
are secured by any of the other Loan Documents, have been paid in full.

                  C.6 Licenses.  Borrower  shall  maintain in effect,  and shall
comply  with all of the terms and  conditions  of,  all  licenses,  permits  and
approvals  required by any governmental  agency in connection with the operation
of  Borrower's  business  at the  Riviera  Hotel &  Casino,  including,  without
limitation,  all gaming licenses and approvals where the failure to maintain and
comply with the same would have a Material Adverse Effect.

         D.       DEFAULT.

                  D.l Events of Default. Any of the following shall constitute a
default hereunder (an "Event of Default"):

                           (a)      The failure of Borrower to make any payment
under the Note within fifteen (15) days after such payment is due;

                           (b)      The materially false or misleading nature
of any  representation  or  warranty  of  Borrower  contained  herein  or in any
representation  by Borrower to Lender  concerning  the  financial  condition  of
Borrower;

                           (c)      The failure of Borrower to fully perform
any and all other  covenants and  agreements  hereunder  within thirty (30) days
after notice thereof is given by the Lender to the Borrower;

                           (d)      The failure of Borrower to pay or perform
as required under any other Loan Document; and

                           (e)      Any material and substantial event of
default (subject to any applicable  notice  requirement and opportunity to cure)
by Borrower under the Indenture Agreement.

                  D.2  Acceleration.  Upon the occurrence of an Event of Default
hereunder,  and following any applicable  notice  requirement and opportunity to
cure,  the entire  unpaid  balance of the Note  including  all accrued  interest
shall,  at the option of Lender,  become  immediately due and payable and Lender
shall have such rights of enforcement as may be afforded by law,

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hereunder, or under the Note, or any of the other Loan Documents, subject to the
provisions of Section E.3 hereof.

         E.       REMEDIES.

                  E.l  General.  Upon the  occurrence  of an  Event  of  Default
hereunder,  Lender's obligation to make any further disbursements under the Loan
or to honor any request by Borrower to convert the interest  rate under the Loan
or any portion thereof to the LIBOR Rate shall cease,  and Lender shall have all
rights and remedies  available  to Lender under the law,  hereunder or under the
Note  (including but not limited to the right to accelerate the Note), or any of
the other Loan Documents.

                  E.2  Remedies are  Cumulative.  Subject to Section E.3 hereof,
all  remedies  of Lender  provided  for  herein are  cumulative  and shall be in
addition to any and all other rights and remedies  provided in the Note,  or any
of the other Loan  Documents  or by law.  The  exercise  of any rights of Lender
hereunder  shall  not in any  way  constitute  a cure  or  waiver  of a  default
hereunder or  elsewhere,  or  invalidate  any act done pursuant to any notice of
default,  or  prejudice  Lender  in the  exercise  of any  of its  other  rights
hereunder or elsewhere unless,  in the exercise of said rights,  Lender realizes
all  amounts  owed to it  hereunder  and  under the  Note,  and the  other  Loan
Documents.

                  E.3 Subordination.  Notwithstanding  any provision in any Loan
Document to the contrary,  any indebtedness  under any Loan Document owed at any
time by the  Borrower to the Lender  which is not repaid out of the  proceeds of
the sale of Collateral (the "Subordinated  Indebtedness")  shall be subordinated
to the prior payment in full of all amounts payable under the Senior Debt to the
extent and in the manner provided in this Section.

                  For purposes of this Section, the term "Senior Debt" means the
Borrower's  obligations  for the  principal  of,  premium,  if any, and interest
(including  post-petition  interest in any  liquidation  or  dissolution  of the
Borrower  or in any  bankruptcy,  reorganization,  insolvency,  receivership  or
similar proceeding with respect to the Borrower or its property,  whether or not
a claim for such  interest is allowed or allowable in any such  proceeding)  on,
and reasonable fees, collection expenses and counsel and other professional fees
incurred in connection with collection,  work-out or insolvency related matters,
and other amounts payable on or in connection with the Indenture  Agreement,  as
the same may be amended, modified, supplemented,  restated, extended or replaced
from time to time, or any guaranty in respect of any of the foregoing.

