Document:

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THIS INSTRUMENT IS EXECUTED AND DELIVERED PURSUANT TO THE ORDER CONFIRMING PLAN
OF REORGANIZATION AUTHORIZING DEBTOR TO OBTAIN POST-PETITION FINANCING IN IN RE:
JCC DEVELOPMENT COMPANY, L.L.C., CASE NO. 01-10090, CHAPTER 11, PENDING IN THE
UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF LOUISIANA. SECTION
1146 OF THE BANKRUPTCY CODE EXEMPTS THIS INSTRUMENT, AND THE TRANSACTION
CONSUMMATED PURSUANT HERETO, FROM ALL STAMP, REAL ESTATE TRANSFER, MORTGAGE
RECORDING OR SIMILAR TAX, IMPOSED BY ANY AUTHORITY.

                                  EXHIBIT 10.15

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

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

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

         PERSONALLY CAME AND APPEARED:

         JCC DEVELOPMENT COMPANY, L.L.C., a Louisiana limited liability company
(TIN: 62-1650470), whose registered office in the State of Louisiana is located
at 512 South Peters, New Orleans, Louisiana 70130, and whose mailing address is
512 South Peters, New Orleans, Louisiana 70130, appearing herein by and through
L. Camille Fowler, a duly authorized officer thereof pursuant to a resolution of
its sole member, JCC Holding Company, a Delaware corporation, a certified
extract of which is attached hereto ("Mortgagor"); and

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

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

         PERSONALLY CAME AND APPEARED:

         THE BANK OF NEW YORK, a national banking association (TIN: 13-5160382),
not in its individual capacity but solely as Collateral Agent for the present
and future holders of the Secured Obligations (as defined below), whose mailing
address is 10161 Centurion Parkway,

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Jacksonville, Florida 32256, appearing herein by and through a duly authorized
representative thereof ("Mortgagee");

AND MORTGAGOR AND MORTGAGEE DECLARED THAT:

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

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

         "Assigned Leases" shall have the meaning assigned in Granting Clause
(e)(iv) hereof.

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

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

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

         "Casino Premises" means the immovable property in the Parish of Orleans
more particularly described on Exhibit "1" hereto annexed.

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

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

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

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

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

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

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

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

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

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

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

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

         "JCC" means Jazz Casino Company, L.L.C., a Louisiana limited liability
company.

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

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

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

         "Master Plan" means the master plan developed pursuant to Section 4.1
of the Second Floor Sublease with respect to leasing guidelines and other
matters relating to the development and leasing of the Second Floor.

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

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

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

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

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

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

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

         "Permitted Encumbrances" shall have the meaning assigned in Section 2
of this Mortgage.

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         "Person" means any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.

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

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

         "Rents" shall have the meaning assigned in Granting Clause (e)(iv)
hereof.

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

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

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

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

         "Second Floor" means the second floor of the casino building located on
the Casino Premises.

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

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

         "Secured Obligations" means individually, collectively and
interchangeably, (i) all Protective Advances (as defined in the Intercreditor
Agreement), (ii) all present and future indebtedness, obligations, including,
without limitation, the Minimum Payment Obligations (as defined in the
Intercreditor Agreement), and liabilities owed by JCC to the Minimum Payment

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

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

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

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

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

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

         GRANTING CLAUSES.

         To secure the full and prompt payment and performance of the Secured
Obligations, up to a maximum secured amount that may be outstanding at any time
and from time to time of U.S.

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<PAGE>   7

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

         (a)      the Second Floor Sublease, including, without limitation, all
                  of Mortgagor's present and future right, title and interest,
                  as such may be amended from time to time, as sublessee, in, to
                  and under the Second Floor Sublease, and any other lease and
                  sublease agreements and amendments thereof, affecting the
                  Second Floor, together with Mortgagor's right, title, and
                  interest in all constructions and improvements on the Second
                  Floor and the component parts thereof;

         (b)      TOGETHER with all constructions, structures, improvements,
                  fixtures, additions, enlargements, extensions, modifications
                  or repairs of every kind and description, now or hereafter
                  erected or placed on the Second Floor, or thereunto belonging
                  or appertaining, which may from time to time be owned or
                  leased by Mortgagor, or which may be used or useable in
                  connection with any present or future use or operations of the
                  Second Floor, whether now owned or hereinafter acquired by
                  Mortgagor, including all water, sanitary and storm sewer,
                  drainage, electricity, steam, gas, telephone and other utility
                  equipment and facilities, all plumbing, lighting, heating,
                  ventilating, air-conditioning, refrigerating, incinerating,
                  compacting, fire protection and sprinkler, surveillance and
                  security vacuum cleaning, public address and communications
                  equipment and systems, all kitchen and laundry appliances,
                  screens, awnings, floor coverings, partitions, elevators,
                  escalators, motors, machinery, pipes, fittings and other types
                  of equipment and personal property of every kind and
                  description now or hereafter located on the Second Floor which
                  by the nature of their location thereon or attachment thereto
                  are deemed real or immovable property under applicable law;
                  and including all materials intended for the construction,
                  reconstruction, repair, replacement, alteration, addition or
                  improvement of or to such buildings,

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<PAGE>   8

                  equipment, fixtures, component parts, structures and
                  improvements, all of which materials shall be deemed to be
                  part of the Property immediately upon delivery thereof to the
                  Second Floor to be part of the Improvements immediately upon
                  their incorporation therein, together with all replacements
                  thereof, substitutions therefor, additions thereto, and any
                  other component parts of any and all such Property (all of the
                  constructions, structures, improvements and component parts of
                  the Second Floor are collectively referred to as the
                  "Improvements");

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

         (d)      TOGETHER with all of the rights, way, privileges, servitudes,
                  easements, tenements, hereditaments, appurtenances and
                  advantages belonging to or in anywise appertaining to the
                  Second Floor or any part thereof (collectively, the "Rights
                  and Privileges"), including, without limitation, the Rights
                  and Privileges, if any, of Mortgagor in and to the Casino
                  Premises, and in and to any alleys or passages, rights of
                  ingress or egress, riparian rights, air rights, development
                  rights, and all other Rights and Privileges, whatsoever, in
                  any way belonging, relating or appertaining to any of the
                  Property, or any part thereof, whether now owned or hereafter
                  acquired by Mortgagor; and

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

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

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

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

                                       8
<PAGE>   9

All of the foregoing property and rights described in these Granting Clauses,
individually, collectively and interchangeably, including, without limitation,
any and all of Mortgagor's present and future property and rights subject to
this Mortgage, are referred to herein as the "Property."

         MORTGAGE PROVISIONS.

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

         1. Subordination. Mortgagee, for itself and on behalf of the Holders,
hereby acknowledges that this Mortgage and the mortgage, lien, security interest
and collateral assignment granted by Mortgagor hereunder shall be subject to the
terms of the Second Floor Sublease and the provisions of the Master Plan, as it
may be amended, modified, restated or supplemented from time to time. All rights
granted Mortgagee on behalf of the Holders in and to the Second Floor and the
Second Floor Sublease pursuant to this Mortgage and the exercise by Mortgagee of
any remedies as provided in this Mortgage shall be subject and subordinate to
Landlord's rights in the Second Floor as set forth in the Second Floor Sublease
and the Master Plan, including, without limitation, the right of Landlord in and
to rent payable pursuant to Section 3.1 of the Second Floor Sublease.

         2. Permitted Encumbrances. This Mortgage is made and accepted subject
to the exceptions set forth on Exhibit "2" hereto annexed and as otherwise
agreed to by Mortgagee in writing (collectively, the "Permitted Encumbrances").

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

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

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

         6. Term. This Mortgage will remain in effect until all of the Secured
Obligations are fully satisfied and there is no agreement or commitment to
advance any additional indebtedness or other obligations under any of (i) the
Minimum Payment Guaranty Documents,

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<PAGE>   10

including, without limitation, the HET/JCC Agreement, (ii) the Indentures, (iii)
the Revolving Credit Documents, including, without limitation, the Revolving
Credit Agreement, or (iv) the Shared Security Documents, including this
Mortgage. At such time, upon written request from Mortgagor, Mortgagee shall
execute and deliver to Mortgagor a written cancellation instrument.

         7. Recordation and Filing. Mortgagor authorizes Mortgagee to file
multiple originals, or photocopies, carbon copies, or facsimile copies of this
Mortgage and appropriate financing statements with the appropriate filing
officer in the State of Louisiana pursuant to the provisions of the Uniform
Commercial Code. Mortgagor's employer identification number is accurately set
out on the first page of this Mortgage. Mortgagor will not change its employer
identification number or its name, identity or corporate structure or address so
that any financing statement filed in connection herewith may become seriously
misleading unless and until it notifies Mortgagee in writing and executes all
new appropriate financing statements or other such documents as Mortgagee may
reasonably require, with Mortgagor being required to pay the cost of such
documentation and the filing thereof as provided above.

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

         9. Lien. This Mortgage is intended to encumber, effect, and constitute
a lien on the Second Floor Sublease, Improvements and all of Mortgagor's
interest therein and all of the other Property, regardless of whether
Mortgagor's interest therein is that of lessee, sublessee, owner or otherwise,
and regardless of whether the nature of such interest changes from time to time
from lessee to sublessee to owner or vice-versa in any combinations, and in any
such event the lien of this Mortgage shall automatically extend to and cover any
and all interest of Mortgagor in the Property without the need of any amendment,
supplement, notice, or action of any kind by Mortgagee. To the extent that this
Mortgage is a mortgage in Mortgagor's interest in

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<PAGE>   11

the Second Floor or the Improvements as lessor, this Mortgage will cover and
include all of Mortgagor's rights to perform the obligations of the lessor under
any Assigned Lease as well as all of Mortgagor's right to receive the benefits
accruing to the lessor under any Assigned Lease.

         10. Assignment of Leases and Rents. This Mortgage includes the
collateral assignment, as security for the Secured Obligations up to the maximum
secured amount that may be outstanding at any time and from time to time of
$10,000,000,000.00, of all Assigned Leases and all Rents (subject to Section 1
hereof), and further includes Mortgagor's rights to enforce all Assigned Leases
and to receive and enforce any and all rights that Mortgagor might have to
collect Rents (subject to Section 1 hereof).

