<PAGE>   1
THIS INSTRUMENT IS EXECUTED AND DELIVERED PURSUANT TO THE ORDER CONFIRMING PLAN
OF REORGANIZATION AUTHORIZING DEBTOR TO OBTAIN POST-PETITION FINANCING IN RE:
JAZZ CASINO COMPANY, L.L.C., CASE NO. 01-10087, CHAPTER 11, PENDING IN THE
UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF LOUISIANA. SECTION
1146 OF THE BANKRUPTCY CODE EXEMPTS THIS INSTRUMENT, AND THE TRANSACTION
CONSUMMATED PURSUANT HERETO, FROM ALL STAMP, REAL ESTATE TRANSFER, MORTGAGE
RECORDING OR SIMILAR TAX, IMPOSED BY ANY AUTHORITY.
Jazz Casino v 5.doc

                                                                 EXHIBIT 10.12

UNITED STATES OF AMERICA            )                ACT OF MORTGAGE
                                    )                     AND
STATE OF LOUISIANA                  )             COLLATERAL ASSIGNMENT
                                    )                      BY
PARISH OF ORLEANS                   )         JAZZ CASINO COMPANY, L.L.C.
                                    )                  IN FAVOR OF
                                    )            THE BANK OF NEW YORK,
                                    )             AS COLLATERAL AGENT
                                    )         FOR THE PRESENT AND FUTURE
                                    )                    HOLDERS
                                    )        OF THE SECURED OBLIGATIONS

         BE IT KNOWN, that on this ________ day of _____________, 2001,
effective as of the Plan Effective Date (as defined below);

         BEFORE ME, the first undersigned Notary Public in and for the State of
Louisiana, Parish of Orleans, and in the presence of the undersigned competent
witnesses;

         PERSONALLY CAME AND APPEARED:

         JAZZ CASINO COMPANY, L.L.C., a Louisiana limited liability company
(TIN: 72-1429291), whose registered office in the State of Louisiana is located
at 512 South Peters, New Orleans, Louisiana 70130, and whose mailing address is
512 South Peters, New Orleans, Louisiana 70130, appearing herein by and through
L. Camille Fowler, a duly authorized officer thereof pursuant to a resolution of
its sole member, JCC Holding Company, a Delaware corporation, a certified
extract of which is attached hereto ("Mortgagor"); and

         AND BE IT KNOWN, that on this ________ day of _____________, 2001,
effective as of the Plan Effective Date (as defined below);

         BEFORE ME, the second undersigned Notary Public in and for the State of
Louisiana, Parish of Orleans, and in the presence of the undersigned competent
witnesses;

         PERSONALLY CAME AND APPEARED:

         THE BANK OF NEW YORK, a national banking association (TIN: 13-5160382),
not in its individual capacity but solely as Collateral Agent for the present
and future holders of the Secured Obligations (as defined below), whose mailing
address is 10161 Centurion Parkway, Jacksonville, Florida 32256, appearing
herein by and through a duly authorized representative thereof ("Mortgagee");




<PAGE>   2


AND MORTGAGOR AND MORTGAGEE DECLARED THAT:

         DEFINITIONS: The following terms shall have the following meanings when
used herein. Capitalized terms used but not otherwise defined herein shall have
the respective meanings set forth in the Intercreditor Agreement.

         "Advances" means all advances made by Mortgagee for the protection of
the interests of Mortgagee in the Property and the rights and privileges of
Mortgagee hereunder, including any advances identified as "Advances" under this
Mortgage, and shall include all interest payable with respect thereto as set
forth in this Mortgage. Advances under this Mortgage shall include protective
advances that may be made, to the extent permitted by the Intercreditor
Agreement, by any Secured Creditor under any Shared Security Document or any
separate security agreements executed pursuant to any Shared Security Document,
and affecting any portion of the Property.

         "Assigned Leases" shall have the meaning assigned in Granting Clause
(f)(vi) hereof.

         "Bankruptcy Code" means the United States Bankruptcy Code, 11
U.S.C. Section 101 et seq.

         "Casino Ground Lease" means that certain Lease Agreement by and between
Landlord, as lessor, and Celebration Park Casino, Inc. (n/k/a Grand Palais
Casino, Inc.), as lessee, dated as of April 27, 1993, recorded on April 27, 1993
in the conveyance records of the Parish of Orleans at Notarial Archives No.
93-018036 as Conveyance Office Instrument No. 68200, as assigned to HJC by
Assignment and Assumption of Sublease, dated as of March 15, 1994, filed March
16, 1994 under Notarial Archives No. 94-13862, as Conveyance Instrument No.
83931, and as amended by Amended Lease Agreement, dated as of March 15, 1994,
recorded on March 16, 1994 in the conveyance records of the Parish of Orleans at
Notarial Archives No. 94-13887 as Conveyance Office Instrument No. 83942, as
amended by Amendment to Lease Agreement, dated as of October 5, 1994, recorded
on October 6, 1994 in the conveyance records of the Parish of Orleans at
Notarial Archives No. 94-46778 as Conveyance Office Instrument No. 94519, and as
assigned and transferred to JCC by Order In Aid of Consummation in bankruptcy
proceedings entitled "In the Matter of Harrah's Jazz Company, No. 95-14545, in
the U. S. Bankruptcy Court for the Eastern District of Louisiana, dated October
29, 1998, filed October 30, 1998, under Notarial Archives No. 98-50453,
Conveyance Office Instrument 1681225, and as amended and restated in that
certain Amended and Restated Lease Agreement among Landlord, Mortgagor and the
City of New Orleans, as intervenor, dated as of October 29, 1998 and recorded on
October 30, 1998 in the conveyance records of the Parish of Orleans at Notarial
Archives No. 98-50458, as Conveyance Office Instrument No. 168130, and as
amended by that certain First Amendment to Amended and Restated Lease Agreement
among Landlord, Mortgagor and the City of New Orleans, as intervenor, dated
effective March 31, 2001, and recorded in the conveyance records of the Parish
of Orleans at Notarial Archives No. _____________, as Conveyance Office
Instrument No. __________, as the same may be assigned, amended, modified,
restated or supplemented from time to time, constituting a sublease of the
Casino Premises in connection with a ground lease created by the City Lease.

         "Casino Operating Contract" means that certain Amended and Renegotiated
Casino Operating Contract among HJC, Mortgagor and the State of Louisiana by and
through the


                                       2
<PAGE>   3


LGCB, dated as of October 30, 1998, as amended by that certain First Amendment
to Amended and Renegotiated Casino Operating Contract dated October 19, 1999,
and further amended by that certain Second Amendment to Amended and Renegotiated
Casino Operating Contract dated as of March 30, 2001, as the same may be
amended, modified, restated or supplemented from time to time.

         "Casino Premises" shall have the meaning assigned in Granting Clause
(a) hereof.

         "City Lease" means that certain Lease Agreement by and between the City
of New Orleans, as lessor, and Landlord, as lessee, dated April 27, 1993 and
recorded on April 27, 1993 in the conveyance records of the Parish of Orleans
under Notarial Archives No. 93-18035 as Conveyance Office Instrument No. 68199,
as amended and restated by that certain Amended and Restated Lease Agreement,
dated March 15, 1994 and recorded on March 16, 1994 in the conveyance records of
the Parish of Orleans under Notarial Archives No. 94-13885 as Conveyance Office
Instrument No. 83940, and as further amended by that certain First Amendment to
Amended and Restated Lease Agreement, dated as of October 29, 1998 and recorded
on October 30, 1998 in the conveyance records of the Parish of Orleans under
Notarial Archives No. 98-50457, as Conveyance Office Instrument No. 168129, as
the same may be assigned, amended, modified, restated or supplemented from time
to time.

         "Collateral Agent" shall have the meaning set forth in the
Intercreditor Agreement.

         "Condemnation Proceeds" shall have the meaning assigned in Granting
Clause (f)(v) hereof.

         "Event of Default" means (i) any "Event of Default" under, and as
defined in, the Intercreditor Agreement, or (ii) any default under, or breach of
any provision of, this Mortgage after the expiration of any cure period
expressly provided herein (or if no cure period is specified, after notice by
Mortgagee to Mortgagor and, in the case of a non-monetary default, thirty (30)
days opportunity to cure).

         "Excluded Collateral" means (i) the House Bank (as defined in the
Management Agreement); (ii) the Louisiana Gross Gaming Revenue Share Payments,
including the State's Interest in Daily Collections (as such terms are defined
in the Casino Operating Contract); and (iii) the Casino Operating Contract.

         "Franchise Agreement" means that certain Franchise Agreement by the
City of New Orleans in favor of Grand Palais Casino, Inc. (formerly Celebration
Park Casino, Inc.), dated April 27, 1993 and recorded on April 27, 1993 in the
conveyance records of the Parish of Orleans under Notarial Archives No. 93-18038
as Conveyance Office Instrument No. 68202, as assigned by that certain
Assignment and Assumption of General Development Agreement and of Franchise
Agreement, dated March 15, 1994 and recorded on March 16, 1994 in the conveyance
records of the Parish of Orleans under Notarial Archives No. 94-13863 as
Conveyance Office Instrument No. 83932, as further assigned, amended and
restated by that certain Assigned, Amended and Restated Franchise Agreement by
and between the City of New Orleans, Grand Palais Casino, Inc. and HJC, dated
March 15, 1994 and recorded on March 16, 1994 in the conveyance records



                                       3
<PAGE>   4


of the Parish of Orleans under Notarial Archives No. 94-13864 as Conveyance
Office Instrument No. 83933, as the same may be amended, modified, restated or
supplemented from time to time.

         "Franchise Area" shall have the meaning assigned in Granting Clause (b)
hereof.

         "Harrah's Management Company" means Harrah's New Orleans Management
Company, a Nevada corporation, and its successors.

         "HET" means Harrah's Entertainment, Inc., a Delaware corporation.

         "HET/JCC Agreement" means that certain Amended and Restated HET/JCC
Agreement, dated as of March 30, 2001, by and among Mortgagor, HET, HOC and JCC
Holding Company or any successor agreement thereto or any substitute agreement
therefor providing for the furnishing of the Minimum Payment Guaranty, as the
same (or any successor or substitute) may be amended, modified, restated or
supplemented from time to time.

         "HJC" means Harrah's Jazz Company, a Louisiana general partnership.

         "HOC" means Harrah's Operating Company, Inc., a Delaware corporation,
and its successors.

         "Holders" means individually, collectively and interchangeably the
present and the future holders of the Secured Obligations.

         "Improvements" shall have the meaning assigned in Granting Clause (c)
hereof.

         "Incorporeal Rights" shall have the meaning assigned in Granting Clause
(f) hereof.

         "Indenture" means that certain Indenture pursuant to which Mortgagor
has issued Senior Notes due 2008, entered into by Mortgagor, JCC Holding
Company, JCC Canal Development, L.L.C., JCC Fulton Development, L.L.C., JCC
Development Company, L.L.C., and the Trustee, dated as of the Plan Effective
Date, as such agreement may be amended, modified, restated or supplemented from
time to time.

         "Insurance Proceeds" shall have the meaning assigned in Granting Clause
(f)(ii) hereof.

         "Intercreditor Agreement" means that certain Intercreditor Agreement,
dated as of March 30, 2001, among the Trustee, the Collateral Agent, the
Revolver Creditors and the Minimum Payment Guarantors, as the same may be
amended, modified, restated or supplemented from time to time.

         "Land" shall have the meaning assigned in Granting Clause (c) hereof.

         "Landlord" means Rivergate Development Corporation, a Louisiana public
benefit corporation.

         "LGCB" means, collectively, the Louisiana Gaming Control Board, its
successors and assigns.


                                       4
<PAGE>   5


         "Louisiana Gaming Regulations" means the Louisiana Economic Development
and Gaming Corporation Act, La. R.S. 27:201 et seq. and the rules and
regulations thereunder and the Louisiana Gaming Control Law, La. R.S. 27:1 et
seq., and the rules and regulations thereunder, collectively, as such statutes
and regulations may be amended from time to time.

         "Management Agreement" means that certain Third Amended and Restated
Management Agreement by and between Mortgagor and Harrah's Management Company,
dated as of March 30, 2001, as the same may be amended, modified, restated or
supplemented from time to time.

         "Minimum Payment Guarantors" means HET and HOC, as obligors, or any
successor or substitute guarantor providing a Minimum Payment Guaranty in
accordance with the requirements of the Casino Operating Contract.

         "Minimum Payment Guaranty" shall have the meaning set forth in the
Intercreditor Agreement.

         "Minimum Payment Guaranty Documents" shall have the meaning set forth
in the Intercreditor Agreement.

         "Mortgage" means this Act of Mortgage and Collateral Assignment, as
amended, modified, restated or supplemented from time to time.

         "Mortgagor" shall have the meaning set forth in the appearance clause
of this Mortgage.

         "Mortgagee" shall have the meaning set forth in the appearance clause
of this Mortgage.

         "Ordinary Course Leases" means leases or subleases granted to other
persons or entities by Mortgagor in the ordinary course of business which do not
materially interfere with the conduct of the business of Mortgagor or any of its
subsidiaries, or do not materially detract from the nature of the related assets
of Mortgagor or any of its subsidiaries.

         "Permitted Encumbrances" shall have the meaning assigned in Section 1
of this Mortgage.

