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                                 EXHIBIT 10(w)





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                         COMMERCIAL SECURITY AGREEMENT


<TABLE>
<S>                                        <C>
Grantor: Fair Grounds Corporation          Lender: First National
         1751 Gentilly Blvd.                       Bank Of Commerce
         New Orleans, LA 70119                     P.O. Box 60279
         TIN: 72-0361770                           New Orleans, LA 70160
                                                   TIN: 72-0269760
</TABLE>

THIS COMMERCIAL SECURITY AGREEMENT is entered into between the Fair Grounds
Corporation, a Louisiana corporation (referred to below as "Grantor"); and
First National Bank of Commerce (referred to below as "Lender").  For valuable
consideration, Grantor hereby pledges to Lender, and grants to Lender a
continuing security interest in, the Collateral to secure Grantor's present and
future Indebtedness and agrees that Lender shall have the rights stated in this
Agreement with respect to the Collateral, in addition to all other rights which
Lender may have by law or otherwise.

DEFINITIONS.  The following words shall have the following meanings when used
in this Agreement:

         Accounts.  The word "Accounts" shall mean all accounts as defined in
         Section 9-106 of the UCC, now owned or hereafter acquired by Grantor.
         The word "Accounts" shall also mean and include all other receivables,
         contract rights, instruments, documents, notes and all other similar
         obligations and indebtedness that may now and in the future be owed to
         or held by Grantor from whatever source arising, and all monies and
         proceeds payable thereunder, and all of Grantor's rights and remedies
         to collect and enforce payment and performance thereof.

         Agreement.  The word "Agreement" means this Commercial Security
         Agreement, as this Commercial Security Agreement may be amended or
         modified from time to time.

         Collateral.  The word "Collateral" means individually, collectively
         and interchangeably any and all of Grantor's present and future
         rights, title and interest in and to the following described property,
         together with any and all present and future additions thereto,
         substitutions therefor, and replacements thereof:

                 (a)      the Accounts;





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                 (b)      the Inventory;

                 (c)      the Equipment;

                 (d)      the Fire Insurance Proceeds;

                 (e)      the General Intangibles;

                 (f)      the Tax Relief;

                 (g)      the Construction Property;

                 (h)      the Jazz Fest Contract;

                 (i)      the VSI Contract;

                 (j)      the Management Agreement;

                 (k)      all deposit accounts of Grantor maintained by Grantor
                          with Lender, all cash deposited therein from time to
                          time, and other monies and properties of any kind of
                          Grantor in the possession or under the control of
                          Lender;

                 (l)      all books and records, including without limitation
                          computer lists, credit files, computer programs,
                          tapes, disks, punch cards, data processing software,
                          transaction files, master files, printouts (and other
                          computer materials and records) of Grantor pertaining
                          to any of the foregoing Collateral; and

                 (m)      all Proceeds and products of any or all of the
                          Collateral described in clauses (a) through (l)
                          hereof.


         Construction Property.  The words "Construction Property" mean
         individually, collectively and interchangeably any and all existing or
         future contracts or agreements of Grantor of any kind or nature
         dealing with the reconstruction of the New Orleans Fair Grounds Race
         Course in New Orleans, Louisiana, or with the related construction
         and/or modification of any new or existing facilities in any way
         related to racing or wagering activities or the administration
         thereof, any and all rights of Grantor in and to all goods, materials,
         equipment, machinery and/or inventory used and/or to be used in such
         construction activities provided for therein, whether located at the
         Fair Grounds Race Course at 1751 Gentilly Boulevard, New Orleans,





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         Louisiana, or elsewhere, all  documents of title, warehouse receipts,
         bills of lading and all attachments and accessions related thereto,
         whether added now or later, all plans and specifications, blueprints,
         drawings, models, and other renderings of the work related thereto,
         all building permits and other permits required for such activities,
         all agreements of Grantor with any contractors, architects or
         engineers related thereto, all rights of Grantor in and to any payment
         or performance bonds provided to Grantor in connection with such work,
         all products and proceeds derived from or to be derived therefrom,
         including without limitation, . . .  [CONFIDENTIAL INFORMATION OMITTED
         AND FILED SEPARATELY WITH THE COMMISSION]. . . and all rights of
         Grantor to collect or enforce payment and performance thereof, as well
         as to enforce any guarantees of any of the foregoing, including
         without limitation, Grantor's books, records, files, computer disks
         and software, and all other rights that Grantor may have with regard
         thereto.

         Encumbrances.  The word "Encumbrances" means individually,
         collectively and interchangeably any and all presently existing and/or
         future mortgages, liens, privileges and other contractual and/or
         statutory security interests and rights of every nature and kind that,
         now and/or in the future may affect the Collateral or any part or
         parts thereof.

         Equipment.  The word "Equipment" means all goods classified as
         equipment as such term is defined in Section 9-109(2) of the UCC, now
         owned or hereafter acquired by Grantor or held on consignment,
         wherever located.

         Event of Default.  The words "Event of Default" mean individually,
         collectively, and interchangeably any of the Events of Default set
         forth below in the section titled "Events of Default."

                CONFIDENTIAL INFORMATION OMITTED AND FILED 
                SEPARATELY WITH THE COMMISSION.

         General Intangibles.  The words "General Intangibles" mean all general
         intangibles as defined in Section 9-106 of the UCC, including without
         limitation (i) all contractual rights and obligations or indebtedness
         owing to Grantor (other than Accounts) from whatever source arising;
         (ii) all things and actions, rights represented by judgments and
         claims arising out of tort and other claims related to the Collateral,
         including the right to assert and otherwise be the proper party of
         interest to commence and prosecute actions;  (iii) all goodwill,
         patents, patent licenses, trademarks, trademark licenses, trade names,
         service marks, trade secrets, rights and intellectual property,
         copyrights,





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         permits and other licenses of any kind or nature whatsoever (including
         all of Grantor's racing, off-track betting and video poker licenses,
         to the fullest extent allowed by applicable law); (iv) and all rights
         or claims in respect of refunds for taxes paid or to the Tax Relief.

         Grantor.  The word "Grantor" means Fair Grounds Corporation, a
         Louisiana corporation, its successors and assigns.

         Guarantor.  The word "Guarantor" means and includes individually,
         collectively, interchangeably and without limitation, each and all of
         the guarantors and/or sureties in connection with the Indebtedness.

         Indebtedness.  The word "Indebtedness" means the Indebtedness of
         Grantor arising under or pursuant to the Note, in principal, interest,
         costs, expenses and attorneys' fees and all other fees and charges,
         together with all other indebtedness and costs and expenses for which
         Grantor is responsible under this Agreement or under any of the
         Related Documents.  In addition, the word "Indebtedness" also includes
         any and all other loans, extensions of credit, obligations, debts and
         liabilities, plus interest thereon, of Grantor, or any one or more of
         them, that may now and in the future be owed to or incurred in favor
         of Lender, as well as all claims by Lender against Grantor, or any one
         or more of them, whether existing now or later; whether they are
         voluntary or involuntary, due or to become due, direct or indirect or
         by way of assignment, determined or undetermined, absolute or
         contingent, liquidated or unliquidated; whether Grantor may be liable
         individually or jointly with others, of every nature and kind
         whatsoever, in principal, interest, costs, expenses and attorneys'
         fees and all other fees and charges; and whether Grantor may be
         obligated as guarantor, surety, accommodation party or otherwise.

         Inventory.  The word "Inventory" means all goods classified as
         inventory as such term is defined in Section 9-109(4) of the UCC, now
         owned or hereafter acquired by Grantor or held on consignment,
         wherever located.

         Jazz Fest Contract.  The words "Jazz Fest Contract" mean that certain
         Agreement dated as of October 1, 1992, by and between Grantor and The
         New Orleans Jazz & Heritage Foundation, Inc.

         Lender.  The word "Lender" means First National Bank of Commerce, its
         successors and assigns, and any subsequent holder or holders of
         Grantor's Note, or any interest therein.





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         Management Agreement.  The words "Management Agreement" mean that
         certain Management Agreement dated October 7, 1992, by and between
         Grantor and Finish Line Management Corp.