         11. Remedies. Subject to Sections 1 and 35 of this Mortgage, upon the
occurrence and during the continuance of any Event of Default, Mortgagor shall
forthwith upon demand of Mortgagee surrender to Mortgagee possession of the
Second Floor and the Property, and Mortgagee shall be entitled to take actual
possession of the Property or any part thereof personally or by its agents or
attorneys, and Mortgagee in its discretion may, in addition to any other rights
at law or in equity, with or without force and with or without process of law,
enter upon and take and maintain possession of all or any part of the Property
together with all documents, books, records, papers and accounts of Mortgagor
relating thereto, and may as attorney-in-fact or agent of Mortgagor, or in its
own name as Mortgagee and under the powers herein granted:

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

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

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

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

         (e)      extend or modify any then existing subleases in accordance
                  with the terms thereof and make new subleases, which
                  extensions, modifications or new subleases may provide for
                  terms to expire, or for options to lessees to extend or renew
                  terms to

                                       11
<PAGE>   12

                  expire, beyond the final maturity date of the Secured
                  Obligations and the issuance of a deed or deeds to a purchaser
                  or purchasers at a foreclosure sale, it being understood and
                  agreed that any such subleases, and the options or other such
                  provisions to be contained therein, shall be binding upon
                  Mortgagor and all persons whose interests in the Property are
                  subject to the lien hereof and shall be binding also upon the
                  purchaser or purchasers at any foreclosure sale; and/or

         (f)      withdraw any monies on deposit with any financial institution
                  in the name of or on behalf of Mortgagor.

         12. Performance of Lease Obligations; Indemnification. In the event
that Mortgagee or any third party acquires Mortgagor's interest in the Second
Floor Sublease pursuant to this Mortgage (whether by foreclosure, other
enforcement proceeding or otherwise), Mortgagee or such third party, as the case
may be, shall perform or cause to be performed all of Mortgagor's obligations
under the Second Floor Sublease as and to the extent required thereunder;
provided, however, Mortgagee or such third party, as the case may be, shall
remain so obligated only for as long as Mortgagee or such third party, as the
case may be, retains an interest in the Second Floor Sublease. Except as
provided in the immediately preceding sentence, Mortgagee shall not be obligated
to perform or discharge, nor does it hereby undertake to perform or discharge,
any obligation, duty or liability under any Assigned Lease. Mortgagor shall and
does hereby agree to indemnify and to hold Mortgagee harmless of and from all
liability, loss or damage which Mortgagee might incur under said leases or under
or by reason of the assignment of any subleases, and of and from any and all
claims or demands whatsoever which may be asserted against Mortgagee by reason
of any alleged obligations or undertakings to perform or discharge any of the
terms, covenants or agreements contained in said leases, including without
limitation any claims arising out of Mortgagee's negligence or strict liability,
but excluding any such claims arising out of Mortgagee's gross negligence or
willful misconduct. Should Mortgagee incur any such liability, loss or damage
under any of said leases, or under or by reason of the assignment thereof, or in
the defense of any claims or demands, the amount thereof, including costs,
expenses and reasonable attorneys' fees and costs, including reasonable
attorneys' fees and costs on appeal, shall be secured hereby and Mortgagor shall
reimburse Mortgagee therefor immediately upon demand, together with interest at
the rate provided in Section 18 of this Mortgage to the date of reimbursement.

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

         14. Maintenance; Waste. Mortgagor shall not directly or indirectly
commit or suffer any waste or stripping of the Property, and Mortgagor shall
keep the Improvements protected and in good order, repair and condition at all
times, and in connection therewith, Mortgagor shall make or shall cause to be
made all repairs, renewals and replacements, structural and non-structural,
exterior and interior, ordinary and extraordinary and foreseen and unforeseen to
the Improvements. From and after the occurrence of an Event of Default,

                                       12
<PAGE>   13

Mortgagee, as provided under the Intercreditor Agreement, shall have the right,
but shall not be obligated, to take such actions as Mortgagee may deem necessary
to correct or remedy such failure, and any amounts expended or advanced in
connection therewith shall be Advances hereunder and part of the Secured
Obligations. In such event, Mortgagee and any person designated by Mortgagee
shall have, and is hereby granted, the right to enter upon the Property at
reasonable times and from time to time for the purpose of taking any such
action.

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

         16.      Payment of Taxes and Insurance

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

         (b)      If Mortgagor, following written notice from Mortgagee to
                  Mortgagor and thirty (30) days opportunity to cure, fails to
                  obtain or maintain any insurance required to be maintained by
                  Mortgagor under the provisions of the Shared Security
                  Documents, as applicable, or any other documents executed in
                  connection with any of the Secured Obligations, Mortgagee, as
                  provided in Section 4 of the Intercreditor Agreement and this
                  Mortgage, shall be authorized (but shall not be obligated) to
                  pay such amounts, including premiums with respect to insurance
                  which protects Mortgagee's interest only and any amounts so
                  paid by Mortgagee shall be included within the Advances
                  hereunder and part of the Secured Obligations.

         17. Default in Compliance with Law. If Mortgagor shall fail to comply

                                       13
<PAGE>   14

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

         18. Reimbursement for Advances. Within thirty (30) days following
written demand therefor by Mortgagee to Mortgagor, Mortgagor shall reimburse
Mortgagee or any Secured Creditor (to the extent permitted by the applicable
Shared Security Documents and the Intercreditor Agreement) for any amount(s)
paid or advanced by Mortgagee or such Secured Creditor (i) for Taxes pursuant to
Section 16(a) of this Mortgage, (ii) for insurance pursuant to Section 16(b) of
this Mortgage, (iii) for the cost of keeping the Property in good order, repair
and condition pursuant to Section 14 of this Mortgage, (iv) to comply with
applicable laws, rules or regulations pursuant to Section 17 of this Mortgage,
or (v) for any other purposes set forth herein or permitted hereby or by the
Shared Security Documents and the Intercreditor Agreement, or otherwise
reasonably necessary in connection therewith (including, without limitation,
Advances for the preservation of the lien of this Mortgage). All such amounts
shall constitute Advances hereunder, and such amounts, together with the
interest accrued thereon as hereinafter provided, shall form part of the Secured
Obligations and shall be fully secured hereby. Mortgagor shall pay interest on
any Advances at a rate applicable to overdue loan principal pursuant to Section
2.7 of the Credit Agreement from the date(s) of such Advances until Mortgagor
reimburses Mortgagee therefor.

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

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

                                       14
<PAGE>   15

reasonably be expected to have a material adverse effect on the Second Floor or
the operation of the Second Floor. Mortgagee and Mortgagor acknowledge that the
provisions of this Section 20 shall apply only to the extent such legal
proceedings relate solely to the Second Floor or its operation or to Mortgagor's
interest therein, and not to the Casino Premises generally, and to the extent
any obligations pursuant to this Section 20 are not otherwise required to be
performed by JCC or any other entity pursuant to the terms of any document
(other than this Mortgage) which secures the Secured Obligations.

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

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

         23.      Acceleration; Enforcement; Confession of Judgment

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

         (b)      Mortgagor does hereby name, constitute, and appoint Mortgagee
                  and Mortgagee's agents as Mortgagor's true and lawful agent
                  and attorney-in-fact

                                       15
<PAGE>   16

                  with full power of substitution and with power for Mortgagee
                  in its name and capacity or in the name and capacity of
                  Mortgagor to carry out and enforce following an Event of
                  Default, any or all of the Incorporeal Rights collaterally
                  assigned and pledged or otherwise encumbered under this
                  Mortgage and at Mortgagee's sole discretion to file any claim
                  or to take any other action or proceedings and to make any
                  settlement of claims, either in its own name or in the name of
                  Mortgagor or otherwise, that Mortgagee may deem necessary or
                  desirable in order to collect and enforce the payment and
                  performance of the obligations owed to Mortgagor under the
                  Incorporeal Rights. Upon receipt of a written notice from
                  Mortgagee that an Event of Default exists, the parties to the
                  Incorporeal Rights are hereby expressly and irrevocably
                  authorized and directed to pay any and all amounts and perform
                  any duties, liabilities, or obligations due to Mortgagor
                  pursuant to any of the Incorporeal Rights to and for Mortgagee
                  or such nominee as Mortgagee may designate in such notice. The
                  power of attorney granted to Mortgagee and its agents is
                  coupled with an interest and may not be revoked by Mortgagor
                  as long as this Mortgage remains in effect. Mortgagor
                  specifically declares that nothing in this Mortgage shall
                  operate (i) to place any responsibility for the control, care,
                  management, or repair of the Property upon Mortgagee or for
                  the carrying out of any of the terms or conditions of any
                  present or future lease that may affect the Property, or (ii)
                  to make Mortgagee responsible or liable for (A) any waste
                  committed on the Property by any lessee or by any other party,
                  (B) the dangerous or defective condition of the Property,
                  including but not limited to liability as described in
                  Louisiana Civil Code Articles 2315 through 2324, or (C) any
                  negligence in the management, upkeep, repair, or control of
                  the Property that may result in loss, injury, or death to any
                  lessee or other party. If the Property is transferred by
                  virtue of any judicial foreclosure proceeding, the Property
                  may, in Mortgagee's sole discretion, be transferred free and
                  clear of, and unencumbered by, any and all subordinate leases,
                  assignments, and contracts. Upon request by Mortgagee
                  following an Event of Default, Mortgagor will immediately
                  notify individual obligors and debtors under the Incorporeal
                  Rights, advising such obligors and debtors of the fact that
                  their respective agreements and/or obligations have been
                  collaterally assigned and pledged to Mortgagee. In the event
                  that Mortgagor should fail to provide such notices for any
                  reason upon request by Mortgagee, Mortgagor agrees that
                  Mortgagee may forward appropriate notices to such obligors and
                  debtors, either in Mortgagee's name or the name of Mortgagor.