         "Plan" means the Joint Plan of Reorganization under Chapter 11 of the
Bankruptcy Code, as of February 8, 2001, as confirmed by order of the United
States Bankruptcy Court for the Eastern District of Louisiana on March 19, 2001,
in the following proceeding: In re: JCC Holding Company, No. 01-10086, jointly
administered with In re: Jazz Casino Company, L.L.C., No. 01-10087, In re: JCC
Canal Development, L.L.C., No. 01-10088, In re: JCC Fulton Development, L.L.C.,
No. 01-10089, and In re: JCC Development Company, L.L.C., No. 01-10090, as the
same may be amended, modified or supplemented from time to time.

         "Plan Effective Date" means the "Effective Date" under and as defined
in the Plan.

         "Property" shall have the meaning assigned at the end of the Granting
Clauses of this Mortgage.

         "Rents" shall have the meaning assigned in Granting Clause (f)(vi)
hereof.


                                       5
<PAGE>   6


         "Revolver Creditor" shall have the meaning set forth in the
Intercreditor Agreement.

         "Revolving Credit Agreement" means that certain Revolving Credit
Agreement dated as of March 30, 2001, among Mortgagor, JCC Holding Company, the
Revolver Creditor, and the other parties thereto, as the same may be amended,
modified, restated, supplemented or extended from time to time.

         "Revolving Credit Documents" shall have the meaning set forth in the
Intercreditor Agreement.

         "Rights and Privileges" shall have the meaning assigned in Granting
Clause (e) hereof.

         "Second Floor Sublease" means that certain Second Floor Non-Gaming
Sublease between Mortgagor and JCC Development Company, L.L.C., a Louisiana
limited liability company, dated as of October 29, 1998, as evidenced by that
certain Memorandum of Sublease, dated as of October 29, 1998, and recorded on
October 30, 1998 in the conveyance records of the Parish of Orleans at Notarial
Archives No. 98-50474, as Conveyance Office Instrument No. 168131, as the same
may be assigned, amended, modified, restated or supplemented from time to time.

         "Secured Creditors" means, collectively, (i) the Minimum Payment
Guarantors, (ii) the Revolver Creditor, and (iii) the Trustee and the holders
from time to time of the Senior Notes.

         "Secured Obligations" means individually, collectively and
interchangeably, (i) all Protective Advances (as defined in the Intercreditor
Agreement), (ii) all present and future indebtedness, obligations, including,
without limitation, the Minimum Payment Obligations (as defined in the
Intercreditor Agreement), and liabilities owed by Mortgagor to the Minimum
Payment Guarantors under the Minimum Payment Guaranty Documents, including,
without limitation, the HET/JCC Agreement, (iii) all present and future
indebtedness, obligations, including, without limitation, the New Bond
Obligations (as defined in the Intercreditor Agreement), and liabilities owed by
Mortgagor to any and all present and future holders of the Senior Notes under
the Indenture, (iv) all present and future indebtedness, obligations, including,
without limitation, the Revolving Credit Agreement Obligations (as defined in
the Intercreditor Agreement), and liabilities owed by Mortgagor to the Revolver
Creditor under the Revolving Credit Documents, including, without limitation,
the Revolving Credit Agreement, (v) all Other Obligations (as defined in the
Intercreditor Agreement), and (vi) any sums owed by Mortgagor under this
Mortgage, including any Advances, or any one or more of the foregoing, and any
and all promissory notes, bonds, loan agreements, indentures and other
instruments or documents evidencing such present and/or future indebtedness,
obligations and liabilities, including any amendments thereto, extensions,
renewals and refinancings thereof, and replacements, substitutions and
consolidations thereof, whether such obligations are committed or purely
discretionary, and whether absolute or contingent, liquidated or unliquidated,
voluntary or involuntary, determined, due or to become due, and whether now
existing or hereafter arising, whether Mortgagor is obligated alone or with
others on a "solidary" or "joint and several" basis, as a principal obligor or
as a surety, guarantor, or endorser, all up to a maximum secured amount that may
be outstanding at any time and from time to time of U.S. $10,000,000,000.00,
including, but not limited to, all Advances. NOTWITHSTANDING ANY OTHER PROVISION
OF THIS


                                       6
<PAGE>   7


MORTGAGE, THE MAXIMUM AMOUNT OF THE SECURED OBLIGATIONS SECURED HEREBY SHALL BE
LIMITED TO U.S. $10,000,000,000.00.

         "Senior Notes" means the Senior Notes due 2008 issued pursuant to the
Indenture.

         "Shared Security Documents" shall have the meaning assigned in the
Intercreditor Agreement.

         "Taxes" means any taxes, assessments, forced contributions, and other
governmental charges in the nature thereof, general and special, ordinary and
extraordinary, of every nature and kind whatsoever which may be levied, assessed
or imposed upon the Property, whether any or all of such Taxes be levied
directly or indirectly, including, to the extent applicable, "in lieu" taxes.

         "Trustee" means Wells Fargo Bank Minnesota, National Association, as
Trustee under the Indenture (together with any successor Trustee).

         "Uniform Commercial Code" means the Louisiana Civil Code Articles 3278
et seq., La. R.S. Section 9:4401, La. R.S. Section 9:5386 and 5388 and La.
R.S. Section 10:9-101 et seq., as such statutes may be amended from time to
time.

         GRANTING CLAUSES.

         To secure the full and prompt payment and performance of the Secured
Obligations, up to a maximum secured amount that may be outstanding at any time
and from time to time of U.S. $10,000,000,000.00, MORTGAGOR HEREBY MORTGAGES,
AFFECTS, AND HYPOTHECATES, IN FAVOR OF MORTGAGEE AND ITS SUCCESSORS AND ASSIGNS
FOR THE BENEFIT OF THE HOLDERS all of Mortgagor's estate, right, title and
interest, whether now owned or hereafter acquired, whether as owner, lessor,
lessee, or otherwise, and whether vested or contingent, and including all of
Mortgagor's rights to perform all obligations under and to receive the benefits
of any leases, in and to all of the following described land (immovable
property) and interests in land (immovable property), leases, leasehold
interests, estates, servitudes, rights, buildings, other constructions,
improvements, property, fixtures, component parts, machinery and equipment to
the full extent that such property is susceptible of mortgage under the
Louisiana Civil Code, Louisiana Revised Statutes, and other provisions of
Louisiana law; grants a continuing security interest in favor of Mortgagee and
its successors and assigns, as secured party for the benefit of the Holders, in
all property and rights described below, whether now owned or hereafter
acquired, that are susceptible of a security interest under the Uniform
Commercial Code or any other provision of Louisiana law; and does further
affect, hypothecate, collaterally assign and pledge unto and in favor of
Mortgagee and its successors and assigns, as collateral assignee for the benefit
of the Holders, all present and future leases and rents, as well as all other
property and rights described below, whether now owned or hereinafter acquired,
that are susceptible of collateral assignment under the Uniform Commercial Code
or any other provision of Louisiana law:

         (a)      the Casino Ground Lease, including, without limitation, all of
                  Mortgagor's present and future right, title and interest, as
                  such may be amended



                                       7
<PAGE>   8


                  from time to time, in, to and under the Casino Ground Lease,
                  and any other lease and sublease agreements and amendments
                  thereof, affecting certain immovable property in the Parish of
                  Orleans more particularly described on Exhibit "1" hereto
                  annexed, together with Mortgagor's right, title, and interest
                  in the buildings and other constructions and improvements on
                  the leased premises and the component parts thereof (which
                  leased premises are referred to herein as the "Casino
                  Premises");

         (b)      All of Mortgagor's present and future right, title and
                  interest in, to, and under the Franchise Agreement, affecting
                  certain immovable property in the Parish of Orleans more
                  particularly described on Exhibit "2" hereto annexed (the
                  "Franchise Area"), together with Mortgagor's right, title, and
                  interest (if any) in the building and other constructions and
                  improvements in the Franchise Area and the component parts
                  thereof; provided, however, notwithstanding anything set forth
                  in this Mortgage, the Franchise Agreement and any and all
                  rights of Mortgagor in and to the Franchise Area may be
                  terminated, released, canceled, surrendered or modified
                  (provided same will not have a material adverse effect on
                  Mortgagor's casino operations at the Casino Premises);

         (c)      TOGETHER with all of the buildings, other constructions,
                  structures, improvements, fixtures, additions, enlargements,
                  extensions, modifications or repairs of every kind and
                  description, now or hereafter erected or placed on any of the
                  Land (as defined below), or thereunto belonging or
                  appertaining, which may from time to time be owned or leased
                  by Mortgagor, or which may be used or useable in connection
                  with any present or future use or operations of the Land,
                  whether now owned or hereinafter acquired by Mortgagor,
                  including all parking areas, roads, driveways, walks, fences,
                  walls, beams, recreation facilities, drainage facilities,
                  lighting facilities and other site improvements, all water,
                  sanitary and storm sewer, drainage, electricity, steam, gas,
                  telephone and other utility equipment and facilities, all
                  plumbing, lighting, heating, ventilating, air-conditioning,
                  refrigerating, incinerating, compacting, fire protection and
                  sprinkler, surveillance and security, vacuum cleaning, public
                  address and communications equipment and systems, all kitchen
                  and laundry appliances, screens, awnings, floor coverings,
                  partitions, elevators, escalators, motors, machinery, pipes,
                  fittings and other types of equipment and personal property of
                  every kind and description now or hereafter located on the
                  Land or attached to the Improvements (as defined below) which
                  by the nature of their location thereon or attachment thereto
                  are deemed real or immovable property under applicable law;
                  and including all materials intended for the construction,
                  reconstruction, repair, replacement, alteration, addition or
                  improvement of or to such buildings, equipment, fixtures,
                  component parts, structures and improvements, all of which
                  materials shall be deemed to be part of the Property
                  immediately upon delivery thereof on the Land to be part of
                  the Improvements immediately upon their incorporation therein,
                  together with all replacements thereof, substitutions
                  therefor, additions thereto, and any other component parts of
                  any and all such Land (all of the land described in and
                  subject to this Mortgage, including the Casino Premises,
                  whether owned in



                                       8
<PAGE>   9


                  fee or full ownership by Mortgagor or affected by leases in
                  which Mortgagor has an interest, is collectively referred to
                  as the "Land," and all of the buildings, other constructions,
                  structures, improvements and component parts of the Land are
                  collectively referred to as the "Improvements");

         (d)      TOGETHER with Mortgagor's rights in and to any supplement,
                  modification, amendment, novation, reconduction, restatement,
                  or replacement of any of the leases affecting the Land;

         (e)      TOGETHER with all of the rights, way, privileges, servitudes
                  (including those servitudes arising pursuant to Section 4.18
                  of the Casino Ground Lease), easements, tenements,
                  hereditaments, appurtenances and advantages belonging to or in
                  anywise appertaining to any of the Property or any part
                  thereof (collectively, the "Rights and Privileges"),
                  including, without limitation, the Rights and Privileges, if
                  any, of Mortgagor in and to the land lying in the streets,
                  roads or avenues, open or proposed, in front of or adjoining
                  the Land, and in and to any alleys or passages, rights of
                  ingress or egress, riparian rights, air rights, development
                  rights, and all other Rights and Privileges, whatsoever, in
                  any way belonging, relating or appertaining to any of the
                  Property, or any part thereof, whether now owned or hereafter
                  acquired by Mortgagor; and

         (f)      TOGETHER with the following rights and privileges (the
                  "Incorporeal Rights"):

                  (i)      Any and all of Mortgagor's present and future right,
                           title and interest in and to the proceeds of the
                           sale, transfer, financing, refinancing or conveyance
                           or conversion into cash or liquidated claims, whether
                           voluntary or involuntary, of all or any of the
                           Property, including all title insurance proceeds
                           under any title insurance policy now or hereafter
                           held by Mortgagor, all rights, dividends and other
                           claims of any kind whatsoever (including damage,
                           secured, unsecured, priority and bankruptcy claims)
                           relating to the Property, the rights of Mortgagor to
                           receive such sale proceeds directly from the
                           purchaser or purchasers, and further to enforce any
                           rights that Mortgagor may have to collect such sale
                           proceeds, including without limitation, Mortgagor's
                           right to commence appropriate collection actions
                           against the purchaser or purchasers thereof;

                  (ii)     Any and all of Mortgagor's present and future rights,
                           title and interest in and to the unearned insurance
                           premiums and proceeds of insurance affecting all or
                           any part of the Property, including the right to
                           receive such unearned insurance premiums and
                           insurance proceeds directly from the insurer and,
                           whether applicable, to enforce any rights that
                           Mortgagor may have to collect such amounts
                           ("Insurance Proceeds");

                  (iii)    Mortgagor's claims and rights to the payment of
                           damages arising from any rejection of the Casino
                           Ground Lease by the lessor of the Casino Ground Lease
                           under the Bankruptcy Code;


                                       9
<PAGE>   10


                  (iv)     Any and all escrow payments paid to Mortgagor
                           pursuant to any loan documents executed in connection
                           with the Secured Obligations;

                  (v)      Any and all of Mortgagor's present and future right,
                           title and interest in and to the proceeds of any
                           award or claim for direct or consequential damages
                           relating to any condemnation, expropriation,
                           conveyance, or other taking of all or any part of the
                           Property by any governmental authority, including,
                           without limitation, any awards resulting from a
                           change or grade of streets and awards for severance
                           damages, and further including the right to receive
                           such condemnation proceeds directly from such a
                           governmental authority and, where applicable, to
                           enforce any rights that Mortgagor may have to collect
                           such condemnation proceeds as provided herein
                           ("Condemnation Proceeds");

                  (vi)     Any and all present and future leases, subleases or
                           other occupancy agreements affecting the Property,
                           whether or not of record, for the use or occupancy of
                           all or any part of the Property, together with all
                           amendments, supplements, consolidations,
                           replacements, restatements, extensions, renewals and
                           other modifications of any thereof, and together with
                           all guarantees of any of the obligations of the
                           tenants under any of said leases (the "Assigned
                           Leases"), and all rents, fruits, income, and profits
                           therefrom (collectively, the "Rents"), including
                           without limitation, any and all rents, income,
                           profits, bonuses, revenues, royalties, cash or
                           security deposits, advances, rentals and other
                           payments, and further including Mortgagor's rights to
                           enforce all Assigned Leases and to receive and
                           enforce any rights that Mortgagor might have to
                           collect Rent. Such Assigned Leases include, without
                           limitation, Mortgagor's interest as sublessor in the
                           Second Floor Sublease;

                  (vii)    Any and all of Mortgagor's present and future right,
                           title and interest and other claims or demands that
                           Mortgagor now has or may hereafter acquire against
                           anyone with respect to any damage to all or any part
                           of the Improvements, including without limitation,
                           damages arising or resulting from any defect in or
                           with respect to the design or construction of all or
                           any portion of the Improvements, or arising from any
                           default under any construction, architectural or
                           engineering contract or agreement relating to the
                           Improvements; and

                  (viii)   Any and all present and future options to sell or to
                           lease the Property, or any interests therein.