                           (a)      If there shall be any Event of Default (as
defined in the Indenture Agreement, herein, a "Senior Debt Event of Default") in
respect of Senior Debt, unless and until such Senior Debt Event of Default shall
have been cured or waived or shall have ceased to exist,  the  Borrower  may not
make any  payment on account of the  Subordinated  Indebtedness,  or acquire for
cash,  property  or  securities,  by set-off or  otherwise,  or redeem,  retire,
purchase,

                                       10


<PAGE>



deposit  moneys for defeasance of or to acquire the  Subordinated  Indebtedness,
and the Borrower shall not segregate and hold separate for the benefit of Lender
money for any such payment or distribution.

                  (b) If any payment or  distribution  of assets of the Borrower
is received by Lender in respect of the Subordinated Indebtedness at a time when
that payment or distribution  should not have been made because of any provision
of this Section, such payment or distribution will be received and held in trust
for the  benefit of and will be paid over to the holders of Senior Debt or their
representatives  which is due and payable and remains  unpaid or unprovided  for
(pro rata as to each of such holders on the basis of the  respective  amounts of
Senior Debt which is due and payable  held by them) until such Senior Debt Event
of Default shall have been cured or waived or shall have ceased to exist.

                  (c) Upon any  distribution  of assets of either  Borrower,  or
upon any dissolution, winding up, liquidation or reorganization of such Borrower
(whether in bankruptcy,  insolvency,  receivership or similar proceeding related
to such  Borrower  or its  property  or upon an  assignment  for the  benefit of
creditors or otherwise) (a "Liquidation Event"):

                           (i) the  holder  of all  Senior  Debt  will  first be
         entitled  to  receive  payment  in full in  cash of the  principal  and
         interest  due on Senior Debt and all other  amounts  due in  connection
         with Senior  Debt  before  Lender is entitled to receive any payment on
         account of the Subordinated Indebtedness;

                           (ii) any  payment or  distributions  of assets of the
         Borrower  of any  kind or  character,  whether  in  cash,  property  or
         securities, to which Lender would be entitled except for the provisions
         of this Section (including, without limitation,  distributions received
         by Lender in respect of  obligations  junior in right of payment to the
         Subordinated  Indebtedness) will be paid by the liquidating  trustee or
         agent of such  other  person  making  such a  payment  or  distribution
         directly to the holders of Senior Debt or their  representatives to the
         extent  necessary  to make  payment in full in cash of all Senior  Debt
         remaining  unpaid,  after giving  effect to any  concurrent  payment or
         distribution,  to the holders of such Senior Debt or provision for that
         payment or distribution; and

                           (iii)  if,  notwithstanding  the  foregoing,  upon  a
         Liquidation  Event  any  payment  or  distribution  of assets of either
         Borrower  of any  kind or  character,  whether  in  cash,  property  or
         securities  is  received  by  Lender  on  account  of the  Subordinated
         Indebtedness  before  all  Senior  Debt is paid  in  full in  cash,  or
         effective provision made for such payment, such payment or distribution
         will be received  and held in trust for the benefit of and will be paid
         over to the holders of the Senior Debt  remaining  unpaid or unprovided
         for or their  representative  for  application  to the  payment of such
         Senior  Debt until all such  Senior Debt has been paid in full in cash,
         after  giving  effect to any  concurrent  payment  or  distribution  or
         provision therefor to the holders of such Senior Debt.

                                       11


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                  (d) For so long as payment hereunder is prohibited pursuant to
this Section,  Lender shall not demand,  sue for, collect or receive any payment
in  respect  of the  Subordinated  Indebtedness;  provided,  however,  that  the
foregoing  shall not be deemed to limit in any  manner  remedial  actions by the
Lender  against  the  Collateral  or the  filing by Lender of proofs of claim or
other required notices resulting from the occurrence of a Liquidation Event.