         Note.  The word "Note" means that certain promissory note dated of
         even date herewith made by Grantor payable to the order of Lender in
         the principal sum of $2,150,000.00, together with all extensions,
         renewals, or modifications thereof, and any and all promissory note or
         notes given in connection with the refinancing of any part of the
         indebtedness evidenced thereby.

         Permitted Liens shall mean (i) Encumbrances securing Indebtedness,
         (ii) Encumbrances for taxes, assessments or governmental charges which
         are not yet due and payable or which are being contested in good faith
         so long as adequate reserves for such taxes, assessments or charges
         have been established or are being maintained, provided Lender's lien
         is not jeopardized, and (iii) Encumbrances relating to workers'
         compensation laws, unemployment insurance laws, social security or
         pension laws or similar legislation which are not yet due and payable
         or which are being contested in good faith so long as adequate
         reserves for such taxes, assessments or charges have been established
         or are being maintained, provided Lender's lien is not jeopardized.

         Pledgor.  The word "Pledgor" means and includes (i) Bryan G. Krantz,
         (ii) Marie G. Krantz, (iii) Vickie Krantz, (iv) Jefferson Downs
         Corporation, a Louisiana corporation, (v) Richard Katcher, in his
         capacity as trustee of that certain trust (the "Trust") established
         pursuant to that certain Third Restatement of John G. Masoni Trust
         Agreement dated as of April 19, 1991, by and between John G. Masoni
         and John G. Masoni, Trustee, as heretofore amended by that certain
         Modification of Third Restatement of John G. Masoni Trust Agreement
         dated October 24, 1992 (the "Trust Agreement"), and (vi) the Trust.

         Proceeds.  The word "Proceeds" means all proceeds as defined in
         Section 9-306(1) of the UCC, and includes all cash and non-cash
         proceeds, and includes proceeds of such proceeds, in each case whether
         now existing or hereafter arising.

         Related Documents.  The words "Related Documents" mean and include
         individually, collectively, interchangeably and without limitation all
         promissory notes, credit or loan agreements, guaranties, security
         agreements, mortgages, collateral mortgages, deeds of trust, and all
         other instruments and documents, whether now or hereafter existing,
         executed in connection with Grantor's Indebtedness to Lender.





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         Security Interest.  The words "Security Interest" mean the security
         interest in the Collateral granted hereunder.

         Tax Relief.  The words "Tax Relief" mean all of Grantor's rights to
         those certain benefits arising pursuant to the video poker franchise
         fee exemption authorized by La. R.S. 33:4862.21, for which Grantor has
         been qualified by letter dated September 30, 1994, from Melinda
         Schwegman, Lieutenant Governor of the State of Louisiana and
         Chairperson of the Interim Emergency Board of the State of Louisiana,
         addressed to Senator B.B. Rayburn, Chairman of the Joint Legislative
         Committee on the Budget, and by resolution of the Joint Legislative
         Committee on the Budget dated March 2, 1995.

         UCC.  The word "UCC" means the Uniform Commercial Code, Commercial
         Laws-Secured Transactions (La. R.S. 10:9-101 et seq.) in effect in the
         State of Louisiana, as amended from time to time, provided that if by
         reason of mandatory provisions of law, the perfection or effect of
         perfection or non-perfection of the Security Interest in the
         Collateral is governed by the Uniform Commercial Code as in effect in
         a jurisdiction other than the State of Louisiana, "UCC" means the
         Uniform Commercial Code as in effect in such other jurisdiction for
         purpose of the provisions hereof related to such perfection or effect
         of perfection or non-perfection.

         VSI Contract.  The words "VSI Contract" mean that certain Agreement
         dated March 9, 1992, by and among Grantor, Video Services, Inc.,
         Jefferson Downs Corporation, and Finish Line Management Corp.


CONTINUING SECURITY INTEREST TO SECURE PRESENT AND FUTURE INDEBTEDNESS.
Grantor does hereby grant a continuing security interest in the Collateral in
favor of Lender to secure any and all present and future Indebtedness of
Grantor in favor of Lender, as may be outstanding from time to time, with the
continuing preferences and priorities provided under applicable Louisiana law.

NO LIABILITY.  The Security Interests are granted as security only and shall
not subject Lender to, or transfer in any way affect or modify, any obligation
or liability of Grantor with respect to any of the Collateral or any
transaction in connection therewith.

DURATION OF THIS AGREEMENT.  This Agreement shall remain in full force and
effect until such time as this Agreement and the Security Interests created
hereby are terminated and cancelled by Lender under a written cancellation
instrument in favor of Grantor.





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OBLIGATIONS OF GRANTOR.  Grantor represents, warrants and covenants to Lender
as follows:

         Organization.  Grantor is a corporation which is duly organized,
         validly existing, and in good standing under the laws of the State of
         Louisiana.

         Authorization.  Grantor's execution, delivery and performance of this
         Agreement have been duly authorized, and do not conflict with, and
         will not result in a violation of, or constitute or give rise to an
         event of default under Grantor's articles of incorporation or by-laws,
         or any agreement or other instrument which may be binding upon
         Grantor, or under any law or governmental regulation or court decree
         or order applicable to Grantor and/or its properties.

         Perfection of Security Interest.  Grantor agrees to execute such
         financing statements and to take whatever other actions are requested
         by Lender to perfect and continue Lender's Security Interest in the
         Collateral.  Upon request of Lender, Grantor will deliver to Lender
         any and all of the documents evidencing or constituting the
         Collateral, and Grantor will note Lender's Security Interest upon any
         and all chattel paper if not delivered to Lender for possession by
         Lender.  Grantor hereby appoints Lender as its irrevocable
         attorney-in-fact for the purpose of executing any documents necessary
         to perfect or to continue the Security Interest granted in this
         Agreement.  Lender may at any time, and without further authorization
         from Grantor, file a carbon, photographic, facsimile, or other
         reproduction of any financing statement or of this Agreement for use
         as a financing statement.  Grantor will reimburse Lender for all
         expenses for the perfection, termination, and the continuation of the
         perfection of Lender's Security Interest in the Collateral.  Grantor
         promptly will notify Lender of any change in Grantor's name including
         any change to the assumed business names of Grantor.  Grantor also
         promptly will notify Lender of any change in Grantor's tax
         identification number.  Grantor further agrees to notify Lender in
         writing prior to any change in address or location of Grantor's
         principal governance office.  Grantor represents and warrants to
         Lender that Grantor has provided Lender with Grantor's correct IRS tax
         identification number and that Grantor has no other tax identification
         numbers.  Grantor promptly shall notify Lender should Grantor apply
         for or obtain a new tax identification number.

         No Violation.  The execution and delivery of this Agreement will not
         violate any law or agreement governing Grantor or to which Grantor is
         a party, and its articles of





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         incorporation and by-laws do not prohibit any term or condition of this
         Agreement.

         Enforceability of Collateral.  To the extent the Collateral consists
         of Accounts, chattel paper, or General Intangibles, the Collateral is
         enforceable in accordance with its terms, is genuine, and fully
         complies with applicable state and federal laws and regulations
         concerning form, content and manner of preparation and execution, and
         all persons appearing to be obligated on the Collateral have authority
         and capacity to contract and are in fact obligated as they appear to
         be on the Collateral, free of any offset, compensation, deduction or
         counterclaim.  At the time any  Account becomes subject to a Security
         Interest in favor of Lender, the Account shall be a good and valid
         account representing an undisputed, bona fide indebtedness incurred by
         the account debtor, for merchandise held subject to delivery
         instructions or theretofore shipped or delivered pursuant to a
         contract of sale, or for services theretofore performed by Grantor
         with or for the account debtor; there shall be no setoffs or
         counterclaims against any such Account; and no agreement under which
         any deductions or discounts may be claimed shall have been made with
         the account debtor except those disclosed to Lender in writing.. .
         [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
         COMMISSION]. . . .

         Removal of Collateral.  To the extent the Collateral consists of
         Accounts or General Intangibles, the records concerning the Collateral
         shall be kept and maintained at Grantor's main business address at
         1751 Gentilly Boulevard, New Orleans, LA 70119, and also at Grantor's
         place of business at 1300 Sunset Blvd., Kenner, LA 70065, or at such
         other locations as are acceptable to Lender.  Except for sales of
         Inventory in the ordinary course of business, Grantor shall not remove
         the Collateral from its existing locations without the prior written
         consent of Lender.