         (g)      All of Mortgagor's right, title and interest, presently or in
                  the future, in and to the Land and any other real or immovable
                  property described in this Mortgage, whether as owner, lessee,
                  sublessee or otherwise.



                                       10
<PAGE>   11


All of the foregoing property and rights described in these Granting Clauses,
individually, collectively and interchangeably, including, without limitation,
any and all of Mortgagor's present and future property and rights subject to
this Mortgage, are referred to herein as the "Property." Notwithstanding the
foregoing, the Property shall not include any of the Excluded Collateral.

         MORTGAGE PROVISIONS.

         Mortgagor hereby declares, acknowledges, covenants and agrees as
follows:

         1. Permitted Encumbrances. This Mortgage is made and accepted subject
to the exceptions set forth on Exhibit "3" hereto annexed and as otherwise
agreed to by Mortgagee in writing (collectively, the "Permitted Encumbrances").

         2. Acknowledgment of Collateral Agent. Mortgagor declares and
acknowledges that the original Mortgagee is contemplated to be Mortgagee in its
capacity as Collateral Agent under the Intercreditor Agreement. Mortgagee
declares that the taxpayer identification number of Mortgagee is accurately set
forth in the appearance clause to this Mortgage. Mortgagor further declares and
acknowledges that the Secured Obligations may be transferred or negotiated one
or more times and that the Holders shall include any and all holder or holders
of the Secured Obligations from time to time.

         3. Future Advances. This Mortgage has been executed by Mortgagor
pursuant to Louisiana Civil Code Article 3298 and other applicable laws,
including the Uniform Commercial Code, for the purpose of securing the Secured
Obligations that may now be existing and/or that may arise in the future as
provided herein, with the preferences and priorities provided under applicable
Louisiana law.

         4. Maximum Amount. In accordance with the requirements of applicable
law, including Louisiana Civil Code Article 3288 and La. R.S. Section 9:4401,
Mortgagor acknowledges, notwithstanding any other provision of this Mortgage or
any other document to the contrary, the maximum amount of Secured Obligations
secured hereby that may be outstanding at any time and from time to time shall
be U.S. $10,000,000,000.00.

         5. Term. This Mortgage will remain in effect until all of the Secured
Obligations is fully paid in cash and satisfied and there is no agreement or
commitment to advance any additional indebtedness or other obligations under any
of (i) the Minimum Payment Guaranty Documents, including, without limitation,
the HET/JCC Agreement, (ii) the Indenture, (iii) the Revolving Credit Documents,
including, without limitation, the Revolving Credit Agreement, or (iv) the
Shared Security Documents, including this Mortgage. At such time, upon written
request from Mortgagor, Mortgagee shall execute and deliver to Mortgagor a
written cancellation instrument.

         6. Recordation and Filing. Mortgagor authorizes Mortgagee to file
multiple originals, or photocopies, carbon copies, or facsimile copies of this
Mortgage and appropriate financing statements with the appropriate filing
officer in the State of Louisiana pursuant to the provisions of the Uniform
Commercial Code. Mortgagor's employer



                                       11
<PAGE>   12

identification number is accurately set out on the first page of this Mortgage.
Mortgagor will not change its employer identification number or its name,
identity or corporate structure or address so that any financing statement filed
in connection herewith may become seriously misleading unless and until it
notifies Mortgagee in writing and executes all new appropriate financing
statements or other such documents as Mortgagee may reasonably require, with
Mortgagor being required to pay the cost of such documentation and the filing
thereof as provided above.

         7. Representations and Warranties. Mortgagor hereby represents and
warrants to Mortgagee that: (a) pursuant to the Casino Ground Lease, Mortgagor
has a valid and enforceable leasehold interest in and to the Casino Premises and
has or will have valid and merchantable title to the Improvements constructed or
to be constructed thereon so long as such Casino Ground Lease is in full force
and effect, subject to the Permitted Encumbrances; (b) none of the Property has
heretofore been alienated by Mortgagor, and there are no liens or encumbrances
against the Property other than the Permitted Encumbrances; (c) there are no
defenses or offsets to this Mortgage or the Secured Obligations; (d) Mortgagor
has full power and authority to encumber the Property in the manner and form set
forth in this Mortgage; (e) all consents and approvals to this Mortgage under
the Plan have been obtained; (f) the Assigned Leases have not been assigned by
Mortgagor or, to the knowledge of Mortgagor, any tenant, thereunder; (g) to the
knowledge of Mortgagor, as of the date hereof, the Assigned Leases are in full
force and effect and there is no material default under any Assigned Lease and
there is existing no condition which with the giving of notice or passage of
time or both would cause a material default thereunder; and (h) the execution,
delivery and performance of this Mortgage do not require any consent under, and
will not contravene any provision of or cause a default under, any of the Casino
Ground Lease, the Franchise Agreement or the Assigned Leases. Mortgagor
represents and warrants that this Mortgage is and will remain a valid and
enforceable first mortgage on, security interest in and collateral assignment of
the Property pursuant to and in accordance with the terms hereof, subject only
to the Permitted Encumbrances, and Mortgagor will preserve title to the Property
and will forever warrant and defend such title and the validity and priority of
the lien of this Mortgage against the claims of all persons.

         8. Lien. This Mortgage is intended to encumber, effect, and constitute
a lien on the Casino Ground Lease, the Franchise Agreement, the Land and the
Improvements and all of Mortgagor's interest therein and all of the other
Property, regardless of whether Mortgagor's interest therein is that of lessee,
sublessee, owner, or otherwise, and regardless of whether the nature of such
interest changes from time to time from lessee to sublessee to owner or
vice-versa in any combinations, and in any such event the lien of this Mortgage
shall automatically extend to and cover any and all interest of Mortgagor in the
Land and the Improvements without the need of any amendment, supplement, notice,
or action of any kind by Mortgagee. To the extent that this Mortgage is a
mortgage in Mortgagor's interest in the Land and Improvements as lessor, this
Mortgage will cover and include all of Mortgagor's rights to perform the
obligations of the lessor under any Assigned Lease as well as all of Mortgagor's
right to receive the benefits accruing to the lessor under any Assigned Lease.

         9. Assignment of Leases and Rents. This Mortgage includes the
collateral assignment, as security for the Secured Obligations up to the maximum
secured amount that may be outstanding at any time and from time to time of
$10,000,000,000.00, of all Assigned


                                       12
<PAGE>   13


Leases and all Rents, and further includes Mortgagor's rights to enforce all
Assigned Leases and to receive and enforce any and all rights that Mortgagor
might have to collect Rents.

         10. Remedies. Subject to Section 35 of this Mortgage, upon the
occurrence and during the continuance of any Event of Default, Mortgagor shall
forthwith upon demand of Mortgagee surrender to Mortgagee possession of the
Property, and Mortgagee shall be entitled to take actual possession of the
Property or any part thereof personally or by its agents or attorneys, and
Mortgagee in its discretion may, in addition to any other rights at law or in
equity, with or without force and with or without process of law, enter upon and
take and maintain possession of all or any part of the Property together with
all documents, books, records, papers and accounts of Mortgagor relating
thereto, and may as attorney-in-fact or agent of Mortgagor, or in its own name
as Mortgagee and under the powers herein granted:

         (a)      hold, operate, manage or control the Property and conduct the
                  business, if any, thereof, either personally or by its agents,
                  and with full power to use such measures, legal or equitable,
                  as in its discretion it deems proper or necessary to enforce
                  the payment or security of the income, rents, fruits, issues
                  and profits of the Mortgaged Property, including actions for
                  the recovery of Rents, and direct collection of Rents and
                  other payments from tenants in accordance with the provisions
                  of La. R.S. Section 9:4401, Mortgagor hereby granting
                  Mortgagee full power and authority to exercise each and every
                  one of the rights, privileges and powers herein granted at any
                  and all times hereafter, without notice to Mortgagor;

         (b)      cancel or terminate any sublease for any cause or on any
                  ground which would entitle Mortgagor to cancel the same;

         (c)      enforce any term and provision of any sublease, including
                  actions in specific performance;

         (d)      elect to cancel any sublease made subsequent to this Mortgage
                  or subordinated to the lien hereof unless this Mortgage has
                  specifically been made subordinate to such sublease, but in no
                  event including termination of the Second Floor Sublease other
                  than in accordance with the terms thereof;

         (e)      extend or modify any then existing subleases in accordance
                  with the terms thereof and make new subleases, which
                  extensions, modifications or new subleases may provide for
                  terms to expire, or for options to lessees to extend or renew
                  terms to expire, beyond the final maturity date of the Secured
                  Obligations and the issuance of a deed or deeds to a purchaser
                  or purchasers at a foreclosure sale, it being understood and
                  agreed that any such subleases, and the options or other such
                  provisions to be contained therein, shall be binding upon
                  Mortgagor and all persons whose interests in the Property are
                  subject to the lien hereof and shall be binding also upon the
                  purchaser or purchasers at any foreclosure sale; and/or


                                       13
<PAGE>   14


         (f)      subject to the rights of Landlord pursuant to the Casino
                  Ground Lease, withdraw any monies on deposit with any
                  financial institution in the name of or on behalf of
                  Mortgagor.

         11. Performance of Lease Obligations; Indemnification. Mortgagor and
Mortgagee acknowledge that the rights granted under this Mortgage with respect
to the Casino Ground Lease are subject to and may be exercised and enforced only
in conformity with the provisions of the Casino Ground Lease. Landlord's rights
to terminate the Casino Ground Lease as provided in Article XXI thereof for
nonpayment of rent or otherwise, shall not be impaired, altered or affected by
any seizure, foreclosure, attachment, sequestration, levy or execution on the
Casino Ground Lease. Any seizure, foreclosure, attachment, sequestration, levy
or execution on the Casino Ground Lease must be on the entirety of the Casino
Ground Lease, including Mortgagor's duties and obligations thereunder, including
but not limited to the obligation to pay rent and all other amounts due
thereunder. All rights of Mortgagor under the Casino Ground Lease are
indivisible from Mortgagor's obligations to Landlord thereunder. In the event
that Mortgagee or any third party acquires Mortgagor's interest in either the
Casino Ground Lease or the Improvements on the Casino Premises pursuant to this
Mortgage (whether by foreclosure, other enforcement proceeding or otherwise),
Mortgagee or such third party, as the case may be, shall perform or cause to be
performed all of Mortgagor's obligations under the Casino Ground Lease as and to
the extent required thereunder; provided, however, Mortgagee or such third
party, as the case may be, shall remain so obligated only for as long as
Mortgagee or such third party, as the case may be, retains an ownership interest
in the Casino Ground Lease and/or the Improvements on the Casino Premises.
Except as provided in the immediately preceding sentence, Mortgagee shall not be
obligated to perform or discharge, nor does it hereby undertake to perform or
discharge, any obligation, duty or liability under the Casino Ground Lease, the
Second Floor Sublease or any Assigned Lease. Mortgagor shall and does hereby
agree to indemnify and to hold Mortgagee harmless of and from all liability,
loss or damage which Mortgagee might incur under said leases or under or by
reason of the assignment of any subleases, and of and from any and all claims or
demands whatsoever which may be asserted against Mortgagee by reason of any
alleged obligations or undertakings to perform or discharge any of the terms,
covenants or agreements contained in said leases, including without limitation
any claims arising out of Mortgagee's negligence or strict liability, but
excluding any such claims arising out of Mortgagee's gross negligence or willful
misconduct. Should Mortgagee incur any such liability, loss or damage under any
of said leases, or under or by reason of the assignment thereof, or in the
defense of any claims or demands, the amount thereof, including costs, expenses
and reasonable attorneys' fees and costs, including reasonable attorneys' fees
and costs on appeal, shall be secured hereby and Mortgagor shall reimburse
Mortgagee therefor immediately upon demand, together with interest at the rate
provided in Section 18 of this Mortgage to the date of reimbursement.

