EXHIBIT 10.7

                               SECURITY AGREEMENT

                          DATED AS OF JANUARY 27, 1999

                                 BY AND BETWEEN

                         LOUISIANA CASINO CRUISES, INC.

                                       AND

                      U. S. BANK TRUST NATIONAL ASSOCIATION

                                   AS TRUSTEE



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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
SECTION                                                                           PAGE
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<S>               <C>                                                             <C>
SECTION 1.        Grant of Security.................................................1

SECTION 2.        Security for Obligations..........................................3

SECTION 3.        Company Remains Liable............................................4

SECTION 4.        Delivery of Security Collateral and Account Collateral............4

SECTION 5.        Maintaining the Collateral Account................................4

SECTION 6.        Intentionally Omitted.............................................4

SECTION 7.        Investing of Amounts in the Collateral Account....................5

SECTION 8.        Release of Amounts................................................5

SECTION 9.        Representations and Warranties....................................5

SECTION 10.       Certain Covenants.................................................7

SECTION 11.       Insurance.........................................................9

SECTION 12.       Place of Perfection; Records; Collection of Receivables..........10

SECTION 13.       Voting Rights; Dividends; Etc....................................10

SECTION 14.       As to the Assigned Agreements....................................12

SECTION 15.       Payments Under the Assigned Agreements...........................13

SECTION 16.       Transfers and Other Liens; Pledged Shares........................13

SECTION 17.       Trustee Appointed Attorney-in-Fact...............................13

SECTION 18.       Trustee May Perform..............................................14

SECTION 19.       The Trustee's Duties.............................................14

SECTION 20.       Remedies.........................................................14

                                       ii


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SECTION 21.       Registration Rights..............................................16

SECTION 22.       Regulatory Matters...............................................17

SECTION 23.       Indemnity and Expenses...........................................18

SECTION 24.       Security Interest Absolute.......................................19

SECTION 25.       Amendments; Waivers; Etc.........................................20

SECTION 26.       Addresses for Notices............................................20

SECTION 27.       Continuing Security Interest; Assignment Under the Indenture.....20

SECTION 28.       Release and Termination..........................................20

SECTION 29.       Gaming Laws......................................................21

SECTION 30.       The Mortgages....................................................21

SECTION 31.       Governing Law; Terms.............................................21

SECTION 32.       Execution in Counterparts........................................21

SECTION 33.       Interaction with Indenture.......................................21
</TABLE>

Schedule I        -        Assigned Agreements
Schedule II       -        Locations of Equipment and Inventory
Schedule III      -        Trade Names
Schedule IV       -        Deposit Accounts
Exhibit A         -        Form of Deposit Account Letter
Exhibit B         -        Form of Consent and Agreement

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                               SECURITY AGREEMENT

         SECURITY AGREEMENT dated as of January 27, 1999 made by and between
LOUISIANA CASINO CRUISES, INC., a Louisiana corporation, with an office at 1717
River Road North, Baton Rouge, Louisiana 70802 (the "COMPANY") and U.S. BANK
TRUST NATIONAL ASSOCIATION, as trustee (in such capacity, together with any
successor appointed pursuant to Section 7.8 of the Indenture, the "TRUSTEE") for
the holders (the "HOLDERS") under an Indenture dated as of January 27, 1999
(such Indenture, as it may be amended, supplemented or otherwise modified from
time to time in accordance with its terms, the "INDENTURE") . Capitalized terms
not otherwise defined in this Agreement shall have the meanings set forth in the
Indenture.

         PRELIMINARY STATEMENTS:

                  (1) The Company has entered into the Indenture pursuant to
which the Company will issue up to $55,000,000 of 11% Senior Secured Notes Due
2005 (the "NOTES") .

                  (2) The Company has opened a collateral account (the
"COLLATERAL ACCOUNT") with U.S. Bank Trust National Association, Account No.
______________, in the name of Louisiana Casino Cruises, Inc. but under the sole
dominion and control of the Trustee and subject to the terms of this Agreement
(on the date hereof, the balance in the Collateral Account is $0).

                  (3) It is a condition precedent to the execution of the
Indenture by the Trustee and the purchase of the Notes by the Holders that the
Company shall have granted to the Trustee the assignment and security interest
and made the pledge and assignment contemplated by this Agreement.

         NOW, THEREFORE, in consideration of the premises, the Company hereby
agrees with the Trustee for its benefit and the ratable benefit of the Holders
as follows:

         SECTION 1. GRANT OF SECURITY. The Company hereby assigns and pledges to
the Trustee for its benefit and the ratable benefit of the Holders, and hereby
grants to the Trustee for its benefit and the ratable benefit of the Holders a
security interest in, the collateral described in paragraphs (a), (b), (c), (d),
(e), (f) and (g) of this Section 1 (collectively, the "COLLATERAL"):

                  (a) all of the Company's right, title and interest, whether
         now owned or hereafter acquired, in and to (i) all equipment in all of
         its forms, wherever located (other than any gaming equipment that was
         acquired with the proceeds of Indebtedness provided by one or more
         lenders that are not Affiliates of the Company and is or at the time of
         its acquisition becomes subject to a perfected security interest in
         such gaming equipment (the "EXCLUDED GAINING EQUIPMENT"), now or
         hereafter existing (including, but not limited to, security and
         surveillance equipment, cash registers, telephone, facsimile and other
         communications equipment, chairs, desks, cabinets and other furniture),
         all furniture, fixtures and all parts thereof and all accessions
         thereto and (ii) the vessel

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         Casino Rouge (Official Number 1027353), together with all boilers,
         engines, machinery, masts, spars, sails, boats, anchors, cables,
         chains, rigging, tackle, apparel and fittings relating thereto (any and
         all such equipment, furniture, fixtures, parts and accessions being the
         "EQUIPMENT");

                  (b) all of the Company's right, title and interest, whether
         now owned or hereafter acquired, in and to all inventory in all of its
         forms, wherever located, now or hereafter existing (including, but not
         limited to, (i) all food, beverages, linens and other hotel supplies,
         glasses, china and other restaurant supplies and all raw materials and
         work in process therefor, finished goods thereof and materials used or
         consumed in the manufacture or production thereof, (ii) goods in which
         the Company has an interest in mass or a joint or other interest or
         right of any kind (including, without limitation, goods in which the
         Company has an interest or right as consignee) and (iii) goods that are
         returned to or repossessed by the Company), and all accessions thereto
         and products thereof and documents therefor (any and all such
         inventory, accessions, products and documents being the "INVENTORY");

                  (c) all of the Company's right, title and interest, whether
         now owned or hereafter acquired, in and to all accounts, contract
         rights, chattel paper, instruments, deposit accounts (including the
         deposit accounts listed on Schedule IV hereto), general intangibles and
         other obligations of any kind, now or hereafter existing, whether or
         not arising out of or in connection with the sale or lease of goods or
         the rendering of services, and all rights now or hereafter existing in
         and to all security agreements, leases and other contracts securing or
         otherwise relating to any such accounts, contract rights, chattel
         paper, instruments, deposit accounts, general intangibles or
         obligations, but excluding any gaming license issued by the State of
         Louisiana or any subdivision or agency thereof to the extent granting
         of a security interest in such gaming license would violate applicable
         governing law (any and all such accounts, contract rights, chattel
         paper, instruments, deposit accounts, general intangibles and
         obligations, to the extent not referred to in paragraph (e) or (f) of
         this Section 1, being the "RECEIVABLES", and any and all such leases,
         security agreements and other contracts being the "RELATED CONTRACTS");

                  (d) all of the Company's right, title and interest in and to
         each of the agreements listed on Schedule I hereto, as such agreements
         may be amended, supplemented or otherwise modified from time to time
         (collectively, the "ASSIGNED AGREEMENTS"), including, without
         limitation, (i) all rights of the Company to receive moneys due and to
         become due under or pursuant to the Assigned Agreements, (ii) all
         rights of the Company to receive proceeds of any insurance, indemnity,
         warranty or guaranty with respect to the Assigned Agreements, (iii) any
         claims of the Company for damages arising out of or for breach of or
         default under one or more of the Assigned Agreements and (iv) all
         rights of the Company to terminate the Assigned Agreements, to perform
         thereunder and to compel performance and otherwise exercise all
         remedies thereunder (all such Collateral being the "AGREEMENT
         COLLATERAL");