         (c)      Should one or more Events of Default occur or exist, Mortgagee
                  shall have the additional right, at its sole option, to
                  separately sell the aforesaid Incorporeal Rights, or any part
                  or parts thereof, at private or public sale, at such price or
                  prices as Mortgagee may deem best, either for cash or for any
                  other compensation, or on credit, or for future delivery,
                  without the assumption of any credit risk. The sale of the
                  aforesaid Incorporeal Rights may be without appraisement, the
                  benefit of which is also expressly waived by Mortgagor.
                  Mortgagee may exercise any other remedies with regard to
                  Mortgagor's rights as

                                       16
<PAGE>   17

                  may be authorized under the Uniform Commercial Code or under
                  the applicable laws of any other applicable state. The sale,
                  lease or other disposition of the Incorporeal Rights after
                  default may be for cash, credit, or any combination thereof.
                  Mortgagee may purchase all or any part of such Incorporeal
                  Rights at public sale (or if permitted by law, at private
                  sale) and in lieu of actual payment of any such purchase
                  price, may set-off the amount of such price against the then
                  outstanding Secured Obligations.

         (d)      To the full extent permitted by applicable law, Mortgagor
                  hereby waives and releases Mortgagee and each Secured Creditor
                  of and from any and all liability and penalties for failure of
                  Mortgagee to comply with any statutory or other requirement
                  imposed upon Mortgagee relating to notices of sale, holding of
                  sale, or reporting of any sale. Mortgagee shall have the right
                  to postpone or adjourn any sale or other disposition of the
                  Incorporeal Rights at any time without giving of notice of any
                  such postponed or adjourned dates. In the event Mortgagee
                  seeks to take possession of any or all of the Incorporeal
                  Rights by court process, or otherwise, Mortgagor hereby
                  irrevocably waives any bonds and surety or security relating
                  thereto required by any statute, court rule or otherwise as an
                  incident to such possession. Mortgagor further waives any
                  demand for possession prior to the commencement of any suit or
                  action and waives the right to trial by jury with respect
                  thereto, and any other action in which Mortgagee is a party.

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

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

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

         24. Appointment of Keeper. If the Property or any part thereof is
seized as an incident to an action for the recognition or the enforcement of
this Mortgage by

                                       17
<PAGE>   18

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

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

         26. Covenants to Abide by Leases. Subject to the terms of this
Mortgage, with respect to the Second Floor Sublease and any and all other leases
now or hereafter mortgaged or required to be mortgaged hereunder or pursuant to
a supplement to or amendment of this Mortgage (other than Ordinary Course
Leases), as of the date such lease becomes subject to the lien of this Mortgage,
Mortgagor does specially covenant as follows:

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

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

         (c)      Mortgagor shall not, without the prior written consent of
                  Mortgagee, modify, extend or in any way alter the terms of the
                  Second Floor Sublease or any lease or cancel or surrender the
                  Second Floor Sublease or any lease, or waive, execute, condone
                  or in any way release or discharge the lessor thereunder of or
                  from the obligations covenants, conditions and agreements by
                  said lessor to be done and performed, which, in any case,
                  would have a material

                                       18
<PAGE>   19

                  adverse effect on Mortgagor's interest in the Second Floor
                  Sublease or any such lease pursuant to this Mortgage;

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

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

                                       19
<PAGE>   20

                  Floor at any time and from time to time for the purpose of
                  taking any such action. If the lessor under the Second Floor
                  Sublease or any lease shall deliver to Mortgagee a copy of any
                  notice of default sent by said lessor to Mortgagor under the
                  Second Floor Sublease or any lease, such notice shall
                  constitute full protection to Mortgagee for any action taken
                  or omitted to be taken by Mortgagee, in good faith, in
                  reliance thereon;

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

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

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

         (i)      In the event such lease is rejected or disaffirmed by the
                  lessor thereunder (or by any receiver, trustee, keeper,
                  custodian or other party who succeeds to the rights of such
                  landlord) pursuant to any bankruptcy, insolvency,
                  reorganization, moratorium or similar law, Mortgagor covenants
                  that it will not elect to treat such lease or sublease as
                  terminated under 11 U.S.C. Section 365(h) or any similar or
                  successor law or right and hereby assigns to Mortgagee the
                  sole and exclusive right to make or to refrain from making any
                  such election, and

                                       20
<PAGE>   21

                  Mortgagor agrees that any such election, if made by Mortgagor,
                  shall be void and of no force or effect;

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

         (k)      Mortgagor immediately upon obtaining knowledge of a breach by
                  the lessor under the Second Floor Sublease or any lease (or by
                  any receiver, keeper, trustee, custodian or other party who
                  succeeds to the rights of such lessor) or any inability of
                  such lessor (or any such receiver, trustee, custodian or other
                  party) to perform the terms and provisions of the Second Floor
                  Sublease or any lease (including by reason of a rejection or
                  disaffirmance of the Second Floor Sublease or any lease, as
                  the case may be, pursuant to any bankruptcy, insolvency,
                  reorganization, moratorium or similar law), will notify
                  Mortgagee of any such breach or inability. Mortgagor shall, at
                  its expense, diligently commence and prosecute any proceedings
                  as may be necessary or advisable against such lessor in
                  connection with such breach and shall, upon the request of
                  Mortgagee, deliver to Mortgagee copies of all papers served in
                  connection therewith; provided that no settlement or
                  compromise of any such proceeding shall be made by Mortgagor
                  without Mortgagee's prior written consent if such settlement
                  or compromise could have a material adverse effect on
                  Mortgagor's interest in the Second Floor Sublease or any such
                  lease pursuant to this Mortgage.

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

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

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

                                       21
<PAGE>   22

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

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

         (c)      Any failure of Mortgagee to insist upon the strict performance
                  by Mortgagor of any of the terms and provisions hereof shall
                  not be deemed to be a waiver of any of the terms and
                  provisions hereof, and Mortgagee, notwithstanding any such
                  failure, shall have the right thereafter to insist upon the
                  strict performance by Mortgagor of any and all of the terms
                  and provisions of this Mortgage to be performed by Mortgagor.
                  Neither Mortgagor nor any person now or hereafter obligated
                  for the payment of the whole or any part of the sums now or
                  hereafter secured by this Mortgage shall be relieved of such
                  obligation by reason of the failure of Mortgagee to comply
                  with any request of Mortgagor, or of any other person so
                  obligated, to take action to foreclose or otherwise enforce
                  any of the provisions of this Mortgage or any obligations
                  secured by this Mortgage, or by reason of the release,
                  regardless of consideration, of the whole or any part of the
                  security held for the indebtedness secured by this Mortgage,
                  or by reason of any agreement or stipulation between any
                  subsequent owner or owners of the Property and Mortgagee
                  extending the time of payment or modifying the terms of the
                  indebtedness secured hereby or this Mortgage without first
                  having obtained the consent of Mortgagor or such other person,
                  and in the latter event, Mortgagor and all such other persons
                  shall continue to be liable to make such payment according to
                  the terms of any such agreement of extension or modification
                  unless expressly released and discharged in writing by
                  Mortgagee.

         (d)      Regardless of consideration and without the necessity for any
                  notice to or consent by the holder of any subordinate lien or
                  encumbrance on the Property, Mortgagee may release the
                  obligation of anyone at any time liable for any of the Secured
                  Obligations secured by this Mortgage or any part of the
                  security held for such Secured Obligations and grant or agree
                  to such extensions, indulgences and modifications in relation
                  to the Secured Obligations as Mortgagee may determine, without
                  the consent of the holder of any such subordinate lien or
                  encumbrance and without any obligation to give notice of any
                  kind thereto and

                                       22
<PAGE>   23

                  without, as to the security or the remainder thereof, in any
                  way impairing or affecting the lien hereof or the priority
                  thereof over any subordinate lien or encumbrance. Any
                  subsequent encumbrances of the Property are hereby, by virtue
                  of this Section 29(d), specifically given notice of the
                  foregoing reservation of rights.

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

         30. Notices. Except as otherwise expressly provided herein, all notices
or other communications required or permitted to be given or delivered pursuant
to this Mortgage shall be in writing and shall be given by hand delivery,
certified United States mail, prepaid, with return receipt requested, overnight
courier service or facsimile transmission with receipt confirmed. Any party
hereto may from time to time, by notice in writing served upon the other parties
hereto pursuant to this Section 30 designate a different address or person to
whose attention notices shall be given. Notices hereunder shall be deemed given
upon receipt. The addresses of the parties hereto for notices are:

                  Mortgagor:        JCC Development Company, L.L.C.
                                    c/o JCC Holding Company
                                    365 Canal Street, Suite 900
                                    New Orleans, LA  70130
                                    Attention:  President

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

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

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

         33.      Reinscription of Mortgage

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

                                       23
<PAGE>   24

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

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

         34.      [Intentionally omitted.]

         35. Intercreditor Agreement. Notwithstanding any other provision of
this Mortgage or any document or instrument executed by Mortgagor (other than
the Second Floor Sublease), this Mortgage and all liens and security interests
and rights granted herein, and the priority thereof, are expressly subject to
the provisions of the Intercreditor Agreement which are incorporated herein by
reference and made applicable hereto. In addition, Mortgagee is the Collateral
Agent, as defined in and pursuant to the terms of the Intercreditor Agreement,
and, notwithstanding anything herein to the contrary, the rights, powers,
remedies and obligations of Mortgagee hereunder shall be subject to the
provisions of the Intercreditor Agreement. Any exercise or waiver by Mortgagee
of any of its rights, powers or remedies hereunder or any other act by Mortgagee
hereunder shall be conclusive evidence of Mortgagee's authority pursuant to the
Intercreditor Agreement against all persons other than the Secured Creditors.
Nothing in this Mortgage shall limit or waive any rights granted to Mortgagee as
a "Leasehold Mortgagee" or the "First Leasehold Mortgagee," as the case may be,
under and as defined in the Casino Ground Lease. Mortgagee hereby acknowledges
that Mortgagor has assigned Landlord certain rights in the Capital Replacement
Fund (as defined in the Casino Ground Lease) under Sections 5.3(e), 7.1(c) and
19.8(d) of the Casino Ground Lease, subject to the terms of the Casino Ground
Lease, and that Landlord has certain rights in and to a portion of the rent due
under the Second Floor Sublease pursuant to Section 3.1 thereof, subject to the
terms of the Second Floor Sublease.

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

         37. Indemnification. Mortgagor shall indemnify and defend the Mortgagee
and its directors, officers, employees, agents and representatives (each an
"Indemnified Party") from and against all liabilities (including any
environmental liabilities), obligations, claims, losses, damages,

                                       24
<PAGE>   25

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

                            [Signature page follows]

                                       25
<PAGE>   26

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

WITNESSES:                                   JCC DEVELOPMENT COMPANY, L.L.C., a
                                             Louisiana limited liability company

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

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

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

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

                          (Commission issued for life.)