         Transactions Involving Collateral.  Except for Inventory sold or
         Accounts collected in the ordinary course of Grantor's business,
         Grantor shall not sell, offer to sell, or otherwise transfer or
         dispose of the Collateral except for sales of Inventory during the
         normal course of Grantor's business and dispositions of Equipment
         which has become obsolete or which is being replaced in the normal
         course of Grantor's business (collectively, "Permitted Dispositions").
         . .  [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
         COMMISSION]. .  . . This includes security interests even if junior in
         right to the Security Interests granted under this Agreement.  Unless
         waived by Lender, all proceeds from any disposition (other than
         Permitted Dispositions) of the Collateral (for whatever reason) shall
         be held in trust





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         for Lender and shall not be commingled with any other funds; provided
         however, this requirement shall not constitute consent by Lender to
         any sale or other disposition (other than Permitted Dispositions).
         Upon receipt, Grantor shall immediately deliver any such proceeds to
         Lender.

         Title, Authority, Binding Effect.  Grantor represents and warrants to
         Lender that it holds good and marketable title to the Collateral, free
         and clear of all Encumbrances except for Permitted Liens and the
         Lender's Security Interest.  No financing statement covering any of
         the Collateral is on file in any public office other than those which
         reflect the  Security Interest created by this Agreement or to which
         Lender has specifically consented.  Grantor further represents and
         warrants that it has requisite authority to enter into this Agreement
         in favor of Lender and to grant to Lender the Security Interest in the
         Collateral as provided herein.  Grantor additionally represents and
         warrants that this Agreement is binding upon Grantor as well as
         Grantor's successors and assigns, and is legally enforceable in
         accordance with its terms.  The foregoing representations and
         warranties and all other representations and warranties of Grantor
         under this Agreement shall be continuing and shall survive the
         termination of this Agreement.

         Collateral Schedules and Locations.  As often as Lender shall
         reasonably require, and insofar as the Collateral consists of
         Accounts, Grantor shall deliver to Lender schedules of such
         Collateral, including such information as Lender may require,
         including without limitation names and addresses of account debtors
         and agings of accounts.

         Repairs and Maintenance.  Grantor shall keep and maintain and shall
         cause others to keep and maintain the Collateral in good order, repair
         and merchantable condition.  Grantor shall further make and/or cause
         all necessary repairs to be made to the Collateral, including the
         repair and restoration of any portion of the Collateral that may be
         damaged, lost or destroyed.  In addition, Grantor shall not, without
         the prior written consent of Lender, make or permit to be made any
         alterations to any of the Collateral that may reduce or impair the
         Collateral's use, value or marketability.  Furthermore, Grantor shall
         not, nor shall Grantor permit others to abandon, commit waste, or
         destroy the Collateral or any part or parts thereof.

         Taxes.  Grantor shall promptly pay or cause to be paid when due, all
         taxes, local and special assessments, and governmental and other
         charges of every type and description, that may from time to time be
         imposed, assessed and levied against the Collateral or against
         Grantor.  Grantor further agrees to furnish Lender with evidence that





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         such taxes, assessments, and governmental and other charges have been
         paid in full and in a timely manner.  Grantor may withhold any such
         payment or elect to contest any lien if Grantor is in good faith
         conducting an appropriate proceeding to contest the obligation to pay
         and so long as Lender's interest in the Collateral is not jeopardized.

         Compliance With Governmental Requirements.  Grantor shall comply
         promptly with all laws, ordinances and regulations of all governmental
         authorities applicable to the production,  disposition, or use of the
         Collateral.  Grantor may contest in good faith any such law, ordinance
         or regulation and withhold compliance during any proceeding, including
         appropriate appeals, so long as Lender's interest in the Collateral,
         in Lender's reasonable opinion, is not jeopardized.  Grantor shall not
         use the Collateral, in any manner that would damage, depreciate or
         diminish its value (other than for damage, depreciation and
         diminishment in value to the Collateral caused by Grantor's normal
         business operations) or that may result in cancellation or termination
         of insurance coverage.  Grantor additionally agrees not to do or
         suffer to be done anything that may increase the risk of fire or other
         hazards to the Collateral.

         Hazardous Substances.  Grantor represents and warrants that the
         Collateral never has been, and never will be so long as this Agreement
         remains a lien on the Collateral, used for the generation,
         manufacture, storage, treatment, disposal, release or threatened
         release of any hazardous waste or substance, as those terms are
         defined in the Comprehensive Environmental Response, Compensation, and
         Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.
         ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986,
         Pub. L. No.  99-499 ("SARA"), the Hazardous Materials Transportation
         Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and
         Recovery Act, 49 U.S.C. Section 6901, et seq., or other applicable
         state or Federal laws, rules, or regulations adopted pursuant to any
         of the foregoing, except in compliance with such laws and regulations.
         The representations and warranties contained herein are based on
         Grantor's due diligence in investigating the Collateral for hazardous
         waste.  Grantor hereby (a) releases and waives any future claims
         against Lender for indemnity or contribution in the event Grantor
         becomes liable for cleanup or other costs under any such laws, and (b)
         agrees to indemnify and hold harmless Lender from and against any and
         all claims and losses resulting from a breach of this provision of
         this Agreement.  This obligation to indemnify shall survive the
         payment of the Indebtedness and the satisfaction of this Agreement.





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         Required Insurance.  So long as this Agreement remains in effect,
         Grantor shall, at its sole cost, keep and/or cause others, at their
         expense, to keep the portions of the Collateral consisting of tangible
         property constantly insured against loss by fire, by hazards included
         within the term "extended coverage," and by such other hazards
         (including flood insurance to the extent any of the Collateral is
         located in flood zones "A" or "B") as may be required by Lender.  Such
         insurance shall be in an amount not less than the full replacement
         value of such Collateral, or such other amount or amounts as Lender
         may require or approve in  writing.  Grantor shall further provide and
         maintain, at its sole cost and expense, comprehensive general
         liability insurance, naming both Grantor and Lender as parties
         insured, protecting against claims for bodily injury, death and/or
         property damage arising out of the use, ownership, possession,
         operation and condition of the Collateral, and further containing a
         broad form contractual liability endorsement covering Grantor's
         obligations to indemnify Lender as provided hereunder.  During the
         course of any construction activities involving the Collateral,
         Grantor shall further provide and maintain, at its sole cost and
         expense, builder's all risk insurance coverage against "all risks of
         physical loss,"  including loss by fire, theft, vandalism, malicious
         mischief, explosion, windstorm, collapse, sprinkler leakage, and
         extended coverage in an amount not less than the full replacement
         value of the Collateral.  Grantor shall also maintain, or cause to be
         maintained, workers' compensation insurance for all contractors,
         subcontractors and for Grantor to the fullest extent required by law.

         Grantor may purchase such insurance from any insurance company or
         broker that is acceptable to Lender, provided that such approval may
         not be unreasonably withheld.  All such insurance policies, including
         renewals and replacements, must also be in form and substance
         acceptable to Lender, and must additionally contain a Lender's loss
         payable or other  endorsement in favor of Lender, providing in part
         that (a) all proceeds and returned premiums under such policies of
         insurance will be paid directly to Lender, and (b) no act or omission
         on the part of Grantor, or any of its officers, agents, employees or
         representatives, nor breach of any warranty contained in such
         policies, shall affect the obligations of the insurer to pay the full
         amount of any loss to Lender.  Such policies of insurance must also
         contain a provision prohibiting cancellation or the alteration of such
         insurance without at least thirty (30) days' prior written notice to
         Lender of such intended cancellation or alteration.





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         Grantor agrees to provide Lender with originals or certified copies of
         such policies of insurance.  Grantor further agrees to promptly
         furnish Lender with copies of all renewal notices and, if requested by
         Lender, with copies of receipts for paid premiums.  Grantor shall
         provide Lender with originals or certified copies of all renewal or
         replacement policies of insurance no later than fifteen (15) days
         before any such existing policy or policies should expire.  If
         Grantor's insurance policies and renewals are held by another person,
         Grantor agrees to supply original or certified copies of the same to
         Lender within the time periods required above.