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                  (e) all of the following (collectively, the "ACCOUNT
         COLLATERAL"):

                           (i) the Collateral Account, all funds held therein
                  and all certificates and instruments, if any, from time to
                  time representing or evidencing the Collateral Account;

                           (ii) Collateral Investments (as hereinafter defined)
                  from time to time and all certificates and instruments, if
                  any, from time to time representing or evidencing the
                  Collateral Investments;

                           (iii) all notes, certificates of deposit, deposit
                  accounts, checks and other instruments from time to time
                  hereafter delivered to or otherwise possessed by the Trustee
                  for or on behalf of the Company, in substitution for or in
                  addition to any or all of the then existing Account
                  Collateral; and

                           (iv) all interest, dividends, cash, instruments and
                  other property and assets from time to time received,
                  receivable or otherwise-distributed in respect of or in
                  exchange for any or all of the then existing Account
                  Collateral;

                  (f) any and all shares of stock of, or other equity interests
         in, any Restricted Subsidiary or any other Person owned, as of the date
         hereof, or from time to time acquired by the Company in any manner
         after the date hereof (the "PLEDGED SHARES"), the certificates
         representing the Pledged Shares, and all dividends, cash, instruments
         and other property from time to time received, receivable or otherwise
         distributed in respect of or in exchange for any or all of the Pledged
         Shares (the "SECURITY COLLATERAL"); and

                  (g) all proceeds of any and all of the foregoing Collateral
         (including, without limitation, proceeds that constitute property of
         the types described in paragraphs (a) - (f) of this Section 1) and, to
         the extent not otherwise included, all (i) payments under insurance
         (whether or not the Trustee is the loss payee thereof), or any
         indemnity, warranty or guaranty payable by reason of loss or damage to
         or otherwise with respect to any of the foregoing Collateral and (ii)
         cash.

         SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures the payment
of all obligations of the Company now or hereafter existing under or with
respect to the Notes, the Indenture or any of the Security Documents, whether
for principal, premium, interest, fees, expenses or otherwise (all such
obligations being the "SECURED OBLIGATIONS"). Without limiting the generality of
the foregoing, this Agreement secures the payment of all amounts that constitute
part of the Secured Obligations and would be owed by the Company to the Trustee
or the Holders under or with respect to the Notes, the Indenture or the Security
Documents but for the fact that they are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization or similar proceeding involving
the Company.

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         SECTION 3. COMPANY REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (a) the Company shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by the Trustee of any of the
rights hereunder shall not release the Company from any of its duties or
obligations under the contracts and agreements included in the Collateral and
(c) neither the Trustee nor any Holder shall have any obligation or liability
under the contracts and agreements included in the Collateral by reason of this
Agreement, nor shall the Trustee or any Holder be obligated to perform any of
the obligations or duties of the Company thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.

         SECTION 4. DELIVERY OF SECURITY COLLATERAL AND ACCOUNT COLLATERAL. All
certificates or instruments representing or evidencing Security Collateral or
Account Collateral shall be delivered to and held by or on behalf of the Trustee
pursuant hereto and shall be in suitable form for transfer by delivery or shall
be accompanied by duly executed instruments of transfer or assignment in blank,
all in form and substance satisfactory to the Trustee. The Trustee shall have
the right, at any time and without notice to the Company, to transfer to or to
register in the name of the Trustee or any of its nominees any or all of the
Security Collateral and Account Collateral, subject only to the revocable rights
specified in Section 13(a) hereof. In addition, the Trustee shall have the right
at any time to exchange certificates or instruments representing or evidencing
Account Collateral for certificates or instruments of smaller or larger
denominations.

         SECTION 5. MAINTAINING THE COLLATERAL ACCOUNT. So long as any Secured
Obligation shall remain unpaid and until such time as the Indenture shall have
been satisfied and discharged in accordance with Section 8.1 thereof:

                  (a) The Company will maintain the Collateral Account with the
         Trustee.

                  (b) It shall be a term and condition of the Collateral
         Account, notwithstanding any term or condition to the contrary in any
         other agreement relating to the Collateral Account and except as
         otherwise provided in Sections 8 and 20 hereof, that no amount
         (including interest on Collateral Investments, as hereinafter defined)
         shall be paid or released to or for the account of, or withdrawn by or
         for the account of, the Company or any other Person from the Collateral
         Account.

The Collateral Account shall be subject to such applicable laws, and such
applicable regulations of the Board of Governors of the Federal Reserve System
and of any other appropriate banking or governmental authority, as may now or
hereafter be in effect.

         SECTION 6. Intentionally Omitted.

         SECTION 7. INVESTING OF AMOUNTS IN THE COLLATERAL ACCOUNT. The Trustee
will upon receipt of the written instructions of the Company from time to time,
subject to Sections 8 and 20

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hereof, (a) invest amounts on deposit in the Collateral Account in such
marketable securities in the name of the Trustee as the Company may select and
(b) invest interest paid on the marketable securities referred to in clause (a)
above, and reinvest other proceeds of any such marketable securities that may
mature or be sold in the name of the Trustee as the Company may select (the
marketable securities referred to in clauses (a) and (b) above being,
collectively, "COLLATERAL INVESTMENTS"). Interest and proceeds that are not
invested or reinvested in Collateral Investments as provided in the immediately
preceding sentence shall be deposited and held in the Collateral Account.

         SECTION 8. RELEASE OF AMOUNTS. Subject to Section 20 hereof, amounts
held in the Collateral Account shall be released only in accordance with the
terms and conditions of Section 11.4 of the Indenture.

         SECTION 9. REPRESENTATIONS AND WARRANTIES. The Company represents,
warrants and agrees for itself and its Collateral as follows:

                  (a) LOCATION OF COMPANY AND COLLATERAL, ETC. All of the
         Equipment and Inventory is located at one or more of the places
         specified in Schedule II hereto. The principal place of business of the
         Company or, if the Company has more than one place of business, the
         chief executive office of the Company and the office where the Company
         keeps its records concerning its Receivables, copies of each Assigned
         Agreement to which it is a party and copies of all chattel paper that
         evidence Receivables, are located, in each case, at the address listed
         below the name of the Company on the signature page hereof. Copies of
         each Assigned Agreement (certified by the Secretary of the Company to
         be true and complete) and originals of all chattel paper that evidence
         Receivables have been delivered to the Trustee. None of the Receivables
         or the Agreement Collateral is evidenced by a promissory note, chattel
         paper or other instrument, except for promissory notes, chattel paper
         or other instruments that have been delivered to the Trustee pursuant
         to the terms of this Agreement.

                  (b) OWNERSHIP OF COLLATERAL. The Company is the legal and
         beneficial owner of the Collateral in which it is granting a security
         interest free and clear of any Lien, except for (i) Liens created
         hereunder in favor of the Trustee and (ii) Permitted Liens. No
         effective financing statement or other instrument similar in effect
         covering all or any part of the Collateral is on file in any recording
         office, except such as may have been filed in favor of the Trustee
         relating to this Agreement. The Company has exclusive possession and
         control of the Equipment and Inventory. All of the trade names of the
         Company are listed below its name on Schedule III hereto.

                  (c) AGREEMENT COLLATERAL. The Assigned Agreements, copies of
         which (certified by the Secretary of the Company to be true and
         complete) have been furnished to the Trustee, have been duly
         authorized, executed and delivered by (i) the Company and (ii) to the
         knowledge of the officers and directors of the Company, each other
         party

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         thereto, have not been amended, supplemented or otherwise modified
         except as set forth on Schedule I hereto, are in full force and effect
         and are binding upon and enforceable against all parties thereto in
         accordance with their terms, subject, as to enforcement of remedies, to
         applicable bankruptcy, insolvency (including, without limitation, all
         laws relating to fraudulent transfers), moratorium or other laws
         affecting enforcement of creditors' rights generally from time to time
         in effect and except as enforcement thereof is subject to general
         principles of equity (regardless of whether enforcement is considered
         in a proceeding in equity or at law). There exists no default under any
         Assigned Agreement by (i) the Company and (ii) to the knowledge of the
         officers and directors of the Company, each other party thereto. Each
         party to each Assigned Agreement other than the Company has executed
         and delivered to the Company a consent, in substantially the form of
         Exhibit B hereto, to the assignment of the Agreement Collateral to the
         Trustee pursuant to this Agreement.