                                       26
<PAGE>   27

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

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

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

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

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

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

                          (Commission issued for life.)

                                       27
<PAGE>   28

                                   Exhibit "1"

                                 Casino Premises

PARCEL 1--CASINO PREMISES

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

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

CANAL STREET PORTION:

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

Commencing at Point K, being the intersection of the easterly line of former
Delta Street and the southerly line of Canal Street, and also being the
northeast corner of Square RS, measure thence along the southerly line of Canal
Street North 52 degrees 44 minutes 02 seconds West, a distance of 87.04 feet to
the Point of Beginning. From the Point of Beginning, measure thence along the
southerly line of Canal Street North 52 degrees 44 minutes 02 seconds West, a
distance of 129.11 feet to the westerly line of the former I-310 Tunnel; thence
along said line along a curve to the right having a radius of 1689.02 feet, a
distance of 78.94 feet to the northerly line of said Tunnel; thence along said
line South 85 degrees 05 minutes 17 seconds East, a distance of 104 feet to the
easterly line of the former I-310 Tunnel; thence along said line along a curve
to the left having a radius of 1585.02 feet, a distance of 148.4 feet to the

                                       28
<PAGE>   29

Point of beginning, as shown on a survey plat by Gandolfo, Kuhn & Associates,
dated October 20, 1998, Drawing No. T-182-3.

POYDRAS STREET PORTION:

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

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

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

PARCEL 2--LAFAYETTE SUBSURFACE AREA

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

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

                                       29
<PAGE>   30

eighths to the upper line of Lafayette Street and Northeast corner of Square 5;
thence along the upper line of Lafayette Street North 75 degrees 59 minutes 17
seconds West, a distance of 118 feet 1 inch 1 eighth to the easterly line of
Fulton Street; thence along the easterly line of Fulton Street North 2 degrees 0
minutes 19 seconds West, a distance of 46 feet 9 inches 7 eighths to the Point
of Beginning, all in accord with a survey plat by Gandolfo, Kuhn & Associates,
dated October 20, 1998, Drawing No. T-182-3.

PARCEL 3--POYDRAS STREET SUPPORT FACILITY

TRACT 1:

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

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

TRACT 2:

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

                                       30
<PAGE>   31

Beginning at the intersection of the upper line of Poydras Street with the
westerly line of Convention Center Boulevard; thence along said line of
Convention Center Boulevard, South 2 degrees 23 minutes 18 seconds East, 371
feet 1 inch 0 1/2 eighths to the lower line of Lafayette Street; thence along
said line, North 75 degrees 59 minutes 17 seconds West, 117 feet 7 inches 4
eighths to the East line of Fulton Street, thence along said line, North 2
degrees 0 minutes 19 seconds West, 369 feet 10 inches 1 eighth to the upper line
of Poydras Street, thence along said line, South 76 degrees 14 minutes 24
seconds East, 114 feet 10 inches 6 eighths to the westerly line of Convention
Center Boulevard and the Point of Beginning.

TRACT 3:

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

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

PARCEL 4--POYDRAS TUNNEL AREA

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

Beginning at the northeast corner of Square 4, being the intersection of the
west line of Convention Center Boulevard with the south line of Poydras Street,
134 feet wide; thence go along the North line of Square 4, North 76 degrees 14
minutes 24 seconds West, 114 feet 10 inches 6 eighths to the Northwest corner of
Square 4, and the East line of Fulton Street; thence along the projection of
said line, North 2 degrees 0 minutes 19 seconds West, 139 feet 4 inches 1 eighth
to the North line of Poydras Street; thence along said line South 76 degrees 14

                                       31
<PAGE>   32

minutes 24 seconds East, 180 feet to a point; thence go South 25 degrees 14
minutes 37 seconds West, 136 feet 10 inches 1 eighth to the point of beginning,
all as shown on a survey plat by Gandolfo, Kuhn & Associates, dated on October
20, 1998, Drawing No. T-182-3.

PARCEL 5--PEDESTRIAN BRIDGE AREAS

TRACT 1--FULTON STREET AIR RIGHTS AREA:

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

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

TRACT 2--LAFAYETTE STREET AIR RIGHTS AREA:

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

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

                                       32
<PAGE>   33

118 feet 1 inch 1 eighth to the easterly line of Fulton Street; thence along the
easterly line of Fulton Street North 2 degrees 0 minutes 19 seconds West, a
distance of 46 feet 9 inches 7 eighths to the Point of Beginning, all in accord
with a survey plat by Gandolfo, Kuhn & Associates, dated October 20, 1998,
Drawing No. T-182-3.

TRACT 3--POYDRAS STREET AIR RIGHTS AREA:

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

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

PARCEL 6--ENCROACHMENT AREA

TRACT 1:

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

TRACT 2:

Those sidewalks and right of ways adjacent to and portions of Lafayette Street,
Fulton Street, Convention Center Boulevard and Girod Street located within ten
(10) feet from the lot lines of Square 5, First Municipal District, City of New
Orleans, Orleans Parish, Louisiana upon which foundations, canopies, roof
overhangs, columns, decorative paving, fountains, landscaping, streetscaping,
lighting, directional signage, underground utilities and other

                                       33
<PAGE>   34

encroachments are, or will be constructed in connection with the Improvements
located or to be located upon said Square 5. Reference is made to a survey plat
by Gandolfo, Kuhn & Associates, dated October 20, 1998, Drawing No. T-182-3.

TRACT 3:

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

                                       34
<PAGE>   35

                                   Exhibit "2"

                             Permitted Encumbrances

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

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

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

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

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

                                       35
<PAGE>   36

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

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

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

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

10.      Terms and Conditions of Approved Zoning Plans:

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

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

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

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

12.      Terms and Conditions of the Lease Agreement by and between Rivergate
         Development Corporation, as lessor, and Celebration Park Casino, Inc.
         (n/k/a Grand Palais Casino, Inc.), as lessee, dated April 27, 1993,
         filed April 27, 1993, under Notarial Archives No.

                                       36
<PAGE>   37

         93-018036, as Conveyance Instrument No. 68200, as assigned to Harrah's
         Jazz Company by Assignment and Assumption of Sublease, dated March 15,
         1994, filed March 16, 1994 under Notarial Archives No. 94-13862, as
         Conveyance Instrument No. 83931, and as amended by Amended Lease
         Agreement, dated March 15, 1994, filed March 16, 1994, under Notarial
         Archives No. 94-13887, as Conveyance Instrument No. 83942, as amended
         by Amendment to Lease Agreement dated October 5, 1994, filed October 6,
         1994, under Notarial Archives No. 94-46778, as Conveyance Office
         Instrument No. 94519, and as assigned and transferred to Jazz Casino
         Company, L.L.C., by Order In Aid of Consummation in bankruptcy
         proceedings entitled "In the Matter of Harrah's Jazz Company, No.
         95-14545, in the U. S. Bankruptcy Court for the Eastern District of
         Louisiana, dated October 29, 1998, filed October 30, 1998, under N.A.
         #98-50453, COI #168125, and as amended and restated in Amended and
         Restated Lease Agreement among Rivergate Development Corporation, as
         landlord, and Jazz Casino Company, L.L.C., as tenant, and City of New
         Orleans, as intervenor, dated October 29, 1998, filed October 30, 1998,
         under Notarial Archives No. 98-50458, Conveyance Office Instrument No.
         168130, and as amended by that certain First Amendment to Amended and
         Restated Lease Agreement among Landlord, Mortgagor and the City of New
         Orleans, as intervenor, dated effective March 31, 2001, and recorded in
         the conveyance records of the Parish of Orleans at Notarial Archives
         No. _____________, as Conveyance Office Instrument No. __________,

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

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

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

                                       37<PAGE>   1
                                                                   EXHIBIT 10.16

                               GUARANTY AGREEMENT

                  GUARANTY AGREEMENT, dated as of March 30, 2001 (as amended,
modified or supplemented from time to time, this "Guaranty"), made by each of
the undersigned (each a "Guarantor" and, collectively, the "Guarantors"). Except
as otherwise defined herein, capitalized terms used herein and defined in the
Revolving Credit Agreement (as in effect on the date hereof) shall be used
herein as therein defined.

                              W I T N E S S E T H:

                  WHEREAS, JCC Holding Company ("JCC Holding"), Jazz Casino
Company, L.L.C. ("JCC" or the "Company"), Harrah's Entertainment, Inc. ("HET"),
a Delaware corporation, Harrah's Operating Company, Inc. ("HOC"), a Delaware
corporation, and Harrah's New Orleans Management Company ("HNOMC"), a Nevada
corporation, as lenders (HET, HOC and HNOMC, as lenders pursuant to the
Revolving Credit Agreement, together with an additional lenders thereunder from
time to time, being herein called the "Lenders"), have entered into a Revolving
Credit Agreement, dated as of March 30, 2001, providing for the making of
Revolving Loans and the issuance of, and participation in, Letters of Credit as
contemplated therein and the incurrence of Letter of Credit Obligations in
respect of certain Letters of Credit outstanding as of the Initial Borrowing
Date as contemplated therein (as used herein, the term "Revolving Credit
Agreement" means the Revolving Credit Agreement described above in this
paragraph, as the same may be amended, modified or supplemented from time to
time);

                  WHEREAS, the proceeds of the Revolving Loans will be used, in
part, to finance the operation of the Casino and to provide for the Company's
working capital and general corporate requirements;

                  WHEREAS, the Guarantors own a substantial beneficial interest
in the parent of the Company and will obtain substantial economic and other
benefits as a result of the operation of the Casino;

                  WHEREAS, it is a condition precedent to the consummation of
the Plan of Reorganization, and the willingness of Bankers Trust Company
("BTCo") to allow the Existing Letters of Credit (as defined in the Revolving
Credit Agreement as originally in effect) to remain outstanding, that each
Guarantor shall have executed and delivered this Guaranty; and

                  WHEREAS, each Guarantor will obtain benefits from BTCo's
agreement to allow the Existing Letters of Credit to remain outstanding and,
accordingly, desires to execute this Guaranty in order to satisfy the condition
described in the preceding paragraph;