         Grantor agrees to notify immediately Lender in writing of any material
         casualty to or accident involving the Collateral, whether or not such
         casualty or loss is covered by insurance.  Grantor further agrees to
         promptly notify Grantor's insurance company and to submit an
         appropriate claim and proof of claim to the insurance company in the
         event that any Collateral is lost, damaged, or destroyed as a result
         of an insured hazard.  Lender may submit such a claim and proof of
         claim to the insurance company on Grantor's behalf, should Grantor
         fail to do so promptly for any reason.  Grantor hereby irrevocably
         appoints Lender as its agent and attorney-in-fact, such agency being
         coupled with an interest, to make, settle and adjust claims (other
         than with respect to claims giving rise to Fire Insurance Proceeds)
         under such policy or policies of insurance and to endorse the name of
         Grantor on any check or other item of payment for the proceeds
         thereof; it being understood, however, that unless one or more Events
         of Default exist under this Agreement, Lender will not settle or
         adjust any such claim without the prior approval of Grantor (which
         approval shall not be unreasonably withheld).

                  CONFIDENTIAL INFORMATION OMITTED AND FILED 
                  SEPARATELY WITH THE COMMISSION.

         Lender's receipt of such insurance proceeds and the application of
         such proceeds as provided herein shall not, however, affect the lien
         of this Agreement.  Nothing under this section shall be deemed to
         excuse Grantor from its obligations promptly to repair, replace or
         restore any lost or damaged Collateral, whether or not the same may be
         covered by insurance (unless Lender requires that such insurance
         proceeds be applied to reduce the Indebtedness), and whether or not
         such proceeds of insurance are available, and whether such proceeds
         are sufficient in amounts to complete such repairs, replacement or
         restoration to the satisfaction of the Lender.  Furthermore, unless
         otherwise confirmed by Lender in writing, the application or release
         of any insurance proceeds by Lender shall not be deemed to





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         cure or waive any Event of Default under this Agreement.  Any
         proceeds which have not been disbursed within six (6) months after
         their receipt and which Grantor has not committed to the repair or
         restoration of the Collateral shall be used to prepay the
         Indebtedness.

         Insurance Reports.  Grantor, upon request of Lender, shall furnish to
         Lender reports on each existing policy of insurance showing such
         information as Lender may reasonably request including the following:
         (a) the name of the insurer; (b) the risks insured; (c) the amount of
         the policy; (d) the property insured; (e) the then current value on
         the basis of which insurance has been obtained and the manner of
         determining that value; and (f) the expiration date of the policy.  In
         addition, Grantor shall upon request by Lender (however not more often
         than annually) have an independent appraiser satisfactory to Lender
         determine, as applicable, the cash value or replacement cost of the
         Collateral.

         Prior Encumbrances.  To the extent applicable, Grantor shall fully and
         timely perform any and all of its obligations under any prior
         Encumbrances affecting the Collateral.  Without limiting the
         foregoing, Grantor shall not commit or permit to exist any breach of
         or default under any such prior Encumbrances.  Grantor shall further
         promptly notify Lender in writing upon the occurrence of any event or
         circumstances that would, or that might, result in a breach of or
         default under any such prior Encumbrance.  Grantor shall further not
         modify or extend any of the terms of any prior Encumbrance or any
         Indebtedness secured thereby, or request or obtain any additional
         loans or other extensions of credit from any third party creditor or
         creditors whenever such additional loan advances or other extensions
         of credit may be directly or indirectly secured, whether by cross-
         collateralization or otherwise, by the Collateral,  or any part or
         parts thereof, with possible preference and priority over Lender's
         Security Interest.  Grantor additionally agrees to use its best
         reasonable efforts to obtain, upon request by Lender, and in form and
         substance as may then be satisfactory to Lender, appropriate waivers
         and/or subordinations of any lessor's liens or privileges, vendor's
         liens or privileges, purchase money security interests, and any other
         Encumbrances that may affect the Collateral at any time; and if such
         waivers or subordinations cannot be obtained by Grantor to cause to be
         paid such claims giving rise to any prior Encumbrances affecting the
         Collateral.

         Future Encumbrances.  Except for Permitted Liens,  Grantor shall not,
         without the prior written consent of Lender, grant any Encumbrance
         that may affect the Collateral, or any





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<PAGE>   15

         part or parts thereof, nor shall Grantor permit or consent to any
         Encumbrance attaching to or being filed against any of the Collateral
         in favor of anyone other than Lender.  Grantor shall further promptly
         pay when due all statements and  charges of mechanics, materialmen,
         laborers and others incurred in connection with the alteration,
         improvement, repair and maintenance of the Collateral, or otherwise
         furnish appropriate security or bond, so that no future Encumbrance
         may ever attach to or be filed against any Collateral.  Grantor
         additionally agrees to obtain, upon request by Lender, and in form and
         substance as may then be satisfactory to Lender, appropriate waivers
         and/or subordinations of any lessor's liens or privileges, vendor's
         liens or privileges, purchase money Security Interests, and any other
         Encumbrances that may affect the Collateral at any time.

         Notice of Encumbrances.  Grantor shall immediately notify Lender in
         writing upon the filing of any attachment, lien, judicial process,
         claim, or other Encumbrance.  Grantor additionally agrees to notify
         Lender immediately in writing upon the occurrence of any default, or
         event that with the passage of time, failure to cure, or giving of
         notice, might result in a default under any of Grantor's obligations
         that may be secured by any presently existing or future Encumbrance,
         or that might result in an Encumbrance affecting the Collateral, or
         should any of the Collateral be seized or attached or levied upon, or
         threatened by seizure or attachment or levy, by any person other than
         Lender.

         Books and Records.  Grantor will keep proper books and records with
         regard to Grantor's business activities and the Collateral in which a
         security interest is granted hereunder, in accordance with generally
         accepted accounting principles, applied on a consistent basis
         throughout, which books and records shall at all reasonable times be
         open to inspection and copying by Lender or its designated agents.
         Lender shall also have the right to inspect Grantor's books and
         records, and to discuss Grantor's affairs and finances with Grantor's
         officers and representatives, at such reasonable times as Lender may
         designate.

         Construction Activities.  The plans and specifications which comprise
         part of the Construction Property are in final form and are
         satisfactory to Grantor and its contractors (subject to possible
         change orders, to the extent permitted hereby), and to the extent
         required by applicable law, to all applicable governmental
         authorities; such plans and specifications, to Borrower's knowledge,
         do not violate any zoning ordinance or restrictive covenant applicable
         to any of the Collateral or the real estate upon which such Collateral
         is located; Grantor has obtained all applicable





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<PAGE>   16

         permits and approvals necessary to undertake the activities
         contemplated by the construction contracts and plans and
         specifications comprising part of the Construction Property; and no
         default exists under any of the construction contracts comprising part
         of the Construction Property.

         Stock Pledges.  Contemporaneously herewith, Pledgors have collectively
         pledged to Lender stock certificates evidencing not less than 72% of
         the currently outstanding shares of capital stock of Grantor.

GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS.  Until the occurrence of
an Event of Default, Grantor may have possession and beneficial use of all the
Collateral (other than proceeds of the Tax Relief and the Fire Insurance
Proceeds) and may use it in any lawful manner not inconsistent with this
Agreement or the Related Documents, provided that Grantor's right to possession
and beneficial use shall not apply to any Collateral where possession of the
Collateral by Lender is required by law to perfect Lender's security interest
in such Collateral.  If an Event of Default exists, Lender may exercise its
rights to collect the Accounts and to notify account debtors to make payments
directly to Lender for application to the Indebtedness.  Lender or Lender's
agents may also periodically contact individual obligors and debtors to verify
the amounts then owing under such obligations, to determine whether such
obligors and debtors have any offsets or counterclaims against the Accounts
and/or Grantor and to inquire about such other matters as Lender may deem
necessary or desirable.  If Lender at any time has possession of any
Collateral, whether before or after an Event of Default, Lender shall be deemed
to have exercised reasonable care in the custody and preservation of the
Collateral if Lender takes such action for that purpose as Grantor shall
request or as Lender, in Lender's sole discretion, shall deem appropriate under
the circumstances, but failure to honor any request by Grantor shall not of
itself be deemed to be a failure to exercise reasonable care.  Lender shall not
be required to take any steps necessary to preserve any rights in the
Collateral against prior parties, nor to protect, preserve or maintain any
security interest given to secure the Collateral.