                  (d) VALID AND PERFECTED PRIORITY SECURITY INTEREST. This
         Agreement and the pledge and assignment of the Collateral pursuant
         hereto create, a valid and perfected first priority security interest
         in the Collateral, enforceable against all third parties and securing
         the payment of the Secured Obligations, and all filings and other
         actions necessary or desirable and requested by the Trustee prior to
         the date hereof to create, perfect and protect such security interest
         have been duly made or taken or will be duly made or taken on or
         immediately after the Issue Date.

                  (e) THIRD PARTY AUTHORIZATIONS. No authorization, approval or
         other action by, and no notice to or filing with, any governmental
         authority or regulatory body or other third party is required for:

                           (i) the grant by the Company of the assignment and
                  security interest granted hereby, for the pledge by the
                  Company of the Security Collateral pursuant hereto or for the
                  execution, delivery or performance of this Agreement by the
                  Company, or

                           (ii) the perfection or maintenance of the pledge,
                  assignment and security interest created hereby (including the
                  first priority nature thereof), except for the filing of
                  financing and continuation statements under the Uniform
                  Commercial Code, which financing statements have been duly
                  filed, and

                           (iii) the exercise by the Trustee of its voting or
                  other rights provided for in this Agreement or the remedies in
                  respect of the Collateral pursuant to this Agreement, except
                  as may be required in connection with the disposition of any
                  portion of the Security Collateral by laws affecting the
                  offering and sale of securities generally.

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                  (f) INVENTORY. All Inventory produced by the Company has been
         produced by the Company in compliance with all requirements of the Fair
         Labor Standards Act.

                  (g) ASSETS INCLUDED IN COLLATERAL. The Collateral (together
         with the property and assets of the Company subject to other Security
         Documents) consists of all of the property and assets owned by the
         Company or any of its Subsidiaries other than Excluded Gaming
         Equipment. The Collateral includes all property and assets other than
         Excluded Gaming Equipment necessary to operate the business of the
         Company and its Subsidiaries in the same manner as such business is
         conducted on the date hereof and as such business is intended to be
         conducted.

                  (h) FEDERAL IDENTIFICATION NUMBER. The Company's federal tax
         identification number is 72-1196619 and the Company shall not change
         such number, except upon at least 30 days' prior written notice to the
         Trustee and upon the taking or causing to be taken at the Company's
         expense such actions as may be reasonably requested by the Trustee.

         SECTION 10. CERTAIN COVENANTS. So long as any Secured Obligation shall
remain unpaid and until such time as the Indenture shall have been satisfied and
discharged in accordance with Section 8.1 thereof, the Company will:

                  (a) COMPLIANCE WITH LAWS, ETC. Comply, and cause each of its
         Subsidiaries to comply, in all material respects, with all applicable
         laws, rules, regulations and orders, such compliance to include,
         without limitation, compliance with the Employment Retirement Income
         Security Act of 1974, as amended, and the Racketeer Influenced and
         Corrupt Organizations Chapter of the Organized Crime Control Act of
         1970.

                  (b) PAYMENT OF TAXES, ETC. To the extent required under,
         Section 4.5 of the Indenture pay and discharge, and cause each of its
         Subsidiaries to pay and discharge, before the same shall become
         delinquent (i) all taxes, assessments and governmental charges or
         levies imposed upon it or upon the Collateral and (ii) all lawful
         claims that, if unpaid, might by law become a Lien upon the Collateral.

                  (c) LOCATION OF EQUIPMENT AND INVENTORY. Keep all Equipment
         and Inventory (other than Inventory sold in the ordinary course of
         business) at the places therefor specified in Section 9(a) hereof or,
         upon 30 days' prior written notice to the Trustee, at such other places
         in a jurisdiction where all action required by Section 10(h) hereof
         shall have been taken with respect to such Equipment and Inventory.

                  (d) MAINTENANCE OF EQUIPMENT. Maintain and preserve, and cause
         each of its Subsidiaries to maintain and preserve, all Equipment in
         which the Company is granting a security interest in accordance with,
         and to the extent required under, Section 4.15 of the Indenture.

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                  (e) PRODUCTION OF INVENTORY. Produce, and cause each of its
         Subsidiaries to produce, all Inventory in compliance with all
         requirements of the Fair Labor Standards Act.

                  (f) VISITATION RIGHTS. Permit the Trustee (at the Company's
         expense) or any agents or representatives thereof at any reasonable
         time and from time to time to examine and make copies of and abstracts
         from the records and books of account of, and visit the properties of,
         the Company and any of its Subsidiaries, and to discuss the affairs,
         finances and accounts of the Company and any of its Subsidiaries with
         any of their officers or directors and with their independent public
         accountants.

                  (g) LIMITATION ON ACCOUNTS. Not maintain, or permit any of its
         Subsidiaries to maintain, any deposit accounts other than the
         Collateral Account, the deposit accounts set forth on Schedule IV
         hereto or such other accounts to the extent that the bank maintaining
         any such account shall have delivered to the Trustee a deposit account
         letter substantially in the form of Exhibit A hereto.

                  (h) FURTHER ASSURANCES. From time to time at the sole expense
         of the Company, (i) promptly execute and deliver all further
         instruments and documents, and take all further action, that may be
         necessary or desirable, or that the Trustee may request, in order to
         perfect and protect any pledge, assignment or security interest granted
         or purported to be granted hereby or to enable the Trustee to exercise
         and enforce its rights and remedies hereunder with respect to any
         Collateral, including, without limitation:

                           (A) marking conspicuously each document included in
                  the Inventory, each chattel paper included in the Receivables,
                  each Related Contract, each Assigned Agreement and, at the
                  request of the Trustee, each of its records pertaining to the
                  Collateral with a legend, in form and substance satisfactory
                  to the Trustee, indicating that such document, chattel paper,
                  Related Contract or Assigned Agreement is subject to the
                  security interest granted hereby;

                           (B) if any Collateral shall be evidenced by a
                  promissory note or other instrument (other than a draft or
                  check received in the ordinary course of business) or chattel
                  paper, delivering and pledging to the Trustee hereunder such
                  note or instrument or chattel paper duly indorsed and
                  accompanied by duly executed instruments of transfer or
                  assignment, all in form and substance satisfactory to the
                  Trustee;

                           (C) executing and filing such financing or
                  continuation statements, or amendments thereto, and such other
                  instruments or notices, as may be necessary or desirable, or
                  as the Trustee may request, in order to perfect and preserve
                  the pledge, assignment and security interest granted or
                  purported to be granted hereby; and

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                           (D) causing each Restricted Subsidiary (each a
                  "COLLATERAL GRANTOR" and, collectively, the "COLLATERAL
                  GRANTORS") to enter into a supplement to this Agreement or a
                  security agreement (either of which shall become a part of
                  this Agreement upon its execution), in either case
                  substantially in the form of this Agreement and providing the
                  Trustee with a security interest in the assets of such
                  Collateral Grantor substantially similar to the security
                  interest in the Collateral granted herein by the Company to
                  the Trustee; and

                  (ii) furnish to the Trustee statements and schedules further
         identifying and describing the Collateral and such other reports in
         connection with the Collateral as the Trustee may reasonably request,
         all in reasonable detail.

         The Company hereby authorizes the Trustee (at the Company's expense) to
file one or more financing or continuation statements, and amendments thereto,
relating to all or any part of the Collateral without the signature of the
Company where permitted by law. A photocopy or other reproduction of this
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.

         SECTION 11. INSURANCE. (a) The Company shall, at its own expense,
maintain insurance with respect to any Equipment and Inventory in which it is
granting a security interest with responsible and reputable insurance companies
or associations in such amounts and covering such risks as is usually carried by
companies engaged in similar businesses and owning similar properties in the
same general areas in which the Company operates. Each policy for liability
insurance shall provide for all losses to be paid on behalf of the Trustee and
the Company as their interests may appear, and each policy for property damage
insurance shall provide for all losses (except for losses of less than $100,000
per occurrence) to be paid directly to the Trustee; it is acknowledged that any
such payments received by the Trustee that are not related to an Event of Loss
will be promptly endorsed or otherwise paid by the Trustee to the Company. Each
such policy shall in addition (i) name the Company and the Trustee as insured
parties thereunder (without any representation or warranty by or obligation upon
the Trustee) as their interests may appear, (ii) provide that there shall be no
recourse against the Trustee for payment of premiums or other amounts with
respect thereto and (iii) provide that at least 30 days' prior written notice of
cancellation or of lapse shall be given to the Trustee by the insurer. The
Company shall, if so requested by the Trustee, deliver to the Trustee original
or duplicate policies of such insurance and, as often as the Trustee may
reasonably request, a report of a reputable insurance broker with respect to
such insurance. Furthermore, the Company shall, at the request of the Trustee,
duly exercise and deliver instruments of assignment of such insurance policies
to comply with the requirements of Section 10(h) hereof and cause the insurers
to acknowledge notice of such assignment.