         12. Payment and Performance of Secured Obligations. Mortgagor shall
satisfy the Secured Obligations when due in accordance with the terms of the
documentation relating to the various items of Secured Obligations, as
applicable, and shall perform and observe each of Mortgagor's covenants,
agreements and obligations hereunder and thereunder with respect to the Secured
Obligations.


                                       14
<PAGE>   15


         13. Maintaining Condition of the Land and Improvements. Mortgagor shall
not directly or indirectly commit or suffer any waste or stripping of the
Property, and Mortgagor shall keep the Improvements protected and in good order,
repair and condition at all times, and in connection therewith, Mortgagor shall
make all repairs, renewals and replacements, structural and non-structural,
exterior and interior, ordinary and extraordinary and foreseen and unforeseen to
the Improvements. From and after the occurrence of an Event of Default,
Mortgagee, as provided under the Intercreditor Agreement, shall have the right,
but shall not be obligated, to take such actions as Mortgagee may deem necessary
to correct or remedy such failure, and any amounts expended or advanced in
connection therewith shall be Advances hereunder and part of the Secured
Obligations. In such event, Mortgagee and any person designated by Mortgagee
shall have, and is hereby granted, the right to enter upon the Property at
reasonable times and from time to time for the purpose of taking any such
action.

         14. Inspections. Mortgagor hereby authorizes Mortgagee, its agents,
representatives or workmen, to enter (a) without prior notice if an Event of
Default has occurred and is continuing or (b) at any reasonable time during
normal business hours after reasonable advance notice to Mortgagor (except that
with respect to any emergency, Mortgagee, its agents, representatives or workmen
may enter during such time of emergency), upon or in the Land and the
Improvements for the purpose of inspecting the same and for the purpose of
exercising any right, power or remedy which Mortgagee is authorized to exercise
under the terms of this Mortgage; provided, however, that no such entry upon or
in the Land or the Improvements shall be construed to be possession of the Land
or the Improvements or to be a cure of any Event of Default or waiver of any
Event of Default.

         15. Payment of Taxes and Insurance

         (a)      If Mortgagor fails to pay or discharge or cause to be paid or
                  discharged any Taxes within thirty (30) days after the same
                  became due (and unless (i) Mortgagor is contesting such Taxes
                  in good faith by appropriate proceedings, (ii) Mortgagor has
                  established or is maintaining adequate reserve for such Taxes
                  in accordance with generally accepted accounting principles as
                  in effect from time to time, or (iii) the failure to pay or
                  discharge such Taxes will not result in a forfeiture of any
                  portion of the Property which would have a material adverse
                  effect on the business, operations, property, assets,
                  liabilities, condition (financial or otherwise) or prospects
                  of Mortgagor and its subsidiaries taken as a whole or be
                  grounds for declaring a termination of the Casino Ground Lease
                  or any Assigned Lease (other than Ordinary Course Leases)),
                  Mortgagee, as provided in Section 4 of the Intercreditor
                  Agreement, shall be authorized (but shall not be obligated) to
                  pay such Taxes, with full subrogation to all rights of the
                  taxing authorities by reason of such payment, and any amounts
                  so paid by Mortgagee shall be Advances hereunder and part of
                  the Secured Obligations.

         (b)      If Mortgagor, following written notice from Mortgagee to
                  Mortgagor and thirty (30) days opportunity to cure, fails to
                  obtain or maintain any insurance required under the provisions
                  of the Shared Security Documents, as applicable, or any other
                  documents executed in connection with any of the Secured



                                       15
<PAGE>   16

                  Obligations, Mortgagee, as provided in Section 4 of the
                  Intercreditor Agreement and this Mortgage, shall be authorized
                  (but shall not be obligated) to pay such amounts, including
                  premiums with respect to insurance which protects Mortgagee's
                  interest only and any amounts so paid by Mortgagee shall be
                  included within the Advances hereunder and part of the Secured
                  Obligations.

         16. Default in Compliance with Law. If Mortgagor shall fail to comply
with any laws, rules and regulations, including, but not limited to, the
Louisiana Gaming Regulations, of all governmental bodies and agencies having
jurisdiction over or authority with respect to the Property (except such
instances of compliance as could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on all or any portion
of the Property) and such noncompliance continues for thirty (30) days (or any
shorter period for compliance to the extent required by applicable law)
following written notice thereof by Mortgagee, Mortgagee, at Mortgagee's option,
may (but shall not obligated to) take reasonable steps to comply with such law,
rule or regulation and pay the cost thereof, and any amounts expended or
advanced in connection therewith shall constitute Advances and form part of the
Secured Obligations.

         17. Franchise Agreement. Mortgagor represents and warrants that no
Franchise Improvements (as defined in the Franchise Agreement) have been
constructed on the Franchise Area as permitted by the Franchise Agreement.
Mortgagor agrees, to the extent Mortgagor constructs any Franchise Improvements
on the Franchise Area and, as a result thereof, incurs any obligations with
respect to and under the Franchise Agreement, to comply with all of its
obligations under, and all of the terms, covenants and conditions of, the
Franchise Agreement; provided that no Event of Default shall be deemed to have
occurred under this Mortgage as a result of any noncompliance with this Section
17 unless such noncompliance continues for thirty (30) days after written notice
thereof from Mortgagee to Mortgagor. From and after the occurrence of such Event
of Default, Mortgagee shall have the right (but shall be under no obligation) to
take such actions as Mortgagee may deem necessary to correct or remedy such
failure, and any amounts expended or advanced in connection therewith shall be
included as Advances. In such event, Mortgagee and any person designated by
Mortgagee shall have, and is hereby granted, the right to enter upon the
Franchise Area at reasonable times and from time to time for the purpose of
taking any such action.

         18. Reimbursement for Advances. Within thirty (30) days following
written demand therefor by Mortgagee to Mortgagor, Mortgagor shall reimburse
Mortgagee or any Secured Creditor (to the extent permitted by the applicable
Shared Security Documents and the Intercreditor Agreement) for any amount(s)
paid or advanced by Mortgagee or such Secured Creditor (i) for Taxes pursuant to
Section 15(a) of this Mortgage, (ii) for insurance pursuant to Section 15(b) of
this Mortgage, (iii) for the cost of keeping the Property in good order, repair
and condition pursuant to Section 13 of this Mortgage, (iv) to comply with
applicable laws, rules or regulations pursuant to Section 16 of this Mortgage,
or (v) for any other purposes set forth herein or permitted hereby or by the
Shared Security Documents and the Intercreditor Agreement, or otherwise
reasonably necessary in connection therewith (including, without limitation,
Advances for the preservation of the lien of this Mortgage). All such amounts
shall constitute Advances hereunder, and such amounts, together with the
interest accrued thereon as hereinafter provided,



                                       16
<PAGE>   17


shall form part of the Secured Obligations and shall be fully secured hereby.
Mortgagor shall pay interest on any Advances at a rate applicable to overdue
loan principal pursuant to Section 2.7 of the Revolving Credit Agreement from
the date(s) of such Advances until Mortgagor reimburses Mortgagee therefor.

         19. Mortgagee's Option to Act Hereunder. None of the provisions of this
Mortgage shall be construed as making it obligatory upon Mortgagee to pay Taxes
or to comply with laws or regulations affecting the Property or to do any other
act with regard to the Property or as causing Mortgagee to become liable for
loss, damage or injury which may result from the nonpayment of Taxes or to do
any other act.

         20. Notice of Proceeding Affecting the Property

         (a)      Mortgagor shall promptly notify Mortgagee of any knowledge
                  that Mortgagor has or obtains of the commencement of any legal
                  proceedings (including for condemnation or taking) which could
                  have a material adverse effect on the Property or any part
                  thereof or the operation of the casino project thereon, and
                  Mortgagor shall immediately, upon service thereof on or by
                  Mortgagor, deliver to Mortgagee a true copy of each petition,
                  summons, complaint, notice, and all other pleadings or papers,
                  served in connection with any such legal proceeding, and
                  Mortgagee may take such action as may be necessary to preserve
                  Mortgagee's rights and interests affected thereby. Mortgagor
                  shall, at its expense, diligently prosecute and/or defend (as
                  the case may be) all such proceedings and shall, upon the
                  request of Mortgagee, deliver to Mortgagee copies of all
                  papers served in connection therewith, provided that no
                  settlement or compromise of any such proceeding shall be made
                  by Mortgagor without Mortgagee's prior written consent if such
                  settlement or compromise could reasonably be expected to have
                  a material adverse effect on the Property taken as a whole.

         (b)      Notwithstanding any provisions of this Mortgage relating to
                  defaults hereunder, it shall not be a default under this
                  Mortgage if (i) any Condemnation Proceeds or Insurance
                  Proceeds are unavailable to Mortgagee because (A) the Landlord
                  has priority in such proceeds under the Casino Ground Lease,
                  (B) such proceeds have been applied to the restoration or
                  repair of the Casino Premises as required by the applicable
                  terms of Articles XII and XV, as the case may be, of the
                  Casino Ground Lease, or (C) such proceeds have been applied in
                  accordance with Section 11 of the Intercreditor Agreement, or
                  (ii) said proceeds are used for such other use as Mortgagee
                  may approve in writing.

         21. Additional Documents to Maintain Lien. Mortgagor shall keep valid
and, except for the Permitted Encumbrances, unimpaired the lien and privilege
hereby created or to be created and to that end shall execute at any future time
all further instruments as may be necessary or desirable or that may be
reasonably required by Mortgagee to make and keep valid the lien and privilege
of the Mortgage on the Property and each and every part thereof, and to maintain
the priority of the lien and privilege of the Mortgage on the Property.


                                       17
<PAGE>   18


         22. Authentic Evidence. In the event any proceedings are taken
hereunder by way of executory or other process, any and all declarations of
facts made by authentic act before a notary public and in the presence of two
witnesses by a person or persons declaring that such facts lie within his, her
or their knowledge shall constitute authentic evidence of such facts for the
purposes of such executory or other process and also for purposes of La. R.S.
9:3504(D)(6) and La. R.S. 10:9-508, where applicable.

         23. Acceleration; Enforcement; Confession of Judgment

         (a)      Upon an Event of Default, Mortgagee shall have the right to
                  accelerate the maturity and demand immediate payment of all
                  Secured Obligations. It shall be lawful for Mortgagee (and
                  Mortgagor does hereby authorize Mortgagee without notice or
                  putting Mortgagor in default, a putting in default being
                  hereby expressly waived), to cause all or singular the
                  Property to be seized and sold under executory or other legal
                  process, issued by any court of competent jurisdiction,
                  without appraisement, and to the highest bidder for cash or on
                  such terms as Mortgagee may direct; and Mortgagor consents
                  that the Property may be sold, either as a whole or in such
                  lots or parcels as Mortgagee may direct in any such
                  proceedings. Mortgagor hereby expressly waives: (a) the
                  benefit of appraisement, as provided in Articles 2332, 2336,
                  2723 and 2724, Louisiana Code of Civil Procedure, and all
                  other laws conferring the same; (b) the demand and three (3)
                  days delay accorded by Articles 2639 and 2721, Louisiana Code
                  of Civil Procedure; (c) the three (3) days delay provided by
                  Articles 2331 and 2722, Louisiana Code of Civil Procedure; and
                  (d) the benefit of the other provisions of Articles 2331, 2722
                  and 2723, Louisiana Code of Civil Procedure, and any other
                  Articles not specifically mentioned above which would prevent
                  the immediate seizure and sale of any or all of the Property,
                  and Mortgagor expressly agrees to the immediate seizure of the
                  Property in the event of suit hereon.

         (b)      Mortgagor does hereby name, constitute, and appoint Mortgagee
                  and Mortgagee's agents as Mortgagor's true and lawful agent
                  and attorney-in-fact with full power of substitution and with
                  power for Mortgagee in its name and capacity or in the name
                  and capacity of Mortgagor to carry out and enforce following
                  an Event of Default any or all of the Incorporeal Rights
                  collaterally assigned and pledged or otherwise encumbered
                  under this Mortgage and at Mortgagee's sole discretion to file
                  any claim or to take any other action or proceedings and to
                  make any settlement of claims, either in its own name or in
                  the name of Mortgagor or otherwise, that Mortgagee may deem
                  necessary or desirable in order to collect and enforce the
                  payment and performance of the obligations owed to Mortgagor
                  under the Incorporeal Rights. Upon receipt of a written notice
                  from Mortgagee that an Event of Default exists, the parties to
                  the Incorporeal Rights are hereby expressly and irrevocably
                  authorized and directed to pay any and all amounts and perform
                  any duties, liabilities, or obligations due to Mortgagor
                  pursuant to any of the Incorporeal Rights to and for Mortgagee
                  or such nominee as Mortgagee may designate in such notice. The
                  power of attorney granted to Mortgagee and its agents is
                  coupled with an interest and may not be


                                       18
<PAGE>   19


                  revoked by Mortgagor as long as this Mortgage remains in
                  effect. Mortgagor specifically declares that nothing in this
                  Mortgage shall operate (i) to place any responsibility for the
                  control, care, management, or repair of the Property upon
                  Mortgagee or for the carrying out of any of the terms or
                  conditions of any present or future lease that may affect the
                  Property, or (ii) to make Mortgagee responsible or liable for
                  (A) any waste committed on the Property by any lessee or by
                  any other party, (B) the dangerous or defective condition of
                  the Property, including but not limited to liability as
                  described in Louisiana Civil Code Articles 2315 through 2324,
                  or (C) any negligence in the management, upkeep, repair, or
                  control of the Property that may result in loss, injury, or
                  death to any lessee or other party. If the Property is
                  transferred by virtue of any judicial foreclosure proceeding,
                  the Property may, in Mortgagee's sole discretion, be
                  transferred free and clear of, and unencumbered by, any and
                  all subordinate leases, assignments, and contracts. Upon
                  request by Mortgagee following an Event of Default, Mortgagor
                  will immediately notify individual obligors and debtors under
                  the Incorporeal Rights, advising such obligors and debtors of
                  the fact that their respective agreements and/or obligations
                  have been collaterally assigned and pledged to Mortgagee. In
                  the event that Mortgagor should fail to provide such notices
                  for any reason upon request by Mortgagee, Mortgagor agrees
                  that Mortgagee may forward appropriate notices to such
                  obligors and debtors, either in Mortgagee's name or the name
                  of Mortgagor.