ADDITIONAL COVENANTS.  Grantor additionally agrees:

         CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY 
         WITH THE COMMISSION.

         Aging of Accounts.  Grantor will periodically, at such intervals
         requested by Lender, furnish Lender with an aging of that part of the
         Collateral consisting of Accounts, together with a certificate
         executed by an officer of Grantor, in such form and containing such
         representations





                                      151
<PAGE>   17

         and warranties regarding the accounts as Lender may reasonably
         require.

         Notice to Obligors.  Upon request by Lender after the occurrence of an
         Event of Default, Grantor will immediately notify individual obligors
         with regard to the Collateral, advising such obligors and/or debtors
         of the fact that Lender has been granted a Security Interest in their
         obligations.  In the event that Grantor should fail to provide such
         notices for any reason upon request by Lender, Grantor agrees that
         Lender may forward appropriate notices to such obligors and debtors,
         either in Lender's name or in the name of Grantor.

         Additional Documents.  Grantor shall at any time, from time to time,
         one or more times, upon written request by Lender, execute and deliver
         such further documents and do any and all such further acts and things
         as Lender may reasonably request, within its sole discretion, to
         effect the purposes of this Agreement.

         Verifications.  Grantor additionally agrees that Lender or Lender's
         agents may periodically contact Account Debtors in order to verify the
         amounts then owing under such obligations, to determine whether such
         debtors have any offsets or counterclaims against Grantor, and such
         other matters about which Lender may inquire.  In addition, Lender
         shall have the right to have its agent visit the construction site at
         the Fair Grounds Race Course to monitor such construction activities,
         to verify the amounts owed by Grantor under such construction
         contracts, to determine whether the work is progressing on schedule,
         to determine whether any default exist under any such construction
         contracts, and such other matters about which Lender may inquire.
         Grantor agrees to reimburse Lender on demand for the reasonable costs
         it incurs in monitoring such construction activities.

         Notification of Lender.  Grantor will promptly deliver to Lender all
         written notices, and will promptly give Lender written notice of any
         other notices received by Grantor with respect to the Collateral, and
         Lender will promptly give like notice to Grantor of any such notices
         received by Lender or its nominee.

EXPENDITURES BY LENDER.  Grantor recognizes and agrees that Lender may incur
certain expenses in connection with Lender's exercise of rights under this
Agreement.  If not discharged or paid when due, Lender may (but shall not be
obligated to) discharge or pay any amounts required to be discharged or paid by
Grantor under this Agreement, including without limitation all taxes,
Encumbrances and other claims, at any time levied or placed on the Collateral.





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<PAGE>   18

Lender also may (but shall not be obligated to) pay all costs for insuring,
maintaining and preserving the Collateral, including  without limitation, the
purchase of insurance protecting only Lender's interest in the Collateral.
Lender may further take such other action or actions and incur such additional
expenditures as Lender may deem to be necessary and proper to cure or rectify
any actions or inactions on Grantor's part as may be required under this
Agreement.  Nothing under this Agreement or otherwise shall obligate Lender to
take any such actions or to incur any such additional expenditures on Grantor's
behalf, or as making Lender in any way responsible or liable for any loss,
damage, or injury to the Collateral, to Grantor, or to any other person or
persons, resulting from Lender's election not to take such actions or to incur
such additional expenses.  In addition, Lender's election to take any such
actions or to incur such additional expenditures shall not constitute a waiver
or forbearance by Lender of any Event of Default under this Agreement.  All
such expenditures incurred or paid by Lender for such purposes will then bear
interest at the default rate charged under the Notes from the date incurred or
paid by Lender to the date of repayment.  All such expenses shall become a part
of the Indebtedness and will be payable on demand.  This Agreement also will
secure payment of these amounts.  Such right shall be in addition to all other
rights and remedies to which Lender may be entitled upon the occurrence of an
Event of Default.

EVENTS OF DEFAULT.  The following actions or inactions or both shall constitute
Events of Default under this Agreement:

         Default under Indebtedness.  Should Grantor fail to pay any portion of
         the Indebtedness within ten (10) days of the date any such portion of
         the Indebtedness is due and payable.

         Default under this Agreement.  Should Grantor violate, or fail to
         comply fully with any of the terms and conditions of, or default under
         this Agreement, and such default shall continue for thirty (30) days
         after written notice of such default is given by Lender to Grantor
         (provided, however, that no notice or cure period shall apply with
         respect to Grantor's failure to maintain any insurance required by
         this Agreement).

         Default Under Other Agreements.  Should any Event of Default occur or
         exist under any Related Document, including without limitation, any
         event of default specified in any loan or credit agreement now or
         hereafter governing any portion of the Indebtedness, or should any
         default occur under any of the Jazz Fest Contract, the VSI Contract,
         the Management Agreement or any of the construction contracts
         comprising part of the Construction Property, and such default shall
         continue for thirty (30) days after written notice of such default is
         given by Lender to Grantor.





                                      153
<PAGE>   19


         Other Defaults in Favor of Lender.  Should Grantor default under any
         other loan, extension of credit, security agreement, or obligation in
         favor of Lender, and such default shall continue for thirty (30) days
         after written notice of such default is given by Lender to Grantor.

         Default in Favor of Third Parties.  Should Grantor, any Pledgor, or
         any Guarantor default under any loan, extension of credit, security
         agreement, purchase or sales agreement, or any other agreement, in
         favor of any other creditor or person that may materially affect any
         of Grantor's or such Guarantor's property, or Grantor's or such
         Guarantor's ability to perform their respective obligations under this
         Agreement, or any Related Document, or pertaining to the Indebtedness,
         and such default shall continue to exist after the passage of any
         applicable cure period pertaining to same.

         Insolvency.  Should the suspensions, failure or insolvency, however
         evidenced, of Grantor, any Pledgor, or any Guarantor of the Note occur
         or exist.

         Readjustment of Indebtedness.  Should proceedings for readjustment of
         Indebtedness, reorganization, composition or extension under any
         insolvency law be brought by or against Grantor, any Pledgor, or any
         Guarantor.

         Assignment for Benefit of Creditors.  Should Grantor, any Pledgor, or
         any Guarantor file proceedings for a respite or make a general
         assignment for benefit of creditors.

         Receivership.  Should a receiver of all or any part of Grantor's
         property, or the property of any Pledgor or any Guarantor, be applied
         for or appointed.

         Dissolution Proceedings.  Should proceedings for the dissolution or
         appointment of a liquidator of Grantor, any Pledgor, or any Guarantor
         be commenced.

         False Statements.  Should any representation or warranty of Grantor,
         any Pledgor or any Guarantor made in connection with the Indebtedness
         prove to be incorrect or misleading in any material respect.

         Defective Collateralization.  Should this Agreement or any of the
         Related Documents cease to be in full force and effect (including
         failure of any Collateral documents to create a valid and perfected
         security interest or lien) at any time and for any reason, and Grantor
         shall fail to cooperate with Lender in curing same within ten (10)
         days of Lender's written request to Grantor for such cooperation.





                                      154
<PAGE>   20

                  CONFIDENTIAL INFORMATION OMITTED AND FILED 
                  SEPARATELY WITH THE COMMISSION.

         Termination of Racing License, OTB Licenses or Video Poker Licenses.
         Should any of the licenses required by Grantor for the conduct of
         racing activities, pari-mutuel wagering activities, the operation of
         off-track betting facilities presently operated by it or by Finish
         Line Management Corp. on its behalf, or for video poker gaming at any
         of its places of businesses be terminated, revoked, suspended, or not
         renewed when required for the continuation of such activities, or
         should any legislation allowing off-track betting or video poker
         activities be ruled unconstitutional pursuant to a final judgment by a
         court of proper jurisdiction.

         Failure to Prepay Indebtedness with the Fire Insurance Proceeds.
         Should Grantor fail to remit to Lender towards prepayment of the
         Indebtedness any of the Fire Insurance Proceeds immediately upon
         receipt of same (it being  understood that such prepayments will be
         applied to the installments due on the Indebtedness in an inverse
         order of maturity).