                  (b) Reimbursement under any liability insurance maintained by
         the Company pursuant to this Section 11 may be paid directly to the
         Person who shall have incurred liability covered by such insurance. In
         case of any loss involving damage to Equipment or

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         Inventory, the Company shall make or cause to be made the necessary
         repairs to or replacements of such Equipment or Inventory to the extent
         required by Section 4.15 of the Indenture, and any proceeds of
         insurance maintained by the Company pursuant to this Section 11 shall
         be paid to the Company as reimbursement for the costs of such repairs
         or replacements pursuant to Section 11.4 of the Indenture.

         SECTION 12. PLACE OF PERFECTION; RECORDS; COLLECTION OF RECEIVABLES.
(a) The Company shall keep its principal place of business and chief executive
office and the office where it keeps its records concerning the Collateral, and
copies of any Assigned Agreements and copies of all chattel paper that evidence
Receivables, at the location therefor specified in Section 9(a) hereof, or upon
30 days' prior written notice to the Trustee, at such other locations in a
jurisdiction where all actions required by Section 10 (h) hereof shall have been
taken with respect to the Collateral. The Company will hold and preserve such
records, Assigned Agreements and chattel paper and will permit representatives
of the Trustee (at the Company' s expense) at any time during normal business
hours to inspect and make copies of and abstracts from such records and chattel
paper.

                  (b) Except as otherwise provided in this subsection (b), the
         Company shall continue to collect, at its own expense, all amounts due
         or to become due the Company under the Receivables. In connection with
         such collections, the Company may take (and, at the Trustee's
         direction, shall take) such action as the Company or the Trustee may
         deem reasonable, necessary or advisable to enforce collection of the
         Receivables; PROVIDED, HOWEVER, that the Trustee shall have the right
         at any time, upon the occurrence and during the continuance of an Event
         of Default and upon written notice to the Company of its intention to
         do so, to notify the obligors under any Receivables of the assignment
         of such Receivables to the Trustee and to direct such obligors to make
         payment of all amounts due or to become due to the Company thereunder
         directly to the Trustee and, upon such notification and at the expense
         of the Company, to enforce collection of any such Receivables, and to
         adjust, settle or compromise (on reasonable terms) the amount or
         payment thereof, in the same manner and to the same extent as the
         Company might have done. After receipt by the Company of the notice
         from the Trustee referred to in the proviso to the immediately
         preceding sentence, (i) all amounts and proceeds (including
         instruments) received by the Company in respect of the Receivables
         shall be received in trust for the benefit of the Trustee hereunder,
         shall be segregated from other property and funds of the Company and
         shall be forthwith paid over to the Trustee in the same form as so
         received (with any necessary indorsement) and shall be deposited in the
         Collateral Account and, thereafter, applied in accordance with Section
         20 (b) hereof and (ii) the Company shall not adjust, settle or
         compromise the amount or payment of any Receivable, release wholly or
         partly any obligor thereof, or allow any credit or discount thereon.

         SECTION 13. VOTING RIGHTS; DIVIDENDS; ETC. (a) So long as no Event of
Default shall have occurred and be continuing:

                                       10


<PAGE>



                           (i) The Company shall be entitled to exercise or
                  refrain from exercising any and all voting and other
                  consensual rights pertaining to the Security Collateral or any
                  part thereof for any purpose not inconsistent with the terms
                  of this Agreement; PROVIDED, HOWEVER, that the Company shall
                  not exercise or refrain from exercising any such right if such
                  action would have a material adverse effect on the value of
                  the Security Collateral or any part thereof.

                           (ii) The Company shall be entitled to receive and
                  retain any and all dividends, distributions and interest paid
                  in respect of the Security Collateral; PROVIDED, HOWEVER, that
                  any and all

                                    (A) dividends and interest paid or payable
                           other than in cash in respect of, and instruments and
                           other property received, receivable or otherwise
                           distributed in respect of or in exchange for any
                           Security Collateral,

                                    (B) dividends and other distributions paid
                           or payable in cash in respect of any Security
                           Collateral in connection with a partial or total
                           liquidation or dissolution or in connection with a
                           reduction of capital, capital surplus or
                           paid-in-surplus, and

                                    (C) cash paid, payable or otherwise
                           distributed in respect of principal of, or in
                           redemption of or in exchange for, any Security
                           Collateral shall be, and shall be forthwith delivered
                           to the Trustee to hold as, Security Collateral and
                           shall, if received by the Company, be received in
                           trust for the benefit of the Trustee, be segregated
                           from the other property or funds of the Company and
                           be forthwith delivered to the Trustee as Security
                           Collateral in the same form as so received (with any
                           necessary endorsement). The Company shall, upon
                           request of the Trustee, promptly execute such
                           documents and do such acts as may be necessary or
                           advisable to give effect to this paragraph (ii).

                           (iii) Upon not less than ten Business Days' prior
                  notice, accompanied by an Officer's Certificate to the effect
                  that any and all conditions under this Agreement have been
                  met, the Trustee shall execute and deliver (or cause to be
                  executed and delivered) to the Company all such proxies and
                  other instruments as the Company may reasonably request for
                  the purpose of enabling the Company to exercise the voting and
                  other consensual rights that it is entitled to exercise
                  pursuant to paragraph (i) above and to receive the dividends,
                  distributions or interest payments that it is authorized to
                  receive and retain pursuant to paragraph (ii) above.

                  (b) Upon the occurrence and during the continuance of an Event
         of Default:

                                       11


<PAGE>



                           (i) All rights of the Company (A) to exercise or
                  refrain from exercising the voting and other consensual rights
                  that it would otherwise be entitled to exercise pursuant to
                  Section 13(a)(i) hereto shall, upon notice to the Company by
                  the Trustee, cease and (B) to receive the dividends,
                  distributions and interest payments that it would otherwise be
                  authorized to receive and retain pursuant to Section 13(a)(ii)
                  hereto shall automatically cease, and all such rights shall
                  thereupon become vested in the Trustee, which shall thereupon
                  have the sole right to exercise or refrain from exercising
                  such voting and other consensual rights and to receive and
                  hold as Security Collateral such dividends, distributions and
                  interest payments.

                           (ii) All dividends, distributions and interest
                  payments that are received by the Company contrary to the
                  provisions of Section 13(b)(i) shall be received in trust for
                  the benefit of the Trustee, shall be segregated from other
                  property and funds of the Company and shall be forthwith paid
                  over to the Trustee as Security Collateral in the same form as
                  so received (with any necessary endorsement).

         SECTION 14. AS TO THE ASSIGNED AGREEMENTS. (a) The Company shall, at
its own expense:

                           (i) perform and observe all the terms and provisions
                  of each Assigned Agreement to be performed or observed by it,
                  maintain each such Assigned Agreement in full force and effect
                  on its part, enforce each such Assigned Agreement in
                  accordance with its terms and take all such action to such end
                  as may be from time to time reasonably requested by the
                  Trustee; and

                           (ii) furnish to the Trustee promptly upon the
                  Trustee's request therefor copies of all notices, requests and
                  other documents received by the Company under or pursuant to
                  the Assigned Agreements, and from time to time (A) furnish to
                  the Trustee such information and reports regarding the
                  Collateral as the Trustee may reasonably request and (B) upon
                  request of the Trustee make to each other party to any
                  Assigned Agreement such demands and requests for information
                  and reports or for action as the Company is entitled to make
                  thereunder.