                  (e) Nothing  contained  in this Section is intended to or will
impair,  as between the Borrower and Lender,  the  obligations  of the Borrower,
which  are  absolute  and  unconditional,  to pay  to  Lender  the  Subordinated
Indebtedness  as and when it becomes  due or is  intended  to or will affect the
relative  rights of Lender and creditors of the Borrower  other than the holders
of the Senior  Debt,  nor,  except as provided in this  Section,  will  anything
herein  or  therein  prevent  Lender  from  exercising  all  remedies  otherwise
permitted  by  applicable  law upon an Event of Default  under the  Subordinated
Indebtedness,  subject to the rights,  if any, under this Section of the holders
of Senior  Debt in respect  of cash,  property  or  securities  of the  Borrower
received upon the exercise of any such remedy and subject to this Section.

                  (f) No right of any  present  or future  holders of any Senior
Debt to enforce  subordination as provided herein will at any time in any way be
prejudiced  or  impaired  by any act or  failure  to act on the  part of  either
Borrower or by any act or failure to act, in good faith, by any such holder,  or
by any  noncompliance  by the Borrower  with the terms of this  Agreement or the
Indenture  Agreement,  regardless of any knowledge thereof which any such holder
may have or  otherwise  be  charged  with.  The  holders  of Senior  Debt or any
security therefor may release, sell or exchange such security and otherwise deal
freely with the Borrower,  all without affecting the liabilities and obligations
of the Borrower to Lender.

         F.       MISCELLANEOUS.

                  F.l No Waiver.  No waiver of any Event of Default by  Borrower
hereunder shall be implied from any omission by Lender to take action on account
of such  Event of  Default,  and no  express  waiver  shall  affect any Event of
Default  other than the Event of Default  specified in the waiver and the waiver
shall be operative only for the time and to the extent therein  stated.  Waivers
of any covenant, term, or condition contained herein shall not be construed as a
waiver of any  subsequent  breach of the same covenant,  term or condition.  The
consent or  approval by Lender to or of any act by  Borrower  requiring  further
consent  or  approval  shall not be deemed  to waive or render  unnecessary  the
consent or approval to or of any subsequent similar act.

                  F.2 No Third Parties  Benefitted.  This  Agreement is made and
entered into for the sole  protection  and benefit of Lender and  Borrower.  All
conditions of the  obligations of Lender to make advances  hereunder are imposed
solely and  exclusively  for the benefit of Lender and may be freely modified by
Lender with the  concurrence of Borrower or waived by Lender in whole or in part
at any time if in its sole discretion it deems it advisable to do so.

                                       12

<PAGE>



No person other than Borrower  shall have standing to require Lender to make any
Loan advances or be a beneficiary of this Agreement or of any of the advances to
be made hereunder.

                  F.3      Plural Borrowers Jointly and Severally Liable.  RHC
and ROC shall be jointly and severally liable to Lender for the faithful
performance of the terms hereof.

                  F.4 Notices. All notices or other  communications  required or
permitted to be given  hereunder  shall be in writing and shall be considered as
properly  given if mailed by first class United  States mail,  postage  prepaid,
registered or certified with return receipt requested, or by delivering the same
in person to the  intended  addressee,  or by  nationally  recognized  overnight
courier  service.  Notice so mailed  shall be effective  two (2)  business  days
following its deposit.  Notice given in any other manner shall be effective only
if and when received by the addressee.  For purposes of notice, the addresses of
the  parties  shall be as set  forth on the  signature  page  hereof;  provided,
however, that either party shall have the right to change its address for notice
hereunder  to any other  location  by the giving of notice to the other party in
the manner set forth above.

                  F.5 Expenses.  Borrower  shall pay promptly all reasonable and
necessary costs, charges, and expenses incurred by Lender in connection with the
enforcement of the Loan.