RIGHTS AND REMEDIES ON DEFAULT.  If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a
secured party under the Louisiana Commercial Laws (La.R.S. 10:1-101 et seq.).
In addition and without limitation, Lender may exercise any one or more of the
following rights and remedies:

         Accelerate Indebtedness.  Lender may declare the entire Indebtedness,
         including any prepayment penalty which Grantor would be required to
         pay, immediately due and payable, without notice and further demand
         for payment.

         Seizure and Sale of Collateral In Louisiana.  In the event that Lender
         elects to commence appropriate Louisiana foreclosure proceedings under
         this Agreement, Lender may cause the Collateral, or any part or parts
         thereof, to be immediately seized wherever found, and sold, whether in
         term of court or in vacation, under ordinary or executory process, in
         accordance with applicable Louisiana law, to the highest bidder for
         cash, with or without appraisement, and without the necessity of
         making additional demand upon or notifying Grantor or placing Grantor
         in default, all of which are expressly waived.

         Confession of Judgment.  For purposes of foreclosure under Louisiana
         executory process procedures, Grantor confesses judgment and
         acknowledges to be indebted unto and in favor of Lender, up to the
         full amount of the Indebtedness, in





                                      155
<PAGE>   21

         principal, interest, costs, expenses, attorneys' fees and other fees
         and charges.  Grantor further confesses judgment and acknowledges to
         be indebted unto and in favor of Lender in the amount of all
         additional advances that Lender may make on Grantor's behalf pursuant
         to this Agreement, together with interest thereon, up to a maximum of
         two (2) times the face amount of the aforesaid Note.  To the extent
         permitted under applicable Louisiana law, Grantor additionally waives:
         (a) the benefit of appraisal as provided in Articles 2332, 2336, 2723
         and 2724 of the Louisiana Code of Civil Procedure, and all other laws
         with regard to appraisal upon judicial sale; (b) the demand and three
         (3) days' delay as provided under Articles 2639 and 2721 of the
         Louisiana Code of Civil Procedure; (c) the notice of seizure as
         provided under Articles 2293 and 2721 of the Louisiana Code of Civil
         Procedure; (d) the three (3) days' delay provided under  Article 2331
         and 2722 of the Louisiana Code of Civil Procedure; and (e) all other
         benefits provided under Articles 2331, 2722 and 2723 of the Louisiana
         Code of Civil Procedure and all other Articles not specifically
         mentioned above.

         Keeper.  Should any or all of the Collateral be seized as an incident
         to an action for the recognition or enforcement of this Agreement, by
         executory process, sequestration, attachment, writ of fieri facias or
         otherwise, Grantor hereby agrees that the court issuing any such order
         shall, if requested by Lender, appoint Lender, or any agent designated
         by Lender, or any person or entity named by Lender at the time such
         seizure is requested, or any time thereafter, as Keeper of the
         Collateral as provided under La. R.S. 9:5136, et seq.  Such a Keeper
         shall be entitled to reasonable compensation.  Grantor agrees to pay
         the reasonable fees of such Keeper, which are hereby fixed at $50.00
         per hour, which compensation to the Keeper shall also be secured by
         this Agreement.

         Deliver Collateral.  This provision applies, to the extent applicable,
         if and when the Collateral for any reason is located outside the State
         of Louisiana following the occurrence of any Event of Default, or
         should there be a subsequent change in Louisiana law permitting such
         remedies. Lender may require Grantor to deliver to Lender all or any
         portion of the Collateral and any and all certificates of title and
         other documents relating to the Collateral.  Lender may require
         Grantor to assemble the Collateral and make it available to Lender at
         a place to be designated by Lender.  Lender also shall have full power
         to enter upon the property of Grantor to take possession of and remove
         the Collateral.  If the Collateral contains other goods not covered by
         this Agreement at the time of repossession, Grantor agrees Lender may
         take such other goods, provided





                                      156
<PAGE>   22

         that Lender makes reasonable efforts to return them to Grantor after
         repossession.

         Public or Private Sale of Collateral.  To the extent that any of the
         Collateral is then in Lender's possession, Lender shall have full
         power to sell, lease, transfer, or otherwise deal with the Collateral
         or proceeds thereof in its own name or that of Grantor.  Lender may
         sell the Collateral at public auction or private sale.  Unless the
         Collateral threatens to decline speedily in value or is of a type
         customarily sold on a recognized market, Lender will give Grantor
         reasonable notice of the time after which any private sale or any
         other intended disposition of the Collateral is to be made.  The
         requirements of reasonable notice shall be met if such notice is given
         at least ten (10) days before the time of the sale  or disposition.
         All expenses relating to the disposition of the Collateral, including
         without limitation the expenses of retaking, holding, insuring,
         preparing for sale and selling the Collateral, shall become a part of
         the Indebtedness secured by this Agreement and shall be payable on
         demand, with interest at the Note rate from date of expenditure until
         repaid.  Grantor agrees that any such sale shall be conclusively
         deemed to be conducted in a commercially reasonable manner if it is
         made consistent with the standard of similar sales of Collateral by
         commercial banks in New Orleans, Louisiana.

         Appoint Receiver.  This provision applies if and when the Collateral
         for any reason is located outside the State of Louisiana following the
         occurrence of any Event of Default, or should Louisiana law change or
         be interpreted to permit such a remedy.  Lender shall have the
         following rights and remedies regarding the appointment of a receiver:
         (a) lender may have a receiver appointed as a matter of right, (b) the
         receiver may be an employee of Lender and may serve without bond, and
         (c) all fees of the receiver and his or her attorney shall become part
         of the Indebtedness secured by this Agreement.

         Collect Revenues, Apply Accounts.  Lender shall have the right, at its
         sole option and election, at any time, after an Event of Default has
         occurred, to directly collect and receive all proceeds and/or payments
         arising under or in any way accruing from the Collateral, as such
         amounts become due and payable.  In addition, Lender shall have the
         right to apply the monies contained in any of Grantor's deposit
         accounts with Lender to the Indebtedness then outstanding.  In order
         to permit the foregoing, Grantor unconditionally agrees to deliver to
         Lender, immediately following demand, any and all of Grantor's
         records, ledger sheets, and other documentation, in the form requested
         by Lender, with regard





                                      157
<PAGE>   23

         to the Collateral and any and all proceeds and/or payments applicable 
         thereto.

         Lender shall have the further right, if an Event of Default then
         exists, where appropriate and within Lender's sole discretion, to file
         suit, either in Lender's own name or in the name of Grantor, to
         collect any and all proceeds and payments that may then and/or in the
         future be due and owing under this Agreement and if as a result of
         such it is necessary for Lender to attempt to collect any such
         proceeds and/or payments from the obligors therefor, Lender may
         compromise, settle, extend, or renew for any period (whether or not
         longer than the original period) any obligation or Indebtedness
         thereunder or evidenced thereby, or surrender,  release, or exchange
         all or any part of said obligation or Indebtedness, without affecting
         the liability of Grantor under this Agreement or under the
         Indebtedness.  To that end, Grantor hereby irrevocably constitutes and
         appoints Lender as its attorney-in-fact, coupled with an interest and
         with full power of substitution, to take any and all such actions and
         any and all other actions permitted hereby, either in the name of
         Grantor or Lender.

         Additional Expenses.  In the event that it should become necessary for
         Lender to conduct a search for any of the Collateral in connection
         with any foreclosure action, or should it be necessary to remove the
         Collateral, or any part or parts thereof, from the premises in which
         or on which the Collateral is then located, and/or to store and/or
         refurbish such Collateral, Grantor agrees to reimburse Lender for the
         cost of conducting such a search and/or removing and/or storing and/or
         refurbishing such Collateral, which additional expense shall also be
         secured by the lien of this Agreement.

         Specific Performance.  Lender may, in addition to the foregoing
         remedies, or in lieu thereof, in Lender's sole discretion, commence an
         appropriate action against Grantor seeking specific performance of any
         covenant contained herein, or in aid of the execution or enforcement
         of any power herein granted.

         Obtain Deficiency.  Lender may obtain a judgment against Grantor for
         any deficiency remaining on the Indebtedness due to Lender after
         application of all amounts received from the exercise of the rights
         provided in this Agreement and any Related Documents.

         Other Rights and Remedies.  In addition, Lender shall have and may
         exercise any or all other rights and remedies it may have available at
         law, in equity, or otherwise.  To the extent that the perfection of
         the security interest in the





                                      158
<PAGE>   24

         Collateral or the enforcement thereof is governed by the law of any
         state other than Louisiana, then the Lender shall have all the rights
         and remedies of a secured party under the Uniform Commercial Code as
         passed and amended in that state and under any other applicable law.