                  (b) Except as otherwise expressly permitted pursuant to the
         Indenture, the Company shall not cancel or terminate, or consent or
         accept any cancellation or termination of, any Assigned Agreement, or
         enter into any amendment to any Assigned Agreement to which it is a
         party, or grant any consent or waiver from any of the terms thereof,
         except amendments, waivers or consents for certain specified purposes,
         including, among other things, (i) curing ambiguities, defects or
         inconsistencies, (ii) making any change that does not adversely affect
         the rights of any Holder or (iii) mortgaging, pledging or granting a
         security interest in favor of the Company as additional security for
         the payment and performance of the Secured Obligations in any property
         or

                                       12


<PAGE>



         assets (including any additional collateral that is required to be
         mortgaged, pledged or hypothecated, or in which a security interest is
         required to be granted, pursuant to such Assigned Agreement or
         otherwise).

         SECTION 15. PAYMENTS UNDER THE ASSIGNED AGREEMENTS. Notwithstanding
that all payments under the Assigned Agreements shall be made in accordance with
their terms so long as no Event of Default has occurred and is continuing, the
Company agrees, and has effectively so instructed each other party to each
Assigned Agreement that, upon the occurrence and during the continuation of an
Event of Default, all payments due or to become due under or in connection with
such Assigned Agreement shall be received in trust for the benefit of the
Trustee hereunder, shall be segregated from other property and funds of the
Company and shall be forthwith paid over to the Trustee in the same form as so
received (with any necessary indorsement) to be deposited in the Collateral
Account and, thereafter, applied by the Trustee in accordance with Section 20(b)
hereof.

         SECTION 16. TRANSFERS AND OTHER LIENS; PLEDGED SHARES. (a) Except as
otherwise expressly permitted pursuant to the Indenture, the Company shall not
(i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Collateral, or (ii) create or
suffer to exist any Lien upon or with respect to any of the Collateral, except
for the pledge, assignment and security interest created by this Agreement and
Permitted Liens.

                  (b) The Company shall (i) cause each of its Restricted
         Subsidiaries not to issue any stock or other equity securities, except
         to the Company or as otherwise permitted under the Indenture, and (ii)
         pledge hereunder, immediately upon its acquisition (directly or
         indirectly) thereof, any and all shares of stock or other equity
         securities of each of its Subsidiaries or any other Person to the
         Trustee, except as otherwise permitted under the Indenture.

         SECTION 17. TRUSTEE APPOINTED ATTORNEY-IN-FACT. The Company hereby
irrevocably appoints the Trustee its attorney-in-fact, with full authority in
the place and stead of the Company and in the name of the Company or otherwise,
from time to time, to take any action and to execute any instrument necessary to
accomplish the purposes of this Agreement (subsequent to an Event of Default
subject to the rights of the Company under Section 12 hereof), including,
without limitation:

                  (a) to obtain and adjust insurance required to be paid to the
         Trustee pursuant to Section 11 hereof,

                  (b) to ask for, demand, collect, sue for, recover, compromise
         (on reasonable terms), receive and give acquittance and receipts for
         moneys due and to become due under or in respect of any of the
         Collateral,

                                       13


<PAGE>



                  (c) to receive, indorse and collect any drafts or other
         instruments, documents and chattel paper, in connection with clause (a)
         or (b) above, and

                  (d) to file any claims or take any action or institute any
         proceedings necessary for the collection of any of the Collateral or
         otherwise to enforce compliance with the terms and conditions of any
         Assigned Agreement or any other agreements that are part of the
         Collateral, or the rights of the Trustee with respect to any of the
         Collateral.

         SECTION 18. TRUSTEE MAY PERFORM. If the Company fails to perform any
agreement contained herein, the Trustee may itself perform, or cause performance
of, such agreement, and the expenses of the Trustee incurred in connection
therewith shall be payable by the Company under Section 23(b) hereof.

         SECTION 19. THE TRUSTEE'S DUTIES. The powers conferred on the Trustee
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe custody
of any Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Trustee shall have no duty as to any Collateral,
as to ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Security
Collateral, whether or not the Trustee or any Holder has or is deemed to have
knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any
Collateral.

         SECTION 20. REMEDIES. If any Event of Default under the Indenture shall
have occurred and be continuing:

                  (a) The Trustee may exercise in respect of the collateral, in
         addition to other rights and remedies provided for herein or otherwise
         available to it, all the rights and remedies of a secured party upon
         default under the Uniform Commercial Code in effect in the State of
         Louisiana at such time (the "LOUISIANA UNIFORM COMMERCIAL CODE")
         (whether or not the Louisiana Uniform Commercial Code applies to the
         affected collateral) and also may (i) require the Company to, and the
         Company hereby agrees that it will at its expense and upon request of
         the Trustee forthwith, assemble all or part of the Collateral as
         directed by the Trustee and make it available to the Trustee at a place
         to be designated by the Trustee that is reasonably convenient to both
         parties and (ii) without notice except as specified below, sell the
         Collateral or any part thereof in one or more parcels at public or
         private sale, at any of the Trustee's offices or elsewhere, for cash,
         on credit or for future delivery, and upon such other terms as the
         Trustee may deem commercially reasonable. The Company agrees that, to
         the extent notice of sale shall be required by law, at least ten days'
         notice to the Company of the time and place of any public sale or the
         time after which any private sale is to be made shall constitute
         reasonable notification. The Trustee shall not be obligated to make any
         sale of Collateral regardless of notice of sale having been given. The
         Trustee may adjourn any public or private sale from time to time by

                                       14


<PAGE>



         announcement at the time and place fixed therefor, and such sale may,
         without further notice, be made at the time and place to which it was
         so adjourned.

                  (b) Any cash held by the Trustee as Collateral and all cash
         proceeds received by the Trustee in respect of any sale of, collection
         from, or other realization upon all or any part of the Collateral may
         be held by the Trustee as collateral for, and/or then or at any time
         thereafter applied (after payment of any amounts payable to the Trustee
         pursuant to Section 23(b) hereof), in whole or in part, by the Trustee
         for the ratable benefit of the Holders against, all or any part of the
         Secured Obligations in such order as is set forth in Section 6.10 of
         the Indenture. Any surplus of such cash or cash proceeds held by the
         Trustee and remaining after payment in full of all the Secured
         Obligations shall be paid over to the Company or to whomsoever may be
         lawfully entitled to receive such surplus.

                  (c) The Trustee may exercise any and all rights and remedies
         of the Company under or in connection with the Assigned Agreements or
         otherwise in respect of the Collateral, including, without limitation,
         any and all rights of the Company to demand or otherwise require
         payment of any amount under, or performance of any provision of, any
         Assigned Agreement.

                  (d) All payments received by the Company under or in
         connection with any Assigned Agreement or otherwise in respect of the
         Collateral shall be received in trust for the benefit of the Trustee,
         shall be segregated from other property and funds of the Company and
         shall be forthwith paid over to the Trustee in the same form as so
         received (with any necessary indorsement).

                  (e) The Trustee may, without notice to the Company except as
         required by law and at any time or from time to time, charge, set off
         and otherwise apply all or any part of the Secured Obligations against
         the Collateral Account or any part thereof.

                  (f) The following provisions shall apply if the remedies
         indicated are governed by the laws of Louisiana. The Trustee shall have
         the right to cause the Collateral to be seized and sold under Louisiana
         executory or ordinary process, at the Trustee's sole option, without
         appraisement, appraisement being hereby expressly waived, as an
         entirety or in portions as the Trustee may determine, to the highest
         bidder for cash, and otherwise exercise the rights, powers and remedies
         afforded herein and under applicable Louisiana law. For purposes of
         Louisiana executory process procedures, the Company acknowledges the
         Secured Obligations and does hereby confess judgment in favor of the
         Trustee and the Holders for the full amount of the Secured Obligations.
         Any and all declarations of fact made by authentic act before a notary
         public in the presence of two witnesses by a person declaring that such
         facts lie within his knowledge shall constitute authentic evidence of
         such facts for the purpose of executory process. The Company hereby
         expressly waives: (a) the benefit of appraisement as provided for in
         Louisiana Code of Civil Procedure Articles 2332, 2336, 2723 and 2724,
         and all other

                                       15


<PAGE>



         laws conferring such benefits; (b) the demand and three (3) days delay
         accorded by Louisiana Code of Civil Procedure Articles 2639 and 2721;
         (c) the notice of seizure required by Louisiana Code of Civil Procedure
         Articles 2293 and 2721; (d) the three (3) days delay provided by
         Louisiana Code of Civil Procedure Articles 2331 and 2722; (e) the
         benefit of the other provisions of Louisiana Code of Civil Procedure
         Articles 2331, 2722 and 2723; and (f) the benefit of the provisions of
         any other articles of the Louisiana Code of Civil Procedure not
         specifically mentioned above. In the event the Collateral or any part
         thereof is seized as an incident to an action for the recognition or
         enforcement of this Agreement by executory process, ordinary process,
         sequestration, writ of fieri facias, or otherwise, the Company and the
         Trustee agree that the court issuing any such order shall, if
         petitioned for by the Trustee, direct the applicable sheriff to appoint
         as a keeper of the Collateral, the Trustee or any agent designated by
         the Trustee or any person named by the Trustee at the time such seizure
         is effected. This designation is pursuant to Louisiana Revised Statutes
         9:5136 through 9:5140.2, inclusive, and the Trustee shall be entitled
         to all the rights and benefits afforded thereunder as the same may be
         amended. It is hereby agreed that the keeper shall be entitled to
         receive as compensation, in excess of its reasonable costs and expenses
         incurred in the administration or preservation of the Mortgaged
         Property, an amount equal to $500 per day. The designation of keeper
         made herein shall not be deemed to require the Trustee to provoke the
         appointment of such a keeper.