                  NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to each Guarantor, the receipt and sufficiency of which are
hereby acknowledged, each Guarantor hereby makes the following representations
and warranties to BTCo and hereby covenants and agrees with BTCo as follows:

<PAGE>   2

                  1. Each Guarantor, jointly and severally, irrevocably and
unconditionally guarantees: to BTCo the entire payment when due (whether at the
stated maturity, by acceleration or otherwise) of (x) all obligations and
liabilities of the Company to BTCo with respect to the Existing Letters of
Credit (as same may be amended, modified, extended or supplemented from time to
time), including, without limitation, all obligations to reimburse BTCo for any
drawings pursuant thereto, and to pay interest owing with respect thereto, in
accordance with the requirements of Section 2.14 of the Revolving Credit
Agreement, (y) all regularly accruing fees payable with respect to the Existing
Letters of Credit (as same may be amended, modified, extended or supplemented
from time to time), including, without limitation, all fees payable with respect
thereto pursuant to Section 3.1 of the Revolving Credit Agreement and (z) all
increased cost payments, tax payments or gross-ups, indemnification obligations
and other amounts and obligations payable pursuant to the Revolving Credit
Agreement or the other Credit Documents (as defined in the Revolving Credit
Agreement), in each case to the extent (and only to the extent) relating to the
Existing Letters of Credit (as same may be amended, modified, extended or
supplemented from time to time) or the Letter of Credit Obligations relating
thereto (all such principal, unpaid drawings, interest, fees and other amounts
described above in this Section 1 being collectively herein called the
"Guaranteed Obligations"). Each Guarantor understands, agrees and confirms that
BTCo may enforce this Guaranty up to the full amount of the Guaranteed
Obligations against such Guarantor without proceeding against any other
Guarantor, the Company or any other Credit Party, against any security for the
Guaranteed Obligations, or under any other guaranty covering all or a portion of
the Guaranteed Obligations.

                  2. Additionally, each Guarantor, jointly and severally,
unconditionally and irrevocably, guarantees the payment of any and all
Guaranteed Obligations to BTCo whether or not due or payable by the Company upon
the occurrence in respect of the Company of any of the events specified in
Sections 6.1(e), (f) and (g) of the Revolving Credit Agreement (as originally in
effect), and unconditionally and irrevocably, jointly and severally, promises to
pay such Guaranteed Obligations to BTCo, or order, on demand, in lawful money of
the United States. This Guaranty shall constitute a guaranty of payment, and not
of collection.

                  3. The liability of each Guarantor hereunder is exclusive and
independent of any security for or other guaranty of the Guaranteed Obligations
of the Company whether executed by such Guarantor, any other Guarantor, any
other guarantor of the Guaranteed Obligations or by any other party, and the
liability of each Guarantor hereunder shall not be affected or impaired by any
circumstance or occurrence whatsoever, including, without limitation: (a) any
direction as to application of payment by the Company or by any other party, (b)
any other continuing or other guaranty, undertaking or maximum liability of a
guarantor or of any other party as to the Guaranteed Obligations, (c) any
payment on or in reduction of any such other guaranty or undertaking, (d) any
dissolution, termination or increase, decrease or change in personnel by the
Company, (e) any payment made to BTCo on the indebtedness which BTCo repays the
Company pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and each Guarantor waives any
right to the deferral or modification of its obligations hereunder by reason of
any such proceeding, (f) any action or inaction by BTCo as contemplated in
Section 6 hereof, or (g) any invalidity, irregularity or unenforceability of all
or part of the Guaranteed Obligations or of any security therefor.

                                      -2-
<PAGE>   3

                  4. The obligations of each Guarantor hereunder are independent
of the obligations of any other Guarantor, any other guarantor of the Guaranteed
Obligations or the Company, and a separate action or actions may be brought and
prosecuted against each Guarantor whether or not action is brought against any
other Guarantor, any such other guarantor or the Company and whether or not any
other Guarantor, any such other guarantor of the Guaranteed Obligations or the
Company be joined in any such action or actions. Each Guarantor expressly
acknowledges and agrees that any payment by the Company or other circumstance
which operates to toll any statute of limitations as to the Company shall
operate to toll the statute of limitations as to each Guarantor.

                  5. Each Guarantor hereby waives notice of acceptance of this
Guaranty and notice of any liability to which it may apply, and waives
promptness, diligence, presentment, demand of payment, protest, notice of
dishonor or nonpayment of any such liabilities, suit or taking of other action
by BTCo against, and any other notice to, any party liable thereon (including
such Guarantor, any other Guarantor or any other guarantor of the Guaranteed
Obligations or the Company).

                  6. BTCo may at any time and from time to time without the
consent of, or notice to, any Guarantor, without incurring responsibility to
such Guarantor, without impairing or releasing the obligations of such Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:

                  (a) change the manner, place or terms of payment of, and/or
         change or extend the time of payment of, renew or alter, any of the
         Guaranteed Obligations (including any increase or decrease in the rate
         of interest thereon), any security therefor, or any liability incurred
         directly or indirectly in respect thereof, and the guaranty herein made
         shall apply to the Guaranteed Obligations as so changed, extended,
         renewed or altered;

                  (b) take and hold security for the payment of the Guaranteed
         Obligations and sell, exchange, release, surrender, realize upon or
         otherwise deal with in any manner and in any order any property by
         whomsoever at any time pledged or mortgaged to secure, or howsoever
         securing, the Guaranteed Obligations or any liabilities (including any
         of those hereunder) incurred directly or indirectly in respect thereof
         or hereof, and/or any offset thereagainst;

                  (c) exercise or refrain from exercising any rights against the
         Company or others or otherwise act or refrain from acting;

                  (d) release or substitute any one or more endorsers,
         guarantors, the Company or other obligors;

                  (e) settle or compromise any of the Guaranteed Obligations,
         any security therefor or any liability (including any of those
         hereunder) incurred directly or indirectly in respect thereof or
         hereof, and may subordinate the payment of all or any part thereof to
         the payment of any liability (whether due or not) of the Company to
         creditors of the Company other than BTCo;

                                      -3-
<PAGE>   4

                  (f) apply any sums by whomsoever paid or howsoever realized to
         any liability or liabilities of the Company to BTCo regardless of what
         liabilities of the Company remain unpaid;

                  (g) consent to or waive any breach of, or any act, omission or
         default under any of the Credit Documents or any of the instruments or
         agreements referred to therein, or otherwise amend, modify or
         supplement any of the Credit Documents or any of such other instruments
         or agreements; and/or

                  (h) act or fail to act in any manner which may deprive such
         Guarantor of its right to subrogation against the Company to recover
         full indemnity for any payments made pursuant to this Guaranty.

                  7. No invalidity, irregularity or unenforceability of all or
any part of the Guaranteed Obligations or of any security therefor shall affect,
impair or be a defense to this Guaranty, and this Guaranty shall be primary,
absolute and unconditional notwithstanding the occurrence of any event or the
existence of any other circumstances which might constitute a legal or equitable
discharge of a surety or guarantor except payment in full in cash of the
Guaranteed Obligations.

                  8. This Guaranty is a continuing one and all liabilities to
which it applies or may apply under the terms hereof shall be conclusively
presumed to have been created in reliance hereon. No failure or delay on the
part of BTCo in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any right,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein expressly specified are cumulative and not exclusive of any rights or
remedies which BTCo would otherwise have. No notice to or demand on any
Guarantor in any case shall entitle such Guarantor to any other further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of BTCo to any other or further action in any circumstances without notice or
demand. It is not necessary for BTCo to inquire into the capacity or powers of
the Company or the officers, directors, partners or agents acting or purporting
to act on its behalf, and any indebtedness made or created in reliance upon the
professed exercise of such powers shall be guaranteed hereunder.

                  9. Any indebtedness or other liabilities of the Company now or
hereafter held by or owing to any Guarantor (other than in connection with the
Credit Documents and the Minimum Payment Guaranty Documents) is hereby
subordinated to the Guaranteed Obligations of the Company to BTCo, and such
indebtedness and other liabilities of the Company held by or owing to any
Guarantor, if BTCo, after an Event of Default has occurred, so requests, shall
be collected, enforced and received by such Guarantor as trustee for BTCo and be
paid over to BTCo on account of the Guaranteed Obligations of the Company to
BTCo, but without affecting or impairing in any manner the liability of such
Guarantor under the other provisions of this Guaranty. Prior to the transfer by
any Guarantor of any note or negotiable instrument evidencing any indebtedness
or other liabilities (other than in connection with the Credit Documents and the
Minimum Payment Guaranty Documents) of the Company to such Guarantor, such
Guarantor shall mark such note or negotiable instrument with a legend that the
same is subject to this

                                      -4-
<PAGE>   5

subordination. Without limiting the generality of the foregoing, each Guarantor
hereby agrees with BTCo that it will not exercise any right of subrogation which
it may at any time otherwise have as a result of this Guaranty (whether
contractual, under Section 509 of the Bankruptcy Code or otherwise) until all
Guaranteed Obligations have been irrevocably paid in full in cash.

                  10. (a) Each Guarantor waives any right (except as shall be
required by applicable statute and cannot be waived) to require BTCo to: (i)
proceed against the Company, any other Guarantor, any other guarantor of the
Guaranteed Obligations or any other party; (ii) proceed against or exhaust any
security held from the Company, any other Guarantor, any other guarantor of the
Guaranteed Obligations or any other party; or (iii) pursue any other remedy in
BTCo's power whatsoever. Each Guarantor waives any defense based on or arising
out of any defense of the Company, any other Guarantor, any other guarantor of
the Guaranteed Obligations or any other party other than payment in full of the
Guaranteed Obligations, including, without limitation, any defense based on or
arising out of the disability of the Company, any other Guarantor, any other
guarantor of the Guaranteed Obligations or any other party, or the
unenforceability of the Guaranteed Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of the Company other
than payment in full of the Guaranteed Obligations. BTCo may, at its election,
foreclose on any security held by the Lenders or the Collateral Agent by one or
more judicial or nonjudicial sales, whether or not every aspect of any such sale
is commercially reasonable (to the extent such sale is permitted by applicable
law), or exercise any other right or remedy BTCo may have against the Company or
any other party, or any security, without affecting or impairing in any way the
liability of any Guarantor hereunder except to the extent the Guaranteed
Obligations have been paid in full. Each Guarantor waives any defense arising
out of any such election by BTCo, even though such election operates to impair
or extinguish any right of reimbursement or subrogation or other right or remedy
of such Guarantor against the Company or any other party or any security.