         (c)      Should one or more Events of Defaults occur or exist,
                  Mortgagee shall have the additional right, at its sole option,
                  to separately sell the aforesaid Incorporeal Rights, or any
                  part or parts thereof, at private or public sale, at such
                  price or prices as Mortgagee may deem best, either for cash or
                  for any other compensation, or on credit, or for future
                  delivery, without the assumption of any credit risk. The sale
                  of the aforesaid Incorporeal Rights may be without
                  appraisement, the benefit of which is also expressly waived by
                  Mortgagor. Mortgagee may exercise any other remedies with
                  regard to Mortgagor's rights as may be authorized under the
                  Uniform Commercial Code or under the applicable laws of any
                  other applicable state. The sale, lease or other disposition
                  of the Incorporeal Rights after default may be for cash,
                  credit, or any combination thereof. Mortgagee may purchase all
                  or any part of such Incorporeal Rights at public sale (or if
                  permitted by law, at private sale) and in lieu of actual
                  payment of any such purchase price, may set-off the amount of
                  such price against the then outstanding balance of the Secured
                  Obligations.

         (d)      To the full extent permitted by applicable law, Mortgagor
                  hereby waives and releases Mortgagee and each Secured Creditor
                  of and from any and all liability and penalties for failure of
                  Mortgagee to comply with any statutory or other requirement
                  imposed upon Mortgagee relating to notices of sale, holding of
                  sale, or reporting of any sale. Mortgagee shall have the right
                  to postpone or adjourn any sale or other disposition of the
                  Incorporeal Rights at any time without giving of notice of any
                  such postponed or adjourned dates. In the event Mortgagee
                  seeks to take possession of any or all of the Incorporeal
                  Rights by


                                       19
<PAGE>   20


                  court process, or otherwise, Mortgagor hereby irrevocably
                  waives any bonds and surety or security relating thereto
                  required by any statute, court rule or otherwise as an
                  incident to such possession. Mortgagor further waives any
                  demand for possession prior to the commencement of any suit or
                  action and waives the right to trial by jury with respect
                  thereto, and any other action in which Mortgagee is a party.

         (e)      Pursuant to La. R.S. 27:275 et seq., Mortgagee is hereby
                  authorized and empowered to file a petition to foreclose this
                  Mortgage in which the LGCB is named a nominal defendant and in
                  which Mortgagee requests the appointment of a receiver as
                  contemplated by and in accordance with the provisions of the
                  cited statutes and applicable Louisiana Gaming Regulations.
                  The filing of a verified petition by Mortgagee with respect to
                  the Secured Obligations together with a certified copy of this
                  Mortgage shall constitute prima facie proof of Mortgagor's
                  default on the Secured Obligations and Mortgagee's right to
                  enforce the lien of this Mortgage in executory or ordinary
                  proceedings, at Mortgagee's option, and to the appointment of
                  a receiver pursuant to applicable law and regulations.

         (f)      Nothing herein shall prevent Mortgagee from pursuing any other
                  remedies available to Mortgagee at law or in equity, including
                  but not limited to, specific performance, appointment of a
                  receiver and right of entry and possession.

         (g)      For purposes of foreclosure under Louisiana executory process
                  procedures, Mortgagor acknowledges the Secured Obligations and
                  confesses judgment in favor of Mortgagee in the full amount of
                  the Secured Obligations, in principal, interest, costs,
                  expenses, and reasonable attorneys' fees.

         24. Appointment of Keeper. If the Property or any part thereof is
seized as an incident to an action for the recognition or the enforcement of
this Mortgage by executory process, ordinary process, sequestration, writ of
fiere facias, or otherwise, and to the extent that the receiver of the Property
is not appointed pursuant to La. R.S. 27:275 et seq., Mortgagor and Mortgagee
hereby agree that the court issuing any such order shall, if petitioned for by
Mortgagee, direct the sheriff to appoint as a keeper of the Property Mortgagee
or any agent designated by Mortgagee, or any person or entity named by Mortgagee
at the time such seizure is requested, or any time thereafter. This designation
is made pursuant to La. R.S. 9:5136 through 5140.2, inclusive, as the same may
be amended, and Mortgagee shall be entitled to all the rights and benefits
afforded thereunder including reasonable compensation, which compensation shall
be secured by this Mortgage.

         25. Partial Invalidity. If for any reason any of the provisions of this
Mortgage shall be judicially declared invalid or unenforceable, such declaration
shall not affect the validity or enforceability of the other provisions hereof.

         26. Covenants to Abide by Leases. Subject to the terms of this
Mortgage, with respect to each of (a) the Casino Ground Lease, and (b) any and
all other leases



                                       20
<PAGE>   21


now or hereafter mortgaged or required to be mortgaged hereunder or pursuant to
a supplement to or amendment of this Mortgage (other than Ordinary Course
Leases), as of the date such lease becomes subject to the lien of this Mortgage,
Mortgagor does specially covenant as follows:

         (a)      Mortgagor shall pay, by no later than the end of any
                  applicable cure periods granted to Mortgagor under such lease
                  with respect to such payment, all rents, additional rents and
                  other sums required to be paid by Mortgagor, as tenant under
                  and pursuant to the provisions of such lease;

         (b)      Mortgagor shall at all times promptly and faithfully keep and
                  perform, or cause to be kept and performed, by no later than
                  the end of any applicable cure periods granted to Mortgagor
                  under such lease with respect to such performance, all the
                  covenants and conditions contained in such lease by the tenant
                  under such lease to be kept and performed and in all respects
                  conform to and comply with the terms and conditions of such
                  lease, by no later than the end of any applicable cure periods
                  granted to Mortgagor under such lease with respect to such
                  performance, to the end that all things shall be done which
                  are necessary to keep unimpaired the rights of Mortgagor, as
                  tenant, under such lease, and Mortgagor further covenants that
                  it shall not do or permit anything which will impair or tend
                  to impair the security of this Mortgage or will be grounds for
                  declaring a termination of such lease;

         (c)      Mortgagor shall not, without the prior written consent of
                  Mortgagee, modify, extend or in any way alter the terms of
                  such lease or cancel or surrender such lease, or waive,
                  execute, condone or in any way release or discharge the
                  landlord thereunder of or from the obligations covenants,
                  conditions and agreements by said landlord to be done and
                  performed, which, in any case, (i) would have a material
                  adverse effect on the business, operations, property, assets,
                  liabilities, condition (financial or otherwise) or prospects
                  of Mortgagor and its subsidiaries taken as a whole, or (ii)
                  with respect to the Casino Ground Lease, would have a material
                  adverse effect on Mortgagee's rights thereunder, including,
                  without limitation, the provisions of Article XXIII thereof;

         (d)      Mortgagor shall promptly give Mortgagee notice of any default
                  under such lease or of the receipt by Mortgagor of any notice
                  of default from the landlord thereunder, shall furnish to
                  Mortgagee any and all information which it may request
                  concerning the performance by Mortgagee of the covenants of
                  such lease, and shall permit Mortgagee or its representative
                  at all reasonable times to make investigation or examination
                  concerning the performance by Mortgagor of the covenants of
                  such lease. To the extent it is within Mortgagor's control to
                  do so, Mortgagor shall deliver to Mortgagee a copy of such
                  lease certified by Mortgagor as a true and complete copy
                  thereof, an estoppel certificate from the landlord under such
                  lease within twenty (20) days after request by Mortgagee and
                  in such form and content as shall be satisfactory to
                  Mortgagee, as well as any and all documentary evidence
                  received by it showing compliance by Mortgagor with the
                  provisions of such lease. Mortgagor shall also promptly
                  deliver to Mortgagee



                                       21
<PAGE>   22


                  an exact copy of any material notice, communication, plan,
                  specification or other instrument or document received or
                  given by it in any way relating to or affecting such lease;

         (e)      If Mortgagor shall default in the performance or observation
                  of any term, covenant or condition of such lease on the part
                  of Mortgagor as tenant thereunder, to be performed or
                  observed, then, without limiting the generality of the other
                  provisions of this Mortgage, and without waiving or releasing
                  Mortgagor from any of its obligations hereunder, Mortgagee
                  shall, to the extent permitted by such lease, have the right,
                  but shall be under no obligation, after the expiration of all
                  applicable cure periods granted to Mortgagor under such lease,
                  to pay such sum or to perform such term, covenant, or
                  condition as may be in default, to pay any sums and to perform
                  any act or take any action as may be appropriate to cause all
                  of the terms, covenants and conditions of such lease on the
                  part of Mortgagor, as tenant thereunder, to be performed or
                  observed to be promptly performed or observed on behalf of
                  Mortgagor, to the end that the rights of Mortgagor in, to and
                  under such lease shall be kept unimpaired and free from
                  default; provided that, to the extent Mortgagee is not
                  entitled under such lease to cure rights on a consecutive
                  basis to those granted to Mortgagor, Mortgagee may exercise
                  its rights under this paragraph at any time within the five
                  (5) day period prior to the expiration of such cure period
                  upon written notice from Mortgagee to Mortgagor. If Mortgagee
                  shall make any payment or perform any act or take action in
                  accordance with the preceding sentence, Mortgagee will notify
                  Mortgagor of the making of any such payment, the performance
                  of any such act, or the taking of any such action. In any such
                  event, Mortgagee and any person designated by Mortgagee shall
                  have and are hereby granted, the right to enter upon the
                  leased premises at any time and from time to time for the
                  purpose of taking any such action. If the landlord under such
                  lease shall deliver to Mortgagee a copy of any notice of
                  default sent by said landlord to Mortgagor as tenant under
                  such lease, such notice shall constitute full protection to
                  Mortgagee for any action taken or omitted to be taken by
                  Mortgagee, in good faith, in reliance thereon;

         (f)      Mortgagor shall exercise each individual option, if any, to
                  extend or renew the term of such lease, and Mortgagor hereby
                  expressly authorizes and appoints Mortgagee as its
                  attorney-in-fact to exercise, either jointly or individually,
                  any such option in the name and upon behalf of Mortgagor,
                  which power of attorney shall be irrevocable and shall be
                  deemed to be coupled with an interest;

         (g)      In the event of any failure by Mortgagor to perform any
                  covenant to be observed and performed under such lease, the
                  performance by Mortgagee on behalf of Mortgagor of such lease
                  covenant shall not remove or waive, as between Mortgagor and
                  Mortgagee, the corresponding breach of any covenant by
                  Mortgagor hereunder, and any amount so advanced by Mortgagee
                  or any costs incurred in connection therewith, shall be paid
                  by Mortgagor to Mortgagee with interest thereon at the rate
                  set forth in Section 18 of this Mortgage within thirty (30)
                  days after written demand by Mortgagee to Mortgagor therefor
                  and shall also be Advances forming part of the Secured
                  Obligations and shall be fully secured hereby;


                                       22
<PAGE>   23

         (h)      Mortgagor covenants and agrees that, if Mortgagor is permitted
                  by Mortgagee to acquire the lessor's interest under such
                  lease, or any other estate, title or interest in the premises
                  covered by such lease, all of Mortgagor's interest in such
                  premises shall be considered as mortgaged, hypothecated,
                  collaterally assigned and pledged to Mortgagee and the lien
                  hereof shall encumber all of such interest with the same force
                  and effect as though specifically herein mortgaged,
                  hypothecated, collaterally assigned and pledged, without the
                  need for any further mortgage, assignment, amendment,
                  supplement, or other writing. Notwithstanding the foregoing,
                  if Mortgagee so requests following Mortgagor's acquisition of
                  the lessor's interest or any other estate, title, or interest
                  in the leased premises, Mortgagor shall promptly execute and
                  deliver all further instruments, writings, and other
                  assurances as Mortgagee may request to confirm the foregoing;

         (i)      In the event such lease is rejected or disaffirmed by the
                  landlord thereunder (or by any receiver, trustee, keeper,
                  custodian or other party who succeeds to the rights of such
                  landlord) pursuant to any bankruptcy, insolvency,
                  reorganization, moratorium or similar law, Mortgagor covenants
                  that it will not elect to treat such lease as terminated under
                  11 U.S.C. Section 365(h) or any similar or successor law or
                  right and hereby assigns to Mortgagee the sole and exclusive
                  right to make or to refrain from making any such election, and
                  Mortgagor agrees that any such election, if made by Mortgagor,
                  shall be void and of no force or effect;

         (j)      If the landlord under such lease (or any receiver, keeper,
                  trustee, custodian or other party who succeeds to the rights
                  of landlord) rejects or disaffirms such lease pursuant to any
                  bankruptcy, insolvency, reorganization, moratorium or similar
                  law and Mortgagee elects to have Mortgagor remain in
                  possession under any legal right Mortgagor may have to occupy
                  the premises leased pursuant to such lease, (i) Mortgagor
                  shall remain in such possession and shall perform all acts
                  necessary for Mortgagor to retain its legal rights and to
                  remain in such possession for the unexpired term of such lease
                  (including all renewals thereof), whether such acts are
                  required under the then existing terms and provisions of such
                  lease or otherwise, and (ii) all of the terms and provisions
                  of this Mortgage and the lien created hereby shall remain in
                  full force and effect and shall be extended automatically to
                  such possession, occupancy and interest of Mortgagor; and

         (k)      Mortgagor immediately upon obtaining knowledge of a breach by
                  the landlord under such lease (or by any receiver, keeper,
                  trustee, custodian or other party who succeeds to the rights
                  of such landlord) or any inability of such landlord (or any
                  such receiver, trustee, custodian or other party) to perform
                  the terms and provisions of such lease (including by reason of
                  a rejection or disaffirmance of such lease pursuant to any
                  bankruptcy, insolvency, reorganization,


                                       23
<PAGE>   24



                  moratorium or similar law), will notify Mortgagee of any such
                  breach or inability. Mortgagor shall, at its expense,
                  diligently commence and prosecute any proceedings as may be
                  necessary or advisable against such landlord in connection
                  with such breach and shall, upon the request of Mortgagee,
                  deliver to Mortgagee copies of all papers served in connection
                  therewith; provided that no settlement or compromise of any
                  such proceeding shall be made by Mortgagor without Mortgagee's
                  prior written consent if such settlement or compromise could
                  have a material adverse effect on the Property.