         SECTION 21. REGISTRATION RIGHTS. If the Trustee shall determine to
exercise its right to sell all or any of the Security Collateral pursuant to
Section 20 hereof, the Company agrees that, upon request of the Trustee, it
will, at its own expense:

                  (a) execute and deliver, and cause each issuer of the Security
         Collateral contemplated to be sold and the directors and officers
         thereof to execute and deliver, all such instruments and documents, and
         do or cause to be done all such other acts and things, as may be
         necessary to: (i) register such Security Collateral under the
         provisions of the Securities Act of 1933, as from time to time amended
         (the "SECURITIES ACT"), (ii) 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 (iii) make all
         amendments and supplements thereto and to the related prospectus that
         are necessary or advisable, all in conformity with the requirements of
         the Securities Act and the rules and regulations of the Commission
         applicable thereto;

                  (b) use its best efforts to qualify the Security Collateral
         under the state securities or "blue sky" laws and to obtain all
         necessary governmental approvals for the sale of the Security
         Collateral, as requested by the Trustee;

                  (c) cause each such issuer to make available to its security
         holders, as soon as practicable, an earnings statement that will
         satisfy the provisions of Section 11(a) of the Securities Act and the
         rules and regulations thereunder;

                                       16


<PAGE>



                  (d) provide the Trustee with such other information and
         projections as may be reasonably necessary or advisable to enable the
         Trustee to effect the sale of such Security Collateral; and

                  (e) do or cause to be done all such other acts and things as
         may be necessary to make such sale of the Security Collateral or any
         part thereof valid and binding and in compliance with applicable law.

The Trustee is authorized, in connection with any sale of the Security
Collateral pursuant to Section 20 hereof, to deliver or otherwise disclose to
any prospective purchaser of the Security Collateral (i) any registration
statement or prospectus, and all supplements and amendments thereto, prepared
pursuant to clause (a) above, (ii) any information and projections provided to
it pursuant to clause (d) above and (iii) any other material information in its
possession relating to the Security Collateral.

         The Company acknowledges the impossibility of ascertaining the amount
of damages that would be suffered by the Trustee or the Holders by reason of the
failure by the Company to perform any of the covenants contained in this Section
21 and, consequently, agrees that, if the Company shall fail to perform any of
such covenants, it shall pay, as liquidated damages and not as a penalty, an
amount equal to the value of the Security Collateral on the date the Trustee
shall demand compliance with this Section 21.

         SECTION 22. REGULATORY MATTERS. (a) The Company shall take, and shall
cause each issuer of any of the Pledged Shares to take, all action that the
Trustee may request in the exercise of its rights and remedies hereunder, which
includes the right to require the Company or any issuer of any of the Pledged
Shares to transfer or assign the Pledged Shares to any party or parties. In
furtherance of this right, the Company shall, and shall cause each issuer of the
Pledged Shares, (i) to cooperate fully with the Trustee in obtaining all
approvals and consents from each Governmental Authority that the Trustee may
deem necessary or advisable to accomplish any such transfer or assignment of any
part of the Pledged Shares and (ii) to prepare, execute and file with any
Governmental Authority any application, request for consent, certificate or
instrument that the Trustee may deem necessary or advisable to accomplish any
such transfer or assignment of any part of the Pledged Shares; PROVIDED,
HOWEVER, that the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not otherwise so subject. If the
Company fails to execute, or fails to cause each issuer or owner of the Pledged
Shares to execute, such applications, requests for consent, certificates or
instruments, the clerk of any court that has jurisdiction over the Security
Documents may execute and file the same on behalf of the Company.

                  (b) To enforce the provisions of this Section 22, the Trustee
         is authorized to request the consent or approval of any Governmental
         Authority to a voluntary or an involuntary transfer of control of any
         issuer of any of the Pledged Shares. In connection

                                       17


<PAGE>



         with the exercise of its remedies under this Agreement, the Trustee may
         obtain the appointment of a trustee or receiver to assume, upon receipt
         of all necessary judicial or other Governmental Authority consents or
         approvals, control of any issuer of any of the Pledged Shares. Such
         trustee or receiver shall have all rights and powers provided to it by
         law or by court order or provided to the Trustee under this Agreement.

                  (c) Notwithstanding anything to the contrary contained in this
         Agreement:

                           (i) the Trustee will not take any action hereunder
                  that would constitute or result in any transfer of control of
                  any issuer of any of the Pledged Shares without obtaining all
                  necessary Governmental Authority approvals; PROVIDED that the
                  Trustee and the Holders shall be entitled to rely on the
                  advice of regulatory counsel selected by the Trustee to
                  determine whether approvals of any Governmental Authority are
                  required; and

                           (ii) the Trustee shall not foreclose on, sell,
                  transfer or otherwise dispose of, or exercise any right to
                  vote or consent with respect to, any of the Pledged Shares as
                  provided herein or take any other action that would affect the
                  operational, voting or other control of the issuer of any
                  Pledged Shares, unless such action is taken in accordance with
                  the applicable provisions of the Louisiana Act; PROVIDED that
                  the Trustee and the Holders shall be entitled to rely on the
                  advice of regulatory counsel selected by, the Trustee to
                  determine compliance with applicable provision of the
                  Louisiana Act.

                  (d) The Company acknowledges that the approval of each
         appropriate Governmental Authority to the transfer of control of an
         issuer of Pledged Shares may be required, that the ownership thereof is
         integral to the Trustee's realization of the value of such Pledged
         Shares, that there is no adequate remedy at law for failure by the
         Company to comply with the provisions of this Section 22 and that such
         failure could not be adequately compensable in damages and, therefore,
         the Company agrees that the provisions of this Section 22 may be
         specifically enforced.

         SECTION 23. INDEMNITY AND EXPENSES. (a) The Company agrees to indemnify
the Trustee from and against any and all claims, losses and liabilities growing
out of or resulting from this Agreement (including, without limitation,
enforcement of this Agreement), except claims, losses or liabilities resulting
from the Trustee's gross negligence or bad faith as determined by a final
judgment of a court of competent jurisdiction. The indemnification of the
Trustee set forth in the immediately preceding sentence is cumulative and not
exclusive of any indemnity of the Trustee set forth in the Indenture or provided
for under the TIA.

                  (b) The Company will pay upon demand to the Trustee the amount
         of any and all reasonable expenses, including the reasonable fees and
         expenses of its counsel and of any experts and agents, that the Trustee
         may incur in connection with (i) the

                                       18


<PAGE>



         administration of this Agreement, (ii) the custody, preservation, use
         or operation of, or the sale of, collection from or other realization
         upon, any of the Collateral, (iii) the exercise or enforcement of any
         of the rights of the Trustee or the Holders hereunder or (iv) the
         failure by the Company to perform or observe any of the provisions
         hereof, and all amounts so incurred by the Trustee shall be entitled to
         the benefits of Section 7.7 of the Indenture.