                  (b) Each Guarantor waives all presentments, demands for
performance, protests and notices, including, without limitation, notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this Guaranty, and notices of the existence, creation or incurring of new or
additional indebtedness. Each Guarantor assumes all responsibility for being and
keeping itself informed of the Company's financial condition and assets, and of
all other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which such Guarantor
assumes and incurs hereunder, and agrees that BTCo shall have no duty to advise
any Guarantor of information known to them regarding such circumstances or
risks.

                  11. Each Guarantor agrees that this Guaranty may be enforced
only by the action of BTCo and that no other Person shall have any right
individually to seek to enforce or to enforce this Guaranty, it being understood
and agreed that such rights and remedies may be exercised by BTCo upon the terms
of this Guaranty.

                  12. In order to induce BTCo to allow the Existing Letters of
Credit to remain outstanding after the date of the effectiveness of the Plan of
Reorganization as Letters of Credit pursuant to the Revolving Credit Agreement,
each Guarantor makes the following representations, warranties and agreements to
and for the benefit of BTCo, all of which shall

                                      -5-
<PAGE>   6

survive the execution and delivery of this Guaranty and the Credit Documents,
and the effectiveness of the Plan of Reorganization, with the effectiveness of
the Plan of Reorganization, being deemed to constitute a representation and
warranty that the matters specified in this Section 12 are true and correct on
and as of such date (it being understood and agreed that any representation or
warranty which by its terms is made as of a specified date shall be required to
be true and correct in all material respects only as of such specified date):

                  (a) Existence and Qualification; Power; Compliance With Laws.
         Each Guarantor is duly formed, validly existing and in good standing
         under the laws of its jurisdiction of formation. Each Guarantor is duly
         qualified or registered to transact business and is in good standing in
         each other jurisdiction in which the conduct of its business or the
         ownership or leasing of its properties makes such qualification or
         registration necessary, except where the failure so to qualify or
         register and to be in good standing could not (i) reasonably be
         expected to have any material adverse effect whatsoever upon the
         validity or enforceability of this Guaranty or any Credit Document,
         (ii) reasonably be expected to be material and adverse to the condition
         (financial or otherwise), assets, business or operations of the
         Guarantors, taken as a whole, or (iii) reasonably be expected to
         materially impair the ability of the Guarantors, taken as a whole, to
         perform their obligations hereunder and under the Credit Documents.
         Each Guarantor has all requisite corporate power and authority to
         conduct its respective business, to own and lease its respective
         properties and to execute and deliver this Guaranty and to perform its
         obligations hereunder and under the Credit Documents. Each Guarantor is
         in compliance with all laws and legal requirements applicable to its
         respective business, has obtained all authorizations, consents,
         approvals, orders, licenses and permits from, and has accomplished all
         filings, registrations and qualifications with, or obtained exemptions
         from any of the foregoing from, any governmental agency that are
         necessary for the transaction of its business, except where the failure
         so to comply, file, register, qualify or obtain exemptions could not
         (i) reasonably be expected to have any material adverse effect
         whatsoever upon the validity or enforceability of any Credit Document,
         (ii) reasonably be expected to be material and adverse to the condition
         (financial or otherwise), assets, business or operations of HET and its
         Subsidiaries, taken as a whole, or (iii) reasonably be expected to
         materially impair the ability of the Guarantors, taken as a whole, to
         perform their obligations hereunder and under the Credit Documents.

                  (b) Authority; Compliance with Other Agreements and
         Instruments and Government Regulations. The execution, delivery and
         performance by each Guarantor of this Guaranty and each other Credit
         Document to which it is a party have been duly authorized by all
         necessary corporate action and do not and will not:

                           (i) require any consent or approval not heretofore
                  obtained of any partner, director, stockholder, security
                  holder or creditor of such Guarantor;

                           (ii) violate or conflict with any provision of such
                  Guarantor's charter, articles of incorporation or bylaws or
                  analogous formation documents, as applicable;

                                      -6-
<PAGE>   7

                           (iii) result in or require the creation or imposition
                  of any Lien upon or with respect to any property now owned or
                  leased or hereafter acquired by such Guarantor;

                           (iv) violate any requirement of law applicable to
                  such Guarantor;

                           (v) result in a breach by such Guarantor of or
                  constitute a default by such Guarantor under, or cause or
                  permit the acceleration of any obligation owed under, any
                  indenture or loan or credit agreement or any other material
                  contract to which such Guarantor is a party or by which such
                  Guarantor or any of its property is bound or affected;

         and no Guarantor or Subsidiary of a Guarantor that had on the last day
         of the most recently ended fiscal quarter total assets (determined in
         accordance with GAAP) of $50,000,000 or more (each such Subsidiary, a
         "Significant Subsidiary") is in violation of, or default under, any
         requirement of law or agreement described in clause (v) above, except
         to the extent any such defaults or violations, either individually or
         in the aggregate, could not (x) reasonably be expected to have any
         material adverse effect whatsoever upon the validity or enforceability
         of any Credit Document, (y) reasonably be expected to be material and
         adverse to the condition (financial or otherwise), assets, business or
         operations of HET and its Subsidiaries, taken as a whole, or (z)
         reasonably be expected to materially impair the ability of the
         Guarantors, taken as a whole, to perform their obligations hereunder or
         under the Credit Documents.

                  (c) No Governmental Approvals Required. Except as previously
         obtained or made, no authorization, consent, approval, order, license
         or permit from, or filing, registration or qualification with, any
         governmental agency is or will be required to authorize or permit under
         applicable laws the execution, delivery and performance by the
         Guarantors of this Guaranty and the other Credit Documents to which any
         of them is a party.

                  (d) Financial Statements. The statements of financial
         condition of HET and its Subsidiaries at December 31, 2000, and the
         related statements of income and cash flow and changes in shareholders'
         equity of HET and its Subsidiaries for the fiscal year ended on such
         date, copies of which were furnished to BTCo prior to the date hereof,
         present fairly the financial condition of HET and its Subsidiaries at
         the date of such statements of financial condition and the results of
         the operations of HET and its Subsidiaries for such fiscal year. All
         such financial statements have been prepared in accordance with
         generally accepted accounting principles and practices consistently
         applied.

                  (e) No Other Liabilities; No Material Adverse Effect. As of
         the date hereof, no Guarantor had any material liability or material
         contingent liability not reflected or disclosed in the financial
         statements described in clause (d) above, other than liabilities and
         contingent liabilities arising in the ordinary course of business since
         the date of such financial statements. Since December 31, 2000, nothing
         has occurred which could (i)

                                      -7-
<PAGE>   8

         reasonably be expected to have any material adverse effect whatsoever
         upon the validity or enforceability of this Guaranty or any Credit
         Document, (ii) reasonably be expected to be material and adverse to the
         condition (financial or otherwise), assets, business or operations of
         HET and its Subsidiaries, taken as a whole, or (iii) reasonably be
         expected to materially impair the ability of the Guarantors, taken as a
         whole, to perform their obligations hereunder or under the Credit
         Documents.

                  (f) Litigation. There are no actions, suits, proceedings or
         investigations pending as to which any Guarantor or any of its
         Subsidiaries has been served or has received notice or, to the
         knowledge of any Guarantor, threatened against or affecting any
         Guarantor or any of its Subsidiaries or any property of any of them
         before any Governmental Agency (as defined in the HET Credit Agreement)
         in which there is any reasonable possibility of an adverse decision
         which could materially adversely affect the business, consolidated
         financial position or results of operations of the Guarantors, taken as
         a whole, or which in any manner draws into question the validity or
         enforceability of this Guaranty or any of the Credit Documents.

                  (g) Binding Obligations. This Guaranty and each Credit
         Document to which any Guarantor is a party will, when executed and
         delivered by such Guarantor, constitute the legal, valid and binding
         obligation of such Guarantor, enforceable against such Guarantor in
         accordance with its terms, except as enforcement may be limited by
         applicable liquidation, conservatorship, bankruptcy, moratorium,
         rearrangement, receivership, insolvency, reorganization or similar
         debtor relief laws affecting the rights of creditors generally, or
         equitable principles relating to the granting of specific performance
         and other equitable remedies as a matter of judicial discretion.

                  (h) No Guarantor Default or Event of Default. No event has
         occurred and is continuing that is a Guarantor Default or a Guarantor
         Event of Default.

                  (i) Disclosure. No written statement made by the chief
         executive officer, president, chief financial officer, treasurer, any
         vice president or any secretary of any Guarantor to BTCo in connection
         with this Guaranty or any Credit Document or in connection with any
         transaction contemplated herein or therein as of the date thereof
         contained any untrue statement of a material fact or omitted a material
         fact necessary to make the statement made not misleading in light of
         all the circumstances existing at the date the statement was made.

                  (j) Tax Liability. Each Guarantor and its respective
         Subsidiaries have filed all tax returns which are required to be filed,
         and have paid, or made provision for the payment of, all taxes with
         respect to the periods, property or transactions covered by said
         returns, or pursuant to any assessment received by such Guarantor or
         any of its Subsidiaries, except (a) such taxes, if any, as are being
         contested in good faith by appropriate proceedings and as to which
         adequate reserves have been established and maintained and (b)
         immaterial taxes and tax returns so long as no material item or portion

                                      -8-
<PAGE>   9

         of property of such Guarantor or any of its Subsidiaries is in jeopardy
         of being seized, levied upon or forfeited.

                  (k) Gaming Regulations. Each Guarantor and each of their
         respective Subsidiaries is in compliance in all material respects with
         all Gaming Regulations that are applicable to them and their
         businesses.