         27. Covenant to Abide by Second Floor Sublease. Mortgagor shall duly
and punctually perform and observe in all material respects all of its
obligations as sublessor under the Second Floor Sublease (subject to all
applicable cure periods set forth therein).

         28. Power of Decision. Wherever pursuant to this Mortgage Mortgagee
exercises any right given to it to approve, disapprove or consent, or any
arrangement or term is to be satisfactory to Mortgagee, the decision of
Mortgagee to approve or disapprove or to decide that arrangements or terms are
satisfactory or not satisfactory shall be in the sole discretion of Mortgagee
and shall be final and conclusive.

         29. Binding Effect. The covenants herein contained shall bind, and the
benefits and advantages shall inure to, the respective successors and/or assigns
of Mortgagor and Mortgagee.

         30. Amendments, Consents and Waivers in Writing and Related Matters

         (a)      No amendment or waiver of any provision of this Mortgage, nor
                  any consent by Mortgagee hereunder (including but not limited
                  to any consent to any departure by Mortgagee therefrom), shall
                  in any event be effective unless the same shall be in writing
                  and signed by Mortgagee and, with respect to an amendment, by
                  all of the parties thereto, and then such waiver or consent
                  shall be effective only in the specific instance and for the
                  specific purpose for which given.

         (b)      The provisions of this Mortgage shall be construed as a whole
                  according to their common meaning, not strictly for or against
                  any party and consistent with the provisions herein contained,
                  in order to achieve the objectives and purposes of this
                  document. Each party and its counsel have reviewed and revised
                  this Mortgage. Each party agrees that 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 Mortgage.

         (c)      Any failure of Mortgagee to insist upon the strict performance
                  by Mortgagor of any of the terms and provisions hereof shall
                  not be deemed to be a waiver of any of the terms and
                  provisions hereof, and Mortgagee, notwithstanding any such
                  failure, shall have the right thereafter to insist upon the
                  strict performance by Mortgagor of any and all of the terms
                  and provisions of this Mortgage to be


                                       24
<PAGE>   25


                  performed by Mortgagor. Neither Mortgagor nor any person now
                  or hereafter obligated for the payment of the whole or any
                  part of the sums now or hereafter secured by this Mortgage
                  shall be relieved of such obligation by reason of the failure
                  of Mortgagee to comply with any request of Mortgagor, or of
                  any other person so obligated, to take action to foreclose or
                  otherwise enforce any of the provisions of this Mortgage or
                  any obligations secured by this Mortgage, or by reason of the
                  release, regardless of consideration, of the whole or any part
                  of the security held for the indebtedness secured by this
                  Mortgage, or by reason of any agreement or stipulation between
                  any subsequent owner or owners of the Property and Mortgagee
                  extending the time of payment or modifying the terms of the
                  indebtedness secured hereby or this Mortgage without first
                  having obtained the consent of Mortgagor or such other person,
                  and in the latter event, Mortgagor and all such other persons
                  shall continue to be liable to make such payment according to
                  the terms of any such agreement of extension or modification
                  unless expressly released and discharged in writing by
                  Mortgagee.

         (d)      Regardless of consideration and without the necessity for any
                  notice to or consent by the holder of any subordinate lien or
                  encumbrance on the Property, Mortgagee may release the
                  obligation of anyone at any time liable for any of the Secured
                  Obligations secured by this Mortgage or any part of the
                  security held for such Secured Obligations and grant or agree
                  to such extensions, indulgences and modifications in relation
                  to the Secured Obligations as Mortgagee may determine, without
                  the consent of the holder of any such subordinate lien or
                  encumbrance and without any obligation to give notice of any
                  kind thereto and without, as to the security or the remainder
                  thereof, in any way impairing or affecting the lien hereof or
                  the priority thereof over any subordinate lien or encumbrance.
                  Any subsequent encumbrances of the Property are hereby, by
                  virtue of this Section 30(d), specifically given notice of the
                  foregoing reservation of rights.

         (e)      Mortgagee may resort for the payment of the Secured
                  Obligations to any other security therefor held by Mortgagee
                  in such order and manner as Mortgagee may elect.

         31. Notices. Except as otherwise expressly provided herein, all notices
or other communications required or permitted to be given or delivered pursuant
to this Mortgage shall be in writing and shall be given by hand delivery,
certified United States mail, prepaid, with return receipt requested, overnight
courier service or facsimile transmission with receipt confirmed. Any party
hereto may from time to time, by notice in writing served upon the other parties
hereto pursuant to this Section 31 designate a different address or person to
whose attention notices shall be given. Notices hereunder shall be deemed given
upon receipt. The addresses of the parties hereto for notices are:


                                       25
<PAGE>   26


                  Mortgagor:        Jazz Casino Company, L.L.C.
                                    365 Canal Street, Suite 900
                                    New Orleans, LA  70130
                                    Attention:  President

                  Mortgagee:        The Bank of New York, as Collateral Agent
                                    10161 Centurion Parkway
                                    Jacksonville, Florida  32256
                                    Attention:  Trust Department

         32. Gaming Restrictions. This Mortgage and the exercise of the remedies
hereunder are and shall remain subject to Louisiana Gaming Regulations.

         33. Remedies Cumulative. Each right, power, and remedy of Mortgagee
provided for herein and now or hereafter existing at law, in equity, by statute,
pursuant to any other loan document or otherwise shall be cumulative, and the
exercise by Mortgagee of any one or more of said rights, powers, or remedies
shall not preclude the simultaneous or later exercise by Mortgagee of any or all
of such other rights, powers, or remedies. Nothing in this Mortgage shall be
deemed to limit or modify any security interests or rights or remedies under any
other documents executed in connection with any of the Secured Obligations,
including the Security Agreement of even date herewith by Mortgagor in favor of
Mortgagee for the benefit of the Holders.

         34. Reinscription of Mortgage

         (a)      Mortgagor shall reinscribe this Mortgage prior to the date on
                  which the lien of this Mortgage may prescribe by any
                  applicable prescriptive period.

         (b)      During the term of this Mortgage, Mortgagor shall cause this
                  Mortgage to be reinscribed in the manner provided by law in
                  the records of the Recorder of Mortgages for the Parish of
                  Orleans at least forty-five (45) days prior to the tenth
                  (10th) anniversary of the date of this Mortgage and within the
                  reinscription or continuation period provided in La. R.S.
                  Section 9:4401 and Louisiana Civil Code Article 3328, as the
                  same may be amended from time to time.

         (c)      The parties to this Mortgage hereby waive the production of
                  mortgage, conveyance, tax, assignment of accounts receivable
                  and other certificates and relieve and release the Notary
                  before whom this Mortgage was passed from all responsibilities
                  and liabilities in connection therewith.

         35. Mortgage Subject to Intercreditor Agreement. Notwithstanding any
other provision of this Mortgage or any document or instrument executed by
Mortgagor, this Mortgage and all liens and security interests and rights granted
herein, and the priority thereof, are expressly subject to the provisions of the
Intercreditor Agreement which are incorporated herein by reference and made
applicable hereto. In addition, Mortgagee is the Collateral Agent, as defined in
and pursuant to the terms of the Intercreditor Agreement, and, notwithstanding
anything herein to the contrary, the rights, powers, remedies and obligations of
Mortgagee hereunder shall be subject to the provisions of the Intercreditor
Agreement. Any exercise or waiver by Mortgagee of any of its rights, powers or
remedies hereunder or any other act by



                                       26
<PAGE>   27


Mortgagee hereunder shall be conclusive evidence of Mortgagee's authority
pursuant to the Intercreditor Agreement against all persons other than the
Secured Creditors. Nothing in this Mortgage shall limit or waive any rights
granted to Mortgagee as a "Leasehold Mortgagee" or the "First Leasehold
Mortgagee," as the case may be, under and as defined in the Casino Ground Lease.
Mortgagee hereby acknowledges that Mortgagor has assigned Landlord certain
rights in the Capital Replacement Fund (as defined in the Casino Ground Lease)
under Sections 5.3(e), 7.1(c) and 19.8(d) of the Casino Ground Lease, subject to
the terms of the Casino Ground Lease, and that Landlord has certain rights in
and to a portion of the rent due under the Second Floor Sublease pursuant to
Section 3.1 thereof, subject to the terms of the Second Floor Sublease.

         36. GOVERNING LAW. THIS MORTGAGE SHALL BE DEEMED TO BE A NEW YORK
CONTRACT AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK (EXCLUDING MATTERS OF CONFLICT OF LAWS), EXCEPT THAT
MATTERS OF TITLE TO THE PROPERTY AND THE CREATION, PERFECTION, PRIORITY AND (TO
THE EXTENT REQUIRED) FORECLOSURE OF ANY MORTGAGES OR OTHER LIENS ON, AND
SECURITY INTERESTS IN, ANY PROPERTY AND MATTERS RELATING TO THE LOUISIANA GAMING
REGULATIONS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF LOUISIANA.

         37. Indemnification. Mortgagor shall indemnify and defend the Mortgagee
and its directors, officers, employees, agents and representatives (each an
"Indemnified Party") from and against all liabilities (including any
environmental liabilities), obligations, claims, losses, damages, penalties,
suits, actions, proceedings, judgments, costs and expenses (including reasonable
attorneys' fees and expenses) (collectively, "Liabilities"), imposed upon,
incurred by or asserted against any Indemnified Party in connection with the
Property or this Mortgage, except to the extent caused by the gross negligence
or willful misconduct of such Indemnified Party. In the event any suit, action
or proceeding (including any investigation or proceeding initiated or conducted
by any governmental authority or agency) is brought against any Indemnified
Party in connection with any Liability, such Indemnified Party shall promptly
notify Mortgagor and Mortgagor shall promptly retain counsel in connection
therewith, which counsel shall be reasonably acceptable to such Indemnified
Party, and shall pay the fees and expenses of such counsel related to such suit,
action or proceeding. The obligations of Mortgagor under this Section 37 shall
survive the release or termination of this Mortgage or the foreclosure or
transfer in lieu of foreclosure of the Property to the extent any Liability
relates to any action or event occurring prior to such release, termination,
foreclosure or transfer.



                            [Signature page follows]


                                       27
<PAGE>   28



         THUS DONE AND PASSED, on the day, month and year first written above,
in the State and County/Parish aforesaid, by the undersigned Mortgagor in the
presence of the undersigned first Notary and the undersigned competent
witnesses, who hereunto sign their names with Mortgagor after reading of the
whole.

WITNESSES:                            JAZZ CASINO COMPANY, L.L.C., a Louisiana
                                      limited liability company

                                      By:
------------------------------           ------------------------------------

                                      Name:
                                           ----------------------------------

                                      Title:
------------------------------              ---------------------------------


                      ------------------------------------
                                     Notary

                          (Commission issued for life.)





                                       28
<PAGE>   29



         THUS DONE AND PASSED, on the day, month and year first written above,
in the State and County/Parish aforesaid, by the undersigned Mortgagee in the
presence of the undersigned second Notary and the undersigned competent
witnesses, who hereunto sign their names with Mortgagee after reading of the
whole.

WITNESSES:                            THE BANK OF NEW YORK, not in its
                                      individual capacity, but solely as
                                      Collateral Agent


                                      By:
------------------------------           ------------------------------------

                                      Name:
                                           ----------------------------------

                                      Title:
------------------------------              ---------------------------------



                      ------------------------------------
                                     Notary

                          (Commission issued for life.)