         SECTION 24. SECURITY INTEREST ABSOLUTE. The obligations of any
Collateral Grantor under this Agreement are independent of the Secured
Obligations, and a separate action or actions may be brought and prosecuted
against any Collateral Grantor to enforce this Agreement irrespective of whether
any action is brought against the Company or whether the Company is joined in
any such action or actions. All rights of the Trustee and the pledge, assignment
and security interest hereunder, and all obligations of each Collateral Grantor
hereunder, shall be absolute and unconditional, irrespective of:

                  (a) any lack of validity or enforceability of the Indenture or
         any other agreement or instrument relating thereto;

                  (b) any change in the time, manner or place of payment of, or
         in any other term of, all or any of the Secured Obligations or any
         other amendment or waiver of or any consent to any departure from the
         Indenture, including, without limitation, any increase in the Secured
         Obligations resulting from the issuance of additional Notes by the
         Company or any of its subsidiaries or otherwise;

                  (c) any taking, exchange, release or nonperfection of any
         other collateral, or any taking, release or amendment or waiver of or
         consent to departure from any guaranty, for all or any of the Secured
         Obligations;

                  (d) any manner of application of Collateral, or proceeds
         thereof, to all or any of the Secured Obligations, or any manner of
         sale or other disposition of any collateral for all or any of the
         Secured Obligations or any other assets of the Company or any of its
         subsidiaries;

                  (e) any change, restructuring or termination of the corporate
         structure or existence of the Company or any of its subsidiaries; or

                  (f) any other circumstance that might otherwise constitute a
         defense available to, or a discharge of, the Company or a third party
         grantor of a security interest.

         SECTION 25. AMENDMENTS; WAIVERS; ETC. No amendment or waiver of any
provision of this Agreement, and no consent to departure by the Company
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Trustee, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which

                                       19


<PAGE>



given. No failure on the part of the Trustee to exercise, and no delay in
exercising any right hereunder, shall operate as a waiver thereof or consent
thereto, nor shall any single or partial exercise of any such right preclude any
other or further exercise thereof or the exercise of any other right.

         SECTION 26. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and, mailed (first class, postage prepaid),
telegraphed, telecopied, telexed, cabled or delivered to the Company or to the
Trustee, as the case may be, addressed to it at its address specified in the
Indenture or below its signature line on the signature pages hereof or, as to
any party, at such other address as shall be designated by such party in a
written notice to each other party complying as to delivery with the terms of
this Section 26. All such notices and other communications shall, when mailed
(first class, postage prepaid), telecopied, telegraphed, telexed or cabled,
respectively, be effective when deposited in the mails, telecopied, delivered to
the telegraph company confirmed by telex answerback or delivered to the cable
company, respectively, addressed as aforesaid.

         SECTION 27. CONTINUING SECURITY INTEREST; ASSIGNMENT UNDER THE
INDENTURE. This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the date on which
the Secured Obligations shall have been paid in full and the Indenture shall
have been satisfied and discharged in accordance with Section 8.1 thereof, (b)
be binding upon the Company, its successors and assigns and (c) inure, together
with the rights and remedies of the Trustee hereunder, to the benefit of the
Trustee, the Holders and their respective successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), any Holder may
assign or otherwise transfer all or any portion of its rights and obligations
under the Notes held by it to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to such
Holder herein or otherwise.

         SECTION 28. RELEASE AND TERMINATION. (a) On the date on which the
Secured Obligations shall have been paid in full, or on which Legal Defeasance
or Covenant Defeasance shall have occurred, and the Indenture shall have been
satisfied and discharged in accordance with Article VIII thereof, the pledge,
assignment and security interest granted hereby shall terminate and all rights
to the Collateral shall revert to the Company. Upon any such termination, the
Trustee, at the Company's expense, will return to the Company such of the
Collateral in its possession as shall not have been sold, transferred or
otherwise applied pursuant to the terms of the Notes, the Indenture and the
Security Documents, and will execute and deliver to the Company such documents
prepared by the Company and delivered to the Trustee as the Company shall
reasonably request to evidence such termination.

                  (b) Notwithstanding anything to the contrary contained herein,
         upon a release of any part of the Collateral pursuant to Section 11.04
         of the Indenture, the Secured Party shall execute, deliver or
         acknowledge any necessary or proper instruments of termination,
         satisfaction or release to evidence such release, provided, however,
         that no part of the

                                       20


<PAGE>



         Collateral will be released except as expressly set forth in Section
         11.04 of the Indenture. Once any such Collateral is released, such
         Collateral shall be expressly excluded from and shall no longer be
         deemed Collateral under this Security Agreement and shall not be
         subject to any of the representations, covenants or obligations under
         this Security Agreement.

         SECTION 29. GAMING LAWS. Each of the provisions of this Agreement is
subject to and shall be enforced in compliance with, the provisions of the
Louisiana Act.

         SECTION 30. THE MORTGAGES. In the event that any of the Collateral
hereunder is also subject to a valid and enforceable Lien under the terms of any
Mortgage and the terms of such Mortgage are inconsistent with the terms of this
Agreement, then with respect to such Collateral, the terms of such Mortgage
shall be controlling in the case of fixtures and leases, letting and licenses
of, and contracts and agreements relating to real property or leases of real
property, and the terms of this Agreement shall be controlling in the case of
all other Collateral.

         SECTION 31. GOVERNING LAW; TERMS. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Louisiana, except to
the extent that the validity or perfection of the security interest hereunder,
or remedies hereunder, in respect of any particular Collateral are governed by
the laws of a jurisdiction other than the State of Louisiana. Unless otherwise
defined herein or in the Indenture, terms used in Article 9 of the Uniform
Commercial Code adopted by the State of Louisiana are used herein as therein
defined.

         SECTION 32. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page of this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.

         SECTION 33. INTERACTION WITH INDENTURE. Notwithstanding any other
provision of this Security Agreement, the terms and provisions of this Security
Agreement shall be subject and subordinate to the terms of the Indenture. To the
extent that the Indenture provides the Company with a particular cure or notice
period, or establishes any limitations or conditions on Trustee's actions with
regard to a particular set of facts, the Company shall be entitled to the same
cure periods and notice periods and Trustee shall be subject to the same
limitations and conditions in place of the cure periods, notice periods,
limitations and conditions provided for under the Indenture; provided, however,
that such cure periods, notice periods, limitations and conditions shall not be
cumulative as between the Indenture and this Security Agreement. In the event of
any conflict or inconsistency between the provisions of this Security Agreement
and those of the Indenture, including, without limitation, any conflicts or
inconsistencies in any definitions herein or therein, the provisions or
definitions of the Indenture shall govern.

                                       21


<PAGE>



         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their officers thereunto duly authorized as of
the date first above written. 






                         LOUISIANA CASINO CRUISES, INC.

                         By:_____________________________
                         Name:
                         Title:

                         Address: 1717 River Road North
                                  Baton Rouge, Louisiana 70802

                         U. S. BANK TRUST NATIONAL ASSOCIATION

                         By:______________________________
                         Name:
                         Title:

                         Address: 180 East 5th Street
                                  St. Paul Minnesota  55101
                                  Attention: Corporate Trust Administration

                                       22


<PAGE>



                                   SCHEDULE I

                               ASSIGNED AGREEMENTS

1.       Casino Consulting and Management Agreement, dated as of December 11,
         1992, between the Company and Carnival Management Services, Inc., as
         amended by an amendment dated October 8, 1993. Carnival Management
         Services, Inc. is now CRC Holdings, Inc. d/b/a Carnival Resorts & 
         Casinos.

                                       23


<PAGE>



                                   SCHEDULE II

                      LOCATIONS OF EQUIPMENT AND INVENTORY

1.       1717 River Road North
         Baton Rouge, Louisiana 70802

                                       24


<PAGE>



                                  SCHEDULE III

                  TRADE NAMES OF LOUISIANA CASINO CRUISES, INC.

1.       Casino Rouge

                                       25


<PAGE>



                                   SCHEDULE IV

                                DEPOSIT ACCOUNTS

<TABLE>
<CAPTION>
                                                                 ACCOUNT
INSTITUTION                TYPE                                  NUMBER
-----------                ----                                  -------
<S>                        <C>                                   <C>
Bank One                   Payroll                               79000648930
P.O. Box 3399              Operating                             79000648922
Baton Rouge, LA 70821      Lottery                               79000573000
                           Depository                            79000514942
                           Cage Disb.                            79000536628
                           Gaming License Disb.                  79000573868
                           Restricted Cash (Marquis Fund)        79000537144
                           Dental                                79000537020

Liberty Bank & Trust       Minority Donation                     2296799
7990 Scenic Highway
Baton Rouge, LA 70807
</TABLE>

                                       26


<PAGE>



                                    EXHIBIT A

                         FORM OF DEPOSIT ACCOUNT LETTER

                                                         ________________, 199_

(NAME AND ADDRESS
OF DEPOSIT ACCOUNT BANK]

                         LOUISIANA CASINO CRUISES, INC.