                  (l) Solvency. On and as of the date hereof, and giving effect
         to the Indebtedness being guaranteed by the Guarantors hereunder, each
         Guarantor shall be solvent. For purposes of this clause (l), "solvent,"
         as to any Person shall mean that (a) the sum of the assets of such
         Person, both at a fair valuation and at present fair saleable value,
         exceeds its liabilities, including its probable liability in respect of
         contingent liabilities, (b) such Person will have sufficient capital
         with which to conduct its business as presently conducted and as
         proposed to be conducted and (c) such Person has not incurred debts,
         and does not intend to incur debts, beyond its ability to pay such
         debts as they mature. For purposes of the immediately preceding
         sentence, "debt" means any liability on a claim, and "claim" means (x)
         a right to payment, whether or not such right is reduced to judgment,
         liquidated, unliquidated, fixed, contingent, matured, unmatured,
         disputed, undisputed, legal, equitable, secured, or unsecured, or (y) a
         right to an equitable remedy for breach of performance if such breach
         gives rise to a payment, whether or not such right to an equitable
         remedy is reduced to judgment, fixed, contingent, matured, unmatured,
         disputed, undisputed, secured or unsecured. With respect to any such
         contingent liabilities, such liabilities shall be computed at the
         amount which, in light of all the facts and circumstances existing at
         the time, represents the amount which can reasonably be expected to
         become an actual or matured liability.

                  13. Each Guarantor covenants and agrees that on and after the
Effective Date and until no Existing Letter of Credit remains outstanding and
all Guaranteed Obligations are indefeasibly paid in full:

                  (a) Incorporation by Reference. Each Guarantor will comply
         with each of the covenants contained in Sections 5.1 through 5.9 of the
         HET Credit Agreement and Sections 6.1 through 6.7 of the HET Credit
         Agreement and Sections 7.1 and 7.2 of the HET Credit Agreement, which
         Sections, together with all definitions in the HET Credit Agreement
         applicable to such Sections, are hereby incorporated by reference as if
         set forth herein in their entirety, provided that:

                           (i) all references to "Parent" therein shall mean and
                  be a reference to "HET" herein;

                           (ii) all references to "the Company" therein shall
                  mean and be a reference to "HOC" herein;

                           (iii) all references to the "Borrower" or "Borrowers"
                  therein shall mean and be a reference to "HOC", "Marina
                  Associates" or any other "Borrower" (as defined in the HET
                  Credit Agreement) herein;

                                      -9-
<PAGE>   10

                           (iv) all references to "this Agreement," "herein,"
                  "hereunder" and words of similar import therein shall mean and
                  be a reference to this "Guaranty";

                           (v) all references to "Parent and the Borrowers"
                  therein shall mean and be a reference to "HET, HOC and any
                  other Borrower (as defined in the HET Credit Agreement)"
                  herein;

                           (vi) all references to "Parent or any Company"
                  therein shall mean and be a reference to "HET, HOC or any
                  Subsidiary Company" herein;

                           (vii) all references to the "Administrative Agent"
                  therein shall mean and be a reference to "BTCo" herein;

                           (viii) all references to any "Lender" or the
                  "Lenders" therein shall mean and be a reference to "BTCo"
                  herein;

                           (ix) all references to the "Requisite Lenders"
                  therein shall mean and be a reference to "BTCo" herein;

                           (x) all references to a "Default" therein shall mean
                  and be a reference to a "Guarantor Default" herein and as
                  defined below; and

                           (xi) all references to an "Event of Default" therein
                  shall mean and be a reference to a "Guarantor Event of
                  Default" herein and as defined below.

                  As used herein, the term "Guarantor Default" shall mean any
         event, act or condition which with notice or lapse of time, or both,
         would constitute a Guarantor Event of Default.

                  (b) HET hereby agrees to deliver to the Administrative Agent
         at the time of the delivery of the financial statements pursuant to
         Sections 7.1(a) and (c) of the HET Credit Agreement, a certificate of
         the chief financial officer, controller or treasurer of HET setting
         forth (x) the senior implied indebtedness ratings, if any, assigned by
         Moody's Investors Services (or its successors) and Standard & Poor's
         Rating Services (or its successors) to HOC's Indebtedness at the end of
         such fiscal quarter or year, as the case may be, and (y) the
         Consolidated Interest Coverage Ratio (as defined in the HET Credit
         Agreement) at the end of such fiscal quarter or year, as the case may
         be.

                  14. As used herein, the term "Guarantor Event of Default"
shall mean the occurrence of any of the following specified events:

                  (a) Any representation or warranty of any Guarantor made
         herein or in any certificate or other writing delivered by any
         Guarantor pursuant hereto, proves to have been incorrect when made or
         reaffirmed; or

                  (b) Any Guarantor or any of their respective Significant
         Subsidiaries (as defined in the HET Credit Agreement) (i) fails to pay
         the principal, or any principal

                                      -10-
<PAGE>   11

         installment, of any present or future indebtedness for borrowed money
         of $100,000,000 or more including without limitation the Short Term
         Loan Agreement (as defined in the HET Credit Agreement), or any
         guaranty of present or future indebtedness for borrowed money of
         $100,000,000 or more, on its part to be paid, when due (or within any
         stated grace period), whether at the stated maturity, upon
         acceleration, by reason of required prepayment or otherwise or (ii)
         fails to perform or observe any other term, covenant or agreement on
         its part to be performed or observed, or suffers any event to occur, in
         connection with any present or future indebtedness for borrowed money
         of $100,000,000 or more, or of any guaranty of present or future
         indebtedness for borrowed money of $100,000,000 or more, if as a result
         of such failure or sufferance any holder or holders thereof (or an
         agent or trustee on its or their behalf) has the right to declare such
         indebtedness due before the date on which it otherwise would become
         due; or

                  (c) This Guaranty, at any time after its execution and
         delivery and for any reason other than the agreement of BTCo or
         satisfaction in full of all the Guaranteed Obligations ceases to be in
         full force and effect or is declared by a court of competent
         jurisdiction to be null and void, invalid or unenforceable in any
         respect which, in any such event in the reasonable opinion of BTCo, is
         materially adverse to the interests of BTCo; or any Guarantor denies in
         writing that it has any further liability or obligation hereunder, or
         purports in writing to revoke, terminate or rescind same; or

                  (d) A final judgment against HET or any of its Significant
         Subsidiaries is entered for the payment of money in excess of
         $25,000,000 and, absent procurement of a stay of execution, such
         judgment remains unsatisfied for thirty calendar days after the date of
         entry of judgment, or in any event later than five days prior to the
         date of any proposed sale thereunder; or any writ or warrant of
         attachment or execution or similar process is issued or levied against
         all or any material part of the property or assets of any such Person
         and is not released, vacated or fully bonded within thirty calendar
         days after its issue or levy; or

                  (e) Any Guarantor or any of their respective Significant
         Subsidiaries institutes or consents to the institution of any
         proceeding under Title 11 of the United States Code entitled
         "Bankruptcy," as now or hereafter in effect, or any successor thereto
         (the "Bankruptcy Code") relating to it or to all or any part of its
         property or assets, or is unable or admits in writing its inability to
         pay its debts as the mature, or makes an assignment for the benefit of
         creditors; or applies for or consents to the appointment of any
         receiver, trustee, custodian, conservator, liquidator, rehabilitator or
         similar officer for it or for all or any part of its property or
         assets; or any receiver, trustee, custodian, conservator, liquidator,
         rehabilitator or similar officer is appointed without the application
         or consent of that Person and the appointment continues undischarged or
         unstayed for 60 calendar days; or any proceeding under the Bankruptcy
         Code relating to any such Person or to all or any part of its property
         or assets is instituted without the consent of that Person and
         continues undismissed or unstayed for 60 calendar days; or

                  (f) Any Pension Plan (as defined in the HET Credit Agreement)
         maintained by HET or any of its Subsidiaries is determined to have a
         material "accumulated funding

                                      -11-

<PAGE>   12

         deficiency" as that term is defined in Section 302 of ERISA except to
         the extent that any such deficiencies could not, individually or in the
         aggregate, (i) reasonably be expected to have any material adverse
         effect whatsoever upon the validity or enforceability of this Guaranty
         or any Credit Document, (ii) reasonably be expected to be material and
         adverse to the condition (financial or otherwise), assets, business or
         operations of the Guarantors, taken as a whole, or (iii) reasonably be
         expected to materially impair the ability of the Guarantors, taken as a
         whole, to perform their obligations hereunder or under the Credit
         Documents; or

                  (g) The occurrence of a License Revocation with respect to a
         license issued to HET or any of its Subsidiaries by any Gaming
         Authority of the States of New Jersey or Nevada with respect to gaming
         operations at any gaming facility accounting for 5% or more of the
         consolidated gross revenues of HET and its Subsidiaries that continues
         for thirty calendar days; or

                  (h) Guarantor Changes of Control. Any Guarantor Change of
         Control (which, for purposes of this Guaranty, shall mean any "Change
         of Control" as defined in the HET Credit Agreement) shall have
         occurred; or

                  (i) Acceleration of Obligations pursuant to the Revolving
         Credit Agreement; Etc. The maturity of any loans pursuant to the
         Revolving Credit Agreement shall have been accelerated in accordance
         with the remedial provisions contained therein, or for any reason the
         commitments to lend pursuant to the Revolving Credit Agreement shall
         have terminated.

                  As used herein, the term "HET Credit Agreement" shall mean the
Five Year Loan Agreement, dated as of April 30, 1999, among HET, HOC, Marina
Associates, the financial institutions party thereto, BTCo, as Syndication
Agent, Canadian Imperial Bank of Commerce and Societe Generale, as Documentation
Agents, Commerzbank AG, PNC Bank, National Association and Wells Fargo Bank,
N.A., as Co-Documentation Agents, and Bank of America National Trust and Savings
Association, as Administrative Agent (without giving effect to any amendments,
modifications or supplements thereof or thereto after April 30, 1999 unless, and
to the extent, BTCo specifically agrees to give effect to the respective change
for purposes of this Guaranty (although amendments modifications, supplements or
terminations thereof shall be given effect for purposes of determining whether
such credit facility remains in effect or has terminated)).

                  15. Upon the occurrence and during the continuance of any
Event of Default or any Guarantor Event of Default, BTCo shall have the right to
require HET and HOC to (x) pay to BTCo within three Business Days of such demand
by BTCo to the Guarantors, such additional amount of cash, to be held as
security by BTCo for the Company's reimbursement and other obligations in
respect of Existing Letters of Credit then outstanding, as is equal to 103% of
the face amount of all Existing Letters of Credit then outstanding and (y) pay
to BTCo in cash any amounts then owed to BTCo, on a joint and several basis,
pursuant to the terms of this Guaranty. Notwithstanding anything to the contrary
contained herein, if an Event of Default specified in Section 6.1(e), (f) or (g)
of the Revolving Credit Agreement or a Guarantor Event of Default

                                      -12-
<PAGE>   13

specified in Section 14(e) hereof shall occur, the result which would occur upon
the demand of BTCo as specified in the immediately preceding sentence shall
occur automatically without the demand of BTCo; provided that the amounts
payable by HET and HOC under this Section 15 shall be calculated without giving
effect to any reductions to such amounts (except to the extent such reductions
resulted from the payment thereof in cash), whether such reductions resulted
from any event of the type described in Section 6.1(e), (f) or (g) of the
Revolving Credit Agreement, Section 14(e) hereof or otherwise.