                                       29
<PAGE>   30




                                   Exhibit "1"

                                 Casino Premises


PARCEL 1--CASINO PREMISES

A CERTAIN PORTION OF GROUND, situated in the First Municipal District of the
City of New Orleans bounded by Canal, South Peters, and Poydras Streets, and
Convention Center Boulevard shown as Square RS on a survey plat by the office of
Gandolfo, Kuhn & Associates, dated October 20, 1998, Drawing No. T-182-3, being
more particularly described as follows: Begin at Point A, being the southeast
intersection of South Peters and Canal Streets measure thence along the east or
river side line of South Peters Street, South 1 degree 39 minutes 1 second East,
a distance of 727.65 feet to the northerly line of Poydras Street and Point B;
thence along said line of Poydras Street, South 76 degrees 14 minutes 24 seconds
East, a distance of 540.52 feet to the westerly or land side line of Convention
Center Boulevard and Point C, also being the easterly line of former Delta
Street; thence North 2 degrees 24 minutes 29 seconds West, a distance of 455.48
feet to the southerly line of Canal Street and Point K; thence along said line
of Canal Street, North 52 degrees 44 minutes 2 seconds West, a distance of
661.98 feet to Point A and the Point of Beginning.

Together with the existing tunnel portions in the following described subsurface
areas:

CANAL STREET PORTION:

THAT PORTION OF CANAL STREET which lies between two horizontal planes, the lower
plane lying and being at an elevation of -5 feet Cairo Datum and the upper plane
lying and being at an elevation of 30 feet Cairo Datum (approximate street
grade), both as referenced to United States Coast and Geodetic Survey Benchmark
B-96 1991, NGS Published Value having an elevation of 28.72 feet Cairo Datum,
which property forms a portion of the Canal Street right of way, First Municipal
District, City of New Orleans, Orleans Parish, Louisiana, the horizontal
boundaries of which are more fully described as follows:

Commencing at Point K, being the intersection of the easterly line of former
Delta Street and the southerly line of Canal Street, and also being the
northeast corner of Square RS, measure thence along the southerly line of Canal
Street North 52 degrees 44 minutes 02 seconds West, a distance of 87.04 feet to
the Point of Beginning. From the Point of Beginning, measure thence along the
southerly line of Canal Street North 52 degrees 44 minutes 02 seconds West, a
distance of 129.11 feet to the westerly line of the former I-310 Tunnel; thence
along said line along a curve to the right having a radius of 1689.02 feet, a
distance of 78.94 feet to the northerly line of said Tunnel; thence along said
line South 85 degrees 05 minutes 17 seconds East, a distance of 104 feet to the
easterly line of the former I-310 Tunnel; thence along said line along a curve
to the left having a radius of 1585.02 feet, a distance of 148.4 feet to the
Point of beginning, as shown on a survey plat by Gandolfo, Kuhn & Associates,
dated October 20, 1998, Drawing No. T-182-3.


                                       30
<PAGE>   31


POYDRAS STREET PORTION:

THAT PORTION OF POYDRAS STREET which lies between two horizontal planes, the
lower plane lying and being at an elevation of -5 feet Cairo Datum and the upper
plane lying and being at an elevation 30 feet Cairo Datum (approximate street
grade), both as referenced to United States Coast and Geodetic Survey Benchmark
B-96 1991, NGS Published Value having an elevation of 28.72 feet Cairo Datum,
which property forms a portion of the Poydras Street right of way, First
Municipal District, City of New Orleans, Orleans Parish, Louisiana, the
horizontal boundaries of which are more fully described as follows:

Commencing at Point B, being the intersection of the northerly line of Poydras
Street and the easterly line of S. Peters Street, and also being the southwest
corner of Square RS, measure thence along the northerly line of Poydras Street
South 76 degrees 14 minutes 24 seconds East, a distance of 361.51 feet to the
Point of Beginning.

From the Point of Beginning, measure thence along the northerly line of Poydras
Street, South 76 degrees 14 minutes 24 seconds East, a distance of 108.29 feet
to the easterly line of the former I-310 Tunnel; thence along said line South 2
degrees 24 minutes 52 seconds East, a distance of 31.08 feet to the southerly
line of said Tunnel; thence along said line South 87 degrees 35 minutes 08
seconds West, a distance of 104 feet to the westerly line of the former I-310
Tunnel; thence along said line North 2 degrees 24 minutes 52 seconds West, a
distance of 61.24 feet to the Point of Beginning, as shown on a survey plat by
Gandolfo, Kuhn & Associates, dated October 20, 1998, Drawing No. T-182-3.


PARCEL 2--LAFAYETTE SUBSURFACE AREA

THAT PORTION OF LAFAYETTE STREET which lies between two horizontal planes, the
lower plane lying and being at an elevation of -205 feet Cairo Datum
(approximate bottom of pile tip) and the upper plane lying and being at an
elevation of 30 feet Cairo Datum (approximate street grade), both as referenced
to United States Coast and Geodetic Survey Benchmark B-96 1991, NGS Published
Value, having an elevation of 28.72 feet Cairo Datum, which property forms a
portion of the Lafayette Street right of way, First Municipal District, City of
New Orleans, Orleans Parish, Louisiana, the horizontal boundaries of which are
more fully described as follows:

Begin at the southwest corner of Square 4 being the northeast intersection of
Lafayette and Fulton Streets, thence along the lower line of Lafayette Street
South 75 degrees 59 minutes 17 seconds East, a distance of 117 feet 9 inches 5
eighths to a point on the westerly line of Convention Center Boulevard (former
South Front Street) which lies 2 inches 1 eighth from the southeast corner of
Square 4; thence along the westerly line of Convention Center Boulevard, South 2
degrees 19 minutes 52 seconds East, a distance of 46 feet 10 inches 6 eighths to
the upper line of Lafayette Street and Northeast corner of Square 5; thence
along the upper line of Lafayette Street North 75 degrees 59 minutes 17 seconds
West, a distance of 118 feet 1 inch 1



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<PAGE>   32

eighth to the easterly line of Fulton Street; thence along the easterly line of
Fulton Street North 2 degrees 0 minutes 19 seconds West, a distance of 46 feet 9
inches 7 eighths to the Point of Beginning, all in accord with a survey plat by
Gandolfo, Kuhn & Associates, dated October 20, 1998, Drawing No. T-182-3.


PARCEL 3--POYDRAS STREET SUPPORT FACILITY

TRACT 1:

A CERTAIN LOT OF GROUND, situated in the First District of the City of New
Orleans, Orleans Parish, Louisiana, in Square 16, bounded by Poydras, Fulton,
South Peters and Lafayette Streets, which said lot is designated as Lot F on a
plan of resubdivision by Stephen L. Gremillion of Engineering Technology, Inc.,
dated June 28, 1982 approved by the City Planning Commission under Subdivision
Docket No. 96/82, registered as a Declaration of Title Change under Entry No.
466470 in Conveyance Office Book 781, folio 237, records of Orleans Parish, and
according to the survey by John J. Avery, Jr., L.S., dated August 24, 1990, and
according to survey plat by Gandolfo, Kuhn & Associates, Drawing No. T-182-3,
dated October 20, 1998, said Lot F is more fully described and measures as
follows:

Beginning at the intersection of the southerly line of Poydras Street with the
westerly line of Fulton Street; thence along said line of Fulton Street, South 2
degrees 0 minutes 19 seconds East, 92 feet 5 inches 4 eighths to the southerly
line of Lot F; thence along said line, North 76 degrees 7 minutes 30 seconds
West, 46 feet 6 inches 5 eighths to the westerly line of Lot F; thence along
said line, North 1 degree 50 minutes 45 seconds West, 92 feet 3 inches 4 eighths
to the southerly line of Poydras Street, thence along said line South 76 degrees
14 minutes 24 seconds East, 46 feet 3 inches 0 eighths to the westerly line of
Fulton Street and the Point of Beginning.

TRACT 2:

A CERTAIN PARCEL OF LAND, situated in the First District of the City of New
Orleans, in Square 4, Orleans Parish, Louisiana, bounded by Convention Center
Boulevard (formerly South Front Street), Lafayette, Fulton and Poydras Streets,
which said parcel is designated as Lot 1 and is the only lot of and comprises
the whole of said Square 4, on plan of resubdivision of Stephen L. Gremillion of
Engineering Technology, Inc., dated June 28, 1982, approved by the City Planning
Commission under Subdivision Docket No. 96/82, registered as a Declaration of
Title Change under Entry No. 466470 in Conveyance Office Book 781, folio 237,
records of Orleans Parish, and according to a survey by John J. Avery, Jr.,
L.S., dated August 24, 1990, and according to survey plat by Gandolfo, Kuhn &
Associates, Drawing No. T-182-3, dated October 20, 1998, said Lot 1 is described
as follows:

Beginning at the intersection of the upper line of Poydras Street with the
westerly line of Convention Center Boulevard; thence along said line of
Convention Center Boulevard, South 2 degrees 23 minutes 18 seconds East, 371
feet 1 inch 0 1/2 eighths to the lower line of Lafayette Street; thence along
said line, North 75 degrees 59 minutes 17 seconds West, 117 feet 7 inches 4


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<PAGE>   33


eighths to the East line of Fulton Street, thence along said line, North 2
degrees 0 minutes 19 seconds West, 369 feet 10 inches 1 eighth to the upper line
of Poydras Street, thence along said line, South 76 degrees 14 minutes 24
seconds East, 114 feet 10 inches 6 eighths to the westerly line of Convention
Center Boulevard and the Point of Beginning.

TRACT 3:

That certain portion of ground situated in the First Municipal District, City of
New Orleans in Square 5, Orleans Parish, Louisiana, bounded by Convention Center
Boulevard, Girod, Fulton, and Lafayette Streets, designated as Lot G on a survey
plat by the office of Gandolfo, Kuhn and Associates dated October 20, 1998,
Drawing No. T-182-3 and is more particularly described as follows:

Beginning at the southeast corner of Square 5 being the intersection of westerly
line of Convention Center Blvd. with the northerly line of Girod St.; thence
along the northerly line of Girod St. North 76 degrees, 00 minutes, 54 seconds
West, 120 feet 2 inches 6 eighths to the easterly line of Fulton St.; thence
along said easterly line; North 02 degrees 00 minutes 19 seconds West 363 feet,
6 inches, 2 eighths to the southerly line of Lafayette St.; thence along said
southerly line South 75 degrees 59 minutes 17 seconds East, 118 feet, 1 inch, 1
eighth to the westerly line of Convention Center Blvd.; thence along said line,
South 02 degrees 19 minutes 52 seconds East, 364 feet, 0 inches, 6 eighths to
the northerly line of Girod St. and the point of beginning.


PARCEL 4--POYDRAS TUNNEL AREA

THAT PORTION OF POYDRAS STREET which lies between two horizontal planes, the
lower plane lying and being at an elevation of -205 feet Cairo Datum
(approximate bottom of pile tip), and the upper plane lying and being at an
elevation of 30 feet Cairo Datum (approximate street grade), both as referenced
to United States Coast and Geodetic Survey Benchmark B-96 1991, NGS Published
Value, having an elevation of 28.72 feet Cairo Datum, which property forms a
portion of the Poydras Street right of way, First Municipal District, City of
New Orleans, Orleans Parish, Louisiana, the horizontal boundaries of which are
more fully described as follows:

Beginning at the northeast corner of Square 4, being the intersection of the
west line of Convention Center Boulevard with the south line of Poydras Street,
134 feet wide; thence go along the North line of Square 4, North 76 degrees 14
minutes 24 seconds West, 114 feet 10 inches 6 eighths to the Northwest corner of
Square 4, and the East line of Fulton Street; thence along the projection of
said line, North 2 degrees 0 minutes 19 seconds West, 139 feet 4 inches 1 eighth
to the North line of Poydras Street; thence along said line South 76 degrees 14
minutes 24 seconds East, 180 feet to a point; thence go South 25 degrees 14
minutes 37 seconds West, 136 feet 10 inches 1 eighth to the point of beginning,
all as shown on a survey plat by Gandolfo, Kuhn & Associates, dated on October
20, 1998, Drawing No. T-182-3.


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<PAGE>   34

PARCEL 5--PEDESTRIAN BRIDGE AREAS

TRACT 1--FULTON STREET AIR RIGHTS AREA:

THAT PORTION OF FULTON STREET (60' wide)which lies above the horizontal plane
which is at an elevation of 40 feet Cairo Datum (approximately 10' above street
grade) as referenced to United States Coast and Geodetic Survey Benchmark B-96
1991, NGS Published Value having an elevation of 28.72 feet Cairo Datum, which
property forms a portion of the Fulton Street right of way, First Municipal
District, City of New Orleans, Orleans Parish, Louisiana, the horizontal
boundaries of which are more fully described as follows:

Begin at the northeast corner of Square 16 being the point of intersection of
the westerly line of Fulton Street with the upper line of Poydras Street, thence
along the upper line of Poydras Street South 76 degrees 14 minutes 24 seconds
East, a distance of 62 feet 4 inches 1 eighth to the easterly line of Fulton
Street; thence along the easterly line of Fulton Street South 2 degrees 0
minutes 19 seconds East, a distance of 207 feet 8 inches 5 eighths to a point;
thence North 75 degrees 59 minutes 17 seconds West, a distance of 62 feet 5
inches to the westerly line of Fulton Street; thence along the westerly line of
Fulton Street North 2 degrees 0 minutes 19 seconds West, a distance of 207 feet
5 inches 1 eighth to the Point of Beginning, all in accord with a survey plat by
Gandolfo, Kuhn & Associates, dated October 20, 1998, Drawing No. T-182-3.