         Cumulative Remedies.  All of Lender's rights and remedies, whether
         evidenced by this Agreement or the Related Documents or by any other
         writing, shall be cumulative and may be exercised singularly or
         concurrently.  Election by Lender to pursue any remedy shall not
         exclude pursuit of any other remedy, and an election to make
         expenditures or to take action to perform an obligation of Grantor
         under this  Agreement, after Grantor's failure to perform, shall not
         affect Lender's right to declare a default and to exercise its
         remedies.

REGISTRATION OF STOCK.  Grantor acknowledges that Pledgors have
contemporaneously herewith pledged certain shares of the common stock of
Grantor as security for the Indebtedness, and that Pledgors have agreed that
upon the occurrence of an Event of Default, Lender shall have the right to sell
such shares of stock at public or private sales.  If any consent, approval, or
authorization of any federal, state, municipal or other governmental
department, agency or authority should be necessary to effectuate any sale or
other disposition of such stock, or any partial sale or other disposition of
such stock, Grantor will execute all applications and other instruments as may
be required in connection with securing any such consent, approval or
authorization and will otherwise use its best efforts to secure same.  If
Lender shall determine to exercise its right to sell all or any part of such
stock and if in the opinion of counsel to Lender it is advisable to have such
stock or the portion thereof to be sold registered under the provisions of the
Securities Act of 1933, as amended (the "Act"), Grantor hereby agrees, at its
own cost and expense (i) to execute and deliver, and to cause its directors and
officers to execute and deliver, all such instruments and documents, and to do
or cause to be done all other such acts and things, as may be necessary or, in
the opinion of the Lender, advisable to register such stock, or the portion
thereof to be sold, under the provisions of the Act and to cause the
registration statement relating thereto to become effective and to remain
effective for such period as prospectuses are required by law to be furnished,
and to make or cause to be made all amendments and supplements thereto and to
the related prospectus which, in the opinion of the Lender, are necessary or
advisable, all in conformity with the requirements of the Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto, (ii)
to make available to its security holders as soon as practicable an earnings
statement (which need not be audited) covering a period of at least 12 months,
beginning with the first month after the effective date of





                                      159
<PAGE>   25

any such registration statement, which earnings statement will satisfy the
provisions of Section 11(a) of the Act, (iii) to use its best efforts to
qualify such stock under state Blue Sky or securities laws and to obtain the
approval of any governmental authorities for the public sale of such stock,
including all necessary gaming authorities' approvals, as requested by the
Lender, and (iv) at the request of the Lender, to indemnify and hold harmless
the Lender, the holder or holders of the Indebtedness and any underwriters,
including any person controlling any of the foregoing, from and against any
loss, liability, claim, damage and expense, including reasonable attorneys'
fees incurred in connection therewith, under the Act or otherwise insofar as
such loss, liability, claim, damage or expense arises out of or is based upon
any actual or alleged  untrue statement of a material fact contained in such
registration statement or supplement thereto, or arises out of or is based upon
any omission or alleged omission to state therein a material fact required to
be stated or necessary to make the statements therein not misleading, such
indemnification to remain operative regardless of any investigation made by or
on behalf of the Lender, the holder or holders of the Indebtedness or any
underwriters, including any person controlling any of the foregoing; provided,
however, that Grantor shall not be liable in any case to the extent that any
such loss, liability, claim, damage or expenses arises out of or is based on an
untrue statement or alleged untrue statement or an omission or an alleged
omission made in reliance upon and in conformity with written information
furnished specifically to Grantor by Lender, any holder or holder of the
Indebtedness or any underwriter.

Expenses payable by Grantor in connection with any disposition of the stock of
the Pledgors under the provisions above shall include, but shall not be limited
to, all costs of a registration under the Act of any such stock pursuant to any
applicable regulation under the Act, brokers' or underwriters' commissions,
fees or discounts, accounting and legal fees, costs of printing and other
expenses of transfer and sale.  Grantor agrees to pay to Lender on demand
following any Event of Default and in advance of any such registration, sale or
other realization on such stock, such amount which, in the estimation of
counsel to the Lender, will cover all of such costs and expenses described
above, and all other costs and expenses of enforcing the Indebtedness and of
realizing on such stock, including reasonable attorneys' fees and legal
expenses.

ASSIGNMENT OF INDEBTEDNESS.  Grantor hereby recognizes and agrees that Lender
may assign all or any portion of Grantor's Indebtedness to one or more third
party creditors.  Such transfers may include, but are not limited to, sales of
participation interests in Grantor's Indebtedness.  Grantor specifically agrees
and consents to all such transfers and assignments.  Grantor additionally
agrees that any and all of Grantor's Indebtedness in





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favor of such a third party assignee, for the limited purposes set forth above,
will be secured by the Collateral.

PROTECTION OF LENDER'S SECURITY RIGHTS.  Grantor will be fully responsible for
any losses that Lender may suffer as a result of anyone other than Lender
asserting any rights or interest in or to the Collateral.  Grantor agrees to
appear in and to defend all actions or proceedings purporting to affect
Lender's security interests in any of the Collateral subject to this Agreement
and any of the rights and powers granted Lender hereunder.  In the event that
Grantor fails to do what is required of it under this Agreement, or if any
action or proceeding is commenced naming Lender as a party or affecting
Lender's security interests or the rights and powers granted under this
Agreement, then Lender may, without releasing Grantor from any of its
obligations under this Agreement, do whatever Lender believes to be necessary
and proper within its sole discretion to protect the security of this
Agreement, including without limitation making additional advances on Grantor's
behalf as provided herein.

INDEMNIFICATION OF LENDER.  Grantor agrees to indemnify, to defend and to save
and hold Lender harmless from any and all claims, suits, obligations, damages,
losses, costs, expenses (including without limitation Lender's attorneys'
fees), demands, liabilities, penalties, fines and forfeitures of any nature
whatsoever that may be asserted against or incurred by Lender arising out of or
in any manner occasioned by this Agreement and the exercise of the rights and
remedies granted Lender hereunder.  The foregoing indemnity provisions shall
survive the cancellation of this Agreement as to all matters arising or
accruing prior to such cancellation, and the foregoing indemnity shall survive
in the event that Lender elects to exercise any of the remedies as provided
under this Agreement following default hereunder.

EXECUTION OF ADDITIONAL DOCUMENTS.   Grantor agrees to execute all additional
documents, instruments and agreements that Lender may deem to be necessary and
proper, within its sole discretion, in form and substance satisfactory to
Lender, to keep this Agreement in effect, and to consummate fully all of the
transactions contemplated hereby and by any other agreement, instrument or
document heretofore, now or at any time or times hereafter executed by Grantor
and delivered to Lender.

INSPECTION; AUDITS.  Lender and its agents may periodically enter upon
Grantor's premises at reasonable hours and inspect the Collateral.  Lender and
its agents may also periodically conduct audits of the Collateral and may
further inspect and audit Grantor's books and records that in any way pertain
to the Collateral and any part or parts thereof.

APPLICATION OF PAYMENTS.  Grantor agrees that all payments and other sums and
amounts received by Lender under the Indebtedness





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or under this Agreement, shall be applied:  first, to reimburse Lender for its
costs of collecting the same (including but not limited to, reimbursement of
Lender's reasonable attorneys' fees); second, to the repayment of interest on
any Indebtedness; and finally, to the payment of principal on the Indebtedness
then outstanding, which may be applied in such order and priority as Lender may
determine within its sole discretion.

TAXATION.  In the event that there should be any change in law with regard to
taxation of security agreements or the debts they secure, Grantor agrees to pay
any taxes, assessments or charges that may be imposed upon Lender as a result
of this Agreement.