Ladies and Gentlemen:

         Reference is made to account no._______________________ (the "PLEDGED
ACCOUNT") into which certain moneys, instruments and other properties are
deposited from time to time by Louisiana Casino Cruises, Inc. (the "COMPANY").
Pursuant to the Security Agreement dated as of January 27, 1999 (the "SECURITY
AGREEMENT"), the Company has granted to U.S. Bank Trust National Association, as
trustee (the "TRUSTEE") for the Holders referred to in the Indenture dated as of
January 27, 1999 (the "INDENTURE") between the Company, the Subsidiary
Guarantors referred to therein and the Trustee, a security interest in certain
property of the Company, including, among other things, the following (the
"ACCOUNT COLLATERAL"): (a) the Pledged Account, all funds held therein and all
certificates and instruments, if any, from time to time representing or
evidencing the Pledged Account; (b) all interest, dividends, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the then existing
Account Collateral; and (c) all proceeds of any and all of the foregoing Account
Collateral and, to the extent not otherwise included, all (i) payments under
insurance (whether or not the Trustee is the loss payee thereof), or any
indemnity, warranty or guaranty payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Account Collateral and (ii) cash.
It is a condition to the continued maintenance of the Pledged Account with you
that you agree to this letter agreement.

         By signing this letter agreement, you acknowledge notice of, and
consent to the terms and provisions of, the Security Agreement and confirm to
the Trustee that the description of the Pledged Account set forth therein or on
Schedule IV of the Security Agreement is correct and that you have received no
notice of any other pledge or assignment of the Pledged Account.

Further, you hereby agree with the Trustee that:

                  (a) Notwithstanding anything to the contrary in any other
         agreement relating to the Pledged Account, the Pledged Account is and
         will be subject to the terms and conditions of the Security Agreement,
         will be maintained solely for the benefit of the Trustee, will be
         entitled "U.S. Bank Trust National Association, as Trustee, Re:
         Louisiana Casino Cruises, Inc." and will be subject to written
         instructions only from an officer of the Company unless and until such
         time as you receive written instructions from the Trustee of the
         occurrence and continuance of an Event of Default (as defined in
         Section 6.1 of the Indenture), in which case the Pledged Account shall
         be subject solely to the 


                                       27
<PAGE>



         written instructions of the Trustee. In the event that such
         instructions shall conflict with any provision of this or any other
         Agreement regarding the Pledged Account, written instructions from the
         Trustee shall control.

                  (b) If any property subject hereto is at any time attached,
         garnished or levied upon under any order of a court of competent
         jurisdiction or if the payment, assignment, transfer, conveyance or
         delivery of any such property shall be stayed or enjoined by any such
         court order, or if any order, judgment or decree shall be made or
         entered by any court of competent jurisdiction affecting such property
         or any part thereof, then and in any of such events you are authorized,
         in your sole discretion, to rely upon and comply with any such order,
         writ, judgment or decree which you are advised by legal counsel of your
         own choosing is binding upon you and if you comply with any such order,
         writ, judgment or decree you shall not be liable to any of the parties
         hereto or to any other person, firm or corporation by reason of such
         compliance even though such order, writ, judgment or decree may be
         subsequently reversed, modified, annulled, set aside or vacated.

                  (c) All transfers referred to in paragraph (b) above shall be
         made by you irrespective of and without deduction for any counterclaim,
         defense, recoupment of set-off and shall be final, and you will not
         seek to recover from the Trustee or the Holders for any reason any such
         payment once made.

                  (d) The Trustee shall be entitled to exercise any and all
         rights of the Company in respect of the Pledged Account in accordance
         with the terms of this letter agreement and the Security Agreement, and
         you shall comply in all respects with such exercise.

         You shall not be personally liable for any act taken or omitted
hereunder if taken or omitted by you in good faith and in the exercise of your
own best judgment. You shall also be fully protected in relying upon any written
notice, demand, certificate or document that you in good faith believe to be
genuine.

         The Company hereby agrees to pay you reasonable compensation for your
services and shall reimburse you for all reasonable out-of-pocket expenses
(including, without limitation, reasonable compensation and expenses of your
counsel).

         The Company also covenants to indemnify you for, and to defend you and
hold you harmless against, any loss, liability or expense incurred without
negligence or bad faith on your part, arising out of or in connection with the
acceptance or administration of this letter agreement or the performance of its
duties hereunder, including the costs and expenses of defending yourself against
or investigating any claim or liability hereunder, except to the extent that any
such loss, liability or expense was due to your negligence or bad faith.

                                       28


<PAGE>



         This letter agreement shall be binding upon you and your successors and
assigns and shall inure to the benefit of the Trustee, the Holders and their
successors, transferees and assigns. You may terminate this letter agreement
only upon written notice to the Company and the Trustee; provided that you shall
not be entitled to exercise such right to resign until the earlier of (a) the
date upon which (i) the Company has established a new account with a successor
bank on terms and conditions satisfactory to the Company and the Trustee and
(ii) such successor escrow bank shall have entered into a letter with the
Company and the Trustee in substantially the same form as this letter agreement,
or (b) 90 days from the date of the delivery of a notice of termination. Upon
such termination, you shall close the Pledged Account and take such actions as
are necessary to effectuate the transfer of the Pledged Account to the successor
bank.

         This letter agreement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of a
signature page to this letter agreement by telecopier shall be effective as
delivery of a manually executed counterpart of this letter agreement.

         This letter agreement shall be governed by, and construed in accordance
with, the laws of the State of Louisiana.

                                         Very truly yours,

                                         LOUISIANA CASINO CRUISES, INC.

                                         By:_____________________________
                                            Name:
                                            Title:

Acknowledged and
agreed to as of the date first
above written:

(NAME OF DEPOSIT ACCOUNT BANK]

By:____________________________
   Name:
   Title:

Receipt Acknowledged:

U.S. Bank Trust National Association, as Trustee

By:____________________________
   Name:
   Title:

                                       29


<PAGE>



                                    EXHIBIT B

                          FORM OF CONSENT AND AGREEMENT

         The undersigned hereby acknowledges notice of, and consents to the
terms and provisions of, the Security Agreement dated as of January 27, 1999 (as
amended or otherwise modified from time to time, the "SECURITY AGREEMENT", the
terms defined therein being used herein as therein defined) from Louisiana
Casino Cruises, Inc. (the "COMPANY") to U. S. Bank Trust National Association,
as trustee (the "TRUSTEE") for the Holders under the Indenture referred to in
the Security Agreement, and hereby agrees with the Trustee that:

                  (a) The undersigned will make all payments to be made by it
         under or in connection with the Agreement dated ___________________,
         19__ (the "ASSIGNED AGREEMENT") between the undersigned and the Company
         in accordance with the provisions of Section 15 of the Security
         Agreement.

                  (b) All payments referred to in paragraph (a) above shall be
         made by the undersigned irrespective of, and without deduction for, any
         counterclaim, defense, recoupment or set-off and shall be final, and
         the undersigned will not seek to recover from the Trustee or any Holder
         for any reason any such payment once made.

                  (c) The Trustee shall be entitled to exercise any and all
         rights and remedies of the Company under the Assigned Agreement in
         accordance with the terms of the Security Agreement, and the
         undersigned shall comply in all respects with such exercise.

                  (d) The undersigned will not, without the prior written
         consent of the Trustee, (i) cancel or terminate the Assigned Agreement
         (other than in accordance with the terms of such Agreement), or (ii)
         amend or otherwise modify the Assigned Agreement, or (iii) make any
         prepayment of amounts to become due under or in connection with the
         Assigned Agreement, except as expressly provided therein.

         This Consent and Agreement shall be binding upon the undersigned and
its successors and assigns, and shall inure, together with the rights and
remedies of the Trustee hereunder, to the benefit of the Trustee, the Holders
and their successors, transferees and assigns. This Consent and Agreement shall
be governed by, and construed in accordance with, the laws of the State of
Louisiana.

         IN WITNESS WHEREOF, the undersigned has duly executed this Consent and
Agreement as of the date set opposite its name below.

Dated:   _______________, 199_             [NAME OF OBLIGOR]

                                           By:____________________________
                                              Title:


                                       30