                  16. Notwithstanding anything to the contrary contained herein,
in the Revolving Credit Agreement or in an other Credit Document, no Guarantor
shall consent, or shall permit the Lenders to consent, to any change, waiver,
discharge, amendment, modification or termination of the Revolving Credit
Agreement or any other Credit Document which would (x) require the consent of
BTCo in accordance with Section 8.11 of the Revolving Credit Agreement (as in
effect on the Effective Date) and (y) reduce, limit, terminate or otherwise
adversely affect the rights of BTCo with respect to the Existing Letters of
Credit pursuant to the Revolving Credit Agreement and related Credit Documents.
If there is any breach of the covenant contained in the immediately preceding
sentence, the respective changes, waivers, discharges, amendments, modifications
or terminations which are violative of the requirements of the immediately
preceding sentence shall be given no effect for purposes of this Guaranty.
Furthermore, the Guarantors will not permit the Revolving Credit Agreement to be
terminated or replaced (including as contemplated by Section 5.30 of the
Revolving Credit Agreement) unless (x) all Existing Letters of Credit are
terminated and surrendered to BTCO for cancellation and (y) all amounts owing to
BTCo hereunder with respect to the Existing Letters of Credit are repaid in
full.

                  17. If HET and/or HOC make any payments pursuant to this
Guaranty in respect of the Guaranteed Obligations, HET and/or HOC, as the case
may be, shall be subrogated to the rights of the holders of the respective
Guaranteed Obligations so paid; provided that no payments may be made in respect
of such subrogation claims until all Guaranteed Obligations have been
indefeasibly paid in full.

                  18. The Guarantors hereby jointly and severally agree to pay
all out-of-pocket costs and expenses of BTCo in connection with any amendment,
waiver or consent relating hereto and of BTCo in connection with any enforcement
of this Guaranty (including in each case, without limitation, the fees and
disbursements of counsel employed by BTCo).

                  19. This Guaranty shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of BTCo and its successors
and assigns.

                  20. Neither this Guaranty nor any provision hereof may be
changed, waived, discharged or terminated except with the written consent of
each Guarantor directly affected thereby and with the written consent of BTCo.

                  21. Each Guarantor acknowledges that an executed (or
conformed) copy of each of the Credit Documents has been made available to its
principal executive officers and such officers are familiar with the contents
thereof.

                                      -13-
<PAGE>   14

                  22. In addition to any rights now or hereafter granted under
applicable law (including, without limitation, Section 151 of the New York
Debtor and Secured Creditor Law) and not by way of limitation of any such
rights, upon the occurrence and during the continuance of an Event of Default
(such term to mean and include any "Event of Default" as defined in the
Revolving Credit Agreement) or Guarantor Event of Default, BTCo is hereby
authorized at any time or from time to time, without notice to any Guarantor or
to any other Person, any such notice being expressly waived, to set off and to
appropriate and apply any and all deposits (general or special) and any other
indebtedness at any time held or owing by BTCo to or for the credit or the
account of such Guarantor, against and on account of the obligations and
liabilities of such Guarantor to BTCo under this Guaranty, irrespective of
whether or not BTCo shall have made any demand hereunder and although said
obligations, liabilities, deposits or claims, or any of them, shall be
contingent or unmatured.

                  23. All notices, requests, demands or other communications
pursuant hereto shall be deemed to have been duly given or made when delivered
to the Person to which such notice, request, demand or other communication is
required or permitted to be given or made under this Guaranty, addressed to such
party at (i) in the case of BTCo, 130 Liberty Street, New York, New York 10006,
Attention: Mr Clark Peterson and (ii) in the case of any Guarantor, at its
address set forth opposite its signature below; or in any case at such other
address as any of the Persons listed above may hereafter notify the others in
writing.

                  24. If claim is ever made upon BTCo for repayment or recovery
of any amount or amounts received in payment or on account of any of the
Guaranteed Obligations and any of the aforesaid payees repays all or part of
said amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its property
or (ii) any settlement or compromise of any such claim effected by such payee
with any such claimant (including the Company), then and in such event each
Guarantor agrees that any such judgment, decree, order, settlement or compromise
shall be binding upon such Guarantor, notwithstanding any revocation hereof or
other instrument evidencing any liability of the Company, and such Guarantor
shall be and remain liable to the aforesaid payees hereunder for the amount so
repaid or recovered to the same extent as if such amount had never originally
been received by any such payee.

                  25. (a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF BTCO
AND OF THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding
with respect to this Guaranty may be brought in the courts of the State of New
York or of the United States of America for the Southern District of New York,
and, by execution and delivery of this Guaranty, each Guarantor hereby
irrevocably accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each Guarantor hereby
further irrevocably waives any claim that any such courts lack jurisdiction over
such Guarantor, and agrees not to plead or claim, in any legal action or
proceeding with respect to this Guaranty brought in any of the aforesaid courts,
that any such court lacks jurisdiction over such Guarantor. Each Guarantor
hereby further irrevocably waives any claim that any such courts lack
jurisdiction over such Guarantor, and agrees not to plead or claim, in any legal
action or proceeding with respect to this Guaranty brought in any of the
aforesaid

                                      -14-
<PAGE>   15

courts, that any such court lacks jurisdiction over such Guarantor. Each
Guarantor hereby irrevocably designates, appoints and empowers CT Corporation
System, with offices on a date hereof at 111 Seventh Avenue, New York, New York
10021 as its designee, appointee and agent to receive, accept and acknowledge
for and on its behalf, and in respect of its property, service of any and all
legal process, summons, notices and documents which may be served in any such
action or proceeding. If for any reason such designee, appointee and agent shall
cease to be available to act as such, each Guarantor agrees to designate a new
designee, appointee and agent in New York City on the terms and for the purposes
of this provision satisfactory to the Administrative Agent. Each Guarantor
further irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such Guarantor at
its address set forth opposite its signature below, such service to become
effective 30 days after such mailing. Each Guarantor hereby irrevocably waives
any objection to such service of process and further irrevocably waives and
agrees not to plead or claim in any action or proceeding commenced under this
Guaranty that service of process was in any way invalid or ineffective. Nothing
herein shall affect the right of any of BTCo to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against each Guarantor in any other jurisdiction.

                  (b) Each Guarantor hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Guaranty brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that such action or proceeding brought in any such court has been brought in an
inconvenient forum.

                  (c) EACH GUARANTOR AND BTCO (BY ITS ACCEPTANCE OF THE BENEFITS
OF THIS GUARANTY) HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS GUARANTY
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

                  26. It is the desire and intent of each Guarantor and BTCo
that this Guaranty shall be enforced against each Guarantor to the fullest
extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. If, however, and to the extent
that, the obligations of any Guarantor under this Guaranty shall be adjudicated
to be invalid or unenforceable for any reason (including, without limitation,
because of any applicable state or federal law relating to fraudulent
conveyances or transfers), then the amount of the Guaranteed Obligations of such
Guarantor shall be deemed to be reduced and such Guarantor shall pay the maximum
amount of the Guaranteed Obligations which would be permissible under applicable
law.

                  27. This Guaranty may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Guarantors and BTCo.

                                      -15-
<PAGE>   16

                  28. All payments made by any Guarantor hereunder will be made
without setoff, counterclaim or other defense and on the same basis as payments
are made by the Company under Section 3.7 of the Revolving Credit Agreement (as
originally in effect).

                  29. Each Guarantor hereby acknowledges and agrees that BTCo
shall have no obligation whatsoever to amend, modify or supplement, or agree to
any amendment, modification or supplement to, any Existing Letter of Credit, and
that BTCo shall have no obligation whatsoever to issue additional Letters of
Credit pursuant to the Revolving Credit Agreement.

                                      * * *

                                      -16-
<PAGE>   17

                  IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to
be executed and delivered as of the date first above written.

ADDRESSES

One Harrah's Court                          HARRAH'S ENTERTAINMENT, INC.,
Las Vegas, NV                               as a Guarantor
Tel: (702) 407-6393
Fax: (702) 579-2671
Attn: General Counsel                       By
                                               -----------------------
                                            Title:

One Harrah's Court                          HARRAH'S OPERATING COMPANY, INC.,
Las Vegas, NV                               as a Guarantor
Tel: (702) 407-6393
Fax: (702) 579-2671
Attn: General Counsel                       By
                                               -----------------------
                                            Title:

Acknowledged and Agreed to:

BANKERS TRUST COMPANY

By
  -----------------------
Title:

<PAGE>   18

furtherance of the consummation of the transactions contemplated by the Manager
Subordination Agreement have been taken in compliance with the respective
documents therefor and all applicable laws. Harrah's Management Company has duly
executed and delivered the Manager Subordination Agreement.

         3. There are no actions, suits or proceedings pending, or to the best
of my knowledge threatened, against Harrah's Management Company or any of its
subsidiaries (i) with respect to the Manager Subordination Agreement executed by
Harrah's Management Company, (ii) with respect to any material indebtedness of
Harrah's Management Company or any of its subsidiaries, or (iii) that could
reasonably be expected to materially and adversely affect the business,
operations, property, assets, liabilities, conditions (financial or otherwise)
or prospects of Harrah's Management Company and its consolidated subsidiaries
taken as a whole.

         This opinion is furnished by me, as General Counsel of Harrah's
Management Company, to you for your benefit (and the benefit of your assigns and
participants) in connection with the above transactions. This opinion may not be
relied upon by you for any other purpose or furnished to (unless otherwise
required to be so furnished by applicable law or judicial process), quoted to or
relied upon by any other person for any purpose without my prior written
consent.

                                            Very truly yours,

                                            /s/ Kevin Colomb

                                            Kevin Colomb,
                                            General Counsel

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