EFFECT OF WAIVERS.  Grantor has waived, and/or does by these presents waive,
presentment for payment, protest, notice of protest and notice of nonpayment
under all of the Indebtedness secured by this Agreement.  Grantor has further
waived, and/or does by these presents waive, all pleas of division and
discussion, and all similar rights with regard to the Indebtedness, and agrees
that Grantor shall remain liable, together with any and all Guarantors of the
Indebtedness, on a "solidary" or "joint and several" basis.  Grantor further
agrees that discharge or release of any party who is, may, or will be liable to
Lender under any of the Indebtedness, or the release of the Collateral or any
other Collateral directly or indirectly securing repayment of the same, shall
not have the effect of releasing or otherwise diminishing or reducing the
actual or potential liability of Grantor and/or any other party or parties
guaranteeing payment of the Indebtedness, who shall remain liable to Lender,
and/or of releasing any Collateral or other Collateral that is not expressly
released by Lender.

Grantor additionally agrees that Lender's acceptance of payments other than in
accordance with the terms of any agreement or agreements governing repayment
of the Indebtedness, or Lender's subsequent agreement to extend or modify such
repayment terms, shall likewise not have the effect of releasing Grantor,
and/or any other party or parties guaranteeing payment of the Indebtedness,
from their respective obligations to Lender, and/or of releasing any of the
Collateral or other Collateral directly or indirectly securing repayment of the
Indebtedness.  In addition, no course of dealing between Grantor and Lender,
nor any failure or delay on the part of Lender to exercise any of the rights
and remedies granted to Lender under this Agreement, or under any other
agreement or agreements by and between Grantor and Lender, shall have the
effect of waiving any of Lender's rights and remedies.  Any partial exercise of
any rights and remedies granted to Lender shall furthermore not constitute a
waiver of any of Lender's other rights and remedies, it being Grantor's intent
and agreement that Lender's rights and remedies shall be cumulative in nature.
Grantor further agrees that, upon the occurrence of any Event of Default under
this Agreement, any waiver or forbearance





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on the part of Lender to pursue the rights and remedies available to Lender,
shall be binding upon Lender only to the extent that Lender specifically agrees
to any such waiver or forbearance in writing.  A waiver or forbearance as to
one Event of Default shall not constitute a waiver of forbearance as to any
other Event of Default.  None of the warranties, conditions, provisions and
terms contained in this Agreement or any other agreement, documents, or
instrument now or hereafter executed by Grantor and delivered to Lender, shall
be deemed to have been waived by any act or knowledge of Lender, its agents,
officers or employees; but only by an instrument in writing specifying such
waiver, signed by a duly authorized officer of Lender and delivered to Grantor.

MISCELLANEOUS PROVISIONS.  The following miscellaneous provisions are a part of
this Agreement.

         Amendments.  This Agreement, together with any Related Documents,
         constitutes the entire understanding and agreement of the parties as
         to the matters set forth in this Agreement.  No alteration of or
         amendment to this Agreement shall be effective unless given in writing
         and signed by the party or parties sought to be charged or bound by
         the alteration or amendment.

         Applicable Law.  This Agreement has been delivered to Lender and
         accepted by Lender in the State of Louisiana.  This Agreement shall be
         governed by and construed in accordance with the laws of the State of
         Louisiana.

Attorneys' Fees; Expenses.  Grantor agrees to pay upon demand all of Lender's
costs and expenses, including reasonable attorneys' fees and legal expenses,
incurred in connection with the enforcement of this Agreement.  Lender may pay
someone else to  help enforce this Agreement, and Grantor shall pay the costs
and expense of such enforcement.  Costs and expenses include Lender's
reasonable attorneys' fees and legal expenses whether or not there is a
lawsuit, including attorneys' fees and legal expenses for bankruptcy
proceedings (and including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collection services.
Grantor also shall pay all court costs and such additional fees as may be
directed by the court.

Caption Headings.  Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions of
this Agreement.

Notices.  Any notice or demand which, by any provision of this Agreement, is
required or permitted to be given or served by the Lender to or on the Grantor
shall be deemed to have been sufficiently given and served for all purposes (if
mailed) five calendar days after being deposited, postage prepaid, in the





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United States mail, registered or certified mail, or (if delivered by express
courier) one calendar day after being delivered to such courier, or (if
delivered in person) the same day as delivery or (if delivered by facsimile
transmission) on the day reception is confirmed, in each case addressed (until
another address or addresses are given in writing by the Grantor to the Lender)
to the Grantor as follows:

                 Fair Grounds Corporation
                 1751 Gentilly Blvd.
                 New Orleans, LA  70119
                 Telecopy No.: (504) 944-1211
                 Attn:  Gordon Robertson,
                        Vice President and
                               Chief Financial Officer


                 with copies to:

                 Chehardy, Sherman, Ellis, Breslin & Murray
                 Suite 1100
                 One Galleria Blvd.
                 Metairie, LA  70001
                 Attn: David R. Sherman, Esq.
                 Telecopy No.: (504) 833-8080

                 and

                 Richard Katcher, Trustee
                 Four Commerce Park Square
                 23200 Chagrin Boulevard
                 Suite 600
                 Cleveland, Ohio  44122
                 Telecopy No.:  (216) 464-7609


         Any notice or demand which, by any provision of this Agreement, is
required or permitted to be given or served by the Grantor to or on the Lender
shall be deemed to have been  sufficiently given and served for all purposes
(if mailed) five calendar days after being deposited, postage prepaid, in the
United States mail, registered or certified mail, or (if delivered by express
courier) one calendar day after being delivered to such courier, or (if
delivered in person) the same day as delivery or (if delivered by facsimile
transmission) on the day reception is confirmed, in each case addressed (until
another address or addresses are given in writing by the Lender to the Grantor)
to the Lender as follows:





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<PAGE>   30

                 First National Bank of Commerce
                 210 Baronne Street
                 New Orleans, Louisiana 70112
                 Attn:    Hospitality Lending Division,
                          Louis Ballero, Senior Vice President
                 Telecopy No.: (504) 561-1738

                 with a copy to:

                 Liskow & Lewis
                 One Shell Square
                 50th Floor
                 New Orleans, Louisiana 70139-5001
                 Attn:    Wm. Blake Bennett, Esq.
                 Telecopy No.: (504) 592-5108

Power of Attorney.  Grantor hereby appoints Lender as its true and lawful
attorney-in-fact, irrevocably, with full power of substitution to do the
following: (a) to demand, collect, receive, receipt for, sue and recover all
sums of money or other property which may now or hereafter become due, owing or
payable from the Collateral; (b) to execute, sign and endorse any and all
claims, instruments, receipts, checks, drafts or warrants issued in payment for
the Collateral; (c) to settle or compromise any and all claims arising under
the Collateral (other than claims giving rise to Fire Insurance Proceeds and
the claims with respect to the ADT Lawsuit), and, in the place and stead of
Grantor, to execute and deliver its release and settlement for the claim; and
(d) to file any claim or claims or to take any action or institute or take part
in any proceedings, either in its own name or in the name of Grantor, or
otherwise, which in the discretion of Lender may seem to be necessary or
advisable.  This power is given as security for the Indebtedness, and the
authority hereby conferred is and shall be irrevocable and shall remain in full
force and effect until renounced by Lender.

 Severability.  If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstances, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances.  If feasible, any such
offending provision shall be deemed to be modified to be within the limits of
enforceability or validity; however, if the offending provision cannot be so
modified, it shall be stricken and all other provisions of this Agreement in
all other respects shall remain valid and enforceable.

Sole Discretion of Lender.  Whenever Lender's consent or approval is required
under this Agreement, the decision as to whether or not to consent or approve
shall be in the sole and exclusive discretion of Lender and Lender's decision
shall be final and





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<PAGE>   31

conclusive; provided, however, that Lender shall not arbitrarily or
capriciously withhold such consent.

Successors and Assigns Bound; Solidary Liability.  Grantor's obligations and
agreements under the Agreement shall be binding upon Grantor's successors and
assigns.  In the event that there is more than one Grantor under this
Agreement, all of the agreements and obligations made and/or incurred by
Grantors under this Agreement shall be on a "solidary" or "joint and several"
basis.

GRANTOR AND LENDER ACKNOWLEDGE HAVING READ ALL THE PROVISIONS OF THIS SECURITY
AGREEMENT, AND AGREE TO ITS TERMS.  THIS AGREEMENT IS DATED JULY 17, 1995.


GRANTOR:


FAIR GROUNDS CORPORATION

By:_______________________________

Its:______________________________


LENDER:

FIRST NATIONAL BANK OF COMMERCE

By:_______________________________

Its:______________________________





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