TRACT 2--LAFAYETTE STREET AIR RIGHTS AREA:

THAT PORTION OF LAFAYETTE STREET (45' wide) which lies above the horizontal
plane which is at an elevation of 40 feet Cairo Datum (approximately 10' above
street grade) as referenced to United States Coast and Geodetic Survey Benchmark
B-96 1991, NGS Published Value, having an elevation of 28.72 feet Cairo Datum,
which property forms a portion of the Lafayette Street right of way, First
Municipal District, City of New Orleans, Orleans Parish, Louisiana, the
horizontal boundaries of which are more fully described as follows:

Begin at the southwest corner of Square 4 being the northeast intersection of
Lafayette and Fulton Streets, thence along the lower line of Lafayette Street
South 75 degrees 59 minutes 17 seconds East, a distance of 117 feet 9 inches 5
eighths to a point on the westerly line of Convention Center Boulevard (former
South Front Street) which lies 2 inches 1 eighth from the southeast corner of
Square 4; thence along the westerly line of Convention Center Boulevard South 2
degrees 19 minutes 52 seconds East, a distance of 46 feet 10 inches 6 eighths to
the upper line of Lafayette Street and the Northeast corner of Square 5; thence
along the upper line of Lafayette Street North 75 degrees 59 minutes 17 seconds
West, a distance of 118 feet 1 inch 1 eighth to the easterly line of Fulton
Street; thence along the easterly line of Fulton Street North 2 degrees 0
minutes 19 seconds West, a distance of 46 feet 9 inches 7 eighths to the Point
of Beginning, all in accord with a survey plat by Gandolfo, Kuhn & Associates,
dated October 20, 1998, Drawing No. T-182-3.


                                       34
<PAGE>   35


TRACT 3--POYDRAS STREET AIR RIGHTS AREA:

THAT PORTION OF POYDRAS STREET which lies above the horizontal plane which is at
an elevation of 40 feet Cairo Datum (approximately 10' above street grade) as
referenced to United States Coast and Geodetic Survey Benchmark B-96 1991, NGS
Published Value, having an elevation of 28.72 feet Cairo Datum, which property
forms a portion of the Poydras Street right of way, First Municipal District,
City of New Orleans, Orleans Parish, Louisiana, the horizontal boundaries of
which are more fully described as follows:

Beginning at the northeast corner of Square 4, being the intersection of the
west line of Convention Center Boulevard with the south line of Poydras Street,
134 feet wide; thence go along the North line of Square 4, North 76 degrees 14
minutes 24 seconds West, 114 feet 10 inches 6 eighths to the Northwest corner of
Square 4, and the East line of Fulton Street; thence along the projection of
said line, North 2 degrees 0 minutes 19 seconds West, 139 feet 4 inches 1 eighth
to the North line of Poydras Street; thence along said line South 76 degrees 14
minutes 24 seconds East, 180 feet to a point; thence go South 25 degrees 14
minutes 37 seconds West, 136 feet 10 inches 1 eighth to the point of beginning,
all as shown on a survey plat by Gandolfo, Kuhn & Associates, dated October 20,
1998, Drawing No. T-182-3.


PARCEL 6--ENCROACHMENT AREA

TRACT 1:

Those sidewalks and rights of ways adjacent to and portions of Poydras Street,
Convention Center Boulevard, Lafayette Street, and Fulton Street located within
ten (10) feet from the lot lines of Square 4, First Municipal District, City of
New Orleans, Orleans Parish, Louisiana upon which foundations, canopies, roof
overhangs, columns, decorative paving, fountains, landscaping, streetscaping,
lighting, directional signage, underground utilities and other encroachments
are, or will be constructed in connection with the Improvements located or to be
located upon said Square 4. Reference is made to a survey plat by Gandolfo, Kuhn
& Associates, dated October 20, 1998, Drawing No. T-182-3.

TRACT 2:

Those sidewalks and right of ways adjacent to and portions of Lafayette Street,
Fulton Street, Convention Center Boulevard and Girod Street located within ten
(10) feet from the lot lines of Square 5, First Municipal District, City of New
Orleans, Orleans Parish, Louisiana upon which foundations, canopies, roof
overhangs, columns, decorative paving, fountains, landscaping, streetscaping,
lighting, directional signage, underground utilities and other encroachments
are, or will be constructed in connection with the Improvements located or to be
located upon said Square 5. Reference is made to a survey plat by Gandolfo, Kuhn
& Associates, dated October 20, 1998, Drawing No. T-182-3.


                                       35
<PAGE>   36

TRACT 3:

Those sidewalks and right of ways adjacent to and portions of Poydras Street,
Convention Center Boulevard, South Peters Street, and Canal Street located
within fifteen (15) feet from the lot lines of Square RS, First Municipal
District, City of New Orleans, Orleans Parish, Louisiana, upon which
foundations, canopies, roof overhangs, columns, decorative paving, fountains,
landscaping, streetscaping, lighting, directional signage, underground utilities
and other encroachments are, or will be constructed with the Improvements
located or to be located upon said Square RS. Reference is made to a survey plat
by Gandolfo, Kuhn & Associates, dated October 20, 1998, Drawing No. T-182-3.


                                       36
<PAGE>   37




                                   Exhibit "2"

                                 Franchise Area


The Franchise Area (the "Franchise Area") is located on a portion of the Canal
Street right-of-way adjacent to the Rivergate Convention Center property,
generally located between South Peters Street and Convention Center Boulevard
and more particularly described as follows:

That portion of the following immovable property which forms a part of the Canal
Street right of way, situated in the First Municipal District, City of New
Orleans, and more fully described as follows:

Commencing at point A, being the intersection of the easterly or river side line
of South Peters Street and the southerly or upper side line of Canal Street
having a width of 170.52 feet and also being the northwesterly corner of
proposed Lot RS, the Point of Beginning. From the Point of Beginning, measure
thence along the southerly or upper side line of Canal Street N 52 degrees 44
minutes 02 seconds W, a distance of 113.12 feet to the easterly curb in
Tchoupitoulas Street at point L; thence along the projection of said curb and
along the curb of the proposed neutral ground N 24 degrees 30 minutes 37 seconds
E, a distance of 175 feet to a point on the northerly or lower side line of
Canal Street at point M; thence along said line S 52 degrees 44 minutes 02
seconds E, a distance of 827.07 feet to point D; thence measure S 37 degrees 15
minutes 58 seconds W, a distance of 170.52 feet to point N on the southerly or
upper side line of Canal Street; thence along said line N 52 degrees 44 minutes
02 seconds W, a distance of 675.27 feet to point A and the Point of Beginning,
containing 3.1619 acres; all in accordance with a map of Proposed Grand Palais
Casino by Gandolfo, Kuhn & Associates, last dated April 7, 1993.


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<PAGE>   38




                                   Exhibit "3"

                             Permitted Encumbrances


1.       Reservation of servitudes in favor of the Sewerage and Water Board of
         the City of New Orleans (the "Delta Street S&WB Servitude") and in
         favor of New Orleans Public Service, Inc. (the "Delta Street NOPSI
         Servitude"), contained in Ordinance No. 15,799 M.C.S. (Calendar No.
         18,425) of the City of New Orleans, registered April 27, 1993, under N.
         A. No. 93-18030, as Conveyance Office Instrument No. 68196, and in Act
         of Revocation of Dedication by The City of New Orleans dated April 26,
         1993, filed April 27, 1993, under Notarial Archives No. 93-18031, as
         Conveyance Office Instrument No. 68195, as shown on the survey of
         Gandolfo, Kuhn & Associates, Drawing No. T-182-3, dated October 20,
         1998. (AFFECTS PARCEL 1)

2.       Terms and Conditions of General Development Agreement, dated April 27,
         1993, filed April 27, 1993, recorded under Notarial Archives No.
         93-18037, and Conveyance Instrument No. 68201, as assigned and assumed
         by Assignment and Assumption of General Development Agreement and of
         Franchise Agreement, dated March 15, 1994, filed March 16, 1994, as
         Notarial Archives No. 94-13863, Conveyance Office Instrument No. 83932,
         and amended March 15, 1994, recorded March 16, 1994, under Notarial
         Archives No. 94-13889, and Conveyance Office Instrument No. 83943 and
         as amended and restated by that certain Amended and Restated General
         Development Agreement dated October 29, 1998 by and among Rivergate
         Development Corporation, Jazz Casino Company, L.L.C. and City of New
         Orleans, as intervenor.

3.       Terms and Conditions of Second Amended and Restated Management
         Agreement, dated October 29, 1998, by and between Harrah's New Orleans
         Management Company and Jazz Casino Company, L.L.C., as evidenced of
         record by Memorandum of Second Amended and Restated Management
         Agreement, dated as of October 29, 1998, by and between Jazz Casino
         Company, L.L.C. and Harrah's New Orleans Management Company, recorded
         October 30, 1998, Mortgage Office Instrument No. 488187, under Notarial
         Archives No. 98-50510.

4.       Reservation of a servitude in favor of New Orleans Public Service,
         Inc., contained in the sale from City of New Orleans to Morgan's
         Louisiana and Texas Railroad and Steamship Company, dated February 3,
         1932, filed February 6, 1932, in Conveyance Office Book 466, folio 476,
         as shown on the survey of Gandolfo, Kuhn & Associates, Drawing No.
         T-182-3, dated October 20, 1998. (AFFECTS PARCEL 1)

5.       Apparent servitudes for 10" sewer line, 24" drain line and 20" water
         line, in the southeast corner of the land (outside of former Delta
         Street) as shown on the survey by Gandolfo, Kuhn & Associates, Drawing
         No. T-182-3, dated October 20, 1998. (AS TO PARCEL 1)



                                       38
<PAGE>   39

6.       Encroachment of adjoining buildings onto Tract 1 of Parcel 3, as shown
         on survey T-182-3, by Gandolfo, Kuhn & Associates, dated October 20,
         1998. (AS TO TRACT 1 OF PARCEL 3)

7.       Encroachments as evidenced by the following: concrete, brick pedestrian
         passageway and brick walk as shown on survey T-182-3 dated October 20,
         1998 by Gandolfo, Kuhn & Associates, but only to the extent that the
         encroachment is outside the Encroachment Area, as defined in Schedule
         A, Item 4. (AS TO TRACT 3 PARCEL 3)

8.       Encroachment upon Poydras Street by the granite columns and cornice
         appurtenant to Tract 1 of Parcel 3, as shown on the plat of survey by
         Gandolfo, Kuhn & Associates, Drawing No. T-182-3, dated October 20,
         1998. (AS TO TRACT 1 OF PARCEL 3)

9.       Terms and Conditions of Franchise Agreement by and between the City of
         New Orleans and Celebration Park Casino, Inc., dated April 27, 1993,
         filed April 27, 1993, as Notarial Archives No. 93-18038, Conveyance
         Office Instrument No. 68202, as assigned and assumed by Assignment and
         Assumption of General Development Agreement and of Franchise Agreement,
         dated March 15, 1994, filed March 16, 1994, as Notarial Archives No.
         94-13863, Conveyance Office Instrument No. 83932, and as assigned in
         Assigned, Amended and Restated Franchise Agreement by the City of New
         Orleans to Harrah's Jazz Company with Grand Palais Casino, Inc., dated
         March 15,1994, filed March 16, 1994, under Notarial Archives No.
         94-13864, Conveyance Office Instrument No. 83933, (AS TO TRACT 3 OF
         PARCEL 6).

10.      Terms and Conditions of Approved Zoning Plans:

         a.       Filed December 29, 1994 as Notarial Archives No. 94-59464,
                  Conveyance Office Instrument No. 98386.

         b.       Filed April 21, 1995 as Notarial Archives No. 95-17369,
                  Conveyance Office Instrument No. 103509.

         c.       Filed December 29, 1994 as Notarial Archives No. 94-59466,
                  Conveyance Office Instrument No. 98388.

11.      Terms and Conditions of the Lease Agreement by and between City of New
         Orleans, as lessor, and Rivergate Development Corporation, as lessee,
         dated April 27, 1993, filed April 27, 1993, under Notarial Archives No.
         93-18035, as Conveyance Instrument No. 68199, as amended by Amended and
         Restated Lease Agreement dated March 15, 1994, filed March 16, 1994,
         under Notarial Archives No. 94-13885, Conveyance Office Instrument No.
         83940, and as amended by First Amendment to Amended and Restated Lease
         Agreement, as of October 29, 1998, by and between the City of New
         Orleans and Rivergate Development Corporation, recorded October 30,
         1998, Conveyance Office Instrument No. 168129, under Notarial Archives
         No. 98-50457. (AFFECTS PARCELS 1-6)



                                       39
<PAGE>   40


12.      Second Floor Non-Gaming Sublease between Jazz Casino Company, L.L.C.
         and JCC Development Company, L.L.C., recorded on October 30, 1998, as
         Conveyance Office Instrument No. 168131, under Notarial Archives No.
         98-50474.

13.      Entry Agreement entered into October 29, 1998 by and among Rivergate
         Development Corporation, the City of New Orleans, Harrah's
         Entertainment, Inc. and Harrah's Operating Company, Inc., filed October
         30, 1998, as Mortgage Office Instrument No. 488188, under Notarial
         Archives No. 98-50511.

14.      Covenant of Obligations between Jazz Casino Company, L.L.C. and the
         Sewerage and Water Board of New Orleans, recorded June 9, 2000 as
         Mortgage Office Instrument No. 562947, MOB 3487, folio 29, Notarial
         Archives No. 2000-25158.

15.      Amendment to Conditional Use by City of New Orleans City Planning
         Commission dated June 25, 1999, recorded June 28, 1999 as Conveyance
         Office Instrument No. 180901, Notarial Archives No. 99-29371.



                                      40