                  F.6  Actions.  Lender  shall  have the  right to  appear in or
defend any action or  proceeding  purporting  to affect its rights,  duties,  or
liabilities  hereunder,   or  the  disbursement  of  its  funds.  In  connection
therewith, Lender may incur and pay costs and expenses, including reasonable and
necessary (under the Loan Documents)  attorneys' fees, and Borrower shall pay to
Lender on demand  all such  costs  and  expenses  and  Lender is  authorized  to
disburse funds from the Loan for said purpose.

                  F.7  Commissions  and Brokerage Fee.  Borrower shall indemnify
Lender  from  any  responsibility  and/or  liability  for  the  payment  of  any
commission,  charge or brokerage fees to anyone which may be payable by Borrower
in  connection  with the making of the Loan, it being  understood  that any such
commission,  charge,  or brokerage fees will be paid directly by Borrower to the
party or parties  entitled  thereto.  Lender shall  indemnify  Borrower from any
responsibility  and/or  liability for the payment of any  commission,  charge or
brokerage  fees to anyone which may be payable by Lender in connection  with the
making of the Loan, it being  understood that any such  commission,  charge,  or
brokerage fees will be paid directly by Lender to the party or parties  entitled
thereto.

                  F.8 Applicable  Law. This  Agreement  shall be governed by and
construed in accordance with the laws of Nevada,  except as preempted by federal
law. Lender and Borrower consent to the exclusive  personal  jurisdiction by the
courts of Clark County, Nevada, in any action to enforce the rights and remedies
of any party hereunder.


                                       13


<PAGE>



                  F.9 Heirs,  Successors and Assigns.  This  Agreement  shall be
binding  upon and inure to the  benefit of the heirs,  successors,  assigns  and
personal representatives of the parties hereto; provided, however, that Borrower
shall not assign  its rights  hereunder  in whole or in part  without  the prior
written  consent of Lender (except as  contemplated  by Section C.5(d)  hereof),
which  such  consent  may be  granted  or  withheld  in the  sole  and  absolute
discretion of Lender.  Any such  assignment  without said consent shall be void.
Lender  shall  have the  right at any time and from  time to time to  assign  to
participants  or others all or certain of its rights and  obligations  hereunder
but no such assignment shall, without Borrower's written consent, relieve Lender
of its obligations hereunder.

                  F.10 Time.  Time is of the essence of this  Agreement and each
and every provision hereof in which time is an element.

                  F.11  Attorneys'  Fees and Costs.  If any legal  action or any
arbitration or other proceeding is brought for the enforcement of this Agreement
or because of an alleged dispute,  breach, Event of Default or misrepresentation
in connection  with any of the provisions of this  Agreement,  the successful or
prevailing  party shall be entitled to recover  reasonable  attorneys'  fees and
other  costs  incurred in that  action or  proceeding,  in addition to any other
relief to which he may be entitled.

                  F.12 Expiration of Commitment. Lender's obligation to disburse
the Loan is further  conditioned  upon the  execution of this  Agreement and the
other Loan Documents on or before February 28, 1997.

                  F.13  Interpretation.  This  Agreement  shall not be construed
against  the party  preparing  it,  but shall be  construed  as if both  parties
jointly  prepared this Agreement and any  uncertainty and ambiguity shall not be
interpreted against any one party.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.

Riviera Holdings Corporation                RIVIERA HOLDINGS CORPORATION,
2901 Las Vegas Blvd. South                  a Nevada corporation,
Las Vegas, Nevada 89109


                                            By:________________________________

                                               Its: ___________________________


                                       14

<PAGE>


Riviera Operating Corporation                RIVIERA OPERATING CORPORATION,
2901 Las Vegas Blvd. South                   a Nevada corporation, doing 
Las Vegas, Nevada 89109                      business as RIVIERA HOTEL & CASINO


                                             By:________________________________

                                                Its: ___________________________

                                                         "Borrower"







U.S. Bank of Nevada                          U.S. BANK OF NEVADA, a Nevada
Commercial Services Group                    state-chartered commercial bank,
2300 W. Sahara Avenue
Suite 120
Las Vegas, Nevada  89102                     By:_______________________________

                                                Its:___________________________

                                                           "Lender"

                                